Hoho Property Pty Ltd v Bass Finance No 37 Pty Ltd

1. [1]

   HER HONOUR: The plaintiffs, borrower Hoho Property Pty Ltd and guarantors, Thu Duong (Cathy) Ly and husband Trung Hieu (Henry) Ho, seek to set aside loan and security agreements, mortgages and a guarantee. These finance documents were executed when refinancing a property development in Liverpool. The incoming lender was the first defendant, Bass Finance No 37 Pty Ltd (the Lender). The loan was arranged by the second defendant, Premier Finance Australia Pty Ltd (the Broker).

2. [2]

   The plaintiffs contend that, when the finance documents were executed, Ms Ly and Mr Ho suffered from a special disadvantage: they had a limited command of English, a basic level of education and were inexperienced in matters of finance and property development. The finance documents were said to have been executed in circumstances involving duress, illegitimate commercial pressure and unconscionable conduct and ought be set aside pursuant to section 243 of Schedule 2 to the Competition and Consumer Act 2010 (Cth), section 12GM of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and the Contracts Review Act 1980 (NSW).

3. [3]

   By cross-claims, the Lender sought to enforce its rights under the finance documents, while the Broker sued for its unpaid fee. The plaintiffs maintained that, in the circumstances, the Broker was not entitled to its fee and, in the event that the Lender was entitled to enforce its rights against them, the Broker was liable for damages for breach of contract, sufficient to indemnify them for any liability to the Lender.

SUMMARY

1. [4]

   Ms Ly and Mr Ho hail from Vietnam, although they have lived in Australia for many years. While the couple speak English, their solicitor had learned from experience that it was necessary to have legal documents explained to them with a Vietnamese interpreter.

2. [5]

   The couple ran a butchery business but decided to venture into property development, buying a development site with approval to construct apartments. Using the services of a mortgage broker, the couple obtained a 12 month loan to complete the purchase of the land. The loan was to be repaid in January 2021.

3. [6]

   The Broker was retained to source finance to pay out the loan and to fund construction. The Lender offered to provide finance of $9.62 million, of which a sizeable portion would be used to pay interest and fees. The Broker charged some $200,000 for its services.

4. [7]

   Hoho Property was not obliged to repay the existing loan until 28 January 2021. Early repayment did not entitle the borrower to any rebate on interest accruing before that date. However, the Lender was “very keen to get this done pre Xmas”. A completion date of Tuesday, 22 December 2020 was chosen; the plaintiffs’ solicitor was advised of the date on Wednesday, 16 December 2020, when he had been provided with one of the proposed transaction documents, in draft, and subject to change.

5. [8]

   The defendants pressed the plaintiffs and their solicitor to execute the documents, at a time where a complete set of the documents was yet to be provided, and in final form. The plaintiffs’ solicitor resisted the suggested urgency, advising the defendants by email that it was impossible to review the documents in these circumstances by the requested deadline, in particular, where “It is also likely that the clients will require an Interpreter”.

6. [9]

   The defendants regarding the plaintiffs’ solicitor as engaging in delaying tactics. The defendants sent a series of offensive and threatening emails, suggesting that the plaintiffs faced the risk “of not settling the transaction at all if you delay”. The plaintiffs’ solicitor told the Broker that his clients needed an interpreter. The Broker asked the solicitor to have the clients sign the documents and provide advice later; the plaintiffs’ solicitor refused and warned the Lender that pressuring his clients to sign without independent legal advice was considered duress.

7. [10]

   Further unpleasant emails followed from the Lender, telling the plaintiffs’ solicitor not to waste his time sending such emails and to just do his job, failing which there was a risk that completion would not occur. Shortly after these communications, the plaintiffs’ solicitor was provided with a full suite of transaction documents in final form. However, the Lender was not prepared to continue if the plaintiffs continued to use their solicitor.

8. [11]

   The Broker told the plaintiffs that, if they wanted to keep their solicitor, the Lender would not advance the loan, “You have no choice.” This ultimatum caused significant distress to the borrowers, who understood that if they did not execute the documents on the date nominated by the Lender, then there would be no loan at all. The Broker arranged new solicitors and assisted the plaintiffs to terminate the retainer of their existing solicitor by drafting the necessary communications. The Broker provided initial instructions to the new solicitors.

9. [12]

   The plaintiffs did not help themselves. First, shortly before completion, the plaintiffs, with the assistance of the Broker, advised that their assets were significantly greater than initially disclosed in their application, including by reasons of properties in Vietnam worth $7.5 million. This appears to have been done in order to satisfy the Lender that the plaintiffs were able to fund the costs of construction in excess of the proposed loan amount. Second, and more importantly, Ms Ly gave the Broker inaccurate information as to her solicitor’s prior use of an interpreter for the couple and sent a text message – itself expressed in poor English and at the end of a long day in which she had been rung constantly by the Broker – that she did not need an interpreter.

10. [13]

    On the designated day for completion, the plaintiffs met their new solicitors and were provided with legal advice. There was no interpreter; the plaintiffs again said they did not need one. Following completion, the plaintiffs soon went into default.

11. [14]

    The Broker’s performance of its contract was in breach of its obligation to provide its services with reasonable care and skill. Where duress involves actual or threatened unlawful conduct, it was not suggested that the Lender’s threats were unlawful, where there was no legal obligation to provide the loan at all. While the Broker’s breach of contract could be considered unlawful for the purposes of duress, it was not the relevant conduct that generated the illegitimate pressure in question.

12. [15]

    The plaintiffs did suffer from a special disadvantage affecting their ability to make a judgment as to their own best interests, from a combination of circumstances: lack of experience, lack of English proficiency, an artificial deadline and suggested adverse implications should they fail to accede to the Lender’s demands. Given the Lender’s relative non-involvement with the plaintiffs, it did not have actual or constructive knowledge of the special disadvantage. The Broker had actual knowledge of these circumstances save for the plaintiffs’ lack of English proficiency, where the Broker had constructive knowledge given his more extensive dealings with the couple.

13. [16]

    The Broker made unconscientious use of its superior position and engaged in unconscionable conduct but no remedy ought be granted. The plaintiffs sought that the finance documents be declared void, where the unconscionable conduct in question was that of a third party to the contracts, in the absence of procurement by the Lender, or the Lender having actual or constructive notice of the unconscionable conduct. The plaintiffs also sought a declaration that the Broker was not entitled to its fee, where the Broker’s entitlement to the fee arose prior to and independently of the unconscionable conduct. Whilst the Courts have a very wide jurisdiction to grant declaratory relief, it is not so broad.

14. [17]

    Notwithstanding all of this, the Lender failed to prove that it was owed any moneys by the plaintiffs, as the Dobbs certificate did not conform with the contract. It was thus unnecessary to resolve the plaintiffs’ claim for compensation from the Broker, which was premised on liability to the Lender. Similarly for the claim against the Broker for damages for breach of contract, no substantive damage was proved and nominal damages are awarded.

WITNESSES AND DOCUMENTS

1. [18]

   The plaintiffs relied on the evidence of Ms Ly, Mr Ho and their former solicitor, Firas Hammoudi. All were cross examined at length.

2. [19]

   Ms Ly was a pleasant lady who was generally straightforward and made reasonable concessions. Ms Ly appeared keenly aware of the financial implications of these proceedings for herself and her family and was obviously worried and genuinely distressed. However, some of her evidence was unlikely, when Ms Ly denied that she was aware that the interest rates proposed by the Lender were less than the incumbent lender. Ms Ly denied providing details of properties in Vietnam to the Broker, where it was unlikely that the Broker would have been aware of such matters. Ms Ly’s evidence of her meeting with solicitor, Kelvin Solari, was at odds with Mr Solari’s contemporaneous file note and I prefer the latter.

3. [20]

   Mr Ho was also generally straightforward but, on occasion, gave evidence which was at odds with contemporaneous documents. To that extent, I have preferred the documentary evidence as likely to be more accurate. Some of Mr Ho’s evidence was also unlikely, for example, that he did not find out what the interest and fees were on the proposed loan, where – of the couple – he appears to have been responsible for financial matters: see [109].

4. [21]

   Overall, the couple’s evidence was not entirely satisfactory. Whilst I understand the couple’s motivation for describing the circumstances which led to their present financial predicament in terms which were favourable to their case, obviously my role is to find out what happened as accurately as possible.

5. [22]

   Mr Hammoudi was an impressive witness. He gave evidence in a precise and straightforward manner. No issues of credit arose. However, Mr Hammoudi does not appear to have kept file notes. As a consequence, his recollection of conversations with the clients, while honestly given, may not have been entirely accurate, either as to when a particular conversation occurred in the sequence of events or precisely what was said.

6. [23]

   The Lender called no witnesses, although it had earlier served three affidavits by its director, Nicholas Goh. I infer that Mr Goh’s evidence would not have assisted the lender: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 at 320-321.

7. [24]

   The Broker relied on the evidence of its director, Anthony Ostin, and solicitor, Natalee Venegas. Mr Ostin was cross examined at length. Mr Ostin was an intelligent, quick-thinking person. He gave answers which were extremely short, quick and brisk. He was a very defensive witness who tended to exaggerate, “I had hundreds of phone calls with Ms Ly.” Mr Ostin volunteered self-serving statements; when asked whether he and Mr Goh perceived that Mr Hammoudi was engaged in delaying tactics, he added, “… So did the client.” Mr Ostin did not recall conversations that he likely had with Mr Goh, which would have reflected poorly on him. Mr Ostin maintained that he did not recall critical conversations that occurred not long ago.

8. [25]

   Mr Ostin vacillated on occasion in an endeavour to give an answer most advantageous to his case. For example, Mr Ostin said, “the clients wanted it settled before Christmas, okay, because they were frightful Ajax [the incumbent lender] could have sold them up.” Mr Ostin then disavowed this evidence, then accepted it, then said he was not sure, then said he could not recall, then accepted it again.

9. [26]

   Likewise, in his affidavit, Mr Ostin denied that Mr Ho requested that the term of the loan be extended as it was 15 months’ too short. In cross-examination, Mr Ostin recalled Mr Ho saying this, then adhered to his denial, then agreed that it was discussed.

10. [27]

    Mr Ostin initially said that he did not say anything to his clients about the Lender’s advice that its analysis of the feasibility of the development showed zero profit. Then he said that one needed to put the data together and work out where the issue was. Then Mr Ostin said that he did not need to see this feasibility as the Lender would not have proceeded if it did not have profit. The point which Mr Ostin did not answer was why he did not pass the Lender’s dim assessment onto his clients. I have approached his evidence with caution.

11. [28]

    Mr Hammoudi and Mr Ostin’s evidence as to what Ms Ly told them was often at odds. This may be referable to Ms Ly saying different things to different people, perhaps to appease the listener or to advance the couple’s interests as she then perceived them to be. But in the event of conflict between the evidence of Mr Hammoudi and Mr Ostin as to what they said to each other, I prefer Mr Hammoudi’s evidence without hesitation.

12. [29]

    Given the causes of action pursued by the plaintiffs in these proceedings, I also observe that Mr Ostin’s manner was flippant, dismissive and arrogant. Mr Ostin appeared to look down on his clients. He presented as a quick-tempered, forceful person. I expect he would have been quite overwhelming for someone like Ms Ly to deal with in the event of disagreement between them.

Jones v Dunkel

1. [30]

   The Lender and Broker submitted that an adverse inference should be drawn from the plaintiffs’ failure to call their builder or solicitor, Peter Morris. As to the builder, an initial question is whether he is a person who would be natural for the plaintiffs to call. That is, whether he may be regarded as being “in the camp” of the plaintiffs or “a witness likely to be friendly to the interests of the other party”: Payne v Parker [1976] 1 NSWLR 191 at 201-202 (per Glass JA); Ghazal v Government Insurance Office (NSW) (1992) 29 NSWLR 336 at 343 (per Kirby P, Mahoney and Clarke JJA agreeing).

2. [31]

   The builder was most closely aligned with the plaintiffs, having worked with them in respect of the property development for some time. That said, it was the builder who introduced the plaintiffs to the Broker. The builder also dealt with the Lender and Broker, meeting with their representatives, taking numerous phone calls from the Broker and being copied on email communications throughout the transaction. Indeed, the Broker and the Lender appear to have looked to the builder, rather than Ms Ly and Mr Ho, to provide them with the information which they needed to progress the transaction. Presumably, the builder expected to make money from the property development as well, having entered into a building contract with Hoho Property. Overall, I consider that the only “camp” the builder was in was his own. I decline to draw the inference.

3. [32]

   As to Mr Morris, he was the solicitor for the plaintiffs in these proceedings. As to what relevant evidence Mr Morris could have given, it was uncontroversial that he had previously given advice to Ms Ly and Mr Ho without the assistance of an interpreter, when executing loan documents with the incumbent lender. Presumably, Mr Morris formed the view at the time that an interpreter was not needed. I can, and do, readily infer this from these uncontested facts. What else Mr Morris could have added by giving evidence is not entirely unclear. It is not necessary for a party to call an unnecessary witness: Apand Pty Limited v The Kettle Chip Co (1994) 52 FCR 474 at 490 (per Lockhart, Gummow and Lee JJ). Further, whilst the plaintiffs clearly waived privilege over their communications with their solicitors in respect of the transaction, the plaintiffs would have been entitled to claim privilege in respect of Mr Morris' evidence to the extent that he was asked about more recent events. I decline to draw the inference.

4. [33]

   The Lender also sought an adverse inference be drawn from the plaintiffs' failure to call evidence from family members concerning the ownership of property in Vietnam. I also consider such witnesses would fall in the category of unnecessary witnesses, where their evidence would have been of peripheral relevance to the issues in these proceedings. I decline to draw the inference.

Documents

1. [34]

   Unfolding events were recorded in emails, text messages and correspondence. Two records are noteworthy. First, Mr Ostin kept a notebook, although entries in respect of the plaintiffs and other clients, notes made on different dates or notes made with respect of distinct events were not clearly delineated. Without explanation by Mr Ostin, the notes are not particularly informative.

2. [35]

   Second, the mobile phone records of Ms Ly, Mr Ho, Mr Ostin and Mr Hammoudi assisted in ascertaining the likely sequence of critical conversations. Without this, it was not possible to reconcile the affidavit evidence as to who said what when. The differences between the witnesses in this regard was likely not indicative of dishonesty but a lack of contemporaneous records when their affidavits were prepared. I have set out conversations in the sequence in which they most likely occurred.

3. [36]

   It is also worth noting at the outset that the documentary evidence supports the plaintiffs’ suggestion that Ms Ly and Mr Ho had a limited command of English in two respects. First, the couple had two email addresses: one for their business and one for the property development. The couple received emails from a range of people and, on occasion, forwarded these emails onto others. Almost without exception, no ‘cover’ email was sent with the forwarded email, for example, explaining the contents of the forwarded email or asking the recipient to take any particular action. Only two substantive emails were sent from the couple’s email addresses: the first was drafted by Mr Ostin (see [215]) and the second email was, I expect, drafted by someone other than Ms Ly or Mr Ho (see [272]). This bespeaks a lack of ability of either Ms Ly or Mr Ho to write in English.

4. [37]

   Secondly, there are a number of text messages from Ms Ly in evidence, in English. The messages were simple and replete with grammatical and spelling errors, indicative of an imperfect grasp of written English. For example, “Please let I know you need more documents” and “He booking to do valuation on next Wednesday so the report can have on Friday do you think it to late.” When asking the broker to check his email for a letter which had been sent, “Please let I know it that right Tony”; see also [262], [266]. If Ms Ly texts as she speaks, it would be readily apparent to the listener that English is not her first language.

FACTS

1. [38]

   In what follows, some of the factual material is directed to whether Ms Ly and Mr Ho suffered from the special disadvantages asserted, while other material concerns the refinance transaction.

2. [39]

   Ms Ly was born in Vietnam and came to Australia as a refugee when she was 11 years old. Ms Ly had received no education in Vietnam; she cannot read or write in Vietnamese. On arriving in Australia, Ms Ly started school in Year 6 and proceeded to attend Bankstown Girls’ High School to Year 12. Ms Ly said her school results were not good. On finishing high school, Ms Ly sewed at two factories owned and staffed by people from the Vietnamese community. Ms Ly spoke Vietnamese at home and at work.

3. [40]

   Mr Ho was born in Vietnam, where he attended school up to the equivalent of Year 12. On leaving school, Mr Ho worked at an electronics repair shop. In 1994, Ms Ly and Mr Ho married in Vietnam. Their marriage certificate records their occupations as dressmaker and electrician respectively. After their marriage, Mr Ho came to live in Australia. He was then 22 years old and spoke no English. Mr Ho did a “English for Living in Australia” course through Adult Multicultural Education Services. Mr Ho’s first job in Australia was as his brother’s full time carer. Mr Ho spoke Vietnamese at home and at work.

4. [41]

   The couple purchased a family home in Cabramatta, with a loan from Westpac. In 2000, the couple welcomed the arrival of their son and, in 2003, a daughter. The home loan was duly paid off.

5. [42]

   Ms Ly began to work at another factory, which employed both Vietnamese and Thai staff. Ms Ly conversed with her Thai colleagues in English, although their conversations were limited to discussions about clothes, shifts and the like. In 2010, Mr Ho began work at the same factory as his wife. Mr Ho conversed mostly in Vietnamese to his work colleagues but also in English with the workers who did not speak Vietnamese.

Establishing a business

1. [43]

   In 2012, the factory where the couple worked began to close down. Mr Ho lost his job. He found a local butchery, which the owner wanted to close. Mr Ho worked with the butcher without salary for a year to learn how to run the business. The owner then gave Mr Ho the business; no money was paid nor contracts signed, but Mr Ho had to continue to pay the rent.

2. [44]

   When the factory finally closed in 2013, Ms Ly joined her husband at the butcher shop. They employed two Vietnamese staff. Ms Ly worked out the front of the shop while Mr Ho worked out the back. Most of the shop’s customers were Vietnamese and Ms Ly spoke to them in that language. Ms Ly spoke some English with non-Vietnamese customers, but the conversations were limited to greetings and identifying the type and cut of meat that they wanted, quantities and price.

3. [45]

   From humble beginnings, the couple grew the business by selling to local restaurants, most of which were Vietnamese restaurants; they did not have written contracts with the restaurants. Mr Ho was responsible for ordering meat and seafood. Most of his suppliers were Vietnamese and he spoke to them in that language. Mr Ho wrote all of his invoices to Vietnamese customers in Vietnamese. Mr Ho got his workers to write out invoices to non-Vietnamese customers in English, as his command of the English language was limited. Mr Ho spoke to his customers mostly in Vietnamese, although if the restaurants were not operated by Vietnamese people, he spoke to them in English about the cut of meat, the amount and the price. His ability to speak English improved over the years but remained “limited to day-to-day matters.”

4. [46]

   In November 2017, Ho Ho Top Foods Pty Ltd was incorporated. The company operated the business of the butcher shop. The company was set up by the couple’s accountant, Minh Do from Fairfield, who is Vietnamese and explained everything to Ms Ly and Mr Ho in Vietnamese. Ms Ly is the sole director and shareholder of Ho Ho Top Foods. Ms Ly said she knew basically what a company is, but did not know the details of how it was supposed to operate formally. This was rather confirmed in cross-examination, when it was put to Ms Ly that she was the sole director and secretary of Ho Ho Top Foods, “I’m not a secretary. I only work there.”

5. [47]

   The couple’s son set up an email address for the butcher shop: hohotopfoods@gmail.com. Ms Ly and Mr Ho used this email address for work. Mr Ho said he did not use email much in the course of the business; “Cathy deals with emails.”

6. [48]

   Ho Ho Top Foods’ tax return for the 2018 financial year declared income of $1,357,129 and, after expenses, a profit of $865,378. For the 2019 financial year, Ho Ho Top Foods’ income had increased substantially to $3,158,082 but, after expenses, the company declared a profit of $22,951.

A foray into property development

1. [49]

   At some point, Ms Ly purchased a property in Bankstown, worth some $820,000, with another loan from Westpac. The couple began looking for land on which to build a house with a granny flat. A real estate agent introduced the couple to two adjoining properties in Liverpool, which had development approval to construct 32 apartments. The agent offered to help them find a builder and an architect, and to sell the apartments in due course. A valuation obtained in January 2019 put the “GRV” (gross realisation value) of the proposed development at $14.8 million.

2. [50]

   On 20 July 2019, the couple exchanged contracts to purchase the Liverpool properties for $2.4 million. The couple’s solicitor noted on the contract was a Vietnamese gentleman from Cabramatta. A deposit was paid. Settlement was to take place in six months' time, on 20 January 2020. After exchange, the agent suggested that the couple put the land in the name of a company “because if something goes wrong, then they can’t touch you.”

3. [51]

   Ms Ly contacted the couple’s accountant, Mr Do, who set up two companies: Ho Ho Top Property Pty Ltd, of which Mr Ho is sole director and shareholder; and Hoho Property, of which Mr Ho is sole director and Ho Ho Top Property is the shareholder. The Jacknik Family Trust was established. The couple’s son set up an email address for Hoho Property: hohotopproperty@gmail.com. The couple used this email in relation to the Liverpool development.

4. [52]

   The agent referred Ms Ly to a solicitor, Mr Hammoudi, in Liverpool. In September 2019, the contracts for purchase of the Liverpool properties were rescinded. New contracts were exchanged, where the purchaser was now Hoho Property and the purchaser’s solicitor was now Mr Hammoudi’s firm, Circle Bridge Legal.

5. [53]

   The agent also referred the couple to a builder. In November 2019, Ms Ly signed a building contract with Carfi Property Services Pty Ltd. Ms Ly’s signature was witnessed by the agent. The contract price was $7.98 million. The contract included a handwritten special condition, “Any changes to detail that may arise from CC documents & final engineering.” I take this to mean that the contract price did not include such changes, although the special condition is so poorly worded that the opposite construction cannot be excluded. The construction period was 365 days. The couple paid the builder a $200,000 deposit.

6. [54]

   The builder introduced the couple to people he knew and, almost every day for the next six months, Mr Ho and his wife obtained different quotes from wholesale building suppliers such as kitchen installers, timber suppliers, tiles suppliers and plumbing suppliers to get the best price for the cost of the development. Mr Ho looked after the finance in respect of the development, whilst his wife looked after meeting people.

7. [55]

   The couple outlaid some $700,000 for costs and expenses in relation to the property development, including deposits and stamp duty. These funds came, in part, from the butchery business. Ms Ly said that $300,000 came from family members in Vietnam and she borrowed other monies from family and friends.

Finance to complete land purchase

1. [56]

   Efforts began to raise finance to complete the purchase of the Liverpool properties. Ms Ly went to Westpac’s Cabramatta branch and spoke with a Vietnamese banker, but no loan was forthcoming when Ms Ly said that the couple had no experience in building houses. The couple’s accountant introduced them to a broker, Andrew Williams of “Finance Warehouse.”

2. [57]

   In November 2019, Hoho Property sought finance from Ajax Capital Pty Ltd. The balance of the purchase price, being $2.16 million, was sought for a three year term. According to the loan application form, the proposed exit strategy was “Refinance into construction loan, develop & sell property.” The application was likely completed by Mr Williams, as it refers to Ms Ly and Mr Ho in the third person: “Ms Ly is Mr Ho’s wife.”

3. [58]

   On 12 November 2019, Ajax issued an indicative letter of offer in the amount of $2,245,985.35 for 12 months. The interest rate was 9.9% per annum or, on default, 19.9% per annum. In the event that the borrowers repaid the loan early, a minimum of 12 months’ interest still had to be paid. On 15 November 2019, the couple accepted the offer; their signatures were not witnessed.

4. [59]

   In December 2019, the agent began to sell apartments “off the plan.” Six lots were sold for a total of $3.15 million and deposits of $316,000 taken. In about January 2020, a quantity surveyor report was obtained, which estimated the cost of construction at $9,486,262 including contingencies (I take this report to be an earlier iteration of the “Project Cost & Time Verification Report”: see [64]). It will be immediately noted that this exceeded the figure in the building contract by some $1.5 million.

5. [60]

   On 22 January 2020, Ajax’s solicitors provided the loan facility documents to Mr Hammoudi. Mr Hammoudi was then on annual leave. Ms Ly and Mr Ho executed the documents the same day, witnessed by Mr Hammoudi’s colleague, Mr Morris. Mr Morris explained the documents in English. Ms Ly said she understood some of the terms of the loan, but not others, and could not read the documents herself. Ms Ly said she did not fully understand what Mr Morris was saying but did not say anything to him about this at the time, “but I dare not ask the question because … he might have thought that I was stupid, you know. And I was ashamed of asking questions. … or might have upset him for asking many questions.” Mr Ho said he also had difficulty understanding everything that Mr Morris said but did not say anything at the time as he did not think that he needed to “because Mr Morris was temporary, acting on behalf of someone in the same legal firm at that moment.”

6. [61]

   For whatever reason, it would appear that the couple did not say anything which suggested to Mr Morris that they did not understand the documents, such that Mr Morris was obviously comfortable to explain the documents to them without the assistance of a Vietnamese interpreter.

