- Unreported Judgment
SUPREME COURT OF QUEENSLAND
17 June 2002
1, 2 and 5-9 November and 14 December 2001
1.That the plaintiff recover against the defendant possession of the land described as Lot 6 on RP 803163 in the County of Aubigny Parish of Drayton.
2.That the counterclaim be dismissed.
EQUITY - UNCONSCIONABLE DEALING - whether bank had knowledge of the third party mortgagor’s special disadvantage in respect of the granting of the mortgages - requirement of bank for third party mortgagor to obtain independent legal advice - conduct of bank not unconscionable
AGENCY - OSTENSIBLE AUTHORITY - mortgage document sent by bank through the debtor to the third party mortgagor for signature - bank required third party mortgager to obtain independent legal advice - debtor not the agent of the bank for procuring third party mortgage
ESTOPPEL - ANSHUN ESTOPPEL - the causes of action pleaded in the counterclaim had not been raised by the defendant to oppose an earlier application for summary judgment in the same proceeding - it was not unreasonable for the defendant not to have raised those causes of action at the summary judgment stage - relief claimed in counterclaim not inconsistent with summary judgment
MORTGAGES - Remedies of the mortgagee - sale under power - mode of exercise of power - whether mortgagee took reasonable are to ensure sale at market value -
Property Law Act 1974 s 85(1)
Trade Practices Act 1974 (Cth)
Land Title Act 1994
Property Law Act 1974
Alderton v Prudential Assurance Co Ltd (1993) 41 FCR 435
Angel v National Australia Bank Ltd  FCA 1053
Blair v Curran (1939) 62 CLR 464
Blomley v Ryan (1956) 99 CLR 362
Clout v Klein  QSC 401
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Cromwell v County of Sac 94 US 351 (1876)
Emerson v Custom Credit Corporation Limited  1 QdR 516
Garcia v National Australia Bank Ltd (1998) 194 CLR 395
Goodwin v National Bank of Australasia Ltd (1968) 117 CLR 173
Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91
Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd  VR 309
HG & R Nominees Pty Ltd v Fava  2 VR 368
Lisciandro v Official Trustee in Bankruptcy (1996) 69 FCR 180
Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd (2001) 38 ACSR 404
Platzer v Commonwealth Bank of Australia  1 QdR 266
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Ribchenkov v Suncorp-Metway Ltd (2000) 175 ALR 650
Royal Bank of Scotland v Etridge (No 2)  4 All ER 449
Yerkey v Jones (1939) 63 CLR 649
AM Daubney SC and K Buxton for the plaintiff/defendants by counterclaim
TDOJ North SC for the defendant/plaintiff by counterclaim
Blake Dawson Waldron for the plaintiff/defendants by counterclaim
Lynch & Company for the defendant/plaintiff by counterclaim
 MULLINS J: On 13 December 1991 Mr Mohsen Alirezai signed a bill of mortgage (Exhibit 1) in favour of Australia and New Zealand Banking Group Limited (“the bank”) in respect of Lot 2 on RP 803163 in the County of Aubigny Parish of Drayton (“Lot 2”) which, according to its terms, was in consideration of loans, advances, credits or banking accommodation made or given by the bank on the account of Sarlak Enterprises Pty Ltd as trustee for the Joe Sarlak Family Trust (“Sarlak Enterprises”).
 On 6 August 1993 Mr Alirezai signed a bill of mortgage (Exhibit 3) in favour of the bank in respect of Lot 6 on RP 803163 in the County of Aubigny Parish of Drayton (“Lot 6”) which was also a third party security in respect of advances made by the bank to Sarlak Enterprises.
 The bank forwarded to Mr Alirezai notice dated 28 May 1996 (Exhibit 4) seeking immediate payment of the sum of $653,106.35 as the amount owed as at 24 May 1996 in respect of the overdraft account of Sarlak Enterprises that was secured by the mortgages over Lots 2 and 6.
 By notice dated 3 December 1996 the bank’s solicitors demanded that Mr Alirezai give immediate possession of Lots 2 and 6 to the bank (Exhibit 5).
 The bank filed the writ of summons in this proceeding on 5 February 1997 seeking recovery of possession of Lots 2 and 6. The summary judgment application brought by the bank resulted in judgment being entered on 16 April 1997 by White J in favour of the bank against Mr Alirezai for recovery of possession of Lots 2 and 6.
 Mr Alirezai appealed to the Court of Appeal against the judgment to the extent that it applied to Lot 6. The appeal was successful and judgment for recovery of possession of Lot 6 was set aside.
 The bank is therefore pursuing its claim for recovery of possession of Lot 6 in this proceeding. Mr Alirezai has counterclaimed, seeking to have the mortgages of both Lots 2 and 6 set aside for a variety of grounds, claiming damages and also claiming that Lot 2 which was sold by the bank on 24 August 1997 was sold at an undervalue.
 The only witness called by the bank in relation to its claim was Mr Phillip Asche, a manager in the bank’s portfolio management division, who has access to the bank’s records of amounts owed to it by customers. Mr Asche produced bank statements numbered 466 and 476 in respect of Sarlak Enterprises’ account with the bank relevant to calculating the indebtedness of Sarlak Enterprises at 24 May 1996 and at 1 November 2001. Mr Asche calculated the debt to be $653,106.35 as at 24 May 1996 by reference to the statement numbered 466 (Exhibit 6) and $921,219.84 as at 1 November 2001 by reference to the statement numbered 476 (Exhibit 7). The submission made on behalf of Mr Alirezai that Mr Asche used Exhibit 6 to calculate the debt as at 1 November 2001 does not reflect Mr Asche’s evidence which was that he had done a similar exercise with respect to Exhibit 7 to that which he had done in relation to Exhibit 6 in order to calculate the debt of Sarlak Enterprises as at 1 November 2001.
 In respect of his counterclaim, Mr Alirezai gave evidence. He called Mr Joseph Sarlak, his former solicitor Mr Kim Flehr and linguistic expert Ms Mary Cole who had prepared a report in March 2001 after testing Mr Alirezai’s ability to listen to, read, write and speak English, according to the International English Language Testing System (“IELTS”). In relation to that part of the counterclaim alleging that Lot 2 was sold at an undervalue, Mr Alirezai called town planner Mr Michael Challoner and valuer Mr Rodney Brett.
 In its case defending the counterclaim, the bank called Mr Malcolm Jackson who is still employed as the manager of the Dean Street, Albury branch of the bank and who, as a manager at that branch or its predecessor, had control of Sarlak Enterprises’ accounts and the procuring of the mortgages from Mr Alirezai over Lots 2 and 6. Mr Jackson has been joined in the proceeding as the second defendant by counterclaim. The bank also called Mr Malcolm Kennedy, the solicitor employed by the solicitors’ firm Hede & Byrne who was consulted by Mr Alirezai in respect of the execution of each of the mortgages. In relation to the claim that Lot 2 was sold at an undervalue, the bank called valuer Mr Peter Payne and the real estate agent Mr Michael Hosking of Michael Hosking Realty who had the carriage of the sale.
Credit of witnesses
 Mr Alirezai appeared to do his best to recall events and conversations involving Mr Sarlak and Mr Kennedy which occurred between 1991 and 1993, when it was quite apparent from the evidence which he gave about those events and conversations, that there was no appreciation by him at the relevant times of the significance which those events and conversations would assume and that he would be asked to recall them in detail 8 to 10 years later. I have therefore approached Mr Alirezai’s evidence in respect of these events and conversations with caution. I formed the opinion that in respect of other matters Mr Alirezai was generally honest and credible. I reject the submission made on behalf of the bank that Mr Alirezai’s modus operandi when faced with adverse outcomes after involvement with professional people is to disclaim having received any advice or warning. This submission was based on cross-examination of Mr Alirezai about a claim which he lost against his doctor when he developed complications after his back operation in 1995 which I find had no relevance to the matters in issue, did not affect my conclusion as to Mr Alirezai’s credit and could not possibly have supported the submission which was based on it.
 Mr Sarlak’s recollection of events and relevant conversations was sketchy. It was obvious that the steps which Mr Sarlak took to procure Mr Alirezai to mortgage Lots 2 and 6 and to cause those assets to be exposed in respect of his company’s liabilities was not of concern to Mr Sarlak during 1991 and 1993. He was motivated solely by his interests and that of Sarlak Enterprises. That self-interest has also had a distorting effect on his recollection. He blamed the bank for making the loans to Sarlak Enterprises and allowing its overdraft to increase, rather than accepting that it was Sarlak Enterprises that was responsible for its own debts. I have approached Mr Sarlak’s evidence with great caution and looked for verification of his evidence by reference to other evidence, wherever possible, before accepting Mr Sarlak’s evidence on any matter.
 It was apparent that Mr Jackson had prepared himself for giving evidence by studying the bank’s file. His evidence was reliant on the documents that were put before him. It was quite apparent in many instances that he had deduced what had occurred by what he now concluded from the documents on the bank’s file. One example is Exhibit 19. On many occasions there were lengthy pauses before Mr Jackson answered the questions which were asked of him. I have also approached his evidence with caution. Where it has been necessary, however, to choose between the evidence of Mr Jackson and the evidence of Mr Sarlak, I have been assisted by my observations of each of them and a consideration of the evidence of each of them in the light of the large number of documentary exhibits to conclude that Mr Jackson’s evidence was more reliable than that of Mr Sarlak.
 Mr Kennedy impressed as a thorough, careful and totally honest solicitor who was quite open about what he could and could not remember in respect of his dealings with Mr Alirezai.
 Mr Alirezai was born in Tehran, Iran in 1945. Mr Alirezai is a practising Muslim and has lived his life according to Islamic law. His first language is Farsi which is also known as Persian. He was educated at secondary school level in Tehran. While at school he received instruction in English of approximately 1 hour each week. Mr Alirezai came to Australia in 1973. At this time he had no real understanding of the English language. He did not receive any formal training in the English language in Australia. Mr Alirezai opened a savings account with the Commonwealth Bank in 1973.
 Mr Alirezai’s first job was on the assembly line at the GMH factory. He then became a leading hand and worked there for a total period of about three years. Mr Alirezai developed back trouble. He returned to Iran in 1976, conducted a clothing manufacturing business in Iran and returned to Australia in 1978. Mr Alirezai obtained a job as a full time contract cleaner at the Sydney Opera House. In late 1978 Mr Alirezai purchased a house at Toongabbie, obtaining a loan for that purpose from the Commonwealth Bank. He paid out the loan after five or six years.
 Mr Alirezai married in 1983 and with his wife moved from Toongabbie to Toowoomba. He purchased the land outside Toowoomba which he caused to be subdivided into Lots 2 and 6. Mr Alirezai has not been employed since he moved to Toowoomba, although he has run cattle on Lot 2.
 Mr Alirezai met Mr Sarlak in about 1982 in Sydney. Mr Sarlak was also from Iran. Mr Alirezai had known of Mr Sarlak and his family prior to meeting him. Mr Alirezai and Mr Sarlak became friends. They maintained contact with each other throughout the 1980s and spoke regularly on the telephone. They spoke in Farsi. Mr Alirezai knew Mr Sarlak was a builder and believed Mr Sarlak’s business was successful.
 In the late 1980s Mr Alirezai separated from his wife. Their property settlement required that Mr Alirezai pay his wife the sum of $50,000, if he wished to retain Lots 2 and 6. Mr Alirezai was not in a financial position to do this. Mr Alirezai sought assistance from Mr Sarlak who lent Mr Alirezai this sum. Approximately 12 months later in February 1991 Mr Alirezai repaid the loan. In addition Mr Alirezai gave Mr Sarlak the sum of $3000 from his savings. Mr Alirezai felt a moral obligation towards Mr Sarlak, as a result of this loan.
Sarlak Enterprises’ dealings with the bank prior to the mortgage of Lot 2
 By 1989 Sarlak Enterprises had been in business for many years as a civil construction company. Sarlak Enterprises was involved in the construction of cyclone proof warehouses after the cyclone in Darwin in 1974. In 1989 Sarlak Enterprises decided to diversify its business by undertaking the export to Iran of Australian tallow.
 In November 1991 the means by which Sarlak Enterprises financed its business with the bank was by way of overdraft facility and a commercial bill fixed rate facility. In October 1991 Sarlak Enterprises had an approved temporary extension of the overdraft to $280,000 which it had exceeded on 15 and 17 October 1991, according to the bank’s diary notes in Exhibit 11. The diary note for 7 November 1991 showed that the limit was $250,000, which again was slightly exceeded by Sarlak Enterprises. By 28 November 1991 the diary note (in Exhibit 12) showed that the limit was $200,000 and the balance of the account was $209,081. The commercial bill fixed rate facility was for $100,000.