7. [62]

   On 28 January 2020, the Ajax loan was drawn down. On 29 January 2020, purchase of the Liverpool properties was completed. The loan expiry date was 28 January 2021.

Confusion emerges

1. [63]

   The couple’s broker, Mr Williams, immediately began seeking finance to fund construction and to refinance the Ajax loan at the end of its term. On 31 January 2020, Mr Williams sent an email to a potential financier, seeking finance of $11,767,138.

2. [64]

   On 24 February 2020, a quantity surveyor’s report was issued, entitled “Project Cost & Time Verification Report.” The quantity surveyor considered that the cost of the build was likely higher than the contract price; total construction costs including contingencies was more like $9,667,420. Further, the estimated construction period was likely longer, thought to be 17 months allowing for contingencies.

3. [65]

   On 24 February 2020, Ajax emailed a loan statement to hohotopproperty@gmail.com. Later that evening, Mr Williams emailed Ms Ly and Mr Ho:

4. [66]

   On 27 March 2020, Mr Williams sought to negotiate a reduced minimum interest payment with Ajax in the event that his clients refinanced, having regard to the recent economic situation, which I take to be a reference to the COVID-19 outbreak and lockdown measures. Ajax did not agree. Mr Williams forwarded Ajax’s response to Mr Ho at hohotopproperty@gmail.com and suggested that he send the email to Mr Ho’s new broker or lender. The couple were now using Billy Chok of “Lending Association.”

5. [67]

   Mr Williams’ email was forwarded from hohotopproperty@gmail.com to Mr Chok a couple of hours later, with no explanatory message. Mr Chok then emailed Ajax directly, “I think there is a slight confusion with what has been communicated.” The borrowers would be paying their standard repayments under the contract but he wished to know whether there were any exit costs once they refinanced into a construction loan.

6. [68]

   In early April 2020, Mr Hammoudi received a telephone call from Ms Ly, who needed to see him urgently as she did not know that she would have to pay interest for a full year in the event that she refinanced. In cross-examination, Ms Ly said, “Because I did not know, I wasn’t aware of that so I was shocked.” Ms Ly was cranky that Mr Morris had not explained it to her. Mr Hammoudi had difficulty understanding what Ms Ly was telling him over the phone and they arranged a meeting in his office later that day. At the meeting, Ms Ly complained that she was obliged to pay a minimum of 12 months interest to Ajax, “No one tell me that. If I knew, I not sign.” Mr Hammoudi insisted that this had been explained to them by Mr Morris, who spent a lot of time going through the documents with them. Ms Ly said she did not remember this and did not understand the documents very well.

7. [69]

   Mr Hammoudi was very concerned that Ms Ly and Mr Ho did not properly understand the documents they had signed with Ajax in January 2020. Mr Hammoudi formed the view that they should have had the assistance of a Vietnamese interpreter and, from now on, legal documents should be explained to them with the assistance of an interpreter.

A default

1. [70]

   On 28 April 2020, Mr Hammoudi wrote to Ajax’s solicitors, requesting a moratorium on interest payments for six months given the economic impact of COVID-19. The borrower also sought to extend the loan term for a further six months, with repayment of the loan to be revisited at a later date. Mr Williams responded to the borrowers directly at hohotopproperty@gmail.com, strongly recommending that the required repayments be made and that they pursue their exit strategy with their new broker. Mr Williams forwarded his email to Ajax, advising “I have mentioned to them previously in several conversations and emails that they need to make their interest repayments or find an appropriate exit strategy in order to repay this loan or continue to service it.”

2. [71]

   On 1 May 2020, Ajax’s solicitor sent a notice of default to Hoho Property, as interest had not been paid when due on 28 April 2020. Ajax exercised its right to accelerate repayment of the loan and made the due date for payment in three business days, being on 7 May 2020. On receipt of the notice of default, Ms Ly called Mr Williams. Mr Williams explained the letter to her, and his concern that Ajax may step in and try to sell the land. Ms Ly became very concerned, as they did not have funds to repay Ajax in three days’ time. Ms Ly was stressed that they would lose the property. Mr Ho said he was also very stressed and concerned that Ajax was going to come and take the property, and they would lose everything.

3. [72]

   Interest was paid to Ajax, albeit late. For the next few months, Ms Ly remained worried about the situation with Ajax, as she thought that Ajax could come and take the Liverpool property at any moment. Ms Ly tried hard to take out another loan to pay Ajax.

Seeking refinance

1. [73]

   In June 2020, Ms Ly and Mr Ho completed an application for mortgage finance with La Trobe Financial Services Pty Ltd; the form had been completed by the broker, Lending Association. A loan of $696,000 was sought to pay out Ajax, although it is not clear how a loan of that amount would achieve that end. Ms Ly signed the application form.

2. [74]

   In August 2020, La Trobe approved a loan for $696,000. On 1 September 2020, Ms Ly and Mr Ho accepted the offer for finance and executed various documents, including statutory declarations confirming that they had received legal advice from Mr Hammoudi in respect of the loan.

3. [75]

   Importantly, Mr Hammoudi engaged a Vietnamese interpreter to translate the La Trobe loan documents to Mr Ho and Ms Ly; the interpreter signed a certificate of translation. The fact that Mr Hammoudi took this step corroborates his evidence that he had earlier formed the view that his clients should have legal documents explained to them by an interpreter in order to properly understand the documents.

4. [76]

   On 30 September 2020, Prime Capital approved a loan of $8.14 million to Hoho Property. On settlement, $1.155 million would be drawn down to refinance Ajax, with the balance available to complete construction in accordance with quantity surveyor reports. Presumably, the offer from Prime Capital was in conjunction with the La Trobe offer such that, together, Ajax would be paid out and funds provided for construction. The term of the loan was 18 months, with interest of 9.95% per annum.

5. [77]

   The Prime Capital offer expired on 5 October 2020 and does not appear to have been accepted. Ms Ly said the couple paid Mr Chok some $90,000 in application fees but Mr Chok “all of a sudden … disappeared.” Although Ms Ly attempted to contact Mr Chok many times, she did not receive any paperwork in respect of the Prime Capital loan and lost the money paid in fees.

The Broker

1. [78]

   The builder introduced the couple to the Broker, arranging for Ms Ly and Mr Ho to meet Mr Ostin at a restaurant in Cabramatta on 13 November 2020. Mr Ostin made notes at the meeting, including “Land loan expire 28 Jan 2021,” together with the hohotopproperty@gmail.com address.

2. [79]

   According to Ms Ly, she told Mr Ostin that they wanted to find another lender. They had had bad experiences with the current lender and past brokers, who took money and did not get them a loan. They had borrowed close to $2.3 million from Ajax and had to pay the money back in 2021.

3. [80]

   According to Mr Ostin, Ms Ly also asked how much he charged, to which Mr Ostin said, "If I can get you a letter of offer from a lender … our fee would be 2.2% of the loan amount as settled or as contained in the letter of offer if it doesn't settle plus our initial fee of $11,000.” However, to give them some certainty, he would not require them to sign an agreement until they had decided to proceed with the letter of offer. If he could not get a letter of offer, or they did not wish to proceed with an offer, they would not have to sign his agreement or pay any fees.

4. [81]

   Ms Ly and Mr Ho deny that fees were discussed at this meeting. No note is made on this subject in Mr Ostin’s notebook. As the purpose of this meeting appears to have been to introduce the couple to the broker, where the couple had had a bad experience with their last broker, it may be that the subject of fees was left for later, once the couple were comfortable to work with Mr Ostin at all. Nor does it much matter, where Mr Ostin did discuss his fees before and at their next meeting: see [103], [115].

5. [82]

   On 14 November 2020, Mr Ostin sent an email to hohotopproperty@gmail.com, copied to the builder, attaching a loan application form. Mr Ostin asked Mr Ho and Ms Ly, “Please complete this form as best you can.” Further, “You mentioned that there was another security property as collateral security for the land loan. If the ownership of this property includes Cathy then she will need to also be a guarantor [and] Cathy’s details will be required on the application form as well.”

6. [83]

   On 15 November 2020, an email was sent – presumably from hohotopproperty@gmail.com – to Mr Ostin, with no explanatory email, attaching the loan application form completed in handwriting. Mr Ho said the handwriting was his; his daughter helped him to fill out the form. The information provided was mostly straightforward: names, birthdays, contact details and the address of Mr Hammoudi. Some boxes were ticked, recording that Ms Ly and Mr Ho would each be a guarantor. Various “No” boxes were ticked in respect of their financial history: had they ever been bankrupt; had a mortgagee ever sold their property; had a receiver been appointed to a company of which they were a shareholder or officer. Other parts of the form were left blank. For example, while it appears that Hoho Property was the trustee of Jacknik Family Trust, a question calling for details in respect of a trust were left unanswered. So too was the page calling for their asset and liability position, and the page seeking employment details, including the income of the guarantors. Overall, the manner in which the form was completed sheds little light on the couple’s ability to understand English to any level of complexity.

7. [84]

   On 16 November 2020, various pages from the La Trobe application were scanned and emailed to Mr Ostin, with no explanatory email. Presumably, the email was sent from hohotopproperty@gmail.com, although it is not clear. Presumably also, the purpose of sending these pages of the application form was a convenient way to provide the new broker with the details of the couple’s income, employment, living expenses and assets and liabilities, given this information had already been set out in the La Trobe form. According to Mr Ostin’s notebook, he reviewed this information together with information concerning the proposed build. Presumably, Mr Ostin obtained this directly from the builder, as there is no evidence it was provided by the plaintiffs.

8. [85]

   On 17 November 2020, Mr Ostin prepared a list of potential lenders to whom he began to send emails. Mr Ostin provided a submission brief, a valuation of the Liverpool properties, the quantity surveyor’s report, a loan statement for the Ajax loan, a sales brochure, development approval and the builder’s details. The submission brief sought a construction loan of $11.25 million for 18 months, to be settled in December 2020. Mr Ostin agreed that his proposal for 18 months was based on the quantity surveyor’s recommendation of 17 months plus an extra month for comfort.

9. [86]

   The submission brief noted that a construction certificate would be available shortly. Mr Ostin understood that, whilst the development approval was to hand, there was no construction certificate. Mr Ostin agreed that he had looked at the conditions of the development consent, of which there were many. However, he believed that the builder was “able to get it out of the ground.”

10. [87]

    When completed, the submission brief stated that the apartments would be worth some $16 million. Seven apartments had been pre-sold for $3.65 million. The development was expected to generate a profit of 15% on total development costs. The total development costs were $13,838,279, including the building contract price of $8 million and a contingency of $400,000. Mr Ostin understood that there was a difference between the construction contract price and the figure recommended by the quantity surveyor, “There’s always a difference.”

11. [88]

    With equity of $2,584,603 (of which some appears to have been coming from the builder), the lender was asked to fund the remaining $11,253,676. The LVR was said to be 70.78% on Gross Realisation Value, which was said to be $14.8 million. The Broker proposed a fee of 1.65% (including GST) of the loan amount.

12. [89]

    Details and photographs of the development site and the couple’s Cabramatta home were included; the latter was a modest 1960’s single storey three bedroom red brick home. As to the borrowers, the submission brief stated: (emphasis added)

13. [90]

    Noteworthy, the suggestion that the refinance should take place before Christmas 2020 was made before Mr Ostin said the subject was discussed in a meeting with the clients: see [118]. Further, the request was put in less than emphatic terms. As with other aspects of the proposal in the submission brief – such as the amount and term of the loan – it appears to have been put as something of an ‘opening offer’, subject to what any lender may have been prepared to entertain.

14. [91]

    On 18 November 2020, Mr Ostin emailed Mr Ho and Ms Ly, requesting their latest tax returns. In addition, Mr Ostin attached completed pages of the loan application form, setting out the assets and liabilities of Mr Ho, Ms Ly and their two companies. That is, Mr Ostin took the information earlier included in the La Trobe application form, as prepared by the former broker, and inserted the information into the Broker’s form. Mr Ho and Ms Ly were asked to review, amend if required and sign and return the forms as soon as possible.

15. [92]

    The pages of the loan application form provided by Mr Ostin were signed by Mr Ho and Ms Ly the same day, scanned and returned by email to Mr Ostin, again, with no explanatory email. Presumably, tax returns were also provided. Ho Ho Top Foods’ tax return for the 2020 year reported gross income of $3,436,710 but, after expenses, a profit of $55,731.

16. [93]

    By now it would appear that Ms Ly was becoming worried about the ability to find a new lender. On 19 November 2020, Mr Ly texted Mr Ostin, “Please let I know you need more documents. … please help me.”

The Lender

1. [94]

   On 19 November 2020, Mr Ostin sent the submission brief to Mr Goh. Later that evening, Mr Ly sent a further plaintive text to Mr Ostin asking for his help and adding two prayer emojis and an emoji depicting a sad and tearful face. Mr Ostin replied, “I am working for you okay.” Fairly obviously, Mr Ostin had an anxious client.

2. [95]

   Later that evening, Mr Goh replied to Mr Ostin, setting out the key elements of a finance offer. The Lender was interested in providing a loan up to 60% LVR on a new valuation at 8.25% interest. The Lender proposed to charge a 2.25% line fee and a 2% establishment fee. Further:

3. [96]

   Mr Ostin understood “up front” to mean payment on settlement of the facility. The Lender would either pay the Broker in full on completion or partly on completion with a trailer commission. Mr Ostin preferred the former. Either way, the Broker would ultimately be paid out of the facility, that is, by the borrowers.

4. [97]

   On 20 November 2020, Mr Ostin organised a meeting with the Lender. Mr Ostin texted the Lender’s indicative rates to Ms Ly. Mr Ostin set out the portion of Mr Goh’s emails which included the interest rate, line fee and establishment fee but did not include the portion of the email concerning the Broker’s fees.

5. [98]

   Shortly before the meeting with the Lender, however, Mr Goh emailed Mr Ostin, advising that the Lender was undecided on whether to make an offer due to the lack of experience of the developer, “This is part of reason for meeting them on Thursday [26 November 2020], and we will respond as soon as we have the information and [have] made a decision.” The meeting was re-scheduled to 26 November 2020, to be held on site with the builder in attendance. The Broker asked the builder, Mr Ho and Ms Ly to provide further information in advance of the meeting in respect of the expected sales prices and timeframe for the apartments. I apprehend that this request was addressed to the builder; there is certainly no evidence that this information was provided by Mr Ho or Ms Ly.

Site meeting

1. [99]

   On 26 November 2020, Ms Ly, Mr Ho, the builder, Mr Ostin and Mr Goh met on site. Mr Goh asked Mr Ho how much income the butchery business generated for one year and Mr Ho said about $2 million. Ms Ly understood Mr Goh to be referring to the turnover of the business, which I consider was a reasonable inference, where the Lender appears to have taken the same approach. (In the Lender’s subsequent credit paper, it noted that Ho Ho Top Foods had total income of $3.5 million for the 2020 financial year. No mention was made of profit, which was $55,731.)

2. [100]

   According to Ms Ly and Mr Ho, Mr Goh also asked, “Do you have $800,000?” and Ms Ly and Mr Ho said that they did. Ms Ly said that in her mind, the $800,000 covered everything in the shop including stock. In Mr Ho’s mind, the $800,000 referred to savings, moneys owed to him by friends, money which he could borrow from friends and some money from the shop.

3. [101]

   Mr Ostin said that the figure being discussed by Mr Goh was the difference between the building contract price and what the quantity surveyor said it was likely to cost. Assuming that this was made clear to Ms Ly and Mr Ho during the meeting – it was not clear from Mr Goh’s question – then they gave an assurance that they would be able to come up with the funds if need be. Where the construction was expected to extend over 15 to 17 months, I do not accept the Lender’s submission that Mr Goh was seeking, and given, an assurance that the couple then had this amount available in cash.

4. [102]

   According to Mr Ostin, Ms Ly also added that, although the financial documents said their turnover was $3.5 million for the 2020 financial year, the real figure was closer to $8 million. As to whether such a statement would have been true, $8 million turnover was more than double the figure recorded in Ho Ho Top Foods’ most recent tax return. It seems unlikely that someone running a business with $8 million turnover would be struggling to make monthly interest payments of some $19,000 to Ajax in a timely manner, or would have been – in Mr Ostin’s words – “frightful” of the imminent expiry of the Ajax loan. That is, it is unlikely to have been true. This makes it less likely that it was said. The contemporaneous documents make no mention of any suggestion that the butchery business provided any greater source of revenue than that reported in its tax return. Against this, I note that the couple later readily represented that they had assets of significant value, which they now say they did not have: see [157]-[161]. Overall, however, I consider it unlikely that this was said.

5. [103]

   The next day, Ms Ly was clearly anxious to learn of any news; she sent various text messages to Mr Ostin, asking whether he had heard from the Lender. Later that day, on 27 November 2020, Mr Goh provided a term sheet to the Broker, which Mr Ostin forwarded to his clients, noting: (emphasis added)

Offer of finance

1. [104]

   The term sheet was a letter of offer from the Lender to Hoho Property, for a loan of $9.62 million (including capitalised interest and fees) or 65% of valuation. The proposed loan was obviously less than sought. The loan would be drawn down progressively each month by reference to the percentage of the project which had been completed, with “Any cost overruns [or] additional interest to be met by the Borrower.”

2. [105]

   The term of the loan was 15 months. Mr Ostin appreciated very quickly that the offer was for a period which was three months’ shorter than what he had asked for and shorter than the recommended period of construction, with contingencies, provided for in the quantity surveyor’s report. When asked what he did about this, Mr Ostin said “Nothing … the clients did have other professionals as well, quantity surveyors, project managers, builders.”

3. [106]

   The interest rate was 8.25% per annum or, in default, 12.25% per annum. Interest was capitalised. In addition, a “Risk Review Fee” of 5% per annum could be charged on the event of default or potential event of default, until rectified to the satisfaction of the Lender. Putting the nomenclature of the fee to one side, this meant that in the event of default interest/fees charged to the borrower more than doubled to a total of 17.25% per annum. The Lender’s fees included an Establishment Fee of 2% of the Facility Limit payable on signing the loan agreement, “A broker fee of 160bps is also payable.” A Line Fee of 2.25% per annum on the Facility Limit was payable monthly and capitalised. A loan application fee of $35,000 plus GST was payable on acceptance of the letter of offer.

4. [107]

   The offer of finance was subject to various conditions, including:

5. [108]

   Ms Ly and Mr Ho said that neither of them read the term sheet but relied on the builder to explain it to them. Ms Ly said she was not able to read the term sheet or understand it. Ms Ly understood the amount being borrowed. Ms Ly knew there was going to be interest and understood that they did not have to pay the interest up front. Ms Ly knew there were going to be fees but did not know what those fees were. Ms Ly did not know what “bps” was and said Mr Ostin never said how much his fees were going to be in dollars. Certainly, the Lender’s letter of offer did not make it clear.

6. [109]

   Mr Ho said he did not enquire as to the interest rate or fees, although his wife said there were lots of fees. Mr Ho said he did not ask his wife how much the fees were, “because I did not know what that fee is for so that’s why I didn’t ask.” Mr Ho expected that the builder would explain it to him. Mr Ho understood that the interest was going to be a very significant cost in the development project, but understood that the interest rate would be 2% or 3%. I consider the evidence unlikely, both as to Mr Ho’s lack of enquiry as to the fees and interest and as to an understanding that the interest rate was so low.

Contract with Broker

1. [110]

   Later that afternoon, the Broker emailed its proposed contract and an invoice for its initial fee of $11,000. The contract provided that the Broker was entitled to a “Service Fee”, being 2.2% including GST of the “Loan Amount”: clause 1.1, recital E, item 4 of Schedule 1. The Loan Amount was $9.26 million or 65% LVR: clause 1.1, item 3, Schedule 1. Obviously, the amount of the Service Fee depended on variables which were then unknown. The contract did not set out the Service Fee in either a specific, or estimated, amount.

2. [111]

   According to the contract, the Borrower was obliged to pay the Services Fee by the Due Date (clause 4.1.1), which was defined as follows (clause .1):

3. [112]

   That is, on signing the contract, the plaintiffs were obliged to pay the Broker’s fee, whether they proceeded with the Loan or not. Ms Ly and Mr Ho were to sign the contract as guarantors of Hoho Property. The clients charged the Liverpool properties and the Cabramatta property as security for the payment of the Services Fee: clause 4.1.4; item 5, Schedule 1.

4. [113]

   Ms Ly said she had one of her children read Mr Ostin’s email to her, but not the attached contract as it was too complicated. In evidence is a draft email from hohotopproperty@gmail.com to Mr Ostin on Saturday, 28 November 2020, simply stating “I accept the terms.” The email, as sent, is not in evidence and, presumably, was not actually sent. Nor does it much matter where the parties agree that the contract was entered into.

5. [114]

   On 30 November 2020, Mr Ostin met Mr Ho, Ms Ly and the builder at a local restaurant. Mr Ostin took a photograph and made notes. Ms Ly’s spectacles can be seen resting on a piece, or pieces, of paper. Mr Ostin said he provided Ms Ly and Mr Ho with a further copy of the Lender’s letter of offer and the Broker’s contract. Mr Ostin told them that his initial fee was $11,000 payable now if they wished to proceed further with the letter of offer. In addition, a further fee of 2% plus GST was payable but not immediately. He said, “You have had the opportunity to review the Letter of Offer and our service agreement so if you don’t like the terms of either, you don’t have to sign or accept them. We can just walk away at no cost to you.”

6. [115]

   According to Mr Ostin, he explained that the letter of offer referred to 1.6% plus GST for the Broker’s fees on settlement. In addition, they would need to pay a further 0.4% plus GST on settlement. To explain this, Mr Ostin wrote some figures in this notebook and showed them to Ms Ly and Mr Ho:

7. [116]

   According to Mr Ostin, he explained that, if the loan was $10 million, then the Broker’s service fee was 2%, that is, $200,000. The Lender had allocated 1.6%, being $160,000, so they would have to pay $40,000 themselves at settlement to the Broker. Ms Ly said she understood and Mr Ho said “No problem.” Mr Ostin pointed to further figures recorded in his notebook, which he said were made by Mr Ho. (Mr Ho denied that the handwriting was his). Mr Ostin’s notes also record that his clients were interested in making a complaint to the Australian Financial Complaints Authority (AFCA) in respect of Prime Capital or La Trobe.

8. [117]

   Whilst Ms Ly and Mr Ho deny that Mr Ostin explained his fees to them, I accept that he explained the quantum of the fees for two reasons. First, the notes are consistent with giving a simple explanation of how the fees would be calculated and how payment would come from two sources, being from the Lender on completion and the balance from the clients. Second, as will become increasingly apparent, the Broker was absolutely focussed on getting its fee. Mr Ostin would likely have been at pains to make sure that the clients understood knew when and how the fee was to be paid, particularly where part of the fee was to come directly from Ms Ly and Mr Ho on settlement.

9. [118]

   Mr Ostin also said that Ms Ly asked for his help to settle the loan before the end of the year, as they had wasted 12 months on the Ajax loan. Their profit was going down. They did not want to go into default with Ajax in January and needed to settle before then. Mr Ostin said he would do his best. Mr Ostin also volunteered, “Can I just say that I had hundreds of phone calls with Ms Ly and in those phone calls, there would have been many occasions when she said she wanted to settle this, that side of the year, which was Christmas.” Ms Ly and Mr Ho both deny this. I will consider this further at [129].

10. [119]

    At the meeting, Mr Ho and Ms Ly signed the letter of offer from the Lender. The couple said that only the signature page of the letter of offer was at the meeting and signed. Certainly, the pieces of paper in the photograph taken by Mr Ostin appeared to be one or two pages only. In any event, after the meeting, Mr Ostin sent a complete copy of the signed letter of offer to hohotopproperty@gmail.com.

11. [120]

    Shortly afterwards, a scanned copy of the Broker’s service agreement, signed by Mr Ho and Ms Ly (and witnessed by their son) was sent from the hohotopfoods@gmail.com to the Broker, with no cover email. Mr Ostin countersigned the service agreement and emailed it back. Ms Ly said that she had not read the document and it was not explained to her before she signed it. She asked Mr Ostin what it was for and Mr Ostin said, “It’s nothing, just sign it.” I have found that Mr Ostin did explain the contract, at least insofar as it concerned the likely amount of the Broker’s fee and the fact that it was to be paid on settlement from the loan drawdown and also from the couple. There does not appear to have been any explanation that the Services Fee was payable by the couple even if they did not proceed to settlement.

12. [121]

    On 1 December 2020, the Broker’s initial fee of $11,000 was paid, as was the Lender’s loan application fee of $38,500.

Christmas deadline

1. [122]

   On 2 December 2020, a member of the Lender’s staff obtained a quotation from a valuer, which was provided to Mr Goh. Mr Goh replied, “that’s great. See if we can get it pre Xmas. I want to get the first piece funded before 31dec.” That is, the Lender was keen to finalise the loan by the end of the year. The Lender instructed the valuer to provide the valuation “at the earliest possible date but, in any event, no later than 23 December 2020.”

2. [123]

   On 4 December 2020, Ms Ly sent a text message to Mr Ostin, advising that she had spoken to the valuer, “He booking to do valuation on next Wednesday [9 December] so the report can have on Friday [11 December] do you think it to late.” Mr Ostin replied, “The timing is okay.”