 Mr Jackson prepared a diary note dated 6 December 1991 (Exhibit 13) in relation to Sarlak Enterprises’ requirement to provide a bank guarantee for $150,000 to Peerless Holdings Pty Ltd (“Peerless”) to secure the tallow for shipment in January 1992 to Iran. That diary note was prepared, however, after Mr Sarlak had put in place steps to obtain the mortgage from Mr Alirezai in favour of the bank over Lot 2. When Mr Sarlak had first approached Mr Jackson about this bank guarantee, Mr Jackson informed Mr Sarlak that the bank needed more security. It was then that Mr Sarlak told Mr Jackson about a friend who would help him out. Mr Jackson stated in evidence, and I accept, that Mr Sarlak told him that he had a friend for whom he had done a favour in the past by making a loan of $50,000 who would be able to offer some supporting security for the bank guarantee to be issued to Peerless. Mr Jackson also stated that he was aware at some time from the conversations with Mr Sarlak that Mr Alirezai was of “Iranian descent”. I infer that was likely to have been realised by Mr Jackson at the latest when he received the certificate of title for Lot 2 which showed Mr Alirezai’s name.
 The diary note showed that the overdraft limit of Sarlak Enterprises was $260,000 until 18 December 1991, when it was due to be reduced to $200,000 until 16 March 1992, when it was due to be reduced to $100,000 which was described as the “basic” limit. The facilities listed in that diary note included the commercial bill fixed rate facility of $100,000 due to expire on 16 March 1992, the bank guarantee proposed in favour of Peerless of $150,000 shown as expiring on 30 April 1992, and another bank guarantee in the sum of $18,930 due to expire on 31 January 1992. The diary note also showed that the account risk had been downgraded to “B” at 6 December 1991 under an external regrading programme. Mr Jackson stated in evidence that 60% of the accounts were graded “B” and I inferred from his evidence and the contemporaneous diary notes that was of no concern to the bank or him while there was sufficient supporting security in respect of the account.
 The diary note of 6 December 1991 showed that mortgages were to be taken over two additional real properties (one of which was Lot 2) and the other belonged to another third party, one Ronald Stanley Jeffries.
 The calculations in the diary note showed that on the basis of taking 80% of the values of the prime security held and to be taken by the bank, there was a shortfall of $26,370 which would revert to surplus on 18 December 1991. The recommendation was made by Mr Jackson in the diary note as follows:
“In view of Freehold Security now offered and Surplus to Margin available 18/12/91 client is not prepared to execute a Mortgage Debenture and waivure (sic) is supported in this instance.”
which indicated that the bank’s approach to borrowing by Sarlak Enterprises was related to its security position which was considered satisfactory in December 1991.
Events immediately preceding mortgage of Lot 2
 In about November 1991 Mr Alirezai received a telephone call from Mr Sarlak who informed him about a contract he had to sell tallow in Iran, but that he needed to give a guarantee to the tallow company in order to collect the tallow and Mr Sarlak requested that Mr Alirezai permit his title deed for Lot 2 to be used for the guarantee. I find that these were the representations made by Mr Sarlak to Mr Alirezai that resulted in the mortgage over Lot 2. I accept that Mr Alirezai agreed to do what he was asked to do by Mr Sarlak, as he felt under a moral obligation to do so, because of the loan of $50,000 which had been earlier made to him by Mr Sarlak. Mr Alirezai forwarded the title deed to Mr Sarlak. I find that Mr Sarlak did not tell Mr Alirezai what amount of money the guarantee was to be for.
 Mr Sarlak forwarded the deed to the bank at its Albury branch under cover of letter dated 3 December 1991 (Exhibit 41) which stated:
“We wish to use this property to secure a Bank Guarantee of $150,000 made to Peerless Holdings of Melbourne to secure 2,500MT of tallow for our January shipment.
The Bank Guarantee will remain in place until full payment of the goods has been made to Peerless.”
 At some point subsequent to the receipt of this letter Mr Jackson telephoned Mr Sarlak and informed him that security over that property was required to cover all outstanding debts and liabilities of Sarlak Enterprises and not just the bank guarantee to be issued to Peerless. Although Mr Sarlak could not recall this conversation, I accept Mr Jackson’s evidence that such conversation did occur, before the mortgage was despatched for Mr Alirezai’s signature and that Mr Sarlak did not demur from Mr Jackson’s requirement that Lot 2 be security for all debts of Sarlak Enterprises with the bank. That conversation between Mr Jackson and Mr Sarlak was likely to have occurred in view of the memorandum which Mr Jackson prepared on 6 December 1991 (Exhibit 13) in support of requesting approval for the bank guarantee which showed that Lot 2 would be security in respect of all the debts of Sarlak Enterprises. Mr Jackson then arranged to have the bill of mortgage forwarded to Mr Sarlak, so that it could be passed on for Mr Alirezai’s signature.
 Mr Alirezai instructed Nilon Valuation Services to prepare a valuation of Lot 2 which was done on 4 December 1991 and showed the current market value as $130,000.
 I accept that Mr Jackson advised Mr Sarlak that Mr Alirezai would have to take the mortgage to a solicitor and that one of the documents that the bank required to be signed was a letter of independent advice from the solicitor consulted by Mr Alirezai. Mr Jackson stated, and I accept, that Mr Sarlak offered to be “the courier” for sending the documents to Mr Alirezai and having them returned, on the basis that that would be a quicker process than if the documents were sent through the bank’s system. That is consistent with the expedition with which Mr Sarlak was acting in procuring the bank guarantee in favour of Peerless.
 A factual matter that was in issue was whether and, if so, when Mr Sarlak told Mr Jackson that Mr Alirezai did not have a good command or understanding of the English language. Mr Sarlak did not raise this in evidence until he was answering questions in respect of the 1993 transaction. He stated that he could not recall the precise time that he mentioned it to Mr Jackson and stated in the context of documents being sent to and from Mr Alirezai for the 1993 mortgage that “… it was all in the course of these documents going backwards and forwards”. Mr Jackson did not recall mention of Mr Alirezai’s lack of understanding of English being made to him by Mr Sarlak. As the documents sent between Mr Sarlak and Mr Alirezai for the mortgage over Lot 2 were few and Mr Jackson recalled that the reason that Mr Sarlak offered to be the courier for the documents was that it would be a quicker process, I find that Mr Sarlak made no mention of Mr Alirezai’s difficulty with the English language at the time the mortgage over Lot 2 was obtained.
 Mr Sarlak telephoned Mr Alirezai to tell him that he was sending some documents through IPEC which Mr Alirezai had to pick up and take to a solicitor to get it signed. I find that Mr Sarlak did not inform Mr Alirezai of his conversation with Mr Jackson about the mortgage over Lot 2 being security for all debts of Sarlak Enterprises with the bank. Mr Alirezai collected the documents from the IPEC office and attended at the office on his solicitors Hede & Byrne.
Execution of mortgage over Lot 2
 Mr Alirezai stated that Mr Hede’s secretary made an appointment for him to see Mr Kennedy. Mr Alirezai stated that he spoke to Mr Kennedy at the firm’s front reception desk for about five minutes on the first occasion that he met with him. According to Mr Alirezai, he told Mr Kennedy the story which Mr Sarlak had told him about the tallow company and that Mr Alirezai was “guaranteeing …. the tallow company” and that Mr Kennedy told him that the document was a bill of mortgage. Mr Alirezai also stated that Mr Kennedy told him that he would study the document and get back to him. There was nothing in Mr Kennedy’s recollection that was inconsistent with this.
 Mr Alirezai stated that he received a telephone call from Mr Sarlak that night enquiring whether he had picked up the documents. Mr Alirezai confirmed that he had, and told Mr Sarlak that Mr Kennedy had said the document was a bill of mortgage. Mr Alirezai stated that Mr Sarlak said, “Oh, that’s the only way they do it”.
 There are hand written memoranda of Mr Kennedy on the Hede & Byrne file which relate to work undertaken by Mr Kennedy in respect of the bill of mortgage. These memoranda are Exhibits 112 to 116. To the extent that those memoranda purport to record telephone conversations, Mr Kennedy virtually had no recollection of those conversations. The first memorandum is dated 12 November 1991. That was clearly an error. It must have been intended to be dated either 11 December 1991 or 12 December 1991. The memorandum which is Exhibit 114 makes reference to a number of the clauses from Memorandum No H942766 (Exhibit 2) which sets out the covenants that were incorporated in the bill of mortgage over Lot 2. From this can be inferred the fact that a copy of that memorandum accompanied the form of bill of mortgage forwarded to Mr Alirezai by Mr Sarlak for signature.
 Mr Kennedy gave evidence about his usual practice, if he were advising a client in respect of a document, that he would go through the document and make notes and that would then act as an aide-memoire to him, which he would then use when giving advice to the client in respect of the document. Mr Kennedy conceded that his notations set out in Exhibit 114 were as consistent with his perusing the memorandum in order to ascertain its effect, as it was consistent with making notations about an attendance with the client.
 Mr Kennedy could recall that the result of the discussions he had with an officer or officers of the bank was that he inserted the clause in the bill of mortgage with the intent of protecting Mr Alirezai’s property apart from Lot 2. This is also confirmed by the facsimile transmission of 9 January 1992 from Mr Kennedy to the bank (Exhibit 14) confirming advice that the bank would not attempt to recover from the mortgagor any amount in excess of the amount arising from the sale of the property. The inserted clause provided:
“8.Notwithstanding any other condition herein the parties agree that the liability of the mortgagor under the Bill of Mortgage shall be limited to the proceeds of sale of the mortgaged property and the mortgagee hereby agrees that under no circumstances whatsoever shall the mortgagee demand or attempt to recover from the mortgagor any amount in excess of the proceeds of sale of the mortgaged property.”
 It is clear from Mr Kennedy’s memoranda that he received no information from the bank about the financial position of Sarlak Enterprises.
 On 13 December 1991 Mr Alirezai attended on Mr Kennedy again. Mr Alirezai stated that Mr Kennedy had the bill of mortgage and another written letter and saw him at the front desk. Mr Alirezai stated that he did not have any conversation with Mr Kennedy about either document, that Mr Kennedy did not speak to him about the contents of the documents and that, on that occasion, Mr Alirezai did not read those documents. Mr Alirezai conceded in cross examination when asked about the clause inserted by Mr Kennedy, that Mr Kennedy did mention about Mr Alirezai keeping his personal belongings.
 Apart from the bill of mortgage over Lot 2, Mr Alirezai signed a letter addressed to Hede & Byrne (Exhibit 29) on 13 December 1991 in the following terms:
“I, Mohsen Alirezai of Toowoomba, hereby acknowledge that my solicitors, Messrs Hede & Byrne have advised me strongly not to sign the Bill of Mortgage granting security to my friend, Joe Sarlak. I am aware the security is in respect of the company, Sarlak Enterprises Pty Ltd and not Joe Sarlak.
My solicitors have informed me the Bill of Mortgage document in its present form imposes a potential liability on me which extends to any obligations Sarlak Enterprises Pty Ltd owes to the Bank both presently and at any time in the future.
My solicitors have informed me that following conversations with the Bank that the Bank is in agreement to add an additional clause to the document in an attempt to limit my liability to an amount not exceeding the value of the property the subject of the Bill of Mortgage.
I am informed by my solicitors that they are not absolutely certain that the clause will limit my liability.
However despite the misgivings of my solicitors I do intend to execute the Bill of Mortgage.”
 Mr Kennedy signed a certificate (Exhibit 78) to the effect that Mr Alirezai had signed the mortgage voluntarily with full knowledge and understanding of its contents and of the circumstances under which he was undertaking the liabilities contained in the mortgage.
 Mr Kennedy conversed with Mr Alirezai in English. Mr Kennedy could not recall that Mr Alirezai showed any sign that he did not understand the advice which Mr Kennedy gave in relation to the letter of acknowledgement (Exhibit 29) and the bill of mortgage. Although Mr Kennedy could not recall any details of the advice which he had given to Mr Alirezai, he could state, based on his practice, what he would have advised Mr Alirezai. Firstly, Mr Kennedy stated that he obtained Exhibit 29 because he wanted to record his advice to Mr Alirezai. Mr Kennedy therefore stated that the advice that he gave to Mr Alirezai was exactly as it was set out in Exhibit 29. In addition, Mr Kennedy stated that he would not have signed the certificate to the bank, if he had not gone through the terms applying to the mortgage and given Mr Alirezai an explanation of each of them.
 There were inconsistencies between the evidence of Mr Alirezai and that of Mr Kennedy about the advice given by Mr Kennedy and the circumstances of the execution of Exhibit 29 and the bill of mortgage.
 Mr Kennedy had been admitted as a solicitor only on 7 October 1991 after undertaking articles of clerkship for five years with Hede & Byrne. Although Mr Kennedy did not have lengthy experience as a solicitor, he had other experience. He obtained a degree in business studies, after leaving school. Mr Kennedy had operated a newsagency in Toowoomba with his wife for a couple of years immediately prior to commencing employment at Hede & Byrne. Prior to that Mr Kennedy and his wife had a milk run business which they had operated for a couple of years and before that Mr Kennedy had been employed in the same business. In early 1991 Mr Kennedy had undertaken the practice management course conducted by the Queensland Law Society. He therefore stated that at the time of dealing with Mr Alirezai in December 1991, he was very conscious of his obligations, both his duties to clients and his duties to his employers.