3. [124]

   On 8 December 2020, Mr Ostin provided the Lender with the contact details for his clients’ lawyers, being Mr Hammoudi. Mr Goh replied:

4. [125]

   The Broker forwarded Mr Goh’s email to hohotopproperty@gmail.com, requesting advice as to “your Lawyers’ working hours over the Xmas/New Year period and availability to settle the loan in this time.” Again, the impetus to settle the loan at that time of year emanated from the Lender. More specifically, the Lender was planning to settle the loan between Christmas and the New Year. Mr Ostin separately updated Mr Goh:

5. [126]

   Mr Goh replied, “We might just make it by Xmas!” To this, Mr Ostin replied:

6. [127]

   I take Mr Ostin’s reference to “quietly working behind the scenes” to be some kind of assurance that Mr Ostin was working hard to “deliver this deal.” Beyond this, Mr Ostin’s response to Ms Ly and Mr Goh’s queries as to timing could fairly be described as relaxed. The suggestion that completion could occur before Christmas came from Mr Goh. Mr Ostin did not suggest that his clients required that the transaction be completed by then.

7. [128]

   Mr Ostin forwarded Mr Goh’s email – “we might just make it by Xmas!” – to hohoproperty@gmail.com, referring to the Lender’s reply “about a possible settlement before Christmas.” Mr Ostin did not suggest in his email that settlement before Christmas was in accordance with his clients’ instructions but, rather, was a time frame proposed by the Lender. The email chain was forwarded to Mr Hammoudi and, apparently, Ms Ly replied to the Broker expressing her thanks. Mr Ostin did not forward to his clients or their solicitor his separate reply to Mr Goh advising “we have been quietly working the scenes.”

8. [129]

   The next day, on 9 December 2020, Mr Ostin emailed Mr Goh, “I had had confirmation that the clients Lawyer will be away over the Christmas period. Anything we can do to ensure a pre Christmas settlement would be greatly appreciated by all.” Mr Goh replied, “Ok. Lets target the 22nd to settle the initial loan.”

9. [130]

   I note also that, on 15 December 2020, the Lender’s staff exchanged internal emails, in which Mr Goh apologised to Brett Corfield for “getting involved” in the proposed transaction: (emphasis added)

10. [131]

    That is, the selection of 22 December 2020 as the date for completion evolved from Mr Goh’s request to complete the transaction between Christmas and the New Year, to the possibility that due diligence could be completed by Christmas, to the selection of a pre-Christmas date by reason of the unavailability of the borrowers’ solicitor between Christmas and the New Year. It did not arise from the borrowers’ specific request for the transaction to be completed by then.

11. [132]

    The defendants broadly maintained, however, that unless the transaction settled on 22 December 2020, it would not be possible to complete the transaction by 28 January 2021. Mr Ostin strongly resisted the suggestion that the refinance could have been completed in January 2021:

12. [133]

    It was never entirely clear why this followed. Whilst Mr Hammoudi was away “over the Christmas period,” presumably he could have attended to completion of the transaction on his return to the office, as could the Lender’s staff. More importantly for this case, the defendants contended that their insistence on settlement on 22 December 2020 was to meet the borrower’s wishes. I do not accept this. The Lender was keen, for its own reasons, to complete the transaction by then. The Broker was happy to do so, to “deliver this deal” and receive payment of the Services Fee. Where Ms Ly appears to have been generally anxious to have the matter resolved, the clients likely went along with that timeframe.

Preparation of documents

1. [134]

   On 9 December 2020, Mr Goh asked whether Mr Ostin was content for the Lender’s solicitors to start preparing the documents. The Lender also issued an “Initial Request for Information” to the borrower. Various items were struck out, including a construction certificate. Apparently, the Lender did not consider such a document to be necessary.

2. [135]

   On 11 December 2020, Mr Hammoudi’s mobile records show that he called Ms Ly at 2.32pm for two minutes. Mr Hammoudi said Ms Ly told him that she had found a loan for the land and asked him to act on the matter “quickly” as “there is lot of pressure.” Mr Hammoudi asked why there was a lot of pressure and Ms Ly said, “I don’t know. I was told by Tony and Bass that we need to settle. As soon as possible Firas. Please.” Mr Hammoudi agreed. At 2.36 pm, Mr Hammoudi emailed the Lender’s solicitor, confirming that he acted for Hoho Property and attaching the front page of the contracts for apartments which had been sold “off the plan”.

3. [136]

   I should also add here – given the defendants’ general criticism of Mr Hammoudi as being slow – that, in addition to the key communications between the respective solicitors on the transaction set out below, there were various other requests from the Lender’s solicitors to Mr Hammoudi for documents and information. These requests were answered promptly, by Mr Hammoudi or Mr Morris.

4. [137]

   On 14 December 2020, Mr Goh pressed Mr Ostin to provide the Lender’s solicitor with all the information needed that day, including the building contract. Mr Ostin pressed Ajax’ solicitor for a payout figure and contact details “to be invited by our solicitor, KCL Law onto the PEXA workspace”, noting “We are trying to book settlement … on Tuesday 22 December 2020.” KCL Law was the Lender’s solicitor.

5. [138]

   Mr Ostin forwarded Mr Goh’s request for outstanding information to hohotopproperty@gmail.com, “We are trying to book settlement for next Tuesday 22 December 2020 but need to attend to their below request asap.” Mr Ostin emailed Ajax again, requesting the contact details for its solicitors “to enable them to be invited by our solicitor, KCL Law onto the PEXA workspace when loan settlement occurs.” Mr Ostin’s repeated reference to the Lender’s solicitors as “our solicitor” belies the close relationship with the Broker and the Lender.

6. [139]

   Later that afternoon, Mr Corfield emailed Mr Ostin, noting that the building contract was $7.9 million, whilst the quantity surveyor was supporting construction costs of $8.6 million, “Hopefully we can pick this difference up via valuation otherwise we are looking at sub 10% return on cost which is low.” The Lender expected to have the draft project valuation the next day, “to better understand feasibility/project returns.” Mr Ostin understood from this email that the Lender was waiting for the valuation to come in at a higher figure to cover the difference between the building contract price and the likely construction cost. As to what Mr Ostin did with this information, Mr Ostin said, “Nothing. … I’m not credit. It’s not my money.” Mr Ostin did not send Mr Corfield’s email onto Ms Ly or Mr Ho.

7. [140]

   On 15 December 2020, the Lender’s solicitor asked Mr Hammoudi to certify pre-sales, requesting certification and the sales schedule by 12.00 pm on 16 December 2020, “To ensure timely close of this facility as anticipated.” Ajax provided a payout figure, which Mr Ostin forwarded to Mr Hammoudi. The indicative payout figure was calculated for 24 December 2020. Likely, Mr Hammoudi would have understood from the payout figure that the refinance was to be completed on that date, being Christmas Eve.

Borrower’s solicitor learns of deadline

1. [141]

   At 11.44 am on 16 December 2020, the Lender’s solicitor provided Mr Hammoudi with a draft “Senior Facility Agreement” for review, with the security documents to be issued separately. The Lender’s solicitor advised, “Please note the Valuation and QC Report have not yet been submitted and therefore the Facility Limit, LVR and LCR may change.” That is, the borrower’s solicitor had now been provided with one of several transaction documents, in draft, and subject to change. What the Lender’s solicitor had identified may change was also significant, being effectively the amount of the loan.

2. [142]

   At 12.19 pm, the Lender’s solicitor emailed Mr Hammoudi that the client was proposing to settle the transaction on Tuesday, 22 December 2020 and a payout figure was being sought for that date. Mr Hammoudi said this was the first time he was made aware that there was a proposed settlement on 22 December 2020. There is no contemporaneous record which indicates that he was informed of this date at any earlier point in time. It was now Wednesday afternoon, 16 December 2020, and the proposed settlement was the following Tuesday, 22 December 2020.

3. [143]

   Mr Hammoudi immediately called Ms Ly and asked why things were moving so fast. Mr Hammoudi told Ms Ly he had a funny feeling about this. Ms Ly said this was her only chance. If she did not get this loan then “no build for me. I put too much time. Too much pressure. Too much money.” Mr Hammoudi asked why they had to settle next week and what was the rush. Ms Ly said, “I don’t know. Tony and Bass said we need to settle. If we don’t settle, they won’t give money. I try too much to get loan.” Mr Hammoudi asked why they would say that; if they had agreed to lend her the money then why did it have to be next week? Mr Hammoudi proceeded to explain that he had only received the first draft of the loan agreement and was waiting on further documents. He could not do anything now but needed to look at all of the documents together. He also needed to arrange an interpreter so that Ms Ly could understand the documents before signing “like last time.” If he received all of the documents from the Lender by the end of the week, he suggested a meeting the following week with an interpreter.

4. [144]

   Ms Ly pressed Mr Hammoudi to meet with her earlier. Mr Hammoudi explained that, as he did not yet have all the documents, they could not sign the documents now. Ms Ly said, “Bass said settle before Christmas.” Mr Hammoudi said he did not understand the rush and the pressure as Ms Ly had until 28 January 2021 to refinance the Ajax loan. He suggested they do it as soon as he returned from holidays. Ms Ly said she would speak to Mr Ostin.

5. [145]

   At 1.16 pm on 16 December 2020, the Lender’s solicitors provided Mr Hammoudi with security documents for review, being a General Security Agreement, an individual guarantee and indemnity, two mortgages and a memorandum of common provisions. That is, the borrower’s solicitor now had a complete set of transaction documents, albeit the draft loan agreement was subject to change once the lender received the valuation and quantity surveyor’s report.

6. [146]

   By 16 December 2020, the Lender’s valuations were also to hand. Mr Ostin was provided with the valuations, which referred to a construction program of 18 months and a selling period of six months. Mr Ostin reluctantly agreed that the term of the offer from the Lender was too short by seven months but “things change, dates change. … the builder can do it quicker.”

“feasibility … shows zero profit”

1. [147]

   On 17 December 2020, Mr Goh sent an email to Mr Ostin:

2. [148]

   From the various documents now available to Mr Ostin, and the Lender’s analysis as shared with him, the proposed loan had three unattractive features. First, the amount of the loan was insufficient to fund construction. Second, the term of the loan was insufficient to permit construction to be completed by the repayment date, let alone to sell the apartments, this being the means by which the loan was going to be repaid. Third, according to the Lender’s analysis, the development “shows zero profit.” Where this was the couple’s first venture into property development, these features warranted pause for thought, if the borrower was alive to these features.

3. [149]

   Ultimately, Mr Ostin agreed that he did nothing about this. Where Mr Ostin described himself as an information handler, it is noteworthy that Mr Ostin did not hand over information to his clients which indicated that proceeding with the loan might be a bad idea; see likewise [139]. Mr Ostin agreed that he then had no idea whether his clients had obtained any financial advice regarding the development economics of the project, or whether they had obtained any financial advice as to whether the project was feasible or whether they had any understanding as to whether the development would turn a profit.

4. [150]

   Pausing there, the plaintiffs did not contend that the Broker was obliged to give them financial advice, or advice on the feasibility of the property development. As I understood it, the fact that the Broker did not share adverse information with his clients formed part of the circumstances ultimately leading to the suggested unconscionable conduct.

Pressure builds

1. [151]

   At 4.56 pm on Thursday, 17 December 2020, the Lender’s solicitor sent Mr Hammoudi a second version of the loan agreement, noting that Ho Ho Top Foods would now also be a party to the agreement, execute a General Security Agreement and provide a guarantee. The Lender’s solicitor advised, “these documents are subject to Bass Capital’s review and further comments.” Mr Hammoudi’s comments were sought as soon as possible so that execution versions of the documents could be issued. That is, the borrower’s solicitor had now received a second draft of the loan agreement, together with an additional security agreement not previously envisaged, and been informed that both documents were subject to the Lender’s review and further comments.

2. [152]

   At 6.00 pm on 17 December 2020, Mr Hammoudi received a call from Ms Ly, who asked whether he had received the documents from the Lender. Mr Hammoudi said he had received the documents close to 5.00 pm and was just on his way home. Ms Ly asked whether she could come to his office the next day to sign the documents. Mr Hammoudi said, “What are you talking about Cathy? I have just told you that I received further updated documents close to 5.00 pm. I need time to review these documents. These are complex documents. They are not easy.”

3. [153]

   Mr Hammoudi said that Ms Ly immediately started to cry, and he had not heard her cry like this before. He asked what was wrong and Ms Ly said, “I don’t know why everything is hard. Too hard Firas.” Mr Hammoudi asked why it was hard and she said, “I trust you and what you tell me. Tony is saying that you are delaying me and that you are going to lose the deal for me. No good.” Mr Hammoudi expressed surprise. Ms Ly said, “I don’t know what’s happened. I confused. Tony tell me that I just need to sign the documents or I will lose the deal.” Mr Hammoudi explained that Ms Ly could not just sign the documents but needed advice first and he also needed to arrange an interpreter for her. Mr Hammoudi said he would do his best and review the documents over the weekend and maybe they could meet later on Monday or Tuesday for advice.

4. [154]

   At 9.38 am on Friday, 18 December 2020, Mr Corfield provided Mr Ostin with a draft Indicative Funding Table, noting, “Construction Equity required is $2.5m. Are you across where this is being sourced from?” As I read the table, this figure was based on the difference between the building contract price and the amount of the loan which would be available to pay for construction. At 9.46 am, Mr Ostin forwarded the table to the plaintiffs and the builder. It is not entirely clear what Ms Ly and Mr Ho would have understood from this table. Mr Ostin’s notebook contains an entry for 18 December 2020, working out the Broker’s fee based on the numbers in the table.

5. [155]

   The Lender’s solicitor called Mr Hammoudi’s office and, at 9.52 am, sent a follow up email. At about 10.30 am on 18 December 2020, Mr Ostin spoke to Ms Ly. According to Mr Ostin, Ms Ly advised that they were going to go over the documents with Mr Hammoudi at his office later that day, as he was then at a function. Mr Ostin called Mr Hammoudi’s office and was told that Mr Hammoudi was attending a Christmas function. Mr Ostin’s recollection in this regard is inaccurate. In fact, Mr Hammoudi was then in contact with his clients, making brief calls to Ms Ly at 10.41 am, 11.01 am and 11.18 am. Circle Bridge Legal did have a Christmas function that day, but it did not begin until 5.00 pm.

6. [156]

   At 11.32 am, the Lender emailed Mr Ostin, noting that they had yet to hear from Mr Hammoudi in respect of the draft facility agreement. Mr Ostin promptly called Ms Ly and they spoke for nine minutes. At 11.38 am, Mr Ostin forwarded the Lender’s solicitor’s email to Ms Ly, “As discussed … You URGENTLY need to have them review and organise to get you in to sign.” A further four minute call from Mr Ostin to Ms Ly followed at 12.09 pm. Mr Ostin agreed that, by late morning on 18 December 2020, there was a certain amount of pressure on getting things organised in order to settle the transaction by the following Tuesday. Mr Ostin sought to convey a message to Ms Ly to get her solicitor to “get his act together.”

Inflating assets

1. [157]

   At 1.14 pm on Friday, 18 November 2020, Mr Ostin called Mr Goh and they spoke for three minutes. Mr Ostin called Ms Ly twice; they spoke for nine minutes. Mr Ostin’s notebook for 18 December 2020 contains handwritten notes recording what soon appeared in a text message. At 1.41 pm, Mr Ostin sent Ms Ly a text message:

2. [158]

   Ms Ly texted back, “okay.” Mr Ostin send a further text message to Ms Ly, adding an additional property in Vietnam valued at $1.9 million, bringing the total to $7.5 million. At 1.47 pm, Mr Ostin forwarded this text message to Mr Goh, noting “the above will be added shortly to their current A&L’s and sent over for your file.” Mr Goh replied, “Perhaps get addresses for the properties as well.” Mr Ostin sent a further text message asking Ms Ly to “get some address” for the four Vietnamese properties. Mr Ostin rang Ms Ly twice.

3. [159]

   At 2.09 pm, Mr Ostin emailed the plaintiffs a page of the application form which Ms Ly and Mr Ho had earlier completed with the Broker, updated with the additional assets set out in the earlier text messages. The plaintiffs’ net assets had increased from $2.28 million to almost $12 million. Aside from the Vietnam properties, the value of Ho Ho Top Foods, previously stated to be $350,000, was now put at $2.1 million including stock and cash. Where the couple had formally disclosed cash of $3,000, a figure of $1.5 million was now reported.

4. [160]

   At 3.04 pm, Mr Ostin emailed the updated page of the application form to Mr Goh, noting “I’m just getting better details on the Vietnam Real Estate and should have this to you soon.” At 3.38 pm, Mr Ostin called Mr Ho for two minutes. At 3.58 pm, Mr Ho sent a text message to Mr Ostin, “Hi Tony Real estate in Vietnam …” Addresses and values were given for eight properties in Vietnam. Mr Ostin forwarded the text message to Mr Goh, noting “This was just sent from Henry.”

5. [161]

   Ms Ly said Mr Ostin told her that their assets were not high enough and asked whether their family had any property. Ms Ly said that was all the property which they owned but Mr Ho’s sisters had property in Vietnam. Mr Ostin said “That’s okay just let me know. I will handle it.” Ms Ly agreed that she knew that the information would be provided to the Lender. Ms Ly knew that the Broker was deliberately misleading the Lender as to her asset position and knew this was wrong, “Yes, I did follow him. If I did not follow then they would not lend me the money. … He’s the one who’s leading me to it.” Mr Ho denied that he or his wife owned the properties in Vietnam, “if I had that properties, I wouldn’t go ahead with borrowing any money from anyone.”

6. [162]

   Mr Ostin denied the conversation as described by Ms Ly. Rather, he told Ms Ly that the Assets & Liabilities list did not match income and had been questioned by the Lender. Mr Ostin asked where the money from their business went and whether they had any investments. Ms Ly said she owned properties in Vietnam and provided the details, saying they had bought the properties over the years with the profits from their business. Ms Ly also provided values for the business, cash and stock. Mr Ostin made notes, which he put into a text message to Ms Ly.

7. [163]

   Mr Ostin’s description of Mr Goh’s query is not easy to understand, having regard to the modest personal and company assets disclosed in the initial application form. There was no obvious disconformity between their modest income and their modest assets. More likely, Mr Ostin accepted that he knew that, on the face of the Assets & Liability Position statement which he had previously prepared, the clients did not have sufficient resources to fund construction equity of $2.5 million. Mr Ostin agreed that, unless he was able to provide a satisfactory answer to the Lender’s question as to where construction equity of $2.5 million was going to be funded from, the loan would have "fallen over."

8. [164]

   Mr Ostin did not agree, however, that it was important to give the Lender something to make sure that the loan did not "fall over." Mr Ostin did not agree that this was an exercise in “propping up the position of the borrowers to get the loan ‘across the line’.” However, it appears that is exactly what was happening. This reflects most poorly on Ms Ly and Mr Ho, where they provided details of properties and assets which they now say they did not own. It is also difficult to understand why the defendants were prepared to proceed on the basis that the borrowers’ asset position was truly vastly greater than initially disclosed or to accept this information by text messages. (The borrowers later signed an updated application form disclosing these assets, but not until they were also executing the finance documents: see [250].)

Borrower’s solicitor resists suggested urgency

1. [165]

   At 3.00 pm on Friday, 18 December 2020, Mr Hammoudi called Ms Ly and they spoke for two minutes. Ms Ly said that Mr Ostin wanted her to sign urgently. Mr Hammoudi repeated that he needed the weekend to review the documents and he did not then have the final documents to sign anyway. Mr Hammoudi explained that this was not something he could do in days and sometimes it took weeks. Ms Ly said “Tony say me no option. I must sign now.” Mr Hammoudi explained that that was not true. If the loan was not suitable, then they could speak to Ajax and see if they could extend the loan; Ms Ly had other options. Ms Ly said, “But Tony saying I have no other choice.”

2. [166]

   Mr Hammoudi expressed concern and said that Mr Ostin and Bass were being “very pushy and looks like they are pressuring you. I am your lawyer and need to do the best for you. I can’t have you sign documents you don’t understand.” Ms Ly said “but Tony is saying I can’t get another loan anymore. He says he knows a lot of people and he will speak with them … and block all loan.” (This evidence was admitted only as evidence of what Ms Ly told Mr Hammoudi, not as evidence of its truth.) Mr Hammoudi said that Mr Ostin could not do that and repeated that he would do his best to review the documents over the weekend and would call her on Monday.

3. [167]

   At 4.08 pm, Mr Ostin spoke to Ms Ly for six minutes. Presumably, Ms Ly conveyed the substance of her conversation with Mr Hammoudi. Mr Ostin said Ms Ly advised that Mr Hammoudi was still at the Christmas function and did not have time to go through the documents today. Mr Ostin said, “That is not good. He keeps delaying.” I consider Mr Ostin’s recollection in this regard is inaccurate, where the Christmas function had yet to begin and Mr Hammoudi had just spoken to Ms Ly.

4. [168]

   According to Mr Ostin’s mobile phone bill, immediately after speaking with Ms Ly, Mr Ostin called a friend, solicitor Mr Solari, at 4.23 pm and spoke for an hour. I infer that Mr Ostin discussed the proposed transaction with Mr Solari, including whatever concerns Mr Ostin then had. So far as can be told, Mr Ostin’s concern was that Mr Hammoudi was not moving fast enough. Later that evening, at 5.57 pm, Mr Ostin and Ms Ly spoke for some 13 minutes. Perhaps Mr Ostin told Ms Ly something of his hour-long conversation with Mr Solari.

5. [169]

   On Sunday, 20 December 2020, the Lender’s solicitor emailed Mr Hammoudi, noting that the parties were targeting financial close of the facility as soon as possible in the coming week. To achieve this timing, Mr Hammoudi’s clients would be required to return executed documents, obtain independent legal advice and provide a verification certificate and drawdown notice. Confirmation was sought at his earliest convenience, and no later than by 2.00 pm on Monday, 21 December 2020, that execution versions of the finance documents could be circulated “noting that our client proposes some amendments to the commercial terms of those documents.” It is not entirely clear how the borrower’s solicitor was supposed to advise that the documents could be put in final form where the Lender anticipated making further amendments to the "commercial terms." That is, rather than minor drafting changes, the acceptability of the proposed loan may have changed.

6. [170]

   Shortly after midnight on Sunday, 20 December 2020, Mr Hammoudi replied to the Lender’s solicitor, presumably copied to each of the addressees of that email, which included Mr Goh and Mr Ostin. Mr Hammoudi wrote: (emphasis added)

7. [171]

   At 7.46 am on Monday, 21 December 2020, Mr Ostin forwarded this email to the plaintiffs:

8. [172]

   More candidly, at 8.12 am, Mr Ostin emailed Mr Goh and the Lender’s solicitor:

9. [173]

   At 8.12 am, Mr Ostin called Ms Ly and they spoke for four minutes. According to Mr Ostin, he told Ms Ly that the solicitor had known for some time they were trying to settle before Christmas, “Why is he delaying.” Ms Ly said she did not know, where last time she signed loan documents with the firm was in one day with no interpreter. At 8.21 am, Mr Ostin reported to Mr Goh and the Lender’s solicitors:

10. [174]

    Mr Ostin agreed that he was frustrated with Mr Hammoudi and “thought it was a bit strange that all of a sudden now he’s mentioned that the client needs an interpreter. … It was a fluffy, delaying tactic. … He didn’t seem like he was up to speed.” Mr Ostin agreed that he told Mr Goh what his thoughts were. Mr Ostin accepted that he and Mr Goh had a common view that Mr Hammoudi was engaging in delaying tactics and causing trouble, “And so did the client”, and he thought steps had to be taken to do something about Mr Hammoudi, otherwise completion of the transaction would be derailed.

11. [175]

    At 8.17 am, Ms Ly called Mr Hammoudi and they spoke for 13 minutes. Ms Ly said they needed to see him now to sign. Mr Hammoudi said he could see them but he needed to arrange an interpreter. Also, the Lender had said that they wanted to make some more changes to the documents and it was best to receive the amended documents before he sat down with them to provide advice. Mr Ho was also on the line and said, “We need to sign. Tony said. We need to sign today and finish tomorrow.” Mr Hammoudi said that would not be possible. Ms Ly said, “Tony and Bass is not happy with your email. They said that I need to change my lawyer. If I don’t, then there is execution risk.” Mr Hammoudi asked whether they knew what an execution risk was, and Ms Ly said that she did not know.

“Just sign no advice”

1. [176]

   At 8.23 am, Ms Ly reported to Mr Ostin in a three minute phone call. At 8.28 am, Mr Ostin called Mr Solari and they spoke for five minutes. Mr Ostin then called Ms Ly and they spoke for five minutes. At 8.57 am, Mr Ostin called solicitor, Harry Simon, and they spoke for eight minutes. (Two years earlier, Mr Solari had introduced Mr Ostin to Mr Simon; Mr Simon had worked for Mr Ostin a couple of times).