 That Mr Kennedy did adopt a careful approach to advising Mr Alirezai in respect of the proposed mortgage over Lot 2 is borne out by the attendances by Mr Kennedy on officers of the bank, the insertion of clause 8 in the bill of mortgage, Mr Kennedy’s perusal of Memorandum No H942766 and the preparation of Exhibit 29. Notwithstanding Mr Kennedy’s lack of recall, I accept his evidence, based on his practice and his reference to Exhibit 29 and his file memoranda, that he gave the advice to the effect of that recited in Exhibit 29 and discussed the clauses of the memorandum applying to the bill of mortgage which he had selected to note in his file memorandum, even though these notes were also consistent with recording his perusal of the memorandum. I accept Mr Kennedy’s evidence that he was conscious of what was required of him, in order to provide the certificate which had been requested by the bank, as to the independent advice given by him.
 I infer from the facts that Mr Kennedy obtained Exhibit 29, witnessed Mr Alirezai’s execution of the mortgage and gave the certificate to the bank that Mr Alirezai did not give Mr Kennedy any indication that he could not understand the explanations and advice given to him by Mr Kennedy.
 Even on Mr Alirezai’s evidence, it was apparent that Mr Kennedy had explained the effect of clause 8 which he had inserted in the mortgage. Although Mr Alirezai did not have any recollection of any other advice given by Mr Kennedy, I do not find that surprising in that Mr Alirezai’s concern in December 1991 was to comply with the request of Mr Sarlak to whom he felt indebted. I infer that Mr Alirezai was not interested in and therefore has not remembered the advice which Mr Kennedy was providing to him about the proposed transaction. I do not accept the submission that Mr Alirezai had little or no understanding of what Mr Kennedy was telling him and therefore has no memory of it. That is not consistent with what Mr Alirezai recalled about Mr Kennedy explaining the effect of the additional clause and that Mr Kennedy did provide the certificate to the bank. I consider that Mr Alirezai was mistaken about where the signing of the mortgage took place in Hede & Byrne’s office. It is likely that some time was spent by Mr Kennedy in giving the advice to Mr Alirezai. I accept the evidence of Mr Kennedy that he would not have taken a client through a mortgage document, where he was required to give a solicitor’s certificate to the bank, at the front counter of the office.
Events subsequent to mortgage of Lot 2
 A few months later when Mr Alirezai was speaking to Mr Sarlak on the telephone, Mr Sarlak informed him that the tallow shipment had been completed and that payment had been received. At this time Mr Alirezai inquired “What happened to the deed?” and was told by Mr Sarlak, “It is just sitting there”. Mr Sarlak did not tell Mr Alirezai that it was still with the bank. Mr Sarlak stated in evidence that he assumed that Mr Alirezai knew the certificate of title was sitting at the bank, because they had been dealing with the bank. I find that it suited Mr Sarlak not to be specific in describing to Mr Alirezai where the deed was. Mr Alirezai took no steps to obtain the return of his certificate of title for Lot 2 from Mr Sarlak. It was obviously to Mr Sarlak’s advantage not to seek to have the mortgage over Lot 2 released, as it provided Sarlak Enterprises with additional borrowing capacity while it remained in place, despite Mr Sarlak’s protest in evidence that his own properties were sufficient to secure the overdraft of Sarlak Enterprises.
 According to the bank’s diary note for 30 June 1992 in Exhibit 17, the guarantee for $150,000 was returned to the bank by Peerless and the facility was then cancelled.
 In March 1993 Sarlak Enterprises purchased a house property at Albury in respect of which it sought a residential investment property loan for 10 years from the bank. The bank’s diary note dealing with this request (Exhibit 37) set out the existing facilities held by Sarlak Enterprises with the bank at that stage. There was approval for an overdraft of $250,000, although it was only used to the extent of $110,045 at that stage. There was a fixed rate fully drawn advance of $100,000 in respect of which interest only was being paid. The bank approved the residential investment property loan in the sum of $100,000.
Events preceding mortgage of Lot 6
 In early 1993 Mr Alirezai travelled to Albury to visit Mr Sarlak. At this time they had discussions about forming a business to export tallow to Iran. Mr Alirezai stated that Mr Sarlak told him that “the tallow business is good and every $150,000 worth of tallow pays $20,000 profit” and that they could “get involved with the business and do it together”. Mr Alirezai stated that he said to Mr Sarlak:
“I have no money, but I got two deeds, you know, we can borrow against that and go to the business together.”
 In about March or April of 1993 Mr Sarlak telephoned Mr Alirezai and Mr Alirezai stated that Mr Sarlak said to him:
“the business of tallow, I talk to you. I’m going to Iran. I’ve got my own shipment going to Iran and I’m leaving in a few days and if you’re going to do it, I’d like to organise it, get everything prepared before I go away so when I come back I start the business.”
 As at 3 June 1993, Sarlak Enterprises’ facilities with the bank were an overdraft limit of $250,000 which was drawn to $221,770, the residential investment property loan which had a balance of $93,872 and the fully drawn advance which still was in the sum of $100,000. By 25 June 1993 the overdraft was drawn to $275,649 as, according to the diary note (Exhibit 100), Sarlak Enterprises was awaiting payment of $160,000 from an overseas shipment. Sarlak Enterprises therefore sought temporary assistance to $300,000 until 23 July 1993.
 On 6 July 1993 Mr Sarlak made enquiries of the bank about negotiating a documentary credit issued by an Iranian bank covering shipment of mutton products. Mr Sarlak was informed that the bank could negotiate under a bill negotiated not under credit facility (“BNNUC”) or handle the documents on a collection basis. Mr Jackson informed Mr Sarlak that he did not have sufficient security for a BNNUC facility of $350,000 (which was the anticipated maximum shipment that Mr Sarlak would undertake) and Mr Sarlak offered further security from Mr Alirezai. Mr Sarlak told Mr Alirezai about setting up the BNNUC for the tallow shipments. He did not disclose the proposed limit for the BNNUC of $350,000. When asked what Mr Alirezai said in response, Mr Sarlak stated in evidence “Well, he had faith in me and he accepted it”. Mr Sarlak also stated in evidence that the mortgage documents for Lot 6 were prepared to set up the BNNUC system.
 I find that the representations made by Mr Sarlak to Mr Alirezai in early to mid 1993 which resulted in the mortgage over Lot 6 were that he and Mr Alirezai would be involved together in the business of exporting tallow and that Mr Alirezai would need to put up his deeds to Lots 2 and 6 to enable them to borrow against them for the business and that the BNNUC would be set up by the bank for the tallow shipments.
 On 26 July 1993 Mr Alirezai caused a valuation to be done of Lots 2 and 6 by valuer Mr KD Carmichael, as Mr Sarlak had asked him to obtain a valuation of both lots. Lot 2 was valued at $160,000 and Lot 6 at $260,000. The valuations of Mr Carmichael of Lots 2 and 6 are Exhibit 18.
 Mr Alirezai organised for the certificate of title for Lot 6 to be sent to Mr Sarlak, as Mr Sarlak delivered that certificate of title to the bank. Mr Jackson recalled, and I accept, that Mr Sarlak offered to be the courier for arranging for the documents in relation to the mortgage of Lot 6 to be executed by Mr Alirezai and returned in a similar manner to that which had been undertaken for the transaction for Lot 2.
 It was suggested to Mr Jackson in cross-examination that it was at this time that Mr Sarlak told him that Mr Alirezai had difficulty understanding English. Mr Jackson denied this. After having considered the vagueness of Mr Sarlak’s recollection on this aspect and the likelihood that any conversation between Mr Jackson and Mr Sarlak about Mr Alirezai’s difficulty with English arose after the mortgage over Lot 6 had been granted and Mr Jackson was seeking acknowledgement from Mr Alirezai of the increasing indebtedness of Sarlak Enterprises, I accept that Mr Jackson was not informed by Mr Sarlak and therefore did not know of any difficulty for Mr Alirezai in understanding English at the time that the mortgage over Lot 6 was sought and obtained by the bank from Mr Alirezai.
 By letter dated 4 August 1993 (Exhibit 42) the bank forwarded the form of mortgage over Lot 6 and the independent solicitor’s certificate to Sarlak Enterprises for Mr Alirezai and his solicitor respectively to sign. The mortgage over Lot 6 also incorporated the covenants contained in Memorandum No H942766.
 In early August 1993 Mr Alirezai stated that Mr Sarlak asked Mr Alirezai to collect some documents from the bank in Toowoomba and take these documents to his solicitors to have signed as before. Mr Alirezai was mistaken about this aspect, as the consignment note which was attached to the envelope in which the documents had been placed was in evidence (Exhibit 44). It showed that the documents had been sent by Sarlak Enterprises to the office address of Hede & Byrne, although it was marked for the attention of Mr Alirezai. The documents were forwarded under cover of a note in Farsi from Mr Sarlak. The note said:
“My Dear Mohsen. Hello. Today ANZ contacted me for signing the document. As previous, please sign them with your solicitor and I have enclosed return IPEC bag and it - and return including the insurance. I sacrifice myself to you, Joe.”
Execution of mortgage of Lot 6
 On 6 August 1993 Mr Alirezai attended on Mr Kennedy. Mr Alirezai stated that this meeting took place in a meeting or boardroom and lasted approximately 20 minutes. At this meeting Mr Alirezai stated they discussed friendship, religion and Iranian customs. Mr Alirezai stated that he informed Mr Kennedy that he was going into business with Mr Sarlak to export tallow to Iran and that he trusted Mr Sarlak. Mr Alirezai conceded in cross examination that he had agreed with Mr Sarlak to put up both Lots 2 and 6 as security for the business that Mr Sarlak and he were going into and that Mr Alirezai thought he would make money out of going into the tallow business with Sarlak Enterprises.
 Mr Alirezai could recall that Mr Kennedy told him that he had put a clause in the mortgage, so that if anything happened, he could keep his personal things. Mr Alirezai also stated that he recalled that Mr Kennedy said, “Do you realise if Joe doesn’t pay, you have to pay?” when they were discussing the tallow business and that Mr Alirezai responded affirmatively. Mr Alirezai stated that Mr Kennedy did not read the mortgage over to him and did not discuss with him the obligations he was taking on by signing that document. Mr Kennedy had inserted the same additional clause in this mortgage as clause 8 which had been inserted in the mortgage of Lot 2. Mr Alirezai then signed the bill of mortgage for Lot 6.
 Mr Kennedy did not recall his dealings with Mr Alirezai in relation to the mortgage over Lot 6. There was a typed file note, however, on the Hede & Byrne file with the heading “NOTE OF ATTENDANCE ON MR MOHSEN ALIREZAI ON THE 6TH AUGUST 1993” which had Mr Kennedy’s name typed at the foot of the memorandum.
 It is reasonable to infer and consistent with Mr Kennedy’s practice that the note was made by Mr Kennedy soon after his attendance on Mr Alirezai on 6 August 1993 and reflected what occurred at that attendance. The note which is Exhibit 118 states:
“Mr Alirezai informed me on a number of occasions that despite my reservations about executing the mortgage document, he did intend to execute this mortgage document the same as he executed the one previously dealing with Lot 2.
Mr Alirezai informed me that he has great faith in the character of Mr Sarlak and that he was well aware of the fact that if something happened to Mr Sarlak’s dealings, then he may well lose not only the land which he previously offered as security, but also the house property which was the subject of this present mortgage.
I did inform Mr Alirezai that his liability under this particular document would be limited in the same manner as the previously executed mortgage limits his liability to the proceeds of sale of each mortgaged property.
Mr Alirezai confirmed that he was aware of all of this and was happy to sign the documents in the knowledge that if Mr Sarlak or any associated entity went into bankruptcy or liquidation, he ultimately may also lose the house and the land.”
 I infer that Mr Kennedy made contact with the bank in relation to the insertion of cl 8 into the mortgage and that on this occasion Mr Kennedy received no information from the bank about the financial position of Sarlak Enterprises.
 Mr Kennedy signed a certificate (Exhibit 31) in relation to the mortgage of Lot 6 which was in identical terms to that which he had signed for the bank in relation to the mortgage of Lot 2. I infer that Mr Kennedy would not have signed Exhibit 31, if he had any reservation about Mr Alirezai’s ability to understand the explanations and advice which Mr Kennedy gave to him and that Mr Alirezai did not give him any indication that he did not understand what Mr Kennedy was advising him. Under cover of letter dated 6 August 1993 (Exhibit 45) Mr Kennedy returned to Mr Sarlak the executed bill of mortgage of Lot 6 and the certificate in relation to independent advice.
 Although it was only the mortgage over Lot 6 that was given on this occasion, I find that Mr Alirezai believed that he was allowing both Lots 2 and 6 to be used as security for the setting up of the BNNUC for the tallow shipments which Mr Alirezai believed from Mr Sarlak was going to be a business undertaken for the benefit of both of them. That is consistent with the concession to that effect made by Mr Alirezai in cross-examination and with Mr Alirezai procuring the valuations of both Lots 2 and 6 at this time. I also find that, while Mr Alirezai was still influenced by his friendship with and trust of Mr Sarlak, part of Mr Alirezai’s motive for allowing both Lots 2 and 6 to be used as security in favour of the bank in respect of the account of Sarlak Enterprises was the opportunity to make money from being involved in tallow shipments with Mr Sarlak.