2. [177]

   On a fresh but undated page in Mr Ostin’s notebook – after a page dated 18 December 2020 and before a page dated 21 December 2020 – are the following notes:

3. [178]

   On the face of the notebook, each of these topics was the subject of a single meeting or conversation. As I read it, when viewed with the mobile phone records, Mr Ostin likely obtained Mr Simon’s contact details and location (in Victoria) from his call to Mr Solari and discussed, either with Mr Solari or Mr Simon, whether they could act for the borrower on the transaction. Logistics were discussed, including that the settlement was due to take place “tomorrow” and that the facility agreement was 84 pages long. A solicitor appears to have asked whether an accountant had provided financial advice on the transaction. The possibility of signing waivers in order to settle appears to have been discussed.

4. [179]

   In respect of the note, “Put on notice. Execution risk $500k,” the note reads as if the borrowers had already been put on notice of an execution risk and, indeed, Mr Hammoudi recalls having been informed of such a risk by his clients, albeit the clients did not understand what the execution risk was. Further, the reference to “$500k” may indicate the execution risk in question. On the immediately preceding page of the notebook, after jotting down the couple’s various additional assets, appears the note “60% LVR 500k equity.” The execution risk may refer to the couple’s inability to provide the equity required by the Lender, as specified by Mr Corfield in his email sent that morning: see [154]. According to the note, discussion appears to have turned to the solicitors’ fees.

5. [180]

   Mr Ostin said that the page of the notebook recorded a number of different conversations. The first portion of the note was a conversation with Mr Simon on the morning of 21 December 2020. Certainly, the reference in Mr Ostin’s note to settlement of the Ajax facility “tomorrow” is consistent with this. I will return to Mr Ostin’s explanation of the other portions of the note shortly.

6. [181]

   Mr Ostin then reported to Ms Ly (two minutes), who then called Mr Hammoudi (three minutes), while Mr Ostin called Mr Simon again (five minutes). At 9.13 am, Mr Ostin reported to Ms Ly (four minutes) and then left a message at Mr Hammoudi’s office.

7. [182]

   Separately, Mr Goh took the liberty of responding directly to Mr Hammoudi’s email sent shortly after midnight on 20 December 2020, asking why the matter could not wait until the New Year:

8. [183]

   At 9.44 am on 21 December 2020, Mr Hammoudi returned Mr Ostin’s call. They spoke for seven minutes. According to Mr Hammoudi, Mr Ostin asked what was happening and why everything was taking so long. Mr Hammoudi said he had sent an email earlier that morning and could not have Ms Ly and Mr Ho sign documents until he had received a full suite of documents for review, arranged an interpreter and provided his advice. Mr Hammoudi asked why everything was urgent. Mr Ostin said, “We’ve been working around the clock to ensure settlement before Christmas and it seems to me that you’re the only one delaying this matter.” Mr Hammoudi asked how it was that he was delaying the matter when he first received draft documents on Wednesday and a further draft on Thursday with an email on Sunday suggesting further amendments.

9. [184]

   Mr Ostin replied that Mr Hammoudi should receive a full set of documents very shortly for review. Mr Hammoudi told Mr Ostin that, if he received the documents that afternoon, he could review the documents on Tuesday and provide his advice either on Wednesday or Thursday, where Thursday was the last day of the working week. Mr Hammoudi said he needed to see whether an interpreter would be available either on the Wednesday or Thursday. (Although Mr Ostin deposed that at no time did Mr Hammoudi mention that his clients needed an interpreter, in cross-examination, Mr Ostin agreed that Mr Hammoudi said he would arrange an interpreter.)

10. [185]

    To this, Mr Ostin said the advice could not be provided on Thursday as it was the last working day before Christmas and settlement was to occur that day, so the advice needed to be provided on the Wednesday. Mr Hammoudi suggested that he could provide the advice on Thursday morning and they could settle that afternoon. Mr Ostin said “Well, why can’t you just have the clients sign documents today and you can provide your advice later [in the] week on Wednesday or Thursday?” Mr Hammoudi said he could not have his clients sign documents without providing his advice and he needed to arrange an interpreter before he could provide that advice.

11. [186]

    At the bottom of the page of Mr Ostin’s notebook extracted at [177], Mr Ostin wrote:

12. [187]

    This note appears to have been ‘sectioned’ off from earlier notes on the page and, I infer, recorded a separate event or conversation. Most likely, this records the conversation between Mr Ostin and Mr Hammoudi, and in terms described by Mr Hammoudi. At 10.06 am, Mr Ostin reported to Ms Ly (seven minutes), then called Mr Solari and spoke for seven minutes.

13. [188]

    Mr Ostin said the portion of the note extracted at [177] – “sign waivers: to settle” – recorded the call with Mr Hammoudi, who said that if Ms Ostin wanted Ms Ly and Mr Ho to sign the documents, they would have to sign waivers to settle, “I will get them to sign all of the documents and give them no advice at all.” Mr Hammoudi denied this conversation.

14. [189]

    At 10.18 am, Mr Hammoudi replied courteously to Mr Goh: (emphasis added)

15. [190]

    Noteworthy, the italicised portion of the email responded to a suggestion that was not, in fact, made in Mr Goh’s earlier email, where Mr Goh referred to “the risk of not settling the transaction at all if you delay in your review.” Where Mr Hammoudi had, however, recently finished speaking with Mr Ostin, the italicised portion of the email corroborates the fact that Mr Hammoudi’s clients had recently been “pressure[d] … to sign, without first obtaining independent legal advice.” Further, the fact that the borrower’s solicitor was firmly suggesting that this transaction may be entering the arena of duress was a serious matter indeed. It prompted, however, a discourteous outburst in reply from Mr Goh at 10.51 am (sent immediately after a four minutes conversation with Mr Ostin on, presumably, this subject):

16. [191]

    To compound his discourtesy, Mr Goh sent a further email to Mr Hammoudi soon afterwards at 11.04 am:

17. [192]

    Noteworthy, the risk to completion identified by Mr Goh in this email was failure to satisfy the conditions precedent, which I note included the Lender being satisfied that 100% of the Borrower’s Initial Equity Contribution had been invested prior to or at the first drawdown of the Loan. Such an “execution risk” would be consistent with Mr Ostin’s note, and the note on the previous page, in respect of the “$500K.” Or Mr Goh may simply have had in mind the first conditions precedent, “Execution of full loan, mortgage and supporting documentation as provided by the Lender’s solicitor …” It is unclear.

18. [193]

    Mr Ostin said the reference to “execution risk” in his note (extracted at [177]) recorded a call from Mr Goh, who asked Mr Ostin why the borrower’s lawyers were delaying so much. Mr Ostin said he did not know but Mr Hammoudi had offered to meet with the clients to sign if they signed waivers saying that they had signed the documents with no advice. Mr Goh did not agree with this course, “It becomes an execution risk we are not willing to take. We won’t lend the funds if they continue to delay or use Circle Bridge.” Following this conversation, Mr Ostin received Mr Goh’s email referred to at [182]. Mr Ostin told Mr Goh the arrangements that had been made for the clients to go to Mr Hammoudi’s offices on Thursday, but this was not good enough for Mr Goh, “that’s their position. They’re the lender. … They weren’t prepared to deal with Circle Bridge because of the waiver.”

19. [194]

    I do not accept Mr Ostin’s explanation of his notebook entry as comprising several conversations, including one in which Mr Hammoudi offered to get his clients to sign the documents if they signed a waiver, followed by a conversation with Mr Goh in which he declined to proceed in this manner. Mr Ostin’s evidence does not align with the sequence of events as documented by mobile phone records and emails. The page of the notebook makes more sense if read as a single meeting or conversation, as set out at [178]-[179]. I also readily prefer Mr Hammoudi’s evidence, corroborated by Mr Ostin’s subsequent note extracted at [186] and Mr Hammoudi’s email sent to Mr Goh shortly after their conversation (at [189]), that it was Mr Ostin who suggested that the clients sign the documents that day with advice to be provided subsequently. Unsurprisingly, Mr Hammoudi was not prepared to proceed in this manner.

20. [195]

    Separately, at 10.48 am, Mr Corfield provided Mr Hammoudi and the Lender’s solicitor with a draft of disbursements, “assuming settlement tomorrow … subject to review/amendment from all parties.” Of the drawdown sum of $2.1 million, Bass Finance would receive $313,384.50 as an establishment fee and the Broker would receive $167,138.40. The disbursement schedule envisaged that Ho Ho Property would provide $700,258.27. As I read the schedule, the funds to be provided by Hoho Property would be deployed to pay the Lender’s establishment fee, the valuer’s fees, the Lender’s solicitor’s fees, part of the Ajax loan and the Broker’s fee.

21. [196]

    At 11.42 am, Bass Finance’s solicitor emailed Mr Hammoudi the full suite of transaction documents which, if in order, could be issued in final form. That is, this was the first time that the Lender had provided the final transaction documents to the borrower’s solicitor for review.

Enter new solicitors

1. [197]

   Mr Ostin agreed that he told Ms Ly that, if the couple wanted to keep Mr Hammoudi, Bass Finance would not advance the loan. Mr Ostin agreed that, having been told by Mr Goh that the Lender would not lend the funds if they continued to delay or use Circle Bridge Legal, he conveyed that very clearly to Ms Ly because that was the only way, as he saw it, that the transaction would settle in a timely manner and on terms with which Mr Goh would be happy.

2. [198]

   At 11.51 am on 21 December 2020, Mr Ostin sent an email to the Lender, copied to Mr Solari and Mr Simon:

3. [199]

   Ms Ly and Mr Ho were not copied to this email. Mr Ostin said he sent the email on the instructions of Ms Ly and Mr Ho, which they deny. I consider it more likely than not that Mr Ostin retained Mr Solari with the knowledge and approval of Ms Ly, given the mobile phone calls made from Mr Ostin to Mr Solari and Ms Ly since 18 December 2020, as described at [168], [176] and [187].

4. [200]

   Mr Ostin called Mr Solari at 11.53 am (five minutes) and then Ms Ly (four minutes). Notwithstanding the provision of the new solicitors’ details to the Lender, at 12.07 pm, Mr Ostin continued to email Mr Hammoudi, requesting his urgent attention “just on the pre sale certification at the moment … This is very urgent.” Mr Morris promptly attended to the matter at 1.07 pm.

5. [201]

   At 2.24 pm on Monday, 21 December 2020, Mr Ostin sent a further email to the Lender, Mr Solari and Mr Simon:

6. [202]

   At 2.30 pm, Mr Ostin called Mr Simon (26 minutes) and then Mr Solari (nine minutes). Mr Ostin then called Ms Ly and then Mr Ho, each for four minutes. At 5.34 pm, Mr Ostin spoke to Mr Solari for 20 minutes, and a further three minutes at 5.58 pm. According to an invoice later rendered by Solari Law, Mr Solari spent more than one hour that day assisting Mr Ostin in telephone attendances and communicating with Mr Simon in relation to the matter. Mr Simon also issued a costs disclosure to examine “extensive documentation” and advise guarantors in relation to a loan refinance, guarantees and to act as agent for the borrower in PEXA on the refinance. It appears from the contemporaneous records that it was Mr Ostin who was providing instructions to the new solicitors, Mr Solari and Mr Simon, rather than Ms Ly or Mr Ho. There are no records of any phone calls between the borrower and the new solicitors.

7. [203]

   At 2.38 pm, the Lender’s solicitor forwarded the suite of transaction documents to Mr Solari and Mr Simon. Given the tight timeframe, the Lender’s solicitor suggested that the new solicitors confirm that the documents were in order for execution by 10.00 am on 22 December 2020, with execution copies to be circulated by 2.00 pm for execution and return by close of business and financial close to occur at 11.00 am on 23 December 2020.

8. [204]

   At 3.07 pm on 21 December 2020, Mr Ostin spoke to Ms Ly for four minutes. Mr Ostin then sent Ms Ly a text message, “Firaz pleased be advised that your retainer in relation to the loan documents is terminated. Thank you from Cathy & Henry.” That is, Mr Ostin was drafting the communication from his clients to terminate their solicitor’s retainer.

9. [205]

   At 4.33 pm, Mr Hammoudi spoke to Ms Ly and Mr Ho for some six minutes. At 6.24 pm, Ms Ly spoke to Mr Hammoudi for 16 minutes and, at 6.40 pm, a further 16 minutes. Ms Ly said, “Tony is saying that if I want the loan, I can’t use you as my lawyer.” Mr Hammoudi said he was happy for her to see another lawyer as he did not feel comfortable doing this in such a hurry. Ms Ly said she trusted him and wanted him to do this, “I am forced but. I am under pressure. I am stuck and don’t know what to do. I can’t use you anymore.” Mr Hammoudi said this was not right and he was very concerned for her and felt that the Lender wanted her to sign and then find any excuse to sue her. He had seen this happen before and he did not want her to regret this.

10. [206]

    Mr Ho joined the conversation, saying he wanted Mr Hammoudi to help, “I don’t trust Tony and I don’t trust Bass. Something wrong Firas. I want you to help me. Please. Bass Capital wants us to sign and settle tomorrow. I know you are doing everything right and care about us. I don’t want their lawyer. I want you. Can you still help us?” Mr Hammoudi said he was happy to help them but needed to make some changes. If they signed the documents, “I know what will happen, you won’t finish.” Mr Ho asked Mr Hammoudi to speak to Bass “about this only and try change.” Mr Hammoudi agreed that he would send them a short email in respect of this change, which I understand was to seek a longer loan term given the disconformity between the proposed term and the expected construction and sale period. Ms Ly asked Mr Hammoudi to try.

11. [207]

    At 6.56 pm, Ms Ly called Mr Ostin and they spoke for 31 minutes. According to Ms Ly, Mr Ostin said that if she wanted to instruct Circle Bridge Legal they would not approve the loan to provide her with funds. Ms Ly said she did not want to lose her lawyer and Mr Ostin said “You have no choice.” Ms Ly said she felt she had no other choice than to go to the new lawyers. Whilst Mr Ostin agreed that he had carefully picked through Ms Ly’s evidence and identified that with which he agreed and that with which he did not agree, he could not explain why he had not denied this part of Ms Ly’s affidavit.

12. [208]

    Mr Ho participated in the telephone call with Mr Ostin on the evening of 21 December 2021, when Mr Ostin told them they had to terminate Mr Hammoudi’s retainer. Mr Ho said he was extremely fearful as he understood, that if they did not terminate Mr Hammoudi’s retainer and execute the documents on 22 December 2020, they would lose the development loan and have no other option to refinance the Ajax loan or fund the development. He and his wife were scared they were going to lose their home and, if they did not proceed with the loan from the Lender, they would lose everything.

13. [209]

    Mr Ho said he had been told by his wife, from time to time, of the substance of her conversations with Mr Ostin and Mr Hammoudi. He had also observed his wife become increasingly upset and stressed. He formed the view that they had no choice but to sign the documents immediately. Mr Ho was worried about his children, his staff, the business and the families he supported. He felt he was given no other option and thought that if they did not get a loan from the Lender, they would need to continue paying interest to Ajax and may not be able to repay the Ajax loan in January 2021.

Reducing equity contribution

1. [210]

   It had emerged during the course of 21 December 2020 that Ms Ly and Mr Ho did not have $700,000 to hand, as required by the disbursement schedule. Mr Ho told Mr Ostin that they had just bought $500,000 in stock and were owed a lot of money from restaurants. Mr Ostin asked Mr Ho to prepare a list of debtors and to chase the debtors for payment. (Mr Ostin spoke to Mr Ho for eight minutes at 1.16 pm). During the course of the day, Mr Ostin spoke to his clients and to Mr Goh, who progressively agreed to accept $500,000, then $150,000, instead of $700,000. Mr Ostin recalled saying to Mr Goh that the Lender should be called “Miracle Mortgages” and made a note to this effect in his notebook.

2. [211]

   At 7.38 pm, Mr Ostin called Mr Goh (four minutes) before calling Ms Ly for a further 55 minutes. Mr Ostin said he passed on the news that the Lender was prepared to accept only $150,000 on settlement. Mr Ostin also said that much of this conversation “related to building rapport, as we were speaking about our children, pets and food.” During the call, they also discussed terminating Mr Hammoudi’s retainer. According to Mr Ostin, Ms Ly asked for Mr Ostin’s help as she did not know what to say and Mr Ostin offered to send her a text message of what she should say.

3. [212]

   Mr Ostin’s description of this lengthy conversation as “building rapport” is a little odd, where he had been working with Ms Ly now for five weeks and agreed that he rang Ms Ly constantly during the course of the day and evening of 21 December 2020. What I think the length of this conversation, and how Mr Ostin described it, reflects is that he perceived that Ms Ly was uncomfortable with how she was being asked to proceed and Mr Ostin saw the need, and spent the time, to gain her trust and confidence. Specifically, Mr Ho and Ms Ly were now ‘adrift’ from their usual solicitor and about to receive advice on the documentation from someone they had never met before, having been told in no uncertain terms that to proceed otherwise would result in the offer of finance being withdrawn.

4. [213]

   At 8.28 pm, Mr Goh and Mr Ostin exchanged further text messages. Mr Goh asked whether a further response had been received from Mr Ho as to “how much cash they can deposit tomorrow.” Mr Ostin advised, “They are hitting clients left right and centre that are holding payments by citing the New South Wales Government’s latest reaction to COVID.” Later that evening, Mr Ho sent a document by email to Mr Ostin, listing 20 customers, with contact details and various amounts, being “Customer has owed money from Hot Top Foods whom has not paid it back due to COVID-19 circumstances.”

Terminating Mr Hammoudi’s retainer

1. [214]

   In his text messages with Mr Ostin, Mr Goh also asked whether the clients had “sacked” Mr Hammoudi, noting that as Mr Hammoudi had already stated that he had not reviewed the loan documents “so he can’t really charge Henry.” Mr Ostin confirmed that Mr Hammoudi had been terminated by email.

2. [215]

   Following this, Mr Ostin called Mr Solari at 8.43 pm (11 minutes). Mr Ostin then sent Ms Ly a further text message, “Firaz, please be advised that your retainer by us is terminated. We have retained new Solicitors and the Solicitors for Bass Capital are in communication with them.” Presumably this text message was prepared with the assistance of Mr Solari. Having sent the text message, Mr Ostin called Ms Ly at 8.56 pm and they spoke for six minutes. The email terminating Mr Hammoudi’s retainer was sent at 9.23 pm that evening, stating: (emphasis added)

3. [216]

   The last paragraph had been drafted by Mr Ostin by text message. The first paragraph bore no resemblance to any email previously sent by Ms Ly or Mr Ho to anyone and displayed the input of Mr Ostin as well, likely informed by Mr Solari. Ms Ly heard Mr Ostin dictate the email to her son, who typed it into an email. Mr Ostin agreed, “I got put on to Jack.” It remains unclear to me precisely what the “execution risk” was.

4. [217]

   Ms Ly said she terminated Mr Hammoudi’s retainer as she believed that the Lender would not lend to them otherwise. Ms Ly was very fearful that if they did not terminate the retainer and execute the documents on 22 December 2020, they would lose the loan and have no other option to refinance the Ajax loan or fund the development. Ms Ly said that although she trusted Mr Hammoudi, Mr Ostin “make me scared that I will lose everything – all the money I have paid out to builders, architects and many others, and I will lose all of my savings for many, many hardworking years without any holiday and all the savings that’s from my … own blood … and I was like a ball, someone kicking around … I couldn’t think of any other option. Tony said, 'you have no way out. You have no option.' I was very frightened and scared as between the death and life.” Further, “This is what happened, Tony said if you follow Firas direction and then Bass Finance would not lend me any money and then you would lose everything. You don't have any chance to build or construction at all.”

5. [218]

   Whilst Mr Ostin denied that he told Ms Ly that she had no other options but to sign the loan documents, he agreed that he did not have any other options, in particular, he did not have any other loan available for her to accept “within the time frame requested.” Having sent the loan submission to five or six other funders, Bass Finance was the only one that responded positively.

6. [219]

   On receipt of the email terminating his retainer, Mr Hammoudi immediately called Ms Ly, at 9.25 pm, and asked what had happened. Ms Ly said “Tony said that I have to terminate you or I won’t get loan. They don’t want to deal with you anymore. Tony said he has a friend who is a lawyer.” Mr Hammoudi said that they could not force her to go to their lawyer as the lawyer needed to be independent. Ms Ly started crying and Mr Hammoudi heard her begin to inhale and exhale. Ms Ly said “I have no choice. I am forced. They twist my hand.” Mr Hammoudi expressed concern and told her that she had options. Ms Ly asked whether he had sent an email to Bass Finance asking for an extension to the construction period, and Mr Hammoudi offered to do this for her now if she wished. Ms Ly and Mr Ho both asked him to do so. The phone call was six minutes. Following this call, Ms Ly called Mr Ostin and they spoke for 21 minutes.

7. [220]

   At 9.26 pm, Mr Ostin emailed the contact details for Mr Simon and Mr Solari to the plaintiffs, advising that they would be meeting at the offices of Solari Law in Cronulla at 3.30 pm for a video conference call regarding the loan documentation with the Lender. Mr Ostin would meet them there the next day.

8. [221]

   At 9.38 pm, Mr Hammoudi sent an email to the Lender’s solicitor, copied to Mr Ostin:

9. [222]

   Mr Ostin agreed that he was frustrated on receipt of this email, “If you put a 30-month term in it, the deal didn’t work. … You go from a normal construction period to doubling it, the figures just don’t work. … You’ve got someone who’s trying to give advice on a facility that obviously doesn’t understand construction facility. … Purely, the lawyer didn’t know what he was talking about.” Mr Ostin did, however, agree that a question had been raised about the length of the facility and whether it was too short or should be extended. He also agreed that this was brushed aside, “That’s not for me. That’s [for] the professionals.”

10. [223]

    At 9.55 pm, Mr Hammoudi received a call from Ms Ly, who said she was scared that they would lose the loan, “Tony is putting a lot of pressure on us and calls us all the time. Bass don’t like you and if I use you, they won’t lend the money.” Mr Hammoudi said they were using pressure and tactics so that she did not get proper advice and see an interpreter. Ms Ly said she had no choice. Mr Hammoudi said that he respected her decision and that if she wanted to come into the office the next day to draft a statement about how Mr Ostin and the Lender had treated her in the last four weeks, he thought this would be important as he believed that the Lender would sue her one day. Mr Hammoudi said, "I have a funny feeling.” The call lasted for four minutes.

11. [224]

    Ms Ly received a call from Mr Ostin at 10.01 pm, which lasted for five minutes. During this call, presumably Mr Ostin noticed an email from the Lender’s solicitor, forwarding Mr Hammoudi’s request to the Lender. The Lender’s solicitor noted that this represented a material issue so far as pre-sales were concerned as most of the pre-sales had sunset dates of December 2022, which could not be extended. “We had also understood that the Borrower had today appointed new counsel through to completion. This does now not appear to be the case.” At 10.04 pm, whilst still on the phone with Ms Ly, Mr Ostin forwarded Mr Hammoudi’s email to the plaintiffs, initially stating simply “this is not good,” followed by a more substantive email seeking their instructions:

12. [225]

    At 10.07 pm, Ms Ly and Mr Ostin exchanged the following text messages, when Ms Ly checked whether Mr Ostin had received the forwarded email terminating Mr Hammoudi’s retainer. Further:

13. [226]

    Ms Ly said her text message was incorrect and she meant to convey that she did need an interpreter. Ms Ly said that the text message was prepared without the assistance of her son, who went to school that day, but this does not explain any error as the text message was sent in the evening. I do not accept her evidence where it is apparent that she had earlier told Mr Ostin that the Ajax documents had been signed without the need for an interpreter: see [173].

14. [227]

    At 10.23 pm, Mr Ostin forwarded the email terminating Mr Hammoudi’s retainer to the Lender’s solicitor and the Lender:

15. [228]

    For good measure, Mr Ostin forwarded a copy of his email to the plaintiffs at 10.28 pm:

16. [229]

    Later still, at 10.29 pm, Mr Hammoudi sent a further email to Mr Ho, referring to their email terminating his retainer “and our telephone discussions this evening”:

17. [230]

    Whilst it is apparent from Mr Hammoudi’s email that the details provided by his clients were not entirely accurate – where the new solicitor had been recommended by Mr Ostin and not by the Lender – it is a second contemporaneous observation by the solicitor that he considered that “pressure tactics” were being applied to his clients.

18. [231]

    Later at 11.14 pm, Mr Goh sent an email to the Lender’s solicitor, copied to Mr Ostin, noting that he had seen correspondence from the client terminating Mr Hammoudi, “so you can ignore his commentary. I would think that purporting to represent a client without an engagement isn’t the best look.” Obviously, neither Mr Ostin nor Mr Goh were aware that the couple had asked Mr Hammoudi to make this particular request after the email terminating his retainer. Nor does it appear that the couple informed Mr Ostin of this important detail.