Subsequent communications involving the bank
 The statement for the business cheque account of Sarlak Enterprises with the bank for the period 13 to 20 August 1993 (Exhibit 79) showed that the account was credited with the sum of $349,151.43 on 16 August 1993 which was described as “Foreign Bill Agent FBA256015”. Mr Jackson identified that as the drawdown under the BNNUC facility. Although Mr Sarlak initially disputed during the course of his evidence that there was ever a drawdown under the BNNUC facility, he subsequently conceded that the BNNUC was drawn down for a shipment of mutton, and that he did not tell Mr Alirezai that the BNNUC facility was used for that purpose. The effect of the facility being drawn down was that Sarlak Enterprises’ account with the bank obtained the benefit of that credit payment under the facility.
 On 16 August 1993 the bank sent to Mr Sarlak a letter addressed to Mr Alirezai containing a letter of acknowledgment for Mr Alirezai to sign in respect of the existing facilities in the name of Sarlak Enterprises secured against Lots 2 and 6. Mr Sarlak forwarded these documents to Mr Alirezai under cover of a handwritten note in Farsi. Translated the note read:
“Here's with the letter attached which will explain the kind of life that I'm in or explains my life and - which to be all clear for you and who you're dealing with and what we're doing. Please sign and return. I sacrifice myself for you, Joe.”.
 The letter listed an overdraft facility in the amount of $450,000, a fully drawn advance in the amount of $100,000, a residential investment property loan in the amount of $97,425, and a BNNUC for $350,000. Mr Alirezai signed the acknowledgment on the duplicate letter on 23 August 1993 and returned it to Mr Sarlak. A copy of the letter and the acknowledgment together with the handwritten note from Mr Sarlak is Exhibit 19.
 When Mr Alirezai read the letter he noticed the reference “overdraft $450,000”. When Mr Sarlak telephoned, Mr Alirezai asked Mr Sarlak why the figure was $450,000 when the total valuation of the land (Lots 2 and 6) was for $420,000. Mr Alirezai stated that Mr Sarlak informed him that the bank had increased the overdraft by $30,000. This is another instance of Mr Sarlak not being frank with Mr Alirezai in order to ensure that Sarlak Enterprises had the continuing benefit of the security provided by Mr Alirezai.
 Mr Alirezai stated and I accept that a few weeks later he spoke to Mr Sarlak who informed him that they could not do any business as the Iranian company could not pay.
 In about April 1994 Mr Alirezai stated that he was telephoned by Mr Sarlak who informed him that the bank wished to change the export facility to an overdraft facility.
 At this time the bank again forwarded documents dated 13 April 1994 to Mr Sarlak for Mr Alirezai’s attention (Exhibit 20). Mr Sarlak forwarded the documents to Mr Alirezai under cover of a handwritten note in Farsi. This note read:
“Hello, my Dear Moshen. Hope you have a great day and you be in the mood of laugh and happy. As we spoke over the phone, for your information I'll send you the letter from the bank for signing and changing to the overdraft. I sacrifice myself for you, Joe.”
The letter from the bank was an acknowledgment of lending facilities which showed the overdraft as being $600,000 and the full drawn advance as being $100,000. There was no mention of the BNNUC in this document.
 Mr Alirezai called Mr Sarlak and informed him that he was not going to sign the documents as they were not doing any business. Mr Alirezai did not sign or return the documents. Mr Sarlak did not inform Mr Jackson of this refusal by Mr Alirezai.
 In February 1995 Mr Alirezai received a letter dated 10 February 1995 from the bank directly (Exhibit 21). This letter was again seeking an acknowledgment of lending facilities. The overdraft was $720,000 and the fully drawn advance was $100,000. On receiving this letter he faxed a copy to Mr Sarlak with a note at the top in Farsi asking for an explanation. Mr Alirezai stated he also spoke to a Mr Mercer, who was a friend, to see if he could explain the letter and that Mr Mercer could not do so, but he arranged for Mr Alirezai to attend on the manager of the Toowoomba branch of the bank, Mr Deller.
 Mr Alirezai stated that he then attended on Mr Deller at the Toowoomba branch of the bank. Mr Alirezai showed Mr Deller the letter dated 10 February 1995 he had received from the bank and a couple of other letters that had been sent to him by Mr Sarlak. Mr Alirezai stated that Mr Deller said to him that he could not understand them and tried to contact Mr Jackson at the Albury branch of the bank. Mr Alirezai stated that Mr Deller was unable to do so immediately. Mr Alirezai then returned later in the day. When Mr Alirezai returned to the bank he again spoke to Mr Deller. He stated that Mr Deller informed him that Mr Jackson had told him that the documents were unimportant and for Mr Alirezai to sign and return them. Mr Alirezai stated that Mr Deller told him not to sign it, as it was not clear enough.
 That evening Mr Alirezai spoke to Mr Sarlak. Mr Sarlak told him not to worry that he, Mr Sarlak, would speak to Mr Jackson. Mr Alirezai did not sign or return the documents.
 On 29 March 1995 Mr Alirezai was admitted to hospital in Sydney for an operation on his back. He remained in hospital for 67 days. He returned to Toowoomba in the first week of June 1995.
 In June 1995 Mr Alirezai received a further letter from the bank dated 23 June 1995 (Exhibit 22). This was again an acknowledgment of lending facilities. The overdraft was $590,000 and the fully drawn advance was $100,000. Mr Alirezai did not sign or return this letter. He again spoke to Mr Mercer about the letter. At Mr Mercer’s suggestion Mr Alirezai wrote to the bank asking for the return of his title deeds. Mr Alirezai sent a letter to the bank on 30 June 1995 (Exhibit 23) informing the bank that he was currently negotiating selling his properties and asking for return of the title deeds. Mr Jackson forwarded a copy of the letter to Mr Sarlak with a handwritten request “Would you please let me know new arrangements for replacement security” (Exhibit 47). Nothing was offered by Mr Sarlak.
 On 6 July 1995 the bank sent a letter to Mr Alirezai declining to return the title deeds. The bank informed Mr Alirezai that the deeds could not be released as they were being held against the mortgage of Sarlak Enterprises (Exhibit 24). Mr Alirezai stated in evidence that until this time he had no knowledge that the deeds were held against the mortgage.
 Mr Alirezai received another letter from the bank dated 2 November 1995 (Exhibit 25) requesting acknowledgment of the debt of Sarlak Enterprises. The overdraft limit at this time was shown in this letter as $600,000 and reference was made to a full drawn advance of $100,000. Mr Alirezai did not sign or return the letter.
 In February 1996 Mr Alirezai received another letter from the bank in Albury dated 16 February 1996 (Exhibit 26). At this time Mr Alirezai stated and I accept that he rang Mr Jackson directly. Mr Alirezai stated that Mr Jackson informed him that Sarlak Enterprises was doing well and that the debt had been reduced to $619,000 and that Mr Jackson was pushing him to sign and return the letter. Mr Alirezai did not sign or return the acknowledgment.
Relationship between Mr Alirezai and Mr Sarlak
 At the time that Mr Sarlak requested Mr Alirezai to allow his title deed for Lot 2 to be used for the guarantee in favour of the tallow company, Mr Sarlak was making use of the friendship that existed between Mr Alirezai and him, and the fact that he knew that Mr Alirezai felt a moral obligation towards him, because of the help that he had given Mr Alirezai by lending him the sum of $50,000. I also concluded from Mr Alirezai’s evidence that he had respect for Mr Sarlak and trusted him.
 Much was made in submissions on behalf of Mr Alirezai of his Muslim faith and observance of Iranian customs. There only relevance is to explain the feeling which Mr Alirezai expressed of being under a moral obligation to assist Mr Sarlak, when Mr Sarlak requested assistance.
 That relationship of trust and friendship continued and remained at the time that Mr Sarlak suggested in 1993 to Mr Alirezai that they go into business together and that Mr Alirezai put up Lots 2 and 6 as security for the business and, more particularly by July 1993, as security for the BNNUC.
Mr Alirezai’s comprehension of English
 It was submitted on behalf of Mr Alirezai that I make findings about the degree of comprehension of English which Mr Alirezai had at the time of granting each of the mortgages, consistent with what Mr Alirezai has pleaded in sub-paras (d) to (i) of para 1 of the counterclaim. It is obviously not necessary to make findings in relation to each allegation in the counterclaim, if that allegation is not essential to the causes of action that remain in issue or is unnecessary to resolve in the light of the resolution of other matters raised on the pleadings. In view of my finding that the bank did not know of any difficulty for Mr Alirezai in understanding English at the time the mortgage over Lot 6 was granted, it is not necessary to make a finding about Mr Alirezai’s comprehension of English at the time of granting each of the mortgages. As I reached conclusions on some aspects of Mr Alirezai’s comprehension of English during the hearing of the proceeding, I will, however, set out those conclusions.
 Mr Alirezai gave evidence during the course of the trial for approximately 1 day. He did not require an interpreter. There was no evidence to support a submission that his comprehension of the English language had improved markedly at the time of the trial compared to his comprehension at the time of giving each of the mortgages. I accept that it follows from Mr Alirezai’s continuing residence in Australia to the time of the trial that his understanding of English in 1991 and 1993 would not have been better than it was at the time of the trial. During the course of giving evidence, Mr Alirezai appeared to understand the questions which were asked of him, with few exceptions, and was substantially responsive in his answers. He certainly gave the impression of having a reasonable comprehension of English, although I accept that his familiarity with the subject matter of his evidence may have meant that his English appeared a little better than it actually was.
 According to Ms Cole’s report (Exhibit 69) Mr Alirezai’s results in the IELTS test taken by him on 15 March 2001 in respect of listening, reading and writing skills were in the band of an intermittent user where no real communication was possible and that Mr Alirezai had great difficulty understanding spoken and written English. Mr Alirezai performed considerably better in the speaking test where his results were in the band of a good user who has operational command of the language with occasional inaccuracies, inappropriacies and misunderstandings. Ms Cole concluded that Mr Alirezai’s speaking skills enabled him to communicate orally without difficulty. That accorded with my observations.
 The testing of Mr Alirezai’s general listening skills in English does not necessarily indicate what his level of comprehension was when dealing with Mr Kennedy, when Mr Alirezai had some broad indication from Mr Sarlak of the topic on which he was to be advised by Mr Kennedy.
 There is no doubt that Mr Alirezai would have had difficulty if he had attempted to read the terms of the mortgage and the memorandum, which there is no suggestion that he did.
 The most significant evidence about Mr Alirezai’s comprehension of English at the time of signing each of the mortgages is that of himself and Mr Kennedy. To the extent that Mr Alirezai did recall in respect of the mortgage over Lot 2 that Mr Kennedy told him the document was a bill of mortgage and that the additional clause inserted by Mr Kennedy would enable him to keep his personal belongings, Mr Alirezai showed an understanding of what Mr Kennedy told him. The same comment can be made in respect of Mr Alirezai’s evidence of what Mr Kennedy told him at the time of signing the mortgage over Lot 6. As I have already found, on each of these occasions Mr Alirezai did not in any way indicate to Mr Kennedy that he did not understand what Mr Kennedy was advising him.
Extent of bank’s obligation to provide information to Mr Alirezai
 Putting to one side the claim being pursued by Mr Alirezai of unconscionable dealing on the part of the bank, one issue that emerged during the trial was the extent of the bank’s obligation to provide information to Mr Alirezai, at the time he granted each of the mortgages, relating to the existing indebtedness of Sarlak Enterprises and the potential liability that Mr Alirezai was assuming by giving the mortgage.
 The High Court in Goodwin v National Bank of Australasia Ltd (1968) 117 CLR 173, 175 confirmed what was settled law that the transaction between a creditor and surety was not of a class calling for the fullest disclosure. Barwick CJ (with whom the other members of the court agreed) stated at 175:
“But it is settled law that a bank in the position which the respondent occupied in relation to the appellant is only bound to disclose to the intending surety anything which has taken place between the bank and the principal debtor ‘which was not naturally to be expected’, or as it was put by Pollock M.R., in Lloyd’s Bank Ltd. v. Harrison (1925) (unreported) cited in Paget’s Law of Banking, 7th ed. (1966), p. 583 ‘the necessity for disclosure only goes to the extent of requiring it where there are some unusual features in the particular case relating to the particular account which is to be guaranteed’.” (footnote inserted)
 There was no departure from Goodwin in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, 455, 463, 481, 484-485. In fact, it was confirmed by Gibbs CJ at 455 and Mason J at 463 of Amadio that a bank is not obliged to disclose to the surety matters affecting the credit of the customer. In addition Gibbs CJ stated at 456:
“The facts that the company was in grave financial difficulties, and was consistently exceeding its overdraft limit, and that its cheques were being dishonoured, in themselves did no more than throw light on the credit of the company.”
Whether Mr Kennedy had sufficient information to give independent advice
 Mr Alirezai was given leave to make amendments to his counterclaim after the evidence at the trial had been completed. One of those amendments was to para 20 of the counterclaim. Paragraph 20 sets out the circumstances on which Mr Alirezai relies to impugn the acknowledgement which Mr Kennedy had him sign (Exhibit 29). The additional circumstances added by leave given on 9 November 2001 are set out in sub-paras (m) and (n) of para 20 of the counterclaim:
“(m)Malcolm Vincent Kennedy made no enquiry concerning, and had no knowledge of, the financial standing of Sarlak Enterprises or the extent of its indebtedness to the First Defendant, or the nature and value of the securities then held by the First Defendant with respect to the debts of Sarlak Enterprises, or whether any further or other securities were available to the First Defendant to secure the debts of Sarlak Enterprises, or the matters referred to in paragraph 11A, or any of these things;
(n)Malcolm Vincent Kennedy had no knowledge and made no enquiry of the Plaintiff with respect to the Plaintiff’s knowledge of the circumstances under which the Plaintiff was undertaking the liabilities contained in the Bill of Mortgage over Lot 2.”
 The allegation in para 11A of the counterclaim was that the bank knew, or ought to have known, that Mr Sarlak was in a position to influence Mr Alirezai or had a motive for, or interest in, ensuring that Mr Alirezai executed the mortgage over Lot 2 on the basis of the level of indebtedness of Sarlak Enterprises’ account with the bank between 15 October and 6 December 2001.
 Leave was also given to Mr Alirezai to insert para 20A in the counterclaim which alleges that the bank knew, or ought to have known, that at the time when Mr Alirezai signed the mortgage over Lot 2 neither Mr Kennedy nor Mr Alirezai had received any information from it concerning the matters referred to in sub-paras 20(m) and (n). The bank admitted that at the time Mr Alirezai signed the mortgage over Lot 2, neither Mr Kennedy nor Mr Alirezai had received any information from the bank concerning the factual matters pleaded in sub-paras 20(m) and (n) of the counterclaim, but denied any obligation existed on Kennedy to make inquiries in respect of those factual matters and denied any obligation existed on the bank to provide the information concerning those factual matters.
 Like amendments were made to the counterclaim in respect of the certificate executed by Mr Kennedy relating to the execution by Mr Alirezai of the mortgage over Lot 6. Those allegations are found in sub-paras 35(m) and (n) and para 35A of the counterclaim. Like admissions and denials were made by the bank in respect of para 35A of the counterclaim.
 On each occasion Mr Kennedy gave advice to Mr Alirezai of the nature of the transaction being undertaken by Mr Alirezai and what would happen if Sarlak Enterprises defaulted. Mr Kennedy did not need to be aware of Sarlak Enterprises’ current financial history in order to be able to advise Mr Alirezai, as he did so, on what Mr Alirezai’s financial exposure would be in terms of Lots 2 and 6 being sold by the bank, if Sarlak Enterprises defaulted in meeting its obligations to the bank. It was for Mr Alirezai to make a decision based on his relationship with Mr Sarlak and the little he knew about the business of Sarlak Enterprises, as to whether or not he wanted to put each of Lots 2 and 6 at risk.
 The fact is that in respect of each of the proposed mortgages, Mr Kennedy attempted to discourage Mr Alirezai from granting the mortgage. The nature of each transaction was such that Mr Alirezai was putting each of Lot 2 and Lot 6 at risk and Mr Kennedy could and did give that advice without the need for detailed consideration of the financial position of Sarlak Enterprises.
 Although much was made in the course of evidence and submissions about the so-called “unsatisfactory” conduct by Sarlak Enterprises of its account with the bank prior to each of the mortgages being granted, that is not borne out by the evidence. Prior to the granting of the mortgage over Lot 2, the account of Sarlak Enterprises was being conducted close to or above the approved limit, but with increased temporary limits being continually provided by the bank to Sarlak Enterprises. The same observation can be made in respect of the account of Sarlak Enterprises with the bank from June 1993 until the granting of the mortgage over Lot 6.
 I accept Mr Jackson’s evidence that he was not concerned about the conduct of Sarlak Enterprises’ account in the respective periods prior to the granting of the mortgages by Mr Alirezai, as the bank’s position was protected by obtaining adequate security from Sarlak Enterprises to support the indebtedness of Sarlak Enterprises to the bank.
 This is not the sort of case where there were unusual features in the loans made by the bank to Sarlak Enterprises which required disclosure to Mr Alirezai as third party mortgagor. The bank’s requirement for additional security from Sarlak Enterprises in December 1991 was made in connection with Sarlak Enterprises’ request for a bank guarantee in respect of its new venture of exporting tallow. Similarly the requirement for the additional security in July 1993 was in connection with the shipment of mutton then being undertaken by Sarlak Enterprises which was of greater value than each tallow shipment. The facts of this case can be compared with that of the borrower in Amadio which was already insolvent at the time the guarantees were procured by the bank. In this matter Sarlak Enterprises was seeking to expand its business on each of the occasions and did not fail until at least 2 years after the transaction in August 1993.
 On each occasion Mr Kennedy advised Mr Alirezai accurately of the legal effect of the mortgage he was granting and the consequence for Mr Alirezai, if he was called upon under the mortgage to meet the debts of Sarlak Enterprises. Mr Kennedy had sufficient information to give the independent legal advice that the bank required be given to Mr Alirezai on each occasion.
Bank’s entitlement to possession of Lot 6
 In his defence of the bank’s claim Mr Alirezai admitted that he received the bank’s written notice dated 28 May 1996 by which the bank demanded the immediate payment of the sum of $653,106.35, but denied that that sum was owing by him to the bank and denied that that sum was secured by the mortgages, because the mortgages were unenforceable against him in consequence of the matters set out in the counterclaim.
 Putting the counterclaim to one side, Mr Alirezai’s defence to the bank’s claim for possession is merely based on a denial that the sum of $653,106.35 is owing by Mr Alirezai to the bank. Apart from his counterclaim, Mr Alirezai has, in effect, put the bank to proof in respect of the debt which it relies on to support the claim for possession of Lot 6.
 The bank’s record of transactions in relation to the account held by Sarlak Enterprises in the form of the bank statement (Exhibit 6) is the basis for proving that the debt of Sarlak Enterprises owed to the bank as at 24 May 1996 was $653,106.35. By its notice dated 28 May 1996 (Exhibit 4) the bank demanded of Mr Alirezai immediate payment of that sum to the extent to which it was secured by the mortgages over Lot 2 and 6. As cl 8 in each of the mortgages limited the liability of Mr Alirezai under that mortgage to the proceeds of sale of the mortgaged property, what was demanded of Mr Alirezai was that amount equal to the net proceeds of sale of Lots 2 and 6.
 The statement of claim endorsed on the writ in this proceeding pleads two bases for recovery of possession. The first is an entitlement of the bank to possession pursuant to cl 12 of Memorandum No H942766. The second is on the basis of the attornment clause in the Memorandum and the termination of that tenancy by the notice given by the bank’s solicitors on 3 December 1996. In addition the facts pleaded in the statement of claim by the bank give rise to a right to recover possession pursuant to s 78(2)(c)(i) of the Land Title Act 1994.
 Apart from the counterclaim, the bank has shown that on any of these bases it was entitled to possession of Lot 6 upon Mr Alirezai’s failure to pay an amount equivalent to the net proceeds of sale of Lot 6 upon demand being made by notice dated 28 May 1996 and (if the attornment clause were relied on) upon the subsequent termination of the tenancy, as a result of that non-payment.
 The question that has to be determined is whether the bank was entitled to continue to press for possession of Lot 6 at the time of the trial. The bank’s record in the form of the bank’s statement (Exhibit 7) is the basis of proving that the debt of Sarlak Enterprises to the bank as at 1 November 2001 was in excess of the likely net proceeds of sale of Lot 6. The evidence at the trial was that the current market value of Lot 6 was in the order of $200,000.
 An attempt was made during the cross-examination of Mr Asche to raise a doubt as to whether Exhibit 7 accounted for all transactions which had occurred in respect of the account since 1996 such as the crediting of the sale proceeds of Lot 2 and the sale proceeds of other properties which secured the debt of Sarlak Enterprises. The record at the bank in the form of Exhibit 7 speaks for itself. In the absence of evidence which puts in issue the accuracy of the bank’s records, Exhibit 7 shows that the debt of Sarlak Enterprises as at 1 November 2001 was far in excess of the likely net proceeds of sale of Lot 6. The bank has proven that its entitlement to possession of Lot 6 has continued.
Issues at trial
 The causes of action pleaded in Mr Alirezai’s counterclaim are breach of s 52 of the Trade Practices Act 1974 (Cth) (“TPA”), fraudulent misrepresentation, unconscionable dealing, breach of fiduciary duty, undue influence, breach of duty under s 85 of the Property Law Act 1974 (“PLA”) on the sale of Lot 2 and a claim based on limiting the proper construction of the mortgage over Lot 2 to securing the provision of the bank guarantee on account of Sarlak Enterprises in respect of Peerless in the sum of $150,000. Mr Alirezai’s counterclaim against Mr Jackson is for damages for breach of s 52 of the TPA on the basis that Mr Jackson was a party to the contravention of that provision alleged against the bank.
 In the written submissions on behalf of Mr Alirezai (Exhibit 130) the claims based on breach of fiduciary duty and a construction of the mortgage over Lot 2 were, in effect, abandoned.
 Although it will be necessary to deal with each of the causes of action which Mr Alirezai is still pursuing, it is convenient to deal at the outset with discrete issues which were thrown up by the trial.
 These issues can be summarised as follows:
(a) whether the principle enunciated by the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 (“Anshun”) prevents Mr Alirezai seeking any relief in relation to the mortgage over Lot 2;
(b) whether Mr Sarlak was the bank’s agent for the purpose of procuring Mr Alirezai’s signature on the mortgage over Lot 2 and for the purpose of explaining the mortgage and the transaction underlying it;
(c) whether Mr Sarlak was the bank’s agent for the purpose of procuring Mr Alirezai’s signature on the mortgage over Lot 6 and for the purpose of explaining the mortgage and the transaction underlying it;
(d) whether the representations made by Mr Sarlak to Mr Alirezai in respect of each of the mortgage transactions can be attributed to the bank.
 To the extent that Mr Alirezai is pursuing relief against the bank in respect of the mortgage over Lot 2, the bank contends that by reason of the judgment of White J which was not appealed against in respect of Lot 2, Mr Alirezai is prevented by an Anshun estoppel from seeking any relief which is based on a right to have the mortgage over Lot 2 avoided.
 The Anshun estoppel is taken from the following statement of Gibbs CJ and Mason and Aickin JJ in Anshun at 602-603:
“In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff’s claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few. See the illustrations given in Cromwell v. County of Sac.”
 They also stated at 603-604:
“The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. By ‘conflicting’ judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.”
 The illustrations given in Cromwell v County of Sac 94 US 351 (1876) at 356 were:
“Various considerations, other than the actual merits, may govern a party in bringing forward grounds of recovery or defence in one action, which may not exist in another action upon a different demand, such as the smallness of the amount or the value of the property in controversy, the difficulty of obtaining the necessary evidence, the expense of the litigation, and his own situation at the time. A party acting upon considerations like these ought not to be precluded from contesting in a subsequent action other demands arising out of the same transaction’.”
 An analysis of recent authorities on the application of the Anshun principle is found in the judgment of Holmes J in Clout v Klein  QSC 401. Additional recent cases include Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd (2001) 38 ACSR 404 and Angel v National Australia Bank Ltd  FCA 1053.
 Mr Alirezai defended the bank’s application for summary judgment by filing his affidavit sworn on 6 April 1997 which exhibited the defence which he intended to rely on in the proceeding. The only defence affirmatively raised in respect of the mortgage of Lot 2 was that the bank’s notice of demand dated 28 May 1996 required Mr Alirezai to pay $653,106.35 when cl 8 of the mortgage prohibited the mortgagee from demanding any amount from Mr Alirezai in excess of the proceeds of sale of the mortgaged property. To the extent that Mr Alirezai sought to rely on a misrepresentation on the part of the bank it was limited to one that was alleged to have been made by Mr Jackson to Mr Alirezai through his agent Mr Sarlak, prior to the execution of the mortgage over Lot 6, when it was alleged that Mr Jackson told Mr Sarlak that if Sarlak Enterprises did not proceed to draw the Export Credit Facility (BNNUC) for the proposed tallow export contract, the mortgage over Lot 6 would not be relied on. In that defence it was alleged that Mr Alirezai executed the mortgage over Lot 6 in reliance on that representation and that the proposed Export Credit Facility (BNNUC) was not drawn and the proposed tallow export contract did not proceed.
 The effect of the judgment of White J in favour of the bank for recovery of possession of Lot 2 was to find that the bank as mortgagee of Lot 2 from Mr Alirezai as the registered proprietor of Lot 2 was entitled to recover possession of Lot 2 pursuant to the terms of the mortgage on the basis that a debt of $653,106.35 was owing by Sarlak Enterprises to the bank that was secured by the mortgage to the extent provided for by cl 8 of the mortgage. It is implicit in this judgment that the mortgage was valid and subsisting.