Preparing for settlement

1. [232]

   At 5.00 am on 22 December 2020, Mr Solari emailed Mr Ho and Ms Ly a cost disclosure and fee agreement. Mr Solari advised that Mr Simon would be the solicitor finalising the documentation, providing advices and drafting any other documents required as well as attending settlement, whilst Mr Solari would be assisting him in circumstances where:

2. [233]

   At 8.32 am, Mr Solari sent a further email to Mr Ho and Ms Ly, explaining that he would be acting for the borrower while Mr Simon would be acting for the guarantors and also acting for all parties on settlement. Mr Solari forwarded the documents concerning the borrower, Hoho Property Pty Ltd, “Please ensure that you read these documents prior to coming to the meeting this afternoon.” Mr Solari said he would be sending a separate email forwarding the documents for the guarantors, noting that there was a “bit of a double up and you will see that 2 of the documents from here are reproduced [in] the documents for the guarantors.” It is apparent from this email that Mr Solari did not then apprehend that the clients had any difficulty reading English. A further email attaching the documents for the guarantors soon followed at 8.34 am.

3. [234]

   Later that morning, at 8.25 am, Mr Ostin provided Mr Goh with the document forwarded by Mr Ho the evening before in respect of customers who owed money, advising “These funds were expected to be paid prior to settlement.” Mr Ostin then called Ms Ly (for 13 minutes) and asked how she was getting on with collecting $150,000. Ms Ly said they could only come up with $50,000 and would pay the rest early the next month, when the money came in. Ms Ly asked Mr Ostin to help them and said she was scared it would not settle now. Mr Ostin called Mr Solari and then Mr Goh.

4. [235]

   According to Mr Ostin, Mr Goh agreed to settle on the basis of only $50,000 from the borrower, as long as the Lender and the Broker agreed not to get their fees on settlement but to be paid the following month. Mr Ostin agreed. Mr Goh said that any fees that came in would be distributed proportionately between the Lender and the Broker. Although Mr Ostin agreed that the clients expected contribution at settlement of $700,000 thus reducing “almost by the minute” to $50,000, he did not accept that there was an obvious question as to how the borrowers were going to fund the equity contributions going forward.

5. [236]

   Mr Ostin informed Ms Ly that the Lender would go ahead and settle the transaction with just $50,000 coming from the Borrower, as both the Lender and the Broker had agreed not to enforce payment of their fees at settlement, “You’ll still need to pay in January the shortfall of around $650,000 that you were supposed to pay on settlement, which is separate from paying our smaller invoice, which you need to pay straight away.” According to Mr Ostin, Ms Ly also asked him to come to the meeting with Mr Solari that afternoon as they had not met him yet and wanted Mr Ostin there if they needed help.

6. [237]

   Mr Ostin said he asked whether Ms Ly had read the documents and was ready for the meeting with Mr Solari, which was then scheduled for 3.30 pm. Ms Ly said she had not read the documents yet, and Mr Ostin said he would see whether Mr Solari was available to meet earlier to go through the documents with them. Mr Ostin called Mr Solari and they agreed to meet at 12.00 pm instead. Mr Ostin also spoke to Mr Simon for ten minutes and, later, a further four minutes.

7. [238]

   According to Mr Solari’s invoice, he spent more than four and a half hours reviewing documents and attending to various phone calls and emails before the clients arrived at his office on 22 December 2020.

Execution of documents

1. [239]

   Mr Ostin arrived at Mr Solari’s offices shortly before noon. At 12.14 pm on 22 December 2020, Mr Simon emailed Mr Solari, copied to the clients, with further documents for signing and discussion. Attached were various declarations and acknowledgements of legal advice to be made by the clients, Mr Simon’s fee agreement and a document entitled “Matters for Discussion.” The last-mentioned document appears to have been Mr Simon’s notes of how he intended to conduct the meeting that afternoon. At 12.25 pm, the Lender’s solicitors provided Mr Simon and Mr Solari with execution copies of the transaction documents. At 12.39 pm, Mr Solari forwarded the documents to the clients.

2. [240]

   Although Mr Solari's file note said Ms Ly, Mr Ho and Mr Ostin arrived “around midday,” mobile phone records indicate it was more likely that Ms Ly and Mr Ho arrived at 2.00 pm. According to Mr Solari’s handwritten file note, he “called in everyone early when discovered hadn’t read docs.” Mr Solari cancelled his next meeting. More than four and a half hours was then spent with the clients, Mr Ostin and Mr Simon by telephone going through the documents and executing the documents.

3. [241]

   According to Mr Solari’s file note, the first topic of conversation was Mr Ostin’s presence in the meeting. Mr Solari explained the importance of preserving legal professional privilege and that it could be waived by Mr Ostin’s presence. Mr Solari’s file note records:

4. [242]

   The second topic was Mr Solari’s retainer. According to Mr Solari’s note, both confirmed that they wanted Mr Simon and Mr Solari to act, and not their prior solicitor. Mr Solari explained that he would not be offended if they did not wish him to act.

5. [243]

   The next topic was an interpreter. Mr Solari’s note records:

6. [244]

   According to Mr Solari’s file note, he then explained that he was not giving any advice in respect of the building contract, any financial advice, or advice in respect of the clients’ arrangements with the Broker, “both understood.” Further:

7. [245]

   According to Mr Solari’s file note, he circulated highlighted copies of the transaction documents to those present:

8. [246]

   The highlighted documents are in evidence. In particular, Schedule 1 to the Senior Facility Agreement is highlighted in respect of the repayment date (15 months after Financial Close), the establishment fee (now 3% of the Facility Limit), the broker fee (1.6% of the Facility Limit), the Line Fee (2.25% per annum of the Facility Limit), the differing interest rates (now 7.25% or 11.25% in the event of default), the Minimum Earn Amount (being 15 months interest at the lower interest rate), the LVR limit and the LCR limit.

9. [247]

   The corresponding clauses in the body of the document were also highlighted, or at least the headings of the relevant clauses (interest payable to the lender), clause 6 (fees), clause 7 (repayment and prepayment). Clause 13, “Project undertakings,” provided that the borrower was obliged to remedy any cost overruns and ensure that the project was completed on or before the Project Sunset Date. These clauses were highlighted, as was the definition of “Project Sunset Date,” being 13 months after Financial Close (the date on which the first Advance was made).

10. [248]

    Clause 13(t) obliged the borrower, at the request of the Lender, to contribute Contingent Equity as determined by the Lender as reasonably necessary to complete the project. This clause was not highlighted, although the definition of “Contingent Equity” was highlighted being, essentially, the excess of construction costs over the building contract price “being as at the date of this agreement, $628,145 or such other amount as determined by the Lender, to complete the Project …”

11. [249]

    Mr Solari noted that he went through various provisions of the documents including “all fees” and “intensive loan management fee.” Mr Solari’s file note records:

12. [250]

    At 2.13 pm, Mr Goh texted Mr Ostin, “Any problems?” and Mr Ostin replied, “No just needed some advice. I have spoken with (Mr Corfield) and he is working on it.” At 3.44 pm, Mr Solari emailed the page of the Broker’s application form now including the additional Vietnam assets, now signed by the clients. Mr Ostin forwarded the document to the Lender. At 3.55 pm, Mr Goh sent a further text message to Mr Ostin asking whether the clients had signed. Mr Ostin replied, “Still here doing it. Lots of docs to go through.”

13. [251]

    Mr Simon’s part in the conference began by conference call at 4.05 pm and lasted for one hour and 24 minutes. Mr Simon’s “Matters for Discussion” document listed the following topics:

14. [252]

    According to Mr Simon’s file note of the telephone conference:

15. [253]

    According to Mr Solari’s file note, he then proceeded to explain the reporting obligations to the Lender in the schedule and offered to prepare a schedule for the clients, My Ly is noted to have said “she’ll do that.” Execution of the documents was finished at about 6.30 pm. The documents executed by Mr Ho and Ms Ly were:

16. [254]

    Discussion then turned to the payment of Mr Solari’s fees. There appears to have been some haggling, with Ms Ly asking for a reduction if she paid cash. The clients left at about 7.00 pm.

17. [255]

    Ms Ly said the documents were not ready when they arrived. The review of the documents was very quick. Ms Ly said she was not asked whether they required an interpreter, whether they had read the documents or obtained independent financial advice. As Ms Ly described it, Mr Solari gave her and her husband a bundle of papers. He pointed to each section that was in darker text and said something briefly and quickly. Ms Ly did not understand what he was saying. Mr Simon then joined the meeting by teleconference, and asked them to go from page to page of the documents and read out the headings. Ms Ly said that he did not say much more than the headings and did not explain anything further to them. Mr Ostin sat next to Mr Ho. Ms Ly felt very uncomfortable with Mr Ostin being there. Mr Ho said he could feel Mr Ostin staring at him throughout the meeting and felt uncomfortable. Ms Ly felt that he was in the room to make sure they signed the documents and she felt that she could not refuse to do so.

18. [256]

    Mr Ho said that, at the beginning of the meeting, Mr Solari asked him whether he spoke English and he said, “a little bit.” He was never asked if he wanted an interpreter. Mr Ho said that 15 months was too short and more time was needed, while Mr Ostin said “No, you can build it in 15 months.” Mr Ostin did not enquire of Mr Goh whether the term of the loan could be extended as, “At that point in time, the QS had already signed off. The builder had signed off and the lender had signed off on the facility."

19. [257]

    Ms Ly said she did not understand the documents, although understood that they were borrowing money and had to pay interest. Ms Ly did not know or understand that there were two rates of interest and did not know when each was to apply. Ms Ly did not know that there was going to be a high establishment fee of $284,895, which was payable whether or not they borrowed the whole of the loan. Ms Ly did not know that the Broker Fee would be $151,944, which was payable whether or not they borrowed the whole of the loan. Ms Ly did not know there would be a “line fee” of $213,672 or an intensive management fee of 5%, nor a Minimum Earn Amount, said to be $3,114,736.44. She did not understand the reference to LVR and the requirement to put in additional money. Mr Ho also did not understand these aspects of the transaction documents.

20. [258]

    At 7.29 pm, Mr Ostin reported to Mr Goh in a nine minute call. Later that evening, Mr Goh sent a congratulatory email to his staff noting their “Massive effort [for] pulling this one out of the fire. … this is how Bass rolls. Settlement tomorrow, fingers crossed.”

21. [259]

    At 7.46 pm, Mr Hammoudi called Ms Ly and asked whether she had received advice and an interpreter. Ms Ly told him “I didn’t understand anything. There was no interpreter. Lawyer just read the heading. Very very quick. Not long at all. We sign and then talk in the office for a long time.” Ms Ly said that Mr Ostin was in the room and looking at her all the time, making sure that she signed. “He was scary man. He was there looking at me all time.” Ms Ly said they had been with the solicitor for maybe two hours, “Tony said we sign and talk later.” Mr Hammoudi and Ms Ly spoke for 13 minutes. At 10.21 pm, Mr Ostin called Ms Ly and they spoke for nine minutes. Mr Ostin called again at 12.17 am for three minutes. He called Ms Ly again at 9.46 am the next morning for seven minutes.

22. [260]

    For reasons unknown, settlement of the loan was re-booked for 24 December 2020, when the matter settled. The Broker submitted its tax invoices to Hoho Property, totalling $208,923 including GST. Mr Ostin advised that the bulk of the fee was being paid via the Lender while part of its fee, being $41,784.60, was payable to the Broker directly. Mr Ostin sought immediate payment of that amount.

Post-settlement problems

1. [261]

   On 6 January 2021, Mr Ostin pressed for payment of his invoice by noting that Mr Solari had warned them a number of times that the intensive loan management fee would be triggered in the potential event of default.

2. [262]

   On 8 January 2021, at Ms Ly’s request, Mr Ostin obtained a settlement statement from Bass Finance. Ms Ly sent a text message, “Tony you have email me the settlement figures. I have work out that we’re short 3 million. Tony Please call me back.”

3. [263]

   On 13 January 2021, Mr Ostin sent an email to Mr Corfield and Mr Goh following a discussion earlier that day. The builder was to provide additional equity of some $460,000 into the project. A fresh valuation was being considered, thought to provide an additional $715,000 in equity. The Lender was to consider providing further funds, secured by a second mortgage over Ms Ly’s Bankstown property. Further:

4. [264]

   Mr Corfield replied that settlement had occurred on the basis of $2.5 million being required for construction equity, where representations had been made that between the guarantors and the builder, this would not be an issue. As a first priority, “what is the actual upfront equity contribution position between the 2 parties as Bass cannot commit to any additional funding structure until this is resolved.” In addition, the Facility Agreement provided a Contingent Equity component of $628,000, being the difference between the quantity surveyor and building contract cost.

5. [265]

   Thereafter, the builder provided the Broker and the Lender with updates on Mr Ho and Ms Ly’s efforts to recover outstanding debts from creditors and increase pre-sales. On 28 January 2021, Mr Goh suggested to his colleagues that, given additional pre-sales and equity, the Lender could provide an additional mezzanine finance facility, to provide the developer with an additional $750,000.

6. [266]

   Mr Ostin had still not been paid. On 1 February 2021, Ms Ly sent a text message, “I’m still put people own me the money to the Debit company. They still working I will pay you Tony don’t worry.” Noteworthy, Ms Ly did not object to the Broker’s fee, or suggest that she was not aware of the amount of the fee.

7. [267]

   On 1 February 2021, Mr Goh advised the Broker that the Lender would consider increasing the facility by a mezzanine tranche, “This would reduce the sponsor’s equity commitment by around $800k, taking the new requirement to c$1.7m at commencement of construction rather than $2.5m.” Later that evening, an email was sent from hohotopfoods@gmail.com to Mr Corfield requesting a loan statement for the previous month. This was the most fulsome email to date, apparently sent from Mr Ho, but remained brief and simple.

8. [268]

   On 8 February 2021, the Lender sought an update on the status of the construction certificate, noting that the construction conditions precedent had to be met by 24 February 2021. On 11 February 2021, Mr Corfield circulated a draft tripartite deed, apparently to record the builder’s proposed equity contribution to the development. Mr Ostin circulated the document to Ms Ly, Mr Ho and the builder and requesting their review and feedback. Ms Ly and Mr Ho were also asked to provide an update on the issue of a construction certificate, sales and the outstanding equity to be injected “i.e. Where is it coming from, what is the amount available and when will it become available.” No response is in evidence. Mr Ostin repeated his request on 17 February 2021.

9. [269]

   On 18 February 2021, the builder replied: (emphasis added)

10. [270]

    On 8 March 2021, Mr Ostin pressed Ms Ly, Mr Ho and the builder for a further update, in particular, on payment of Council contributions to formalise the construction certificate, updated sales and an update on outstanding equity to be injected. On 10 March 2021, the Lender arranged an online meeting “so that all parties involved can gain visibility on the project/deal progression and to address any recent issues or concerns.” On 12 March 2021, an email came from hohotopproperty@gmail.com “I’m cathy and Henry, How are you, Could you please change 26 of March. Thank you so much.”

11. [271]

    On 1 April 2021, Mr Corfield emailed Mr Ho and Ms Ly, requesting their confirmation of the project’s direction. While a condition precedent to the drawdown of the construction loan was $2.5 million equity being expended on site works, “To date there has not been any progress on the site works or any certainty of any construction equity being provided.” Whilst the Lender was willing to assist with a portion of the equity required, the borrower was requested to urgently address its equity commitment to the project. There is no evidence of a response. On 8 April 2021, Mr Corfield sent a follow-up request, reinforced by a further email from Mr Goh in similar terms.

12. [272]

    On 13 April 2021, Mr Ho replied to Mr Goh in the most lengthy email in evidence, advising that they had instructed their architect to complete any amendments required in a construction certificate. The builder would now act as development manager with full authority over construction and marketing. A new marketing agent had been appointed. The Lender’s “kind offer of the increase in the loan facility” was accepted, the sales program would be accelerated. An allowance had been made in the cashflow to cater for the cost of the construction certificate and an assurance was given that there would be no loss of time. Having regard to the limited and brief correspondence from Mr Ho pre-dating this email, I consider it most likely that this email was drafted by someone other than him.

13. [273]

    Further information was sought by Mr Corfield, in particular, “we are still trying to understand the $ equity you are putting into construction.” Having heard nothing further, on 22 April 2021, the Lender informed Ms Ly and Mr Ho that the matter had been referred to its solicitors. On 26 April 2021, Mr Ostin advised Ms Ly and Mr Ho that the Broker was now also taking action in respect of fees owed. On 28 April 2021, the Broker registered a caveat over the Liverpool and Cabramatta properties. On 29 April 2021, the Lender’s solicitor issued a notice of default and demand.

These proceedings

1. [274]

   On 25 May 2021, the plaintiffs commenced these proceedings. On 28 May 2021, the Lender appointed a receiver to Hoho Property. On 4 June 2021, the quantity surveyor inspected the development site at the request of the Lender and observed that demolition and preliminary site clearance works had been undertaken but detailed excavation works had yet to commence. That is, the project had not progressed at all.

2. [275]

   On 7 June 2021, the parties agreed to a consensual interim injunction regime. The Lender undertook not to take any steps to enforce its rights under the finance documents while Hoho Property agreed to sell the Liverpool properties and to pay the proceeds into Court. On 5 August 2021, the Liverpool property was passed in at auction. The consensual interim injunction regime was brought to an end in October 2021: Hoho Property Pty Ltd v Bass Finance No 37 [2021] NSWSC 1289 (per Williams J). In December 2021, the Liverpool properties were sold at auction. I was informed by the Lender’s senior counsel that the principal was repaid, while interest and fees remained unpaid.

SUBMISSIONS

1. [276]

   The plaintiffs contend that, by the Lender and Broker insisting that the transaction be completed on 22 December 2020, failing which the Lender threatened to withdraw the loan, they applied duress and illegitimate commercial pressure and engaged in unconscionable conduct, where they knew that the plaintiffs did not have any other viable option to refinance the Ajax loan or fund the development. The defendants also knew that the Ajax loan only had to be refinanced in January 2021 and not before the end of 2020. The timetable was driven by the Lender and Mr Ostin's desire to lock in their fees before the end of the year. The defendants were aware that the duration of the development was likely to exceed the period proposed in the finance documents.

2. [277]

   By Mr Hammoudi’s email sent at 1.05 am on 21 December 2020, the plaintiffs submitted that the defendants were on notice that additional time was required to review the documents and properly advise the plaintiffs, who required an interpreter. The defendants were on notice that Ms Ly and Mr Ho had a limited command of the English language, a basic level of education and were inexperienced in matters of finance and property development. Mr Ostin was desperate to meet the Lender’s settlement date and so secure his fees. He pressured his clients incessantly to achieve those aims. Mr Ostin instilled in his client an inescapable fear of losing the “deal,” the fear that such deal was their only option, the fear that they would lose the deal if Mr Hammoudi remained instructed. The Broker exerted unlawful commercial pressure on them to enter into the ruinous contracts which the Lender had proposed.

3. [278]

   The plaintiffs submitted that the defendants used unfair tactics by coercing the plaintiffs into terminating Mr Hammoudi’s retainer and causing Ms Ly and Mr Ho to meet with new solicitors, who they did not know, to execute the documents. The plaintiffs were said to be extremely fearful that if they did not terminate Mr Hammoudi’s retainer and execute the finance documents on 22 December 2020, they would lose the loan and have no viable option to refinance the Ajax loan or fund the development. Ms Ly and Mr Ho executed the documents without the assistance of an interpreter and without receiving advice from Mr Solari and Mr Simon that they understood. Basic assistance was not afforded to them by the defendants, or the new solicitors, despite notice from their (former) solicitor that they required an interpreter. This left the plaintiffs in a position of serious disadvantage. Subject to the plaintiffs doing equity by repaying the Lender the amount that was paid to refinance the Ajax loan together with interest, each of the finance documents were said to be voidable and of no force by reason of duress and illegitimate commercial pressure placed on the plaintiffs, the unjust nature of the agreement and the unconscionable conduct of the Lender and Broker.

4. [279]

   Further, the Broker was said to have aided and abetted, and been knowingly involved in, the Lender’s contravention of the ACL and the ASIC Act and it would be unjust or against good conscience for the Broker to benefit from such conduct. If the finance documents were enforceable, then the Broker was said to be liable to the plaintiffs for damages that effectively indemnified them for their liability to the Lender by reason of the Broker’s conduct. The plaintiffs also submitted that, if they succeed against the Lender then the obligation to pay the Services Fee did not arise as the condition for payment of the fee, being settlement of the advance of moneys pursuant to the Loan, was not satisfied. The caveats lodged by the Broker would have to be removed.

5. [280]

   The Lender submitted that the plaintiffs were well-advised, commercially astute investors who understood the risks they faced and the options open to them, including because they were explicitly and repeatedly told by their own advisors that they did not have to proceed with the facilities. Any commercial pressure the plaintiffs were under was self-induced, being a function of their determination to proceed with a property development to which they had already committed significant funds. To the extent that the plaintiffs were placed under illegitimate pressure, the Lender was not party or privy to that conduct. Even if there had been misconduct, it was said to make no difference where the true cause of the plaintiffs' losses were the risks they took after taking advice and in full knowledge of their exposure, and their perseverance in the venture despite their apparent inability to generate the equity necessary to fund it through their butchery business. The commercial imperatives the plaintiffs had set for themselves determined their course.

6. [281]

   The Lender submitted that there was no communication from the Lender to the borrowers directing or advising them to replace their lawyers, or threatening consequences if they did not. While Mr Goh sent direct communications to Mr Hammoudi, these were to the effect that Mr Hammoudi should get on with his job. There is no evidence that Bass Finance ever told Mr Ostin that they would not lend to the borrowers if the loan did not settle on 22 December 2020. Rather, the Lender simply could not or would not settle except upon confirmation that the borrower had received independent legal advice. The Lender only had Mr Ostin's version of events, such that its attitude to the question of proceeding with Circle Bridge Legal must be evaluated against the background that it had been told that Mr Hammoudi was not going to provide the independent legal advice. The Lender could not be criticised for insisting that such advice be given. The advice given could not be said to be "window dressing" or "precautionary artifice": Stubbings v Jams 2 Pty Ltd [2022] HCA 6; (2022) 399 ALR 300 at [18]-[19], [48]-[49] (per Kiefel CJ, Keane and Gleeson JJ).

7. [282]

   The Lender submitted that the borrowers were capable of entering into a loan facility in full knowledge of the rights and obligations they acquired and the risks they ran in doing so without the need for an interpreter. The borrowers had had the terms of two similar commercial loan facilities explained to them in the previous twelve months, being the Ajax and La Trobe facilities. While Mr Hammoudi came to the view that his clients needed an interpreter, he had been advising the clients without an interpreter for some eight months, and it was therefore hardly surprising that Mr Ostin considered that Ms Ly did not need an interpreter, having dealt with her for a much shorter period of time. That was particularly so where Ms Ly told Mr Ostin by text message that she did not need an interpreter. Rather, Mr Solari and Mr Simon told Mr Ho and Ms Ly the same thing Circle Bridge Legal had told them, namely that they did not have to proceed with the loan. There is no reason on the evidence to conclude that the transaction would ultimately have proceeded any differently had Circle Bridge Legal continued to be retained.

8. [283]

   The Lender submitted that Ms Ly and Mr Ho accepted that they understood the material terms of the facility agreement. Their situation bore no comparison to the circumstances in Commercial Bank of Australia v Amadio [1983] HCA 14; (1983) 151 CLR 447 or Blomley v Ryan (1956) 99 CLR 362. Rather, the borrowers were absolutely determined to pursue the project and eschew all exit strategies they knew they had, in circumstances where the offer of construction finance from the Lender was the only offer open to them. Mr Solari and Mr Simon explained the terms of the facility to them at great length and in detail. The development was said to be viable; the fact that the development did not proceed was referable to the borrowers' unwillingness or inability to progress the matter.

9. [284]

   The Lender submitted that the borrowers understood that they had alternatives to entering into the facility, but these alternatives were unpalatable and involved the loss of the $800,000 already expended. Rather, the borrowers had decided not to sell the property to repay Ajax, or to refinance the Ajax loan only. As the Lender was the only one offering construction finance, they had no choice but to proceed with the Lender. That does not mean that the Lender forced them into a loan they did not want or understand. As such, the plaintiffs have not suffered any loss or damage. The plaintiffs were determined to proceed with the transaction rather than to cut their losses; this was the real cause of whatever pressure the borrowers found themselves under in December 2020. There was no basis for any conclusion that, but for the Lender's conduct, the borrowers would have done anything differently.

10. [285]

    The Broker admitted that the plaintiffs were fearful that, if they did not terminate Mr Hammoudi’s retainer and engage lawyers who could give them timely advice, they were at risk of not being able to obtain the loan and were at risk of not being able to refinance the Ajax loan before its expiry. However, the Broker submitted that the replacement of the clients’ solicitor with Mr Solari and Mr Simon did not involve unfair tactics, illegitimate pressure or duress nor unconscionable conduct. Rather, Mr Ostin – rightly or wrongly – believed that Mr Hammoudi was delaying in his review and attempting to stymie the deal by not providing independent legal advice in a timely fashion. The contemporary records were said to provide a reasonable basis for Mr Ostin having that view. Mr Hammoudi was not in a position to provide advice in time for settlement to proceed on 22 December 2020. Mr Ostin sought to use his professional networks to source independent solicitors for the plaintiffs who were in a position to review the documents and give legal advice.

11. [286]

    Further, so far as the claim for unconscionable conduct was concerned, the Broker submitted that there was no relevant “special disadvantage” which was knowingly exploited by the Broker. Mr Ostin only ever dealt with Ms Ly and Mr Ho in English; he did not understand that they required an interpreter. The first time it was suggested that an interpreter was required was in Mr Hammoudi’s email of 1:05 am on 21 December 20202. That same morning, he was told by Ms Ly that when Circle Bridge advised the plaintiffs on the Ajax loan, no interpreter had been used. He was understandably perplexed as to why an interpreter was required for this loan but not the Ajax loan. Further, Ms Ly told Mr Ostin that she did not need an interpreter by text. During their conference with Mr Solari, both Ms Ly and Mr Ho advised they did not require the services of an interpreter.

12. [287]

    The Broker submitted that the plaintiffs were experienced in the terms of commercial loans pertaining to the development, given their previous experience with the Ajax loan and the proposed La Trobe loan. Further, it was said that they had considerable experience in matters of finance from running a successful butchery business. It was said that the plaintiffs were surrounded by a wealth of professional advisers, while Mr Ostin was not their accountant, financial adviser, lender, project manager or lawyer. Rather, in circumstances where the plaintiffs’ lawyer was not willing or able to provide advice in time, the Broker arranged for the plaintiffs to see competent lawyers who could provide that advice. This was said to be a world away Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392 and Amadio.

DOBB’S CERTIFICATE

1. [288]

   It is convenient to deal with the parties’ claims out of the usual order. As ultimately submitted, the plaintiffs appeared to accept that, if their claims failed, then Hoho Property is in default under the Senior Finance Facility. As to how much is owing, the Lender tendered a document on the letterhead – somewhat confusingly – of Centuria Bass Credit Pty Ltd. The document is entitled “Secured Party’s Certificate”, said to be from the Lender, issued under clause 21.5 of the General Security Agreement, and certifying that the amount due and payable under the General Security Agreement as at 30 November 2022 was $2,568,527. The certificate was signed by Mr Goh as director of Bass Finance.

2. [289]

   This type of clause is referred to as a “Dobbs” clause, after Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643. The purpose of such a clause is to “provide a ready means of establishing the existence and amount of the … debt and avoiding an inquiry upon legal evidence going to make up the indebtedness”: Dobbs at 651 (per Rich, Dixon, Evatt and McTiernan JJ).

3. [290]

   Whether a certificate issued under a Dobbs clause is valid depends on the proper construction of the contract: Beefeater Sales International Pty Ltd v MIS Funding No 1 Pty Ltd [2016] NSWCA 217 at [98] (per Bathurst CJ, Gleeson and Payne JJA agreeing); followed in Vannin Capital Operations Ltd v QNI Resources Pty Ltd [2023] QSC 001 at [55] (per Burns J). That is, does the certificate conform to what the parties have stipulated in the contract as to the manner and form of the document?: Australia and New Zealand Banking Group v Smith [2009] VSC 556 at [41] (per Mukhtar AsJ).

4. [291]

   The plaintiffs submitted that the certificate was invalid as it is signed solely by Mr Goh, rather than in compliance with section 127(1) of the Corporations Act, which provides:

5. [292]

   The plaintiffs relied on Wily v Terra Cresta Business Solutions [2006] NSWSC 1042, where Young CJ in Eq considered that a party seeking to rely on a certificate issued under a Dobbs clause must comply strictly with the clause: at [65], citing Shomat Pty Ltd v Rubinstein (1995) 124 FLR 284 (per Young J (as his Honour then was)). As to why such clauses should be strictly construed, Young J explained in Shomat, “parties who have agreed to forego their rights to dispute the quantum claimed by the other party to the financial transaction expect that the certificate will be given fairly and in proper form”: at 289.

6. [293]

   In Wily, Young CJ in Eq did, however, accept the criticism made by Einstein J in State Bank of New South Wales Ltd v Chia [2000] NSWSC 522; (2000) 50 NSWLR 587, who lamented the triumph of form over substance. There, Einstein J remarked, “It is one thing to say that a Dobbs clause must be interpreted strictly. It is another to interpret a Dobbs clause in a fashion which frustrates its purpose of expeditiously and finally establishing the debt owed by the customer to the bank”: at [252].

7. [294]

   Whilst I consider that the correct approach to Dobbs certificates is now stated in Beefeater Sales, being to construe the contract rather than require strict compliance per se, the rejection of the Dobbs certificates in Shomat and Wily remains illustrative. In Shomat, the Dobbs clause called for “A statement in writing signed by the Mortgagee or by any Solicitor Conveyancer Manager or Accountant or other duly authorised officer of the Mortgagee.” The statement was issued by a director of the Mortgagee. The statement did not say that the person giving the certificate was duly authorised to do so, or that the director fell within another category of person specified in the clause. The statement was held to be invalid.

8. [295]

   In Wily, the Dobbs clause required the certificate be “signed by the Chargee or its solicitors”: at [62]. A certificate was issued by a company director, who certified that he was authorised to give the certificate on behalf of the Chargee. Young CJ in Eq observed at [68]: (emphasis added)

9. [296]

   It does not follow from Wily that a Dobbs certificate must always be signed in compliance with section 127 of the Corporations Act; the validity of a certificate turns on the requirements specified in the contract in question.

10. [297]

    Turning to the Dobbs clause here, clause 21.5 of the General Security Agreement provides:

11. [298]

    “Secured Party” is defined as Bass Finance. Beyond this, the General Security Agreement is silent as to precisely how the Secured Party may give the certificate or, in the event that the certificate is to be given by an officer or employee of the company, by whom the certificate may be given.

12. [299]

    The General Security Agreement incorporates defined terms from the Senior Facility Agreement: clause 1.2 to 1.4. Clause 19 of the General Security Agreement provides:

13. [300]

    However, clause 24 of the Senior Facility Agreement concerns GST; presumably the reference was intended to be to clause 25, which provides:

14. [301]

    “Authorised Representative” is defined as (clause 1.1, Senior Facility Agreement): (emphasis added)

15. [302]

    Whether a “certificate” is the same as a “notice” is, however, questionable. The Senior Facility Agreement and General Security Agreement envisaged a variety of notices being served by the Lender. Some notices advised an intention to exercise rights, whilst other notices advise that a right has been exercised. The former category included notice of an intention to inspect the Borrower’s assets and books (clauses 10.5 and 12.2, Senior Facility Agreement), to recover costs as a result of legislative changes (clause 16.1, Senior Facility Agreement), to assign the Lender’s rights or obligations (clause 21.1, Senior Facility Agreement) and, in the event of default, to collect the Grantor’s book debts or enter buildings comprising the Security Property (clauses 3.6 and 9.3, General Security Agreement). In the latter category, in the event of default the Lender was entitled to serve a notice declaring that the Secured Money was immediately due and payable (clause 15.2, Senior Facility Agreement) or requiring the Grantor to exercise rights in connection with Secured Property which was a Marketable Security (clause 3.7(b), General Security Agreement).

16. [303]

    A certificate does more than warn the recipient that a party intends to exercise its right or to advise that a right has been exercised. A certificate is a document of some formality intended to do more than simply communicate information but to assure, make certain or attest a fact with authority: J Hutchinson Pty Ltd v Transcend Plumbing and Gasfitting Pty Ltd [2023] VSC 39 at [77]-[79] (per Stynes J); Assafiri v The Shell Co of Australia Ltd [2010] NSWSC 1058 at [147] (per McDougall J). Here, by clause 21.5, the certificate amounts to prima facie evidence of the amount payable or other matter so certified.

17. [304]

    Clause 26.6 of the Senior Facility Agreement also provides: (emphasis added)

18. [305]

    Sub-clause (a) refers to “a notice or certificate from or demand by the Lender,” indicating that the contracting parties did not equate, but distinguished between, each type of communique. I conclude that the provisions concerning the execution of notices did not extend to the proper execution of a certificate. (I take the italicised portion of sub-clause (c) to have been intended to apply to sub-clause (a) and (b) as well. “Finance Document” was defined to include the Senior Facility Agreement, the General Security Agreement, the mortgages over the Liverpool and Cabramatta properties and the guarantee and indemnity given by Ms Ly and Mr Ho: clause 1.1; item 3, Schedule 1.)

19. [306]

    The position remains that all that the parties have stipulated in the contract as to the manner and form of the Dobbs certificate is that the Lender gives the certificate. One way to prove that the certificate came from the Lender would be for the company to execute the document by two directors: section 127(1), Corporations Act. That, of course, is not the only way.

20. [307]

    Whilst Mr Goh signed the “Secured Party’s Certificate” as a director of the Lender, he is one of three directors of the company. Whether Mr Goh’s fellow directors knew about or approved of the matters stated in the Dobbs certificate is unknown. The fact that the certificate is on the letterhead of another company is problematic. For the Grantor to conclude that the document was given by the Secured Party, presumptions would need to be made or inferences drawn, as to the authority of Mr Goh or the views of his fellow directors. Details would need to be overlooked, specifically, that the certificate is on the letterhead of another company. Where the subject of the certificate is a matter of significant import, the Grantor cannot be left in doubt as to whether the certificate is given by the Secured Party. I do not consider that the certificate conforms to what the parties stipulated in the General Security Agreement as to the manner and form of the document. Nor has the Lender adduced any other evidence to establish what it is owed. The Lender’s cross-claim fails.

BREACH OF CONTRACT

1. [308]

   Next it is convenient to deal with the plaintiffs’ claim for breach of contract vis a vis the Broker. The plaintiffs contend that it was an implied term of the contract that the Broker, through Mr Ostin, would provide finance broking services with all reasonable care and skill and would not procure completion of the loan referred to in the term sheet by duress, illegitimate commercial pressure or unconscionable conduct. The Broker was said to be in breach of the express and implied terms of the contract. Procuring settlement of the loan by engaging in unconscionable conduct or by exerting illegitimate pressure or duress was said to be the antithesis of reasonable care and skill. The Broker’s conduct was said to have caused the plaintiffs to execute the finance documents and to assume the financial obligations provided for in them. The Broker was therefore said to be liable for damages in the amount that would indemnify the plaintiffs for their liability to the Lender.

2. [309]

   Looking first at the express terms of the contract, clause 3 provides:

3. [310]

   An obligation to use best endeavours requires the obligor to do all they reasonably can do in the circumstances to achieve the contractual object, where ‘best endeavours’ are not second-best endeavours and the words require the obligor, within reasonable limits, to leave no stone unturned to achieve the object in view: Joseph Street Pty Ltd v Tan (2012) 38 VR 241 at [41] (per Warren CJ, Nettle JA and Cavanough AJA). In IBM United Kingdom v Rockware Glass Ltd (1980) FSR 335, Buckley LJ described the obligation as requiring a party to “take all the steps in their power which are capable of producing the desired result”: at 343; followed in Joseph Street at [41].

4. [311]

   The obligation to use “best endeavours” is more onerous than “reasonable endeavours”: Stepping Stones Child Care Centre (ACT) Pty Ltd v Early Learning Services Ltd [2013] ACTSC 173 at [274]-[283] (Refshauge J). However, the obligation is still informed by notions of reasonableness. In Transfield Pty Ltd v Arlo International Ltd [1980] HCA 15; (1980) 144 CLR 83, Mason J considered that a “best endeavours” clause prescribes a standard of endeavour which is measured by what is reasonable in the circumstances, having regard to the nature, capacity and qualifications of the obligor viewed in the light of the particular contract: at 101. As McDougall J put it in OzEcom Ltd v Hudson Investment Group [2007] NSWSC 719, the content of the obligation must be measured having regard to the contract as a whole and to the factual context in which the best endeavours fall to be exerted: at [231].

5. [312]

   Returning to the contract, the Broker was obliged to use its best endeavours to provide the “Services”, which meant (clause 1.1):

6. [313]

   The Broker’s contractual obligation was narrowly defined, both temporally and as to subject matter. Temporally, the Broker’s obligation to provide services began from the date of the agreement, being 30 November 2020, and onwards. Indeed, the Services had largely been performed before the date of the Agreement, where the Borrower’s application for the Loan had already been submitted and accepted by the Lender.

7. [314]

   As to subject matter, the Broker was obliged only to assist the Borrower to obtain the Loan from the Lender. The Broker was not obliged to continue its search for other, more suitable finance than that offered by the Lender. Nor was the Broker obliged to advise whether the Loan was suitable for the Borrower’s requirements, or whether a better loan could be found. Whilst caselaw in this area is scant, I note that it has been held that the role of a finance broker is to obtain or negotiate credit for their client; a finance broker is not obliged to determine whether their client can afford to make the repayments on the loan or give advice on their ability to make those repayments: Dewar v Ollier [2018] WASC 212 at [224] (Tottle J). Certainly, the contract in this case did not oblige the Broker to give such advice.

8. [315]

   Turning then to the implied terms for which the plaintiffs contend, the requirements for implication of terms are uncontroversial and conveniently set out in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 23; (1977) 180 CLR 266 at 282–3. Where a contract is for the provision of professional services, there will generally be an implied term requiring the exercise of care expected of a person in the industry possessing the relevant skill: J W Carter, Contract Law in Australia (7th edition) at 11-14. Thus, for example, “as a starting point, any contract between [an insurance] broker and the client carries with it a term implied by law that the broker will exercise reasonable care and skill”: PC Case Gear Pty Ltd v Instrat Insurance Brokers Pty Ltd (In Liq) [2020] FCA 137; (2020) 379 ALR 732 at [103] (per Anderson J).

9. [316]

   On one view, it is not necessary to imply such a term where the Broker has expressly agreed to use its “best endeavours” in providing the Services. However, I consider that the implied term addresses a different matter. The express term is directed to the required degree of effort to be expended by the Broker, that is, what the Broker is obliged to do. The implied term is directed to the care and skill to be deployed when making such efforts, that is, how the Broker is obliged to do it. A broker could go to great lengths to ensure that its client secured a loan but, if those efforts caused the broker to perform their role in a manner that was reckless or dishonest, then I consider that the client would not have been provided with the performance which it was entitled to expect. I conclude that the contract included an implied term of reasonable care and skill.

10. [317]

    The plaintiffs suggested a second implied term, being that the Broker would not procure completion of the loan by exerting duress or placing illegitimate commercial pressure on the plaintiffs or engage in unconscionable conduct. However, where the law provides remedies for duress and unconscionable conduct which do not depend on implied terms, there is no reason to imply a contractual term to achieve an equivalent result: Spira v Commonwealth Bank of Australia [2003] NSWCA 180; (2003) 57 NSWLR 544 at 552 (per Handley JA). It is unnecessary to imply such a term here.

11. [318]

    I consider that the Broker used its “best endeavours”, where the Broker went to great lengths to ensure that the Borrower obtained the Loan. On one view of it, Mr Ostin went ‘above and beyond’, inserting itself into the relationship between the Borrower and its solicitor, pressing the clients to terminate the solicitor’s retainer, and arranging for new solicitors in order to complete the Loan on the date nominated by the Lender. Further, when it became apparent, shortly before completion, that the plaintiffs did not have the required $700,000 to be paid on completion to cover the Lender and Broker’s fees, Mr Ostin negotiated the progressive reduction of this figure with Mr Goh down to $50,000, including by agreeing with the Lender to defer payment of both their fees until the following month. (I consider that the defendants’ agreement to this course was born of necessity, in order to ensure that the loan transaction completed on the designated date, rather than a mutual act of benevolence.) In truth, the plaintiffs’ complaint is that the Broker went too far and rode rough shod over their need for further assistance and explanation by others.

12. [319]

    The next question is whether the Broker performed its obligation to the quality or standard required by the contract. In order to ensure that the transaction completed on the designated date – being a date set, essentially, for the convenience of the Lender – the Broker strayed well beyond providing Services under the contract. The mortgage broker pressed its client to get rid of their solicitor, when he thought that the solicitor was not moving fast enough. At one point, the mortgage broker asked the solicitor to have the clients execute the documents without any advice, with such advice to be provided later: see [185]-[187]. The mortgage broker made the bold assessment that the solicitor’s written and oral advice that the clients needed an interpreter was a delaying tactic which could be ignored. The mortgage broker arranged new solicitors, undertook all preliminary communications with these solicitors and drafted communications from the client to terminate the retainer of their existing solicitor. Indeed, there is a significant contrast between the tasks which Mr Ostin did not consider formed part of a mortgage broker’s role – such as passing onto his clients adverse information about the proposed loan – when compared with the tasks which he was prepared to undertake, in order to ensure that the transaction completed on 22 December 2020.

13. [320]

    In doing so, I consider that the Broker’s performance of its contractual obligations departed from the required standard of reasonable care and skill, where the Broker has acted beyond the Services to be provided under the contract and in areas where he had no place to be. While Mr Ostin was right to say that the transaction involved an “execution risk”, the real risk was one created by Mr Ostin in pressing his clients to terminate the retainer of their solicitor and to receive advice, instead, from Mr Solari and Mr Simon in the absence of a Vietnamese interpreter, where the mortgage broker had been told by the clients’ solicitor (twice) that an interpreter was needed. I will return to questions of causation and loss at [412].

DURESS

1. [321]

   It is next convenient to consider the plaintiffs’ claim for relief in respect of duress. The doctrine of duress was explained by McHugh JA in Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 at 45:

2. [322]

   That is, the relevant inquiry is two-fold: determining whether pressure was applied to induce entry into the contract, and whether that pressure was illegitimate in nature. In Australia and New Zealand Banking Group Ltd v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149, the Court of Appeal considered that the vagueness inherent in the terms “economic duress” and “illegitimate pressure” can be avoided by treating the concept of “duress” as limited to threatened or actual unlawful conduct: at [66]. The pressure generated by lawful conduct can be dealt with by the principles of unconscionable conduct and undue influence. It is also necessary to determine whether the pressure which is complained of induced the party to enter into the contract; the pressure need not be the only reason for the party entering into the contract: Ford Motor Company of Australia Ltd v Arrowcrest Group Pty Ltd [2003] FCAFC 313; (2003) 134 FCR 522 at [149] (per Lander J).

3. [323]

   An initial question arises as to whether Karam remains the law in New South Wales. The plaintiffs relied on Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36, where McLure P (with whom Newnes JA agreed) was concerned with unlawful conduct, being an actual or threatened breach of contract. Her Honour also referred to the possibility of lawful pressure supporting a claim for duress: at [25]. Her Honour did not refer to Karam. Where the matter at hand involved unlawful conduct, the observation was obiter. In dissent, Murphy JA agreed that the matter at hand involved unlawful conduct and also agreed with Karam that duress was confined to unlawful conduct: at [159].

4. [324]

   Since Verve Energy, Karam was followed in Commercial Base Pty Ltd v Watson [2013] VSC 334 (per Almond J) and referred to without criticism in Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd [2013] NSWCA 317 at [507]; (2013) 85 NSWLR 479 at [45] (per Basten JA). However, the principles as stated by McLure P in Verve Energy were reproduced by Whelan JA in Doggett v Commonwealth Bank of Australia (2015) 47 VR 302, with whom McLeish JA and Garde AJA agreed on this issue: at [73]. However, Whelan JA concluded that the bank “did not threaten to take any illegal course of action” or, indeed, make any threat at all: at [81]. His Honour did not consider Karam or whether duress was confined to unlawful conduct.

5. [325]

   More importantly, in Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85, the majority of the High Court found it unnecessary to determine the correctness of Karam: at [29]. Whilst Nettle J expressed some reservations on this subject, his Honour noted that Karam has been followed without demur and “there would need to be detailed argument and deep consideration of the ramifications of departing from Karam before this Court would contemplate that course: at [70], [73]. Karam was recently followed in Re Dila Pty Ltd [2023] VSC 176 at [64] (per Barrett AsJ).

6. [326]

   Karam remains the law. As such, duress is limited to threatened or actual unlawful conduct, which I note includes actual or threatened breach of contract: Verve Energy at [26], citing Furphy v Nixon [1925] HCA 34; (1925) 37 CLR 161; Smith v William Charlick Ltd [1924] HCA 13; (1924) 34 CLR 38; TA Sundell & Sons Pty Ltd v Memm Yannoulatos (Overseas) Pty Ltd [1956] SR (NSW) 323.

7. [327]

   Here, the plaintiffs relied on the defendants’ threat not to advance the loan if Mr Hammoudi continued to act as the plaintiffs’ solicitor and if the finance documents were not executed on 22 December 2020. It was not suggested that any such threat was unlawful vis a vis the Lender. The letter of offer stated that it did not constitute a legally binding offer of finance but was subject to the approval of the Lender’s investment committee. The investment committee met and approved the loan on 22 December 2020. As such, any threats by the Lender were made at a time when it was not obliged to complete the transaction. There was no threatened or actual unlawful conduct by the Lender.

8. [328]

   To the extent that Mr Ostin’s actions amounted to an actual or threatened breach of the Broker’s contractual obligations, then the Broker may stand in a different position to the Lender. As already described, the Broker’s contractual obligation was to use its “best endeavours” and to perform its work with reasonable care and skill. Mr Ostin made it perfectly plain to the plaintiffs that, unless they engaged a new solicitor and executed the documents on 22 December 2020, there would be no loan. However, I do not consider that the Broker was threatening not to perform its obligations. Rather, the Broker asserted that, unless the plaintiffs took a particular course, then the Lender would not provide the loan. Whilst I have found that the Broker’s performance of its contractual obligations fell short of the standard required by the contract and in that sense, could be considered unlawful, it was not the relevant conduct that generated the pressure said to amount to duress. This claim fails.

UNCONSCIONABLE CONDUCT: GENERAL LAW

1. [329]

   The plaintiffs seek remedies in respect of unconscionable conduct, both under the general law and statute. So far as the general law is concerned, unconscionable conduct occurs where “a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from special disability or is placed in some special situation of disadvantage … the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position: Amadio at 461 (per Mason J); followed in Louth v Diprose (1992) 175 CLR 621 at 626 (per Brennan J); Thorne v Kennedy at [38] (per Kiefel CJ, Bell, Gageler, Keane and Edelmann JJ); Stubbings at [39] and [45] (per Kiefel CJ, Keane and Gleeson JJ).

2. [330]

   A party alleged to have engaged in unconscionable conduct must have actual or constructive knowledge of the special disadvantage, the latter arising from "knowledge of facts from which a person ought to have known that another person was suffering under the relevant special disadvantage": Nitopi v Nitopi [2023] NSWCA 162 (per Bell CJ at [6]). However, constructive notice is insufficient, being notice of facts that might lead on inquiry to the discovery of the existence of a special disadvantage: Nitopi v Nitopi [2022] NSWCA 162 (per Bell CJ at [9]; Ward P at [121]).

3. [331]

   Equity will not intervene to relieve a plaintiff from the consequences of their own foolishness but, rather, to prevent their victimisation: Louth v Diprose at 638 (Deane J). Nor will equity intervene to relieve a plaintiff from the consequences of improvident transactions, where a plaintiff voluntarily engages in risky business, absent conduct on the part of the defendant which makes it just to require the defendant to restore the plaintiff to their previous position: Kakavas at [20]. For example, in Wu v Ling [2016] NSWCA 322, Ms Wu was initially found to be under a special disadvantage, when obtaining high-interest loans from Mr Ling, by reason of her dealings with a Nigerian fraudster. On appeal, the Court concluded that Ms Wu was not at a special disadvantage vis a vis Mr Ling, where he warned her that she may be being taken advantage of by the fraudsters and where the high-interest rate was explicable by Ms Wu’s earlier defaults: see [89], [91], [109]-[116], [126] (per Bergin CJ in Eq, Leeming and Payne JJA. Leeming JA added at [16]:

Special disadvantage

1. [332]

   The first question is whether the plaintiffs suffered from a special disability or were placed in some situation of disadvantage. As recently observed in Stubbings (per Kiefel CJ, Keane and Gleeson JJ) at [40]: (emphasis added)

2. [333]

   The fact that the party is at a serious disadvantage in negotiating a commercial transaction is unlikely to suffice in the case of an experienced business person. For example, in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd [2002] FCAFC 4; (2002) 117 FCR 301, tenants negotiating for a new lease were in a difficult position as a result of “a combination of considered commercial judgement (the decision to borrow heavily in order to purchase the business) and Mr Ranaldi’s oversight in neglecting to exercise the option in good time”: at [64]. The Court held that these factors did not impair their ability to make a decision about the best course of action in the circumstances, “At least in the case of an experienced business person there must, in our opinion, be something more than commercial vulnerability (however extreme) to elevate disadvantage in to special disadvantage”: at [64].

3. [334]

   Lack of English proficiency will not mean that a party has a special disadvantage unless it seriously affects their ability to make a judgment as to their own best interests: Australia and New Zealand Banking Group Ltd v Couanis [2020] WASC 125 at [218] (per Archer J). There may, however, be situations in which the inability to speak or read English in the context of a transaction that involves executing documents, such as guarantees and the like may, in all the circumstances, constitute a situation of special disadvantage: Li v So [2019] VSC 515 at [60] (per Croft J).