 None of the causes of action which Mr Alirezai is now seeking to pursue in his counterclaim arising out of the circumstances under which he granted the mortgage over Lot 2 to the bank were raised in the material filed on his behalf in responding to the summary judgment application. It cannot be said that these causes of action were not relevant to the subject matter of the bank’s claim for recovery of possession of Lot 2. The issue that needs to be determined is whether, in the circumstances, it was unreasonable for Mr Alirezai not to rely on bringing forward those causes of action at the time he was opposing summary judgment.
 It is submitted on behalf of Mr Alirezai that the Anshun estoppel cannot apply because the counterclaim is brought in the same action as the judgment on which the bank relies to claim the estoppel. There is no merit in that submission. It is not a matter of substance that the counterclaim which includes the causes of action which Mr Alirezai seeks to pursue in respect of the granting of the mortgage over Lot 2 are pleaded in the counterclaim in the same proceeding in which the final judgment was given for possession of Lot 2. There was no counterclaim at the time that judgment was given. The counterclaim is, in effect, a new proceeding which agitates Mr Alirezai’s causes of actions in respect of the mortgage over Lot 2.
 As the decision in Angel v National Australia Bank Ltd illustrates, the fact that the judgment which is relied on to raise the Anshun estoppel was given on a summary basis does not preclude the application of the estoppel. It must be a relevant factor, however, that the judgment relied on to give rise to the estoppel was given without a trial. The estoppel was found to exist against mortgagors in Angel v National Australia Bank Ltd who sought to bring an action against a bank in the Federal Court seeking damages and relief under the TPA in respect of a mortgage, after the mortgagors had been unsuccessful in resisting a summary judgment application in Supreme Court proceedings brought by that bank for recovery of possession of the mortgaged property. The mortgagors had raised in defence of the summary judgment application facts that were relied on to allege unconscionable conduct against that bank, although these were different facts from those put forward in the subsequent Federal Court proceeding. Carr J found that the judgment for possession was based on the fact that nothing in the mortgagor’s material resisting the summary judgment application gave rise to an issue or question which ought to be tried and as the matters which the mortgagors sought to raise in the Federal Court including the right to possession of the subject property would conflict with the judgment in the Supreme Court proceeding, the rule in Anshun applied.
 Although Mr Alirezai could have raised these causes of action arising out of the circumstances under which the mortgage over Lot 2 was granted in defending the summary judgment application and, if successful, they would have prevented the judgment for recovery of possession, the nature of those claims are such that, until adjudicated upon, the mortgage which was sought to be challenged would have remained in effect. What is sought now by Mr Alirezai in his counterclaim is a declaration that the bank holds the proceeds of sale of Lot 2 on trust for Mr Alirezai. Relief of that nature is not strictly in conflict with the bank having earlier exercised the right to recover possession of Lot 2 on the basis of the judgment obtained on 16 April 1997.
 Another matter which is relevant to the reasonableness of Mr Alirezai’s conduct at the time of resisting the summary judgment application and is reflected by the contents of the proposed defence was that his situation must have been affected by the fact that Mr Sarlak was assisting him in that endeavour. Mr Flehr’s brief to counsel in respect of the summary judgment application set out what Mr Sarlak had told Mr Flehr about each of the mortgage transactions and referred to a statutory declaration of Mr Sarlak, although a copy of that is no longer in the brief which is Exhibit 60. I infer that the information provided by Mr Sarlak to Mr Flehr was relied on in preparing the proposed defence put forward in the summary judgment application. Mr Flehr also had a recollection that Mr Sarlak had paid one of his firm’s early invoices relating to the matter. In view of Mr Sarlak’s disregard of Mr Alirezai’s interests at the time of obtaining the mortgages over Lots 2 and 6, in order to further the interests of himself and Sarlak Enterprises, it was unlikely that Mr Alirezai obtained assistance from Mr Sarlak which gave his advisers the information required to make the claims now sought to be made in respect of the mortgage over Lot 2.
 In all the circumstances pertaining to Mr Alirezai’s situation at the time of defending the summary judgment application, it was not unreasonable for him not to have raised the causes of action on which he now seeks to rely arising out of the circumstances in which he granted the mortgage over Lot 2.
 Mr Alirezai is not precluded by an Anshun estoppel from pursuing the claims against the bank arising out of the circumstances of the giving of the mortgage over Lot 2.
 The bank also submitted that Mr Alirezai was estopped from making the claims arising out of the circumstances of the granting of the mortgage over Lot 2 by reason of issue estoppel. As issue estoppel can arise only in respect of a judicial determination directly involving issue of fact or of law (Blair v Curran (1939) 62 CLR 464, 531), the implicit finding made by White J that the mortgage over Lot 2 was a valid and subsisting mortgage cannot have disposed of those factual matters which underlie Mr Alirezai’s claims that challenge the validity of that mortgage which were not raised in any way whatsoever on the summary judgment application.
Whether Mr Sarlak was the agent of the bank
 Mr Alirezai pleads in para 14A of the counterclaim that Mr Sarlak was the agent at the bank for the purpose of procuring his signature on the mortgage over Lot 2 and for the purpose of explaining the mortgage and the underlying transaction to Mr Alirezai. An identical allegation in relation to the mortgage over Lot 6 is made in para 30A of the counterclaim. The bank denies these allegations. There is an allegation in para 15 of the counterclaim that the bank clothed Mr Sarlak with ostensible authority to act on its behalf in the procuration of further security to that held by the bank from Sarlak Enterprises prior to December 1991. The allegation is made in para 30 of the counterclaim that the bank clothed Mr Sarlak with actual or ostensible authority to act on its behalf in the procuration of further security to that held by the bank from Sarlak Enterprises prior to July 1993. These allegations are also denied.
 Of the facts relied upon as particulars of the allegation in para 14A of the counterclaim, the following were either admitted by the bank or proved in the terms set out:
(a)the bank provided Mr Sarlak with the form of the mortgage over Lot 2;
(b)the bank left it to Mr Sarlak to obtain Mr Alirezai’s signature on the mortgage over Lot 2, subject to Mr Alirezai taking the mortgage to a solicitor and obtaining a letter from the solicitor certifying to the giving of independent advice by the solicitor in respect of the mortgage;
(c) the bank refrained from sending the mortgage over Lot 2 directly to Mr Alirezai for execution in the sense of accepting Mr Sarlak’s offer to courier the documents to Mr Alirezai;
(d)the bank dealt and communicated with Mr Alirezai through Mr Sarlak, subject to the dealings between the bank and Mr Kennedy;
(e)the bank expressly authorised Mr Sarlak to deliver the mortgage over Lot 2 to Mr Alirezai;
(f)the bank derived a benefit in the ordinary course of its business from the execution by Mr Alirezai of the mortgage over Lot 2; and
(g)the bank had already advanced significant moneys to Sarlak Enterprises and had its own interest in ensuring the success of the business activities being undertaken by Sarlak Enterprises.
 The particulars of the allegation in para 14A of the counterclaim which are in issue are whether the bank expressly authorised Mr Sarlak to obtain Mr Alirezai’s signature on the mortgage over Lot 2 and to explain the mortgage over Lot 2 and the transaction underlying it to Mr Alirezai.
 There are a number of statements in the recent authorities on the circumstances in which a party may be the agent of a lender in connection with the execution of security documents.
 Mr Alirezai relied on the statements made by McPherson JA in Platzer v Commonwealth Bank of Australia  1 QdR 226, 291-292, applying Alderton v Prudential Assurance Co Ltd (1993) 41 FCR 435, 444-446.
 In Platzer Mr Platzer signed a guarantee and bill of mortgage in respect of the debts of a solicitor’s firm at which he was working with the intention of being admitted to partnership, if he were able to be admitted as a solicitor. The principal of the firm was refinancing. The appellant bank provided the security documents to the principal, including the guarantee and bill of mortgage to be executed by Mr Platzer. The principal told Mr Platzer that signing the documents was “just a formality” which induced Mr Platzer to sign them. On the basis that the appellant bank left it to the principal to obtain Mr Platzer’s signature, McPherson JA held that the conclusion that the appellant bank was responsible for misrepresentations made by the principal in order to obtain Mr Platzer’s signature was amply justified on the authority of Alderton.
 In HG & R Nominees Pty Ltd v Fava  2 VR 368, 401 JD Phillips J stated that, where the transaction has been brought about through the wrongdoing of the principal debtor when securing the surety’s signature to the guarantee, the creditor in allowing the principal debtor to obtain the signature of the guarantor does not make the principal debtor an agent, unless the principal debtor was the agent of the creditor or the creditor has actual or constructive notice of the debtor’s wrongdoing.
 The Full Court of the Federal Court in Lisciandro v Official Trustee in Bankruptcy (1996) 69 FCR 180 dismissed an appeal from the trial judge’s refusal to find that the creditor was bound by the principal debtor’s controller’s conduct in inducing Mr Lisciandro to execute the guarantee on the basis that the controller had acted as the creditor’s agent in taking the guarantee to Mr Lisciandro and having it signed. Ryan and Drummond JJ at 188 distinguished Alderton on the basis that that was a case where the person who procured the third party security was expressly authorised by the creditor to undertake that task on the creditor’s behalf. Cooper J at 193-194 relied on authorities including HG & R Nominees Pty Ltd v Fava to hold that Mr Lisciandro had to show the appointment of the controller as the agent of the creditor in accordance with the general principles of agency law. See also Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91, 105.
 The fact that the lender imposed a condition on the loan that independent advice be given to the applicant who was in form a co-borrower, but in substance a surety, was the basis of rejecting a claim that the lender was liable for any misrepresentation made by one of the other borrowers to whom the security documents had been sent: Ribchenkov v Suncorp-Metway Ltd (2000) 175 ALR 650, 660-662.
 It is not necessary to endeavour to reconcile the statements from the above authorities. Taking the proposition of when a party who has been given the security documents which need to be signed may be the agent of a lender in connection with the execution of security documents at its most favourable for Mr Alirezai, the fact that the bank required a letter of independent advice from the solicitor to whom Mr Alirezai was required to take the mortgage, in order to obtain that letter of independent advice, means that a finding that Mr Sarlak was the agent of the bank for the purpose of obtaining Mr Alirezai’s execution of the mortgage over Lot 2 or explaining the mortgage over Lot 2 and the underlying transaction to Mr Alirezai cannot be made out.
 It was submitted on behalf of Mr Alirezai that the bank, upon receipt of Mr Sarlak’s letter dated 3 December 1991 (Exhibit 41) which indicated an intention on Mr Sarlak’s part that Lot 2 would be used to secure the bank guarantee of $150,000 made to Peerless should have inferred that was Mr Alirezai’s understanding of the proposed mortgage. It is therefore submitted that when Mr Jackson explained to Mr Sarlak that the mortgage over Lot 2 was required to cover all the indebtedness of Sarlak Enterprises, Mr Jackson was entrusting Mr Sarlak to pass that explanation onto Mr Alirezai and thereby appointing Mr Sarlak as the bank’s agent to disabuse Mr Alirezai of his understanding of the proposed mortgage. That submission is inconsistent with the requirement imposed by Mr Jackson and conveyed by Mr Sarlak that Mr Alirezai had to take the mortgage to a solicitor and obtain a letter of independent advice. Even Mr Sarlak conceded that he was not asked by anyone from the bank to explain the mortgage to Mr Alirezai and that he did not need to, as Mr Alirezai was to see his lawyer. I do not accept that in these circumstances the fact that Mr Jackson did not expressly seek out Mr Alirezai, by telephone or in writing, to make the same explanation which he made to Mr Sarlak about the requirement of Lot 2 to be a security for all the debts of Sarlak Enterprises can be used to make a finding that Mr Sarlak was the bank’s agent for the purpose of explaining the mortgage over Lot 2 to Mr Alirezai.
 It cannot follow from the facts which I have found in relation to the transmission of the security documents relating to Lot 2 by Mr Sarlak to Mr Alirezai that Mr Sarlak acted with ostensible authority as the agent of the bank. In any case, the bank can also rely on the fact that the representations pleaded in para 8 of the counterclaim were alleged to have been made by Mr Sarlak prior to the involvement of the bank, so that, as a matter of timing, none of these representations, to the extent which they have been proven, can be attributed to the bank.
 Of the facts relied upon as particulars of the allegation in para 30A of the counterclaim, the following were either admitted by the bank or proved in the terms set out:
(a)the bank provided Mr Sarlak with the form of the mortgage over Lot 6;
(b)the bank left it to Mr Sarlak to obtain Mr Alirezai’s signature on the Bill of Mortgage over Lot 6, subject to Mr Alirezai executing the mortgage in the presence of a solicitor and obtaining a letter from the solicitor certifying to the giving of independent advice by the solicitor in respect to the mortgage;
(c)the bank refrained from sending the mortgage over Lot 6 directly to Mr Alirezai for execution in the sense of accepting Mr Sarlak’s offer to courier the documents to Mr Alirezai;
(d)the bank dealt and communicated with Mr Alirezai through Mr Sarlak, subject to the dealings between the bank and Mr Kennedy;
(e)the bank expressly authorised Mr Sarlak to deliver the mortgage over Lot 6 to Mr Alirezai;
(f)the bank derived a benefit in the ordinary course of its business from the execution by Mr Alirezai of the mortgage over Lot 6;
(g)the bank had already advanced significant moneys to Sarlak Enterprises and had its own interest in ensuring the success of the business activities being undertaken by Sarlak Enterprises.