4. [335]

   For example, in Luong v Du [2013] VSC 723, Emerton J observed, “the fact that Hong and Hue had a limited capacity to read and understand documents written in English does not mean they were incapable of making a judgment about their best interests”: at [123]. Whilst her Honour accepted that Mrs Hong had poor English and was not capable of reading the documents or understanding the documents without assistance, she and her husband were well capable of making further inquiries and consulting a solicitor when they felt the need: at [123]-[124]. Likewise, in Dinh v Commonwealth Bank of Australia [2021] WASCA 127, a party’s poor English did not constitute a special disadvantage in circumstances where they were experienced in financial matters, had been given a simple explanation of the terms of an agreement in the presence of person who could translate, and they actually understood the essential terms of the agreement: at [251] (per Buss P, Murphy and Mitchell JJA). In Rozenbilt v Vainer [2019] VSC 316, whilst the plaintiff had a limited grasp of the English language, he had numerous individuals available who would act as his interpreter, whether in meetings or in relation to the transaction and business documents; the documents had been explained to him by one of these persons; he was not disadvantaged to the point that he was unable to make a judgment as to his own best interests: at [107] (per Sifris J).

Special disadvantage: corporations

1. [336]

   The parties to the Senior Facility Agreement included the borrower, Hoho Property, and the third guarantor, Ho Ho Top Foods. It is possible for a corporation to suffer a “special disadvantage”, perhaps if a corporation is in a desperate financial position and acting without advice: Commercial Bank of Australia v Ridout Nominees [2000] WASC 37 at [55]-[61] (per Wheeler J). However, the fact that the plaintiff is a company tells against a finding of special disadvantage: Joelco Pty Ltd v Balanced Security Ltd [2009] QSC 236 at [22] (per de Jersey CJ); Weston v Publishing and Broadcasting Ltd (2011) 83 ACSR 206; [2011] NSWSC 422 at [702]-[706] (per Ward J). It will be difficult for large, well advised commercial entities to establish such a disadvantage: Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) (2008) 39 WAR 1; [2008] WASC 239 at 646-7, [4931] (per Owen J). In HECEC Australia Pty Ltd v Hydro-Electric Corporation [1999] FCA 822, Einfeld J suggested that the doctrine of unconscionability may extend to small corporations dealing with governments: at [43].

2. [337]

   One cannot simply impute a “special disadvantage” suffered by a director to the corporation, as to do so would involve lifting the corporate veil: Weston at 705. For example, in Suncorp-Metway Ltd v Nam Property Holdings Pty Ltd (2010) 16 BPR 30,859; [2010] NSWSC 1078, the mere fact that the director of a company spoke only Vietnamese and not English “would not have led to any reasonable contemplation that there was a disadvantage of a kind for the company”: at [77] (per Garling J).

3. [338]

   At first instance in Ridout, Wheeler J considered that the characteristics of a director may be imputed to the corporation where an individual was advised to adopt a corporate structure by advisers who knew of their special disabilities and then proceeded to take advantage of those disabilities. Further, it may be sufficiently evident to those dealing with the corporation that those that are the effective decision makers suffer from a special disability or disadvantage which makes them unable to make a real judgment as to the best interest of the corporation. In those circumstances, it may be inappropriate that a third party, having notice of such a disability, be permitted to insist on a transaction by reason only of the fact that it was made with a corporate entity: at [59]. However, it will be more difficult to impute the special disability of a director to the corporation where there were multiple directors, or where the director with a special disability was not the guiding mind of the corporation: at [62]. As her Honour also observed, those dealing with a corporation are entitled to assume that the directors are properly performing their statutory duties, including applying themselves with reasonable diligence to the company’s affairs: at [74].

Plaintiffs’ disadvantage

1. [339]

   Noting that “it is usually a combination of circumstances that establishes an entitlement to equitable relief” (Stubbings at [40]), the plaintiffs point to three circumstances giving rise to a special disadvantage: that Mr Ho and Ms Ly had a basic level of education; that they were inexperienced in property development; and that they lacked proficiency in written English.

2. [340]

   The first factor, being Ms Ly and Mr Ho's level of education, can be put to one side. Both Ms Ly and Mr Ho completed high school, in Sydney and Vietnam respectively. I do not think this can be said to be a “basic level of education.” In any case, there is no suggestion that the defendants had actual or constructive knowledge that Ms Ly and Mr Ho were disadvantaged in this regard, such that it could give rise to a claim of unconscionable conduct.

3. [341]

   Second, Ms Ly and Mr Ho were inexperienced in matters of finance and property development. I agree that Ms Ho and Mr Ly were inexperienced in these matters. This was their first foray into property development. Whilst the couple had executed documents in respect of the Ajax facility and La Trobe facility, the Lender’s documents were more numerous and complex, involving construction finance over the life of the project rather than, more simply, money to buy land.

4. [342]

   I do not consider that, in isolation, the plaintiffs’ inexperience was a special disadvantage such that they were unable to make a judgment as to their own best interests. Whilst the couple had no experience in property development and almost no experience in finance, they were not without experience in matters of business more generally. Having operated a business for some eight years from two retail shops together with a wholesale business, with a turnover of some $3.4 million in the 2020 financial year, as well as buying their own home and an investment property, the couple must have acquired some familiarity in matters of commerce. The fact that the couple ventured into property development at all, purchasing the Liverpool properties for $2.4 million, entering into a building contract for some $8 million and raising finance in these amounts, suggests a level of confidence in business matters.

5. [343]

   The couple were not without advisors in this new endeavour. They appeared to rely on the advice of the builder, although this may itself demonstrate some naivety where, presumably, it was in the builder’s interests for the project to go ahead. I note also that, on 4 December 2020, Ms Ly asked Mr Ostin to call her accountant, Mr Do, as he had some questions. Mr Ostin made a note regarding Mr Do, which I cannot decipher. Ms Ly said that Mr Do was not giving advice about the proposed loan. It is hard to see why else Mr Do would have wanted to speak to the Broker; presumably the accountant had some questions about the proposed transaction. Presumably also, Ms Ly and Mr Ho could have consulted with their accountant for advice in respect of the proposed loan if they saw the need. (Of course, that advice may have been more useful if the couple had been provided with the Lender’s assessment of the feasibility of the project, which Mr Ostin received but did not pass on).

6. [344]

   Notwithstanding his inexperience, Mr Ho did appreciate at least some of the problems with the proposed loan. Mr Ho did understand that the funds offered by the Lender was not enough money and they would have to look for additional funds, “Tony said that was not enough. … He promised to help me get additional loan.” The couple also understood that the term of the proposed loan was too short: they instructed Mr Hammoudi – notwithstanding the termination of his retainer – to seek an extension of the loan term. During the meeting with Mr Solari, Mr Ho repeated this request.

7. [345]

   According to Mr Simon’s file note, Mr Ho also raised concerns about a lack of pre-sales. Discussion took place as to what might happen in various scenarios: if the loan did not go ahead, or if the loan went ahead but there were insufficient sales or construction did not complete on schedule. The couple asked about their ability to sell their home or the butchery business during the term of the loan: see [251]. Accordingly, the couple's inexperience does not itself give rise to a special disadvantage capable of giving rise to equitable relief; they were able to identify the relevant considerations and turn their mind to what was in their best interests.

8. [346]

   As to the third component of special disadvantage, Ms Ly and Mr Ho are said to have had a limited command of English. I have referred to the documentary evidence, which corroborates the couple’s lack of ability to write in English, at [36]-[37].

9. [347]

   Turning to the witnesses’ evidence, Ms Ly said she can converse in English but described these conversations as relatively short about day-to-day subjects; Ms Ly requires people with whom she is conversing to repeat themselves many times to attain a basic understanding. Ms Ly finds it easier to speak with people in English face-to-face, as she can see their faces and facial expressions, which helps her to understand what they are saying. Ms Ly relies on her children to read, translate and assist her to understand important or official emails to do with business. Where the emails are too complicated for her children, Ms Ly sends them to others, who call her back and explain the emails to her in basic terms or speak to her children, who then translate the message to her. Ms Ly said she has great difficulty writing in English. She can write short text messages, although prefers to use emojis to express herself. Ms Ly does not write her own emails but asks her children, in particular, her son to write them for her. Ms Ly said “I don’t know how to type even.”

10. [348]

    Mr Ho can write in English and can also read English, “A little bit is okay.” The language of his phone is Vietnamese. He can read and write numbers as Vietnam uses the same numbering system as the English language. Mr Ho agreed that he is pretty good with numbers and understood the concept of percentages.

11. [349]

    Against this, Mr Ostin said that Ms Ly spoke very good English and the need for an interpreter never came into his mind. Mr Ostin said he believed that Ms Ly did not require an interpreter to communicate in, or to understand, verbal or written English. He spoke with her in person and on the telephone. She appeared to understand him. Ms Ly did not require him to repeat himself many times. Ms Ly read documents in his presence and asked questions and discussed the contents of the document in a manner which gave him the impression that she had a good grasp of written English. When Ms Ly later informed him that she did not need an interpreter, Mr Ostin did not doubt her response.

12. [350]

    Likewise, Mr Ostin believed that Mr Ho understood English well. Mr Ostin agreed Mr Ho’s English was more limited than his wife: although they both spoke, she spoke more than he did. When he met with both of them, he agreed that at various points in time Ms Ly spoke to her husband in Vietnamese.

13. [351]

    Mr Hammoudi’s evidence is important. It became obvious to Mr Hammoudi through his dealings with Ms Ly and Mr Ho that English was not their first language and they had difficulties with comprehension. Whilst acting for them on the purchase of the Liverpool properties, Mr Hammoudi did not receive any emails from the clients with instructions other than emails that they forwarded to him. Mr Hammoudi received instructions orally by telephone or in face to face conferences. Mr Hammoudi found that his clients preferred face to face conferences rather than teleconferences. While Ms Ly and Mr Ho always attended meetings together, Mr Hammoudi formed the view that Mr Ho was more at a disadvantage in his comprehension than Ms Ly. Mr Ho often had difficulties and, at times, would turn to his wife to seek clarity in their native tongue of Vietnamese. Mr Hammoudi said his clients asked him to repeat certain words and he did so until he was satisfied that they had understood him. Mr Hammoudi also used other tools to ensure his clients understood, like a whiteboard or drawing on pieces of paper. Mr Hammoudi did not accept that his clients understood “reasonably high level concepts” but agreed that they understood words in simple English.

14. [352]

    I have treated Mr Solari’s note – “Tested them both reading a couple of different clauses and they understood” – with some circumspection, where Mr Solari had only just met the couple and his ability to assess such matters is also unknown. Mr Simon’s ability to test this matter, over a telephone call, was even less.

15. [353]

    By the time of the events with which this case is concerned, Ms Ly was aged 49 and had lived in Australia for some 38 years. Mr Ho was aged 47 and had lived in Australia for 22 years. Both spoke English, although clearly Ms Ly spoke better English than her husband. At the time of these events, the couple’s son and daughter were aged 20 and 17 years respectively. The children were available to translate emails and correspondence for their parents, although I do not accept the Lender’s submissions that the children could be regarded as their parents’ “advisers.” Their children’s ability to translate such documents was presumably limited by their own levels of education and life experience, as well as their fluency in Vietnamese, about which there is no evidence.

16. [354]

    In the course of living and working in Australia over many years, the couple were clearly able to converse in English sufficiently to run a business, including two retail shops and a wholesale business. The business’ tax returns indicate that it was a substantial business. In addition, the couple were able to deal with an agent in the course of purchasing the Liverpool properties, the builder in the course of executing a building contract and endeavouring to progress the project, and with a wide range of suppliers over a six month period in an endeavour to secure the materials needed to undertake construction. In addition, the couple were able to communicate with various brokers and, at least initially, with Mr Morris and Mr Hammoudi without the need for an interpreter. Ms Ly and Mr Ho both spoke English well enough to effectively participate in such conversations.

17. [355]

    But the English ability which is said to have placed the couple at a special disadvantage was not their ability to engage in day-to-day conversation, or to read or write a straightforward email or text message, but to understand legal documents without the assistance of a Vietnamese interpreter. Whilst I consider Ms Ly under-stated her English-speaking ability, the absence of any emails written by her and the poor quality of her text messages support the conclusion that her ability to read and write in the English language was poor. Mr Ho’s abilities were worse. I place considerable weight on Mr Hammoudi’s evidence and observations, which led him to conclude that a Vietnamese interpreter was needed to ensure that Ms Ly and Mr Ho understood legal documents.

18. [356]

    I do not accept the defendants’ submissions that Mr Hammoudi used an interpreter when executing the La Trobe documents simply to protect his law firm, but rather as evidence of a genuine assessment by a conscientious solicitor that that was what his clients needed in order to understand the rights and obligations enshrined in the documents. I accept that Ms Ly and Mr Ho did, in fact, need a Vietnamese interpreter, where the documents to be executed were extensive and complex, as was recognised by the solicitors engaged to review and explain the material, being Mr Hammoudi followed by Mr Solari and Mr Simon: see [152], [202], [232]. Absent an interpreter, Ms Ly and Mr Ho might not properly understand an explanation provided only in the English language. Of course, the evidence may reveal that they did, in fact, understand a particular term of the agreement.

19. [357]

    The question remains whether Ms Ly and Mr Ho’s lack of English proficiency meant that, in the absence of a Vietnamese interpreter when the finance documents were explained to them, their ability to make a judgment as to their own best interests was seriously affected in all of the circumstances. Those circumstances included that the couple were inexperienced in matters of finance and property development. Those circumstances also included the fact that Mr Hammoudi did give Ms Ly and Mr Ho some general advice, in English, which I expect that they nonetheless understood without an interpreter as Mr Hammoudi’s evidence as to the terms of those conversations was simply stated and Ms Ly appears to have engaged with the views expressed by her replies. Specifically, Mr Hammoudi challenged Mr Ostin’s statement that failure to settle the loan on 22 December 2020 meant that the loan could not be completed at all. Contrary to Mr Ostin’s advice, Mr Hammoudi said the couple did have options, including seeking to extend the Ajax loan or to find another lender. Mr Hammoudi warned the couple that the pressure being applied to them was not appropriate and they should be careful. Mr Solari and Mr Simon also said that the couple did not have to sign anything.

20. [358]

    In addition, the couple did receive legal advice, albeit in English, from Mr Solari and Mr Simon. Without being critical of Mr Solari or Mr Simon, their file notes are not particularly informative as to the advice which they gave on particular terms or clauses of the documents. Mr Solari noted that he “particularly explained highlighted provisions.” Whilst I have the highlighted provisions to hand, I do not know what the particular explanation was, that is, whether it was put simply enough that one would expect the couple to have understood the explanation. I have little to go on, but note that the emails which Mr Solari and Mr Simon each sent to the couple before their meeting made no allowance for any lack of English ability on the readers’ part. If their verbal explanation was given in similar terms, it is likely that the couple did not understand some of the explanation given, where the documents in question were complex. Beyond this, I am unable to say with more precision which clauses the couple understood and which they did not, where I am reluctant to place much weight on the couples’ evidence in this regard. Nor do I attach great weight to Mr Solari’s file note – “Clients understood other clauses … Understood real property security with mortgages” – beyond accepting that the clients expressed that they understood, and Mr Solari self-evidently had no reason to think otherwise.

21. [359]

    A further circumstance was the insistence that the plaintiffs execute the documents by the artificial deadline of 22 December 2020, coupled with the clear message that failure to do so would mean that this, and any, opportunity to refinance the Ajax loan would be lost. In this context, some jurists have grouped a plaintiff’s attributes into ‘constitutional’ and ‘situational’ disadvantages, where ‘constitutional’ disadvantages arise from something peculiar to the plaintiff, such as age or illness, and ‘situational’ disadvantages are derived from the particular features of the relationship between the actors, such as emotional dependence of one on the other: ACCC v Samton at 318; Rozenbilt v Vainer at [106] (per Sifris J); Zhou v Kousal [2012] VSC 187; (2012) 35 VR 419 at 431 (per Vickery J). The categorisation of special disadvantages in this way does not supplant the established principles of unconscionable conduct: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51 at 63 (per Gleeson CJ).

22. [360]

    It may well be that someone inexperienced in property development, or who lacks a level of English to understand legal advice, may be able to work their way through new concepts and to understand where their interests lie, if given the time to do so. It may be a different proposition where that person is required to make a decision urgently and against the backdrop of suggested adverse consequences, should they fail to accede to the Lender's demands.

23. [361]

    Overall, I consider that the combination of circumstances – inexperience in finance and property development together with inadequate English ability, an artificial deadline and suggested adverse implications for failing to agree – seriously affected the plaintiffs’ ability to make a judgment as to their own interests. Ms Ly and Mr Ho possessed the necessary vulnerability, the exploitation of which may amount to unconscionable conduct.

24. [362]

    As to whether the corporate plaintiffs suffered from the same special disadvantage, Mr Ho was the sole director of Hoho Property and, through Ho Ho Top Property, the sole shareholder. Mr Ho was the guiding mind of the company. By reason of information collated in the application form and during the course of the transaction, both defendants were aware of both Mr Ho’s role. To the extent that Mr Ho suffered a special disability, of which the defendants had actual or constructive knowledge, then I consider that any special disability which he suffered can be imputed to the corporation. (The matter need not be considered in relation to Ho Ho Top Foods, where a liquidator was appointed to the company shortly before the commencement of the hearing, such that the proceedings brought by this company were stayed.)

Defendants' knowledge

1. [363]

   Whether the defendants had actual or constructive knowledge of the plaintiffs' special disadvantage is itself problematic. The defendants certainly knew of the plaintiffs' inexperience in property development. Mr Ostin agreed that he knew almost from the first moment that he met Ms Ly and Mr Ho that they had never done a property development before, nor entered into a construction loan facility. It was obvious to him that the couple relied very heavily on the builder’s involvement in the project. Their inexperience was made plain to the Lender in the submission brief. The Lender initially deferred its meeting with the borrower as it was undecided whether to make an offer due to the developer’s lack of experience. Mr Goh quizzed Mr Ho on why he had decided to go into property development when they met on site.

2. [364]

   The defendants were aware of the time pressure, having created it. The defendants were also aware of the threatened adverse consequences if the loan documents were not executed on this day, where Mr Goh made the threat and Mr Ostin repeated it.

3. [365]

   However, whether the defendants had the requisite degree of knowledge as to the plaintiffs' lack of proficiency in English is questionable, where the defendants were receiving conflicting information on this score. There is no doubt that, by Mr Hammoudi’s email sent after midnight on Sunday, 20 December 2020, both the Lender and the Broker were informed that the borrower’s solicitor considered it “likely that the clients will require an Interpreter”. Mr Hammoudi repeated the need for an interpreter to Mr Ostin in their telephone call later that morning. I have no doubt that Mr Ostin passed Mr Hammoudi’s comments onto Mr Goh, where Mr Ostin and Mr Goh were in regular telephone contact and Mr Ostin freely shared his views on Mr Hammoudi with the Lender.

4. [366]

   But that was not the only information to hand. Ms Ly told Mr Ostin that the Ajax documents were executed without the assistance of an interpreter, but not that Mr Hammoudi had arranged an interpreter when the clients signed the La Trobe documents. Ms Ly sent a text message, “Why I need interpreter they don’t need interpreter” which, fairly read, indicated that Ms Ly did not consider that she needed an interpreter. According to Mr Solari and Mr Simon’s file notes, Ms Ly and Mr Ho both confirmed to each solicitor that an interpreter was not required.

5. [367]

   Mr Ostin and Mr Goh had also met Ms Ly and Mr Ho. While Mr Goh’s assessment of the couple’s ability to understand English is not known, Mr Ostin said the need for an interpreter never came into his mind. I find this a little difficult to believe, where Mr Ostin was in receipt of the emails (generally blank) and text messages (replete with grammatical and spelling errors) referred to at [36]-[37], which indicated that the author had poor proficiency in written English. The fact that Mr Ostin took it upon himself to retain new solicitors and provide those solicitors with their instructions indicates that Mr Ostin perceived that his clients were unable to do so, or at least with any degree of efficiency: see [202]. The fact that it fell to Mr Ostin to draft the email terminating Mr Hammoudi’s retainer likely indicated to him that Ms Ly was not capable of preparing such a communique herself.

6. [368]

   However, given Ms Ly and Mr Ho’s instructions that they did not need an interpreter, I do not think it can be said that the defendants had actual knowledge of this disadvantage. As to whether they had constructive knowledge, both defendants were aware of the possibility that such a special disadvantage may exist by reason of Mr Hammoudi’s email and telephone call with Mr Ostin, no doubt faithfully reported to Mr Goh. That possibility was enhanced, in the case of the Broker, by the poor quality of written communications received from Ms Ly and the almost complete absence of written communication from Mr Ho. That possibility was tempered by clear instructions by Ms Ly and Mr Ho to the contrary. But awareness of a possibility is not enough, where the defendants’ knowledge must rise to the level of constructive knowledge, as defined by Bell CJ in Nitopi.

7. [369]

   Given Mr Goh’s limited dealings with Ms Ly and Mr Ho, I do not consider that the Lender had constructive knowledge. Mr Goh met the couple once and did not correspond with them. Mr Ostin’s dealings with the couple were more extensive. Notwithstanding Ms Ly’s instructions to the contrary – itself expressed in poor English and at the end of a long day in which she had been rung constantly by Mr Ostin – I consider that the Broker had enough knowledge of facts from which a reasonable person would have concluded that Mr Ho and Ms Ly needed an interpreter. Specifically, he had been told in writing and orally by their solicitor, who had acted for them for some time, that they did. I repeat what I have said at [367]. It is difficult to see how Ms Ly's self-assessment of their proficiency in English would have displaced, in the mind of a reasonable person, the conclusion that, absent an interpreter, they would not understand the documents they were signing. Where the Broker had actual knowledge of the couple’s inexperience in property development, the time pressure and the threatened adverse consequences if the documents were not executed on the specified day, I conclude that the Broker had the requisite knowledge of the couple’s special disadvantage.

Unconscientious use of superior position

1. [370]

   Whether the Broker made unconscientious use of its superior position is the next matter to be considered. It has been said that unconscionability requires a high level of moral obloquy, although I note Gageler J’s strong criticism of this terminology in ASIC v Kobelt [2019] HCA 18; (2019) 267 CLR 1 as arcane and potentially misleading, to the extent that it might be taken to suggest a requirement for conscious wrongdoing: at [91]-[92].

2. [371]

   The Broker was extremely keen to settle the transaction on 22 December 2020 and receive its Services Fee of some $200,000. Whilst the Broker was entitled, under its contract, to be paid the Services Fee even if the loan did not complete, for practical purposes, the best chance of being paid in a timely manner, or at all, was on drawdown of the loan. I do note that, shortly before the plaintiffs executed the finance documents on 22 December 2020, the Broker agreed with the Lender not to get their fees on settlement but to be paid the following month, when it became apparent that the plaintiffs had only $50,000 to contribute to settlement: see [234]-[235]. However, as earlier mentioned, I do not regard this as an act of mutual benevolence but pragmatic acceptance of a credit risk for their fees, in order to complete the drawdown on the date which the Lender had insisted upon for some time.

3. [372]

   On the limited evidence, the Services Fee appears to have been high. The Broker’s rate was higher than that charged by the brokers in respect of the Ajax loan or proposed La Trobe loan. Perhaps obtaining a construction loan was more difficult and attracted a premium. The total fee was higher than the Lender was prepared to countenance as a deduction on drawdown, such that a portion of the fee was to be paid by the plaintiffs directly: see [95]. The fee does not appear to have been negotiated. For one month’s work by a person without any professional qualifications, it was objectively offensive. Regrettably, I suspect this does not mean that such fees are uncommon in this industry.

4. [373]

   Mr Ostin was clearly more interested in getting the Services Fee than protecting his clients’ interests, as evidenced by his failure to pass on information to his clients which suggested that there were problems with the proposed loan: [105], [139], [148]-[149]. Mr Ostin saw Mr Hammoudi as an obstacle to settling the loan on 22 December 2020, where Mr Hammoudi said he needed more time to advise his clients, including with the assistance of an interpreter. Mr Ostin’s conclusion that Mr Hammoudi was pointing to the need for an interpreter as a delaying tactic was bold. Nor is it at all clear why taking the time needed to arrange an interpreter would ‘derail’ the transaction. More likely, it was an unwanted retardant on Mr Ostin’s wish to “deliver this deal” and bank the fee. Further, where Hoho Property was not obliged to repay the Ajax loan until 28 January 2021, and early repayment did not entitle the borrower to any rebate on interest accruing before that date, refinancing the facility in December 2020 might have had some advantages, but economy was not one of them.

5. [374]

   Mr Ostin clearly wanted to get rid of Mr Hammoudi and made that clear to Mr Goh and Ms Ly. Mr Ostin’s assurance to Ms Ly that she did not need an interpreter, in the face of an email from, and telephone call with, her solicitor advising that she did, was another bold assessment. I repeat what I have said at [318]-[320].

6. [375]

   Overall, I view Mr Ostin’s interactions with Ms Ly as predatory, where he applied overwhelming force through constant telephone calls to Ms Ly at all hours of the day and night, where he knew Ms Ly to be inexperienced and anxious, such that threats that the loan would not go ahead, statements that she had no other options, and demands that she fire her solicitor, could be expected to have a huge impact.

7. [376]

   Does the fact the Broker arranged new solicitors change the overall quality of the conduct to something less than unethical or offensive? I think not, where Mr Ostin had constructive knowledge that legal advice given in English was unlikely to perform its intended function of giving Ms Ly and Mr Ho the information they needed to make a decision in their best interests, having regard to the other factors which came into play – of which he also had knowledge – being their lack of experience, being asked to make a decision urgently and being told that, absent this loan, there were no other options.

Remedy

1. [377]

   The plaintiffs seek equitable relief rather than common law damages. Specifically, the plaintiffs seek declaratory relief that the finance documents executed on 22 December 2020 are void and of no effect. As the Lender did not engage in unconscionable conduct, the plaintiffs effectively seek that documents be set aside as a consequence of the unconscionable conduct of a third party to the contractual arrangements, being the Broker.

2. [378]

   In the context of duress, it has been said that duress by a person unconnected with a party to the contract is no cause for impeaching the contractual bargain: Smith v William Charlick Ltd [1924] HCA 13; (1924) 34 CLR 38 at 56 (per Isaacs J). Where a contract is sought to be avoided on the grounds of duress exercised by some third person, the party seeking to avoid the contract must prove that the other party had actual or constructive notice of the duress or procured the contract through the agency of the third party who exercised the duress: Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [51]-[54] (per McColl JA), citing Chitty on Contracts (31st ed, 2012, Vol 1) at 7-053. I note the learned authors of Chitty on Contracts apply the same principle to undue influence and misrepresentation by a third party: (33rd ed, 2018, Vol 1) at 7-025, 8-053, 8-110. I consider that the same principles apply where a party seeks to invalid contracts as a consequence of the unconscionable conduct of a third party to those contracts.

3. [379]

   This is no evidence that the Lender procured any unconscionable conduct by the Broker or had actual or constructive notice of any unconscionable conduct. Rather, Mr Ostin clearly wanted to get rid of Mr Hammoudi and favoured changing solicitors in order to complete the deal. Where the mortgage broker was the representative of the borrower, Mr Goh had no particular reason to think that Mr Ostin was not accurately conveying the borrower’s position. Importantly, whatever misgivings Ms Ly and Mr Ho may have had in this regard, there is no evidence that Mr Goh was aware of this. The Lender was aware that Mr Hammoudi’s retainer had been terminated but there is no evidence that the Lender was aware of the various telephone calls and emails that passed between the borrower, Mr Hammoudi and Mr Ostin in this regard. I do not consider that, in all of these circumstances, the Lender had actual or constructive notice of any unconscionable conduct by the Broker such that the Court would invalid the finance documents. This claim for relief fails.

4. [380]

   The plaintiffs also sought a declaration that the Broker was not entitled to any fees for procuring and arranging the loan from the Lender on the basis of the Broker's unconscionable conduct, where it was said to be unjust and against good conscience for the Broker to benefit from such conduct. However, the Broker became entitled to the Services Fee on execution of its contract with the plaintiffs on 30 November 2020, whether the Loan was completed or not: at [111]. The plaintiffs sought no relief in respect of this contract. The unconscionable conduct occurred some weeks after the Broker became entitled to the Services Fee. Whilst I was not taken to any authority, I consider it would be wrong in principle to grant declaratory relief disentitling the Broker from fees accrued prior to and independently of the unconscionable conduct. Whilst the Courts have a very wide jurisdiction to grant declaratory relief, I do not consider that it is so broad: Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 at 435; Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 at 581-582. This claim for relief also fails.

STATUTORY UNCONSCIONABLE CONDUCT

1. [381]

   Section 20 of the ACL does not apply to contracts for the supply of financial services: section 131A of the Competition and Consumer Act 2010 (Cth). Instead, unconscionable conduct related to the supply of financial services is regulated by the ASIC Act.

2. [382]

   Section 12CA of the ASIC Act prohibits unconscionable conduct, within the meaning of the unwritten law, in relation to the supply of financial services. My conclusions in respect of unconscionable conduct under the general law in respect of the Lender and the Broker apply to this claim, with the consequence that the claim against the Lender fails, while the claim against the Broker is made out.

3. [383]

   Section 12CB(1)(a) of the ASIC Act provides:

4. [384]

   Section 12CB(1) is not limited by the principles of unconscionable conduct under the general law: section 12CB(4)(a). Rather, the section “operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable in connection with the supply or possible supply of financial services”: ASIC v Kobelt (2019) 267 CLR 1 at [87] (per Gageler J), [154] (per Nettle and Gordon JJ). As Kiefel CJ and Bell J put it, in Kobelt, at [14]:

5. [385]

   Unconscionability is a concept that is applied with considerable restraint, going beyond what is ‘fair’ or ‘just’ to circumstances which are highly unethical: Attorney General (NSW) v World Best Holdings Ltd [2005] NSWCA 261; (2005) 63 NSWLR 557 at [120]-[121] (per Spigelman CJ). Unconscionability is not the mere breach of accepted standards of commercial behaviour but is characterised by a substantial departure from such behaviour, which is so plainly or obviously contrary to the behaviour to be expected of those acting in good commercial conscience that it is offensive: Australian Competition and Consumer Commission v Geowash Pty Ltd (subject to a deed of company arrangement) (No 3) [2019] FCA 72; (2019) 360 ALR 441 at 662 (per Colvin J).

6. [386]

   Section 12CC sets out a non-exhaustive list of factors to which the Court may have regard when determining whether a party has engaged in unconscionable conduct. Section 12CC has been said to provide “express guidance as to the norms and values that are relevant to inform the meaning of unconscionability [in section 12CB] and its practical application”: Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 236 FCR 199 at [279] (per Allsop CJ). The section 12CC factors assist in “setting a framework for the values that lie behind the notion of conscience identified in s 12CB”: Kobelt at [154] (per Nettle and Gordon JJ).

7. [387]

   Having concluded that the Broker engaged in unconscionable conduct contrary to section 12CA, and given the already considerable length of this judgment, I will not separately consider the Broker’s liability under section 12CB. Considering the claim against the Lender, the following matters referred to in section 12CC(1) appear relevant:

8. [388]

   Sections 12CB and 12CC do not expressly refer to knowledge of the service recipient’s attributes or circumstances. In Re Takata Air Bags Class Action – Common Questions [2018] NSWSC 1868, Sackar J noted that different knowledge requirements may apply to the general law and statutory provisions: at [20]. In Owerhall v Bolton & Swan Pty Ltd [2016] VSC 91, Derham AsJ noted that the statutory formulation of unconscionable conduct in the ACL was “sufficiently flexible to provide relief for a party in the absence of actual or constructive knowledge of that party’s special disadvantage”: at [77]. Thus, while equitable relief for unconscionable conduct will depend on whether the defendant had actual or constructive knowledge of any special disability, the statutory claim may not be so limited. Presumably, however, if the supplier knew or ought to have known that the service recipient was vulnerable, then this may affect whether the supplier used “unfair tactics” (section 12CC(1)(d)) or “acted in good faith” (section 12CC(1)(l)).

9. [389]

   So far as the Lender is concerned, there was nothing unconscionable about offering a loan which did not meet the borrower’s requirements, was expensive or imprudent. Nor was it unconscionable for the Lender to press for completion of the transaction on a particular date. So far as the borrower’s assets were substantially inflated shortly before completion, I accept the Lender’s submission that there was no suggestion that the Lender participated in any fabrication of Vietnamese assets.

10. [390]

    When put on notice by Mr Hammoudi that there was insufficient time to properly advise the borrower in respect of the proposed transaction, in part, given the late provision of the documents by the Lender’s solicitors and, in part, because it was “likely that the clients will require an Interpreter,” this information was diluted by the Broker and contradicted by Ms Ly. Specifically, Mr Goh was informed by Mr Ostin that “I have just spoken with the client, Cathy and … I can confirm” that the borrower did not have an interpreter when signing the Ajax documents. Mr Ostin advised the Lender that he regarded the suggestion that an interpreter was needed as a delaying tactic by Mr Hammoudi.

11. [391]

    That is, the Lender was receiving conflicting information from the borrower’s solicitor and their mortgage broker. The Lender clearly chose to accept the views expressed by the Broker. Acting on this information, Mr Goh warned Mr Hammoudi that if, he delayed in reviewing the document, then his clients faced the risk “of not settling the transaction at all.” That is, the Lender applied pressure to the Borrower’s solicitor to complete his review of the documents, and advise his clients, by the stipulated deadline.

12. [392]

    Mr Goh’s email was threatening: if Mr Hammoudi did not meet the timetable set by the Lender, then the plaintiffs may lose the loan altogether. Mr Goh’s email was also an exaggeration. Mr Ostin did not accept that Mr Goh told him that if there were any further delays, Bass Finance would not lend, “I wouldn’t say lend. There would be delays. … it wouldn’t have settled til probably in February, or very late January, or February. … because everyone’s on holidays.” Mr Goh’s email was also audacious, where the suggestion that the settlement date of 22 December 2020 was required by the borrowers was inaccurate. The pressure to settle on this date emanated from the Lender, as earlier described.

13. [393]

    Mr Hammoudi’s clear response to the Lender was to suggest that inappropriate pressure was being brought to bear on his clients, which may amount to duress: see [189]. The precise reason why duress was suggested by Mr Hammoudi was that he then perceived that his clients were being asked to sign the documents without legal advice. As I have found, that suggestion emanated from the Broker, not the Lender, which may explain Mr Goh’s fiery replies, pressing Mr Hammoudi to “Just do your job”, failing which, the transaction may not proceed to completion: see [191].

14. [394]

    As earlier mentioned, Mr Ostin wanted to get rid of Mr Hammoudi and shared his view with Mr Goh. Mr Ostin favoured changing solicitors in order to complete the deal, being a suggestion embraced by the Lender. As to section 12CC(1)(b) – whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary – the evidence is not entirely satisfactory, where Mr Goh did not give evidence. The Court has the evidence of Ms Ly and Mr Ostin: Mr Goh said the Lender would not lend if the plaintiffs continued to delay or to use Mr Hammoudi: see [197]. This is confirmed by the email terminating Mr Hammoudi’s retainer, as drafted by Mr Ostin: “I conversed with the Bass Finance lenders telling them that I desire circlebridgelegal to handle my documents but they do not approve to provide the funds for us when you are my advisor as there is a possible execution risk which they are not willing to take.”

15. [395]

    That is, the Lender was not prepared to provide financial services if the plaintiffs continued to retain Mr Hammoudi. This became a condition of providing the loan. This was not reasonably necessary for the protection of the legitimate interests of the Lender. I do not accept the defendants’ contention that Mr Goh took this step because he understood that Mr Hammoudi would only supervise execution of the documents if his clients gave him a waiver. Rather, Mr Goh (wrongly) concluded that Mr Hammoudi was engaged in delaying tactics by insisting on an interpreter. The Lender insisted on a new solicitor in order to settle the transaction on its chosen date. This was not reasonably necessary for the protection of the Lender’s legitimate interests but rather a matter of convenience and put the plaintiffs in a vulnerable position, which must have been obvious to the Lender, or would have been obvious to a reasonable person in the Lender’s position. The importance of this factor is reduced, but not eliminated, by the provision of advice by Mr Solari and Mr Simon.

16. [396]

    Section 12CC(1)(c) is also significant: whether the plaintiffs were able to understand the documents relating to the supply of the financial services. I am satisfied that the plaintiffs were not able to understand the documents without a Vietnamese interpreter.

17. [397]

    Section 12CC(1)(d) is potentially relevant, however, the focus here is on the conduct of the Lender, not the Broker. Beyond the matters already considered in respect of sub-section 12CC(1)(b), no further conduct comes to mind.

18. [398]

    Section 12CC(1)(e) is potentially relevant, albeit there is little evidence of the charges which another lender may have proposed for such a loan. Ajax charged interest of 9.9% per annum or, on default, 19.9% per annum. In the event that the borrowers repaid the loan early, a minimum of 12 months’ interest still had to be paid. The Broker fees were $23,760. In addition, an administration fee of $35,640 and an establishment fee of $12,285.35 would apply. By my calculations, these fees were 1.05%, 1.6% and 0.5% of the loan sum respectively. Although the La Trobe loan did not proceed, La Trobe proposed to charge an application fee of $13,920 on the loan for $696,000. Prime Capital proposed to charge interest of 9.95% per annum and an establishment fee of 2.2% of the facility limit.

19. [399]

    What emerges from this limited material is that the interest rates proposed by the Lender were competitive but the fees were high. The “Intensive Loan Management Fee” of 5% of the Facility Limit, being $474,825 per annum, was large and unusual, although only paid in the event of default or potential default. Further, the “Minimum Earn Amount” of $860,620, less any interest and fees already paid, was also potentially extremely onerous. Where, as happened here, the plaintiffs only drew down an amount sufficient to repay Ajax but made no further drawdowns, the cost of finance proved exorbitant. I note, however, that Ajax also charged a minimum of 12 months interest, even if the loan was repaid early.

20. [400]

    Section 12CC(1)(j)(iii) and (iv) are also relevant, and in the Lender’s favour, where the Lender appears to have tried to work with the plaintiffs sometime after the initial drawdown to progress the project, including by considering providing further finance. The service recipient, on the other hand, did not comply with the terms and conditions of the contract and, indeed, does not appear to have done anything after completion.

21. [401]

    As to sub-section 12CC(1)(a) and (j)(i), the Lender was clearly in a stronger bargaining position than the plaintiffs. Whilst the Lender did agree, shortly before settlement, to a reduced payment by the plaintiffs – from $700,000 to $50,000 – and to defer payment of its fees until the following month, this appears to have been born of necessity in order to ensure that the loan transaction completed on the designated date rather than by reason of any bargaining power of the plaintiffs.

22. [402]

    A court should only take the serious step of denouncing conduct as unconscionable when “satisfied that the conduct is ‘offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society’”: Stubbings at [58] (per Gordon J), citing ASIC v Kobelt at 40 [92] (per Gageler J). Having “one’s conduct impugned as against or as offending conscience” is a “serious matter”: Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd and Another [2021] FCAFC 40; (2021) 285 FCR 133 at 155 [91].

23. [403]

    Having considered each of the matters referred to in section 12CC(1), the only significant factor which stands out is the Lender’s insistence that the plaintiffs get rid of their solicitor, who advised that they needed an interpreter, and complete the transaction on the date set by the Lender after receiving advice from new solicitors. Whilst I consider that the Lender’s conduct was impulsive and unprofessional, the Lender was ‘saved’ by Ms Ly. Where the service recipient had provided information which suggested that their solicitor’s concern that they needed an interpreter was mis-placed, the Lender’s intemperate insistence that they find a new lawyer did not contravene the section.

Remedy

1. [404]

   Statutory unconscionable conduct has only been established against the Broker. Two remedies were sought: first, to disentitle the Broker from its Services Fee on the basis that the Broker aided and abetted, or was knowingly involved in, the Lender’s contravention of section 12CB of the ASIC Act; second, compensation under section 12GF of the ASIC Act. Where the Lender did not contravene section 12CB, it is not necessary to consider the first matter.

2. [405]

   The power to award damages under section 12GF depends on a finding that the plaintiff suffered loss or damage “by” reason of the unconscionable conduct. In cases considering analogous statutory provisions related to misleading and deceptive conduct, the Court has held that the provision should be understood as taking up the common law practical or common-sense concept of causation: Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 525 (per Mason CJ, Dawson, Gaudron and McHugh JJ). As long as the conduct materially contributed to the damage, a causal connection will ordinarily exist even though the conduct, without more, would not have brought about the damage: Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 at [106] (per McHugh J). That is, it is sufficient for the conduct to be a cause of the loss rather than the sole cause of the loss: at [14] (per Gleeson CJ). As the Chief Justice there observed, in the context of the misleading and deceptive conduct provision, “It will commonly be the case that a person who is induced by a misleading or deceptive representation to undertake a course of action will have acted carelessly, or will have been otherwise at fault, in responding to the inducement. The purpose of the legislation is not restricted to the protection of the careful or the astute. Negligence on the part of the victim … is not a bar to an action … unless the conduct of the victim is such as to destroy the causal connection between contravention and loss or damage”: at [13].

3. [406]

   The Lender has failed to prove that it is owed any amount under the Senior Facility Agreement. No relevant loss or damage has arisen as a consequence of execution of the finance documents. This is something of a happy accident for the plaintiffs. Had the Lender’s cross-claim proceeded otherwise, then the issues concerning causation and loss traversed at [414]-[417] would pertain.

CONTRACTS REVIEW ACT

1. [407]

   The terms of the finance documents were said to be unjust within the meaning of section 7 of the Contracts Review Act such that the Court would not enforce them. There was said to be a material inequality of bargaining power between the plaintiffs and the Lender, where the terms of the finance documents were unable to be negotiated, in particular, as to the duration of the loan. The Senior Facility Agreement was said to impose conditions that were harsh and oppressive, including as to interest, fees and the minimum earn amount. These terms were said to amount to a penalty. The plaintiffs were said to be unable to protect their interests in the circumstances.

2. [408]

   As a corporation, Hoho Property is not entitled to relief under the Contracts Review Act: section 6(1).

3. [409]

   Ms Ly and Mr Ho may not be granted relief in relation to a contract “so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person”: section 6(2). This exception has been construed narrowly: N C Seddon and R A Bigwood, Cheshire & Fifoot Law of Contract (11th edition) at 15.27. Where the business is carried out by a company, it is the company and not its directors who carry out the business for the purpose of section 6(2): Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145 at 149 (McLelland J); Quikfund (Australia) Pty Ltd v Airmark Consolidators Pty Ltd [2014] FCAFC 70; (2014) 222 FCR 13 at [134]-[137] (per Allsop CJ, White and Wigney JJ). The presence of a ‘family element’ in the transaction, such as a mortgage given by family members to secure a corporation’s obligation, may bring the contract within the scope of the Act: see, for example, Australian Guarantee Corp Ltd v McClelland (1993) ATPR 41-254.

4. [410]

   In this case, notwithstanding that the finance documents were entered into for the purpose of Hoho Property’s property development business, the fact that Ms Ly – who was not a director or shareholder of that entity – and Mr Ho provided a guarantee as individuals and mortgage over their family home may bring the contract within the purview of the Contract Review Act.

5. [411]

   The only finance documents to which Ms Ly and Mr Ho were a party was the Deed of Guarantee and Indemnity and the mortgage granted over their Cabramatta home. However, these documents, as executed by the plaintiffs, are not in evidence. I have draft documents provided to Mr Hammoudi on 16 December 2020 for review, and a highlighted copy of the memorandum of common provisions produced by Mr Solari on subpoena. I am unable to divine whether these documents were amended between 16 December 2020 and execution on 22 December 2020. I am not prepared in these circumstances to consider each of the matters listed in sub-section 9(2) and (5) of the Contracts Review Act, beyond noting that my observations in respect of similar considerations listed in section 12CC(1) of the ASIC Act remain apposite: see [389]-[401]. I also note that whether a contract is “unjust” is a lower bar than unconscionability. Beyond this, I cannot say without the contracts said to be unjust. [See now Hoho Property Pty Ltd v Bass Finance No 37 Pty Ltd (No 2) [2023] NSWSC 493.]

CONTRACTUAL DAMAGES

1. [412]

   The general measure of damages for breach of contract is the amount, so far as money can provide, necessary to put the plaintiff in the position they would have been if the contract had been performed: Koufos v C Czarnikow Ltd (“The Heron II”) [1969] 1 AC 350; Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454; Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81; (1986) 161 CLR 653. Any loss alleged to be suffered must have been caused by the breach of contract: Monarch SS Co Ltd v A/B Karlshamns Oljefabriker [1949] AC 196; Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd [1968] HCA 64; (1968) 120 CLR 516; Bennett v Minister for Community Welfare [1992] HCA 24; (1992) 176 CLR 408. Whilst damages are assessed at the date of breach, subsequent events may be taken into account so that the damages awarded are as accurate as possible: Wenham v Ella; Smith New Court Securities Ltd v Citibank NA [1997] AC 254; Golden Strait Corp v Nippon Yusen Kubishika Kaisha (“The Golden Victory”) [2007] 2 AC 353; [2007] UKHL 12. See, generally, JW Carter, Contract Law in Australia (7th ed. LexisNexis, 2018) at 36-17.

2. [413]

   In the event that the plaintiffs were liable to the Lender, then the plaintiffs contended that the Broker was liable for damages for breach of contract, being to indemnify them for any liability to the Lender. The Broker submitted that the plaintiffs had failed to prove causation, that is, what would they have done differently if the contract had been performed. Further, there was said to be no evidence that, if the plaintiffs had received advice from Mr Hammoudi with the services of an interpreter, they would not have proceeded with the loan in any event. To this, the plaintiffs replied that hindsight evidence was not generally admissible and was of little weight. Where the plaintiffs said that they did not understand key aspects of the finance documents, the clear inference was that, if they had understood these aspects, they would not have executed the documents.

3. [414]

   In something of a happy accident for the plaintiffs, the Lender has failed to prove that it is owed any amount by the plaintiffs. But this ought not detract from the deficiencies in the plaintiffs’ evidence in respect of causation and loss. True it is that hindsight evidence is regarded as inherently unreliable: Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434 at [16] (per Gleeson CJ); Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232 at 246 (per McHugh J). For example, in Lym International Pty Limited v Marcolongo (2011) 15 BPR 29,465; [2011] NSWCA 303, a property developer was excavating an underground car park damaged the plaintiff’s building. The plaintiff’s evidence as to what they would have done had they been told of the developer’s plans was admissible, however, “By comparison with his proved inaction in the face of real damage already sustained, evidence in hindsight from Mr Marcolongo about what he would have done had he known of those matters, would have been of such slight weight that its absence is also of very slight weight”: at [229].

4. [415]

   Much better evidence is what the plaintiffs, in fact, did when they became aware of the matters which were not explained to them at the time in a language they understood to the requisite level. The evidence in this regard is ambiguous. It is not known when the plaintiffs became aware of the terms of the finance which they did not understand at the time, going to interest, fees and minimum ‘earn’. Nor is there evidence that the plaintiffs then protested in respect of these terms. What is known is that the plaintiffs did not progress the development at all after the initial drawdown of the loan. Once Ajax was paid out, the plaintiffs appear to have done nothing beyond endeavouring to raise money, from the butchery business’ creditors or sale of their personal assets in Vietnam, to pay the defendants’ fees and to fund construction to the extent that the construction costs exceeded the Loan.

5. [416]

   Nor was there any evidence as to whether the plaintiffs could have obtained alternate finance on more favourable terms from another lender at the time. Nor was there evidence of the interest and fees generally charged in the market at the time for construction finance.

6. [417]

   In McCrohon v Harith [2010] NSWCA 67 where McColl JA, with whom Campbell JA and Handley AJA agreed, noted at [122]–[123]:

7. [418]

   Here, all I know is that the plaintiffs stopped ‘dead in their tracks’ after drawdown of the Loan, but I do not know why, nor am I able to form a view as to what the plaintiffs would likely have done had the Broker provided the Services with reasonable care and skill.

8. [419]

   Aside from the Lender’s failure to prove its cross-claim, the plaintiffs failed to establish any substantive loss or damage as a consequence of the Broker’s breach of contract. However, a plaintiff who proves breach of contract, but fails to prove that any loss or damage was caused by that breach is nevertheless entitled to nominal damages to vindicate the infringement of their legal rights: The Owners of the Steamship “Mediana” v The Owners, Master and Crew of the Lightship “Comet” (“The Mediana”) [1900] AC 113 at 116; Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286; Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232. While the amount to be ordered is discretionary, it is not unconfined, and the customary amount was recently decided to be $100: New South Wales v Stevens [2012] NSWCA 415; (2012) 82 NSWLR 106 at [36]–[37] (McColl JA); [79] (Sackville AJA) (Ward JA agreeing with both other judgments). I see no reason to depart from that sum in this case, and will so order.

BROKER’S FEE

1. [420]

   The Broker remains entitled to its Services Fee of $208,923 plus interest.

RELIEF AND ORDERS

1. [421]

   The plaintiffs have failed against the Lender. The Lender has failed against the plaintiffs. I make no order as to costs between these parties as to their respective claims and cross claim.

2. [422]

   The plaintiffs have succeeded against the Broker in establishing a breach of contract and unconscionable conduct. The fruits of their victory are modest, being nominal damages only. The Broker has succeeded on its cross claim. The plaintiffs’ claim was of significant complexity, both factually and legally. The Broker’s cross claim was simple and did not occupy any significant portion of the pleadings, evidence or submissions. Weighing whatever portion of the plaintiffs’ costs they may be entitled to recover from the Broker, having regard to their modest success, against the costs of the cross claim, I consider it appropriate to make no order as to costs between these parties as to their respective claims and cross claim.

3. [423]

   For these reasons, I make the following orders:

   1. (1)

      Judgment for the plaintiffs against the second defendant for nominal damages in the amount of $100.

   2. (2)

      Otherwise dismiss the Amended Summons filed on 21 June 2022.

   3. (3)

      In respect of the Cross-Summons filed on 29 July 2021, judgment for the cross-claimant against the cross-defendants in the amount of $231,598.

   4. (4)

      Dismiss the Cross-Summons filed on 30 August 2021.

   5. (5)

      Make no order as to costs.

   6. (6)

      Direct the parties to notify any errors or omissions within seven days.