 The particulars of the allegation in para 30A of the counterclaim which are in issue are whether the bank expressly authorised Mr Sarlak to obtain Mr Alirezai’s signature on the mortgage over Lot 6 and to explain the mortgage over Lot 6 and the transaction underlying it to Mr Alirezai and the effect of the letter dated 4 August 1993 from the bank to Sarlak Enterprises (Exhibit 42) which was in the following terms:
“We enclose the following documents for execution by Mohsen Alirezai.
1.Mortgage in duplicate
2.Letter of Independent Advice
Please ensure Mohsen Alirezai arranges for execution of the documents in the presence of a Solicitor.”
 Mr Alirezai relies on that letter to assert that there was express authorisation on behalf of the bank for Mr Sarlak to obtain Mr Alirezai’s signature on the mortgage over Lot 6. Mr Alirezai also relies on the terms of this letter and the course of what is described as continuing conduct engaged in by the bank between 1991 and 1993 in entrusting Mr Sarlak with passing on the bank’s intentions concerning the securities to Mr Alirezai, as evidencing an express appointment to explain the transactions underlying the securities to Mr Alirezai.
 The two separate transactions in 1991 and 1993 cannot be characterised as “continuing conduct”. There were no communications from the bank to Mr Alirezai through Mr Sarlak after the mortgage over Lot 2 was granted, until the proposal came about from Mr Sarlak in July 1993, to which Mr Alirezai agreed, that Mr Alirezai allow both Lots 2 and 6 to be used as security in favour of the bank.
 The terms of the letter dated 4 August 1993 do not amount to the express authorisation which Mr Alirezai seeks to draw from that letter, when the letter expressly requires that Mr Alirezai arrange for the execution of the relevant documents in the presence of an independent solicitor.
 The fact that the bank required Mr Alirezai to sign the mortgage over Lot 6 in the presence of a solicitor and required a letter of independent advice from that solicitor means that a finding that Mr Sarlak was the agent of the bank for the purpose of obtaining Mr Alirezai’s execution of the mortgage over Lot 6 or explaining the mortgage over Lot 6 and the underlying transaction to Mr Alirezai cannot be made out. The facts do not support a finding that Mr Sarlak was given either actual or ostensible authority to act on behalf of the bank in obtaining the mortgage over Lot 6 from Mr Alirezai. In addition, as a matter of timing, it cannot be found that the bank was responsible for or connected with the representations alleged in para 24 of the counterclaim to the extent to which they have been proven.
Representations in respect of the mortgage of Lot 2
 In para 15 of the counterclaim Mr Alirezai relies on a finding that the bank had clothed Mr Sarlak with ostensible authority in respect of the procuration of the mortgage over Lot 2 as the basis for asserting that the representations alleged in para 8 of the counterclaim were made by Mr Sarlak pursuant to that ostensible authority. As Mr Alirezai has failed in proving that authority, there can be no finding that the representations which I have found were made by Mr Sarlak were made on behalf of the bank.
 The representations set out in para 13 of the counterclaim are alleged directly against the bank on the basis that in consequence of the drawing and engrossing of the form of mortgage over Lot 2, the delivery of the mortgage to Mr Sarlak for the purpose of arranging the execution of the mortgage by the plaintiff and the delivery of the certificate of title for Lot 2 by Mr Sarlak to the bank, the bank by its conduct and by its silence represented to Mr Alirezai that the mortgage over Lot 2, if executed by Mr Alirezai:
“(e)would be utilised as security for the provision of a bank guarantee in the sum of one hundred and fifty thousand dollars ($150,000.00) by Sarlak Enterprises to Peerless Holdings Pty Ltd;
(f)would constitute a security limited to the amount of the bank guarantee in the sum of one hundred and fifty thousand dollars ($150,000.00);
(g)would be released on the completion of the tallow export contract by the payment of the proceeds of sale of the contract and the Plaintiff’s Certificate of Title to Lot 2 would be returned to the Plaintiff at that time.”
 The terms of the mortgage itself and the requirement of the bank that Mr Alirezai take the mortgage to a solicitor who was required to furnish a letter of independent advice to the bank preclude a finding that the bank made the representations alleged in sub-paras (e),(f) and (g) of para 13 of the counterclaim.
 I had difficulty with the fact that Mr Alirezai was continuing to agitate as a basis for attacking the mortgage over Lot 2 the conduct alleged against the bank in respect of the circumstances of the grant by Mr Alirezai of the mortgage over Lot 2, when Mr Alirezai’s case was that he was asked by Mr Sarlak and agreed to put up both Lots 2 and 6 as security to the bank in August 1993 in connection with the provision of the BNNUC.
 Paragraphs 24 and 25 of the counterclaim (omitting particulars) state:
“24.Between late July 1993 and 6 August 1993 Sarlak:-
(a)represented to the Plaintiff that Sarlak Enterprises had a shipment of tallow due to be exported to Iran and that he needed to urgently arrange finance to cover the cost of a further shipment of tallow to Iran;
(b)represented to the Plaintiff that the First Defendant was not prepared to provide further finance facilities to Sarlak Enterprises unless Sarlak Enterprises provided further security to the First Defendant;
(c)represented to the Plaintiff that the First Defendant had agreed to provide Sarlak Enterprises with a Bill Negotiated Not Under Credit (‘BNNUC’) in the amount of three hundred and fifty thousand dollars ($350,000.00) enable (sic) Sarlak Enterprises to purchase further consignments of tallow for export to Iran but had made the provision of further security by Sarlak Enterprises a precondition of the provision of the BNNUC to Sarlak Enterprises;
(d)requested the Plaintiff to permit Lot 2 and Lot 6 to be pledged by Sarlak Enterprises to the First Defendant as security for the provision of the BNNUC to Sarlak Enterprises in the sum of three hundred and fifty thousand dollars ($350,000.00);
(e) represented to the Plaintiff that in the event that the Plaintiff agreed to permit Lot 2 and Lot 6 to be pledged by Sarlak Enterprises for the purpose referred to in subparagraph (d) herein that the extent to which Lot 2 and Lot 6 would be so pledged to the bank was limited to the amount of three hundred and fifty thousand dollars ($350,000.00) by the amount of the BNNUC;
(f)represented to the Plaintiff that in the event that the Plaintiff agreed to permit Lot 2 and Lot 6 to be pledged by Sarlak Enterprises for the purpose referred to in subparagraph (d) herein that in the event that the BNNUC was never drawn down by Sarlak Enterprise that the First Defendant would discharge the security over Lot 2 and Lot 6 and return the Certificates of Title for Lot 2 and Lot 6 to the Plaintiff;
(g)represented to the Plaintiff that in the event that the Plaintiff agreed to permit Lot 2 and Lot 6 to be pledged by Sarlak Enterprises for the purpose referred to in subparagraph (d) herein that Sarlak would cause security documents to be delivered to the First Defendant’s Toowoomba branch and requested that the Plaintiff attend at the First Defendant’s Toowoomba branch, collect the security documents, sign the security documents and deliver these and the Certificates of Title for Lot 6 to Sarlak.
25.Acting in reliance upon the truth of the representations referred to in paragraph 24 and induced thereby, the Plaintiff agreed to permit Lot 2 and Lot 6 to be pledged to Sarlak Enterprises for the purpose referred to in subparagraph 24(d), agreed to sign security documents to give effect to the matters referred to paragraph 24 and agreed to deliver the security documents and the Certificate of Title for Lot 6 to Sarlak.”
 The bank did not seek to defend the counterclaim in respect of the circumstances of the grant of the mortgage over Lot 2 by relying on the fact that Mr Alirezai subsequently intended Lot 2 to be used as security for the benefit of Sarlak Enterprises in favour of the bank in respect of the BNNUC. The bank relied on this fact in submissions in relation to Mr Alirezai’s claim based on the construction of the mortgage over Lot 2.
 It is therefore appropriate that I consider the findings that should be made on the basis of Mr Alirezai’s pleading in respect of the conduct of the bank in respect of the granting of the mortgage over Lot 2. The subsequent preparedness of Mr Alirezai to allow Lot 2 to be used as a security in August 1993 may be a relevant fact in relation to any relief that Mr Alirezai could be entitled to in respect of the granting of the mortgage over Lot 2.
Representations in respect of the mortgage of Lot 6
 In para 30 of the counterclaim Mr Alirezai relies on a finding that the bank had clothed Mr Sarlak with actual or ostensible authority in respect of the procuration of the mortgage over Lot 6 as the basis for asserting the representations alleged in para 24 of the counterclaim were made by Mr Sarlak pursuant to that actual or ostensible authority. As Mr Alirezai has failed in proving that authority, there can be no finding that the representations which I have found were made by Mr Sarlak were made on behalf of the bank.
 The representations set out in para 28 of the counterclaim are alleged directly against the bank on the basis that in consequence of the drawing and engrossing of the form of mortgage over Lot 6 and the delivery of the mortgage to Mr Sarlak with the request that Mr Sarlak ensure that Mr Alirezai execute the mortgage, the bank by its conduct and by its silence represented to Mr Alirezai that the mortgage over Lot 6, if executed by Mr Alirezai:
“(a)would be utilised as security for the provision of a BNNUC to Sarlak Enterprises in the sum of three hundred and fifty thousand dollars ($350,000.00);
(b)would constitute a security limited to the amount of the BNNUC in the sum of three hundred and fifty thousand dollars ($350,000.00);
(c)would be discharged by the First Defendant in the event that the BNNUC was never drawn down by Sarlak Enterprises and that the Certificate of Title to Lot 2 and Lot 6 would be returned to the Plaintiff at that time.”
 The terms of the mortgage itself and the requirement of the bank that Mr Alirezai arrange for execution of the mortgage in the presence of a solicitor who was required to provide to the bank a letter of independent advice preclude a finding that the bank made the representations alleged in sub-paras (a), (b) and (c) of para 28 of the counterclaim.
 Even if a lender is not in breach of its obligation to make disclosure to an intending surety, the decision in Amadio shows that there are circumstances when a lender can be considered to have engaged in unconscionable conduct in procuring the surety’s entry into the guarantee. Mason J explained the jurisdiction to grant relief on the ground of unconscionable conduct in the following terms at 461:
“But relief on the ground of ‘unconscionable conduct’ is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage, e.g., a catching bargain with an expectant heir or an unfair contract made by taking advantage of a person who is seriously affected by intoxicating drink. Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former 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.
There is no reason for thinking that the two remedies are mutually exclusive in the sense that only one of them is available in a particular situation to the exclusion of the other. Relief on the ground of unconscionable conduct will be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will be granted when such advantage is taken of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest.”
 Mason J referred to statements from the judgments of Fullagar J and Kitto J in Blomley v Ryan (1956) 99 CLR 362, 405, 415 giving examples of situations in which relief may be granted on the ground of unconscionable conduct. Mason J then stated at 462:
“It is not to be thought that relief will be granted only in the particular situations mentioned by their Honours. It is made plain enough, especially by Fullagar J., that the situations mentioned are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word ‘disadvantage’ by the adjective ‘special’ in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party.”
 Deane J summarised the jurisdiction to relieve against unconscionable dealing in Amadio at 474 as follows:
“The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or ‘unconscientious’ that he procure, or accept, the weaker party’s assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable ... .”
 The submissions made on behalf of Mr Alirezai sought to expand the circumstances in which a court would find it was unconscionable for a lender to enforce a guarantee against a volunteer by reference to circumstances discussed in Garcia v National Australia Bank Ltd (1998) 194 CLR 395. It was therefore submitted on behalf of Mr Alirezai that it would be unconscionable for a lender to enforce a guarantee against a volunteer where:
“(a)In fact the surety did not understand the purport and effect of the transaction;
(b)The transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed);
(c)The lender is to be taken to have understood that, the surety may repose trust and confidence in the debtor and that the debtor may not fully and accurately explain the purport and effect of the transaction to the surety; and
(d)The lender did not itself take steps to explain the transaction to the surety or to find out that a stranger had explained it to the surety.”
 As was submitted on behalf of the bank, para (c) of the above submissions on behalf of Mr Alirezai does not properly reflect what was said in the joint judgment of Gaudron, McHugh, Gummow and Hayne JJ in Garcia at 409 which was:
“(c) the lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife;”
 Garcia was concerned with whether the principles in Yerkey v Jones (1939) 63 CLR 649 were still good law. The appellant in Garcia and her husband had executed a mortgage in favour of the respondent which secured all moneys which they might owe the mortgagee including moneys owing under future guarantees given by either of them. The appellant’s husband conducted a number of businesses through companies which were indebted to the respondent. The appellant signed four guarantees in favour of the respondent in respect of the debts of those companies. The appellant and her husband subsequently separated and divorced. The appellant commenced proceedings seeking declarations that the mortgage and the guarantees she had given were of no force and effect and the respondent sought to enforce one of the guarantees and claimed possession of the mortgaged property. The trial judge granted relief to the appellant on the basis of the principles in Yerkey v Jones. The New South Wales Court of Appeal held that it was not bound to follow Yerkey v Jones. The High Court followed Yerkey v Jones and reinstated the orders of the trial judge.
 In the joint judgment in the High Court in Garcia it was explained at 404 that Yerkey v Jones was based on trust and confidence, in the ordinary sense of those words, between marriage partners and it was stated:
“It may be that the principles applied in Yerkey v Jones will find application to other relationships more common now than was the case in 1939 - to long term and publicly declared relationships short of marriage between members of the same or of opposite sex - but that is not a question that falls for decision in this case. It may be that those principles will find application where the husband acts as surety for the wife but again that is not a problem that falls for decision here. This case concerns a husband and wife and it is to that relationship that the present decision relates, just as it is concerned only with the circumstance of the wife acting as surety for her husband. The resolution of questions arising in the context of other relationships may well require consideration of other issues. Thus to take one example, if cohabitation is taken as a criterion, what should a lender know or seek to find out about the nature of the relationship between the parties? But those issues did not arise and were not debated on the hearing of this appeal.”
 Dixon J in Yerkey v Jones dealt with two kinds of circumstances. The first kind was where there was actual undue influence by a husband over a wife and the second kind was one where there was no undue influence, but there was a failure to explain adequately and accurately the suretyship transaction which the husband sought to have the wife enter for the immediate economic benefit not of the wife but of the husband or the circumstances in which her liability may arise. In Garcia the joint judgment explained the analysis of the second kind of case identified in Yerkey v Jones at 409:
“Nor does the analysis depend upon identifying the husband as acting as agent for the creditor in procuring the wife’s agreement to the transaction cf Barclays Bank Plc v O’Brien  1 AC 180 at 194, per Lord Browne-Wilkinson. Rather, it depends upon the surety being a volunteer and mistaken about the purport and effect of the transaction, and the creditor being taken to have appreciated that because of the trust and confidence between surety and debtor the surety may well receive from the debtor no sufficient explanation of the transaction’s purport and effect. To enforce the transaction against a mistaken volunteer when the creditor, the party that seeks to take the benefit of the transaction, has not itself explained the transaction, and does not know that a third party has done so, would be unconscionable.” (footnote inserted)
 Where the joint judgment in Garcia predicted that the principles applied in Yerkey v Jones may apply to other long term and publicly declared relationships short of marriage between members of the same or opposite sex, they were confining the development of the principles applied in Yerkey v Jones to relationships of a like nature to marriage. The principles in Yerkey v Jones, as the joint judgment in Garcia makes clear, have no application whatsoever to Mr Alirezai’s relationship with Mr Sarlak.
 Mr Alirezai also sought to rely on various statements made in the House of Lords in Royal Bank of Scotland v Etridge (No 2)  4 All ER 449. There were 8 appeals before the House of Lords each involving a wife who had given security to a lender for the benefit of her husband. That decision was also clearly confined to marriage type relationships and is of no assistance in this matter.
 For Mr Alirezai to prove unconscionable dealing against the bank, he must prove the elements of that cause of action as set down in Amadio.
 On each occasion that a mortgage was granted by Mr Alirezai to the bank, the bank knew that Mr Alirezai was of Iranian descent, a friend of Mr Sarlak and that Mr Sarlak had done Mr Alirezai a favour in the past by making him a loan of $50,000 and the bank was not aware that Mr Alirezai stood to obtain any financial benefit out of the transaction. What the bank knew of Mr Alirezai was not enough to give the bank knowledge that Mr Alirezai was in a situation of special disadvantage in relation to granting the mortgage.
 Even if it were concluded that the bank did have the knowledge that Mr Alirezai was in a situation of special disadvantage in respect of the granting of each of the mortgages, the bank could not, on any view, be said to have taken unconscientious advantage of its superior bargaining position, when it required Mr Alirezai to take the mortgage to a solicitor to obtain independent legal advice about the transaction: Garcia at 411 and Ribchenkov v Suncorp-Metway Ltd at 664-665.
 Mr Alirezai has failed in proving unconscionable dealing against the bank in respect of obtaining each of the mortgages over Lots 2 and 6 from him.
 Another matter which was raised on behalf of Mr Alirezai was that the bank provided the guarantee to Peerless before it had received the executed mortgage over Lot 2 and the certificate of independent advice. The relevance of the certificate of independent advice is that it is the step which was undertaken by the bank which enables it to rely on the mortgage over Lot 2. That is the only timing implication in respect of the certificate of independent advice. The same observation can be made in relation to the same point which is taken on behalf of Mr Alirezai in respect of the timing of the drawdown of the BNNUC and the receipt by the bank of the certificate of independent advice in respect of the execution of the mortgage over Lot 6.
 It was also pleaded on behalf of Mr Alirezai that it was inequitable for the bank to rely on the certificates of independent advice when it knew that Mr Kennedy and Mr Alirezai had not inquired of the bank in respect of financial information relevant to the existing indebtedness and security position of Sarlak Enterprises. That allegation assumes that Mr Kennedy required that information in order to give the independent legal advice to Mr Alirezai in respect of each mortgage transaction. That assumption is erroneous and is disposed of by my finding that on each occasion Mr Kennedy had sufficient information to give the independent legal advice that the bank required be given to Mr Alirezai.
Trade practices, fraudulent misrepresentation and undue influence
 Each of these causes of action depends upon the bank being fixed with the knowledge, actual or constructive, of the fraud and undue influence alleged by Mr Alirezai against Mr Sarlak.
 It is conceded on behalf of Mr Alirezai that success in each of these causes of action depends on Mr Sarlak being found to be the agent of the bank for the procuration and explanation of each of the mortgages over Lots 2 and 6. As that finding has not been made, Mr Alirezai fails in proving these claims.
Sale of Lot 2
 It is not strictly necessary to consider this claim of Mr Alirezai, as it could be pursued by him only if he were successful in impugning the validity of the mortgage over Lot 2. As he has been unsuccessful in so doing, the mortgage over Lot 2 entitled the bank to all the proceeds of the sale of Lot 2. As the debt of Sarlak Enterprises is far in excess of the notional sale proceeds of Lots 2 and 6 (even allowing for the value of Lot 2 which is most favourable to Mr Alirezai), Mr Alirezai has no interest in whether or not the bank breached the duty imposed by s 85(1) of the PLA in respect of the sale of Lot 2.
 As the parties adduced all evidence relevant to the issue, I will make findings in relation to whether or not the bank breached its duty to take reasonable care to ensure that Lot 2 was sold at the market value.
 In s 85(1) of the PLA “market value” has the general objective meaning of the price which a willing but not anxious vendor would obtain from a person desiring to buy, rather than the price which an anxious vendor would obtain upon a forced sale: Emerson v Custom Credit Corporation Limited  1 QdR 516, 520-521.
 Mr Hosking was given instructions by the bank by letter dated 10 June 1997 (Exhibit 119) to sell Lot 2. Mr Hosking took photographs of the property and organised for 500 copies of a flyer advertising Lot 2 for sale as a mortgagee sale and the auction date of 26 July 1997 together with a photograph and a plan of the land to be printed. They were distributed in the area in the vicinity of Lot 2 and to prospective purchasers and others on Mr Hosking’s database. Advertisements were placed in the Toowoomba “Chronicle” on 21 and 28 June 1997 in which the property was described as:
“Just 3 minutes drive past Toowoomba Town boundary awaits this magnificent 35 acres (13.97ha). Partially fenced undulating country with a choice of many outstanding homesites, all will capture the atmosphere, some will capture the view from this elevated site.”
The bank committed to an advertising budget of $1,427 of which all but $85 was spent. Mr Hosking considered that this was almost double the usual budget for advertising a property at that time.
 There were further advertisements in the “Chronicle” on each Saturday in July 1997 including the day of the auction on 26 July 1997 in which the advertisement prominently stated that there was an auction on that day at 1pm. Mr Hosking also had placed an advertisement in the current Realtor Magazine. The auction date had been altered from that originally planned of 19 July to 26 July 1997, because during the first week of the marketing campaign advertising signs had disappeared from the property.
 Mr Hosking in his report to the bank dated 22 July 1997 (Exhibit 124) recorded that he had received 22 calls about the land and there were about 9 known inspections. There were about 15 people present at the auction including Mr Alirezai. The final bid was $74,250 which was accepted by the bank.
 Mr Hosking referred to the fact that there was not great demand in the market in 1997 for properties of the nature, size and locality of Lot 2. He did not consider that in order to achieve market value, the land should have been marketed over a longer period of time than the period of approximately 6 weeks, although Mr Payne conceded that it was usual for this type of property to “linger” on the market for an extended period of time before being able to be sold. Mr Hosking did not make any reference in any of his advertising to subdivisional potential for the land, although he had one prospective purchaser look at the property for the purpose of considering a subdivision.
 On the question of the manner of the sale of Lot 2, no evidence contrary to that of Mr Hosking was adduced by Mr Alirezai.
 Lot 2 falls away from Mount Rascal Road and had a fairly dense tree cover. It is traversed by a 50 metre wide electricity supply easement on which power poles and powerlines had been placed. It is “battle-axed” in shape. The lot slopes more steeply at the rear to a watercourse and then slopes upwards for the balance of the lot.
 Mr Challoner in his report (Exhibit 9) dealt with the potential of Lot 2 for subdivision. Lot 2 was included in the Rural B zone which was to provide for future rural residential land and the front portion fell within a development control which would permit limited subdivision for rural residential allotments. Mr Challoner was of the opinion that at the time of sale it was possible to subdivide Lot 2 into two lots each of 1 hectare in area with a balance lot at the rear. He was of the opinion that Lot 2 had the potential to be subdivided into 12 lots, although its designation under the relevant development control plan at the date of sale did not allow for Lot 2 to be wholly subdivided in that manner.
 Based on comparable sales identified in his report (Exhibit 8) and a further schedule of comparable sales tendered at the trial (Exhibit 77) Mr Brett was of the opinion that the market value of Lot 2 as at July 1997 was $120,000. This valuation depended upon Mr Challoner’s opinion about the potential for subdivision which Mr Brett treated as an immediate potential for two allotments close to the road frontage and for the balance of the land to be divided into a further ten rural residential sites in the medium to longer term. Mr Brett conceded that the market for rural residential sites around provincial towns in Brisbane stagnated over a considerable period of time through the mid 1990s.
 The bank’s valuer, Mr Payne, is a Toowoomba valuer who has valued Lot 2 as at 29 August 1997 at $84,000. In his report (Exhibit 73) Mr Payne commented on the market at the relevant time as follows:
“The market for rural residential/rural homesites in the Mount Rascal area in 1996/1997 was not of high volume with only eight recorded sales over 1 hectare in size from the start of August 1996 to 1 December 1997 of which two were improved and two were family sales.”
 Mr Payne considered the subdivisional potential of Lot 2 and associated costs and value impacts and concluded:
“Given the availability and demand for lots in the estate 1 kilometre to the north and consequent achievable values for smaller lots correlated to the costs involved, subdivision of the parcel in August 1997 would have carried a high degree of economic risk. Feasibility studies for subdivision into either two or three lots shows that no premium would have been paid for such potential at this time.”
 Curiously Mr Payne concluded his valuation with a statement that he had ascertained market value “for litigation purposes”. In cross-examination, Mr Payne conceded that the purpose for which he was requested to provide the valuation affected the assessment which he made of market value and that market value could be a different figure for other purposes. This is a novel proposition in the light of what is clearly intended by the reference to “market value” in s 85(1) of the PLA which was explained in Emerson v Custom Credit Corporation Limited. It was therefore submitted on behalf of Mr Alirezai that Mr Payne’s valuation of Lot 2 could provide no assistance, because of his fundamental misconception of the legal definition of market value. Although this misconception expressed by Mr Payne means that I have approached his evidence with caution, I do not consider that it results in his report and evidence being of no assistance, as he has otherwise made extensive reference to comparable sales and market analysis. In addition, Mr Payne’s oral evidence revealed his local knowledge of the properties relied on for comparable sales put forward by both Mr Brett and him and gave him the edge in pointing to sales which were more comparable than some of those relied on by Mr Brett.
 I accept the evidence of Mr Payne (which is borne out by the comparable sales and the state of the market in July 1997) that no premium would have been paid for the subdivision potential of Lot 2 when it was sold in July 1997. I therefore consider that the market value of Lot 2 was likely to be a figure closer to that put forward by Mr Payne, rather than the value suggested by Mr Brett. Mr Payne was overly influenced by the actual sale price of Lot 2 achieved by the bank in fixing market value. On the basis of the comparable sales put forward by both valuers, but allowing for the criticism made by Mr Payne of Mr Brett’s comparable sales which I consider to be well based, a range of $90,000 to $100,000 would cover the market value of Lot 2 in July 1997.
 The case advanced against the bank in para 77 of the counterclaim is that the sale of Lot 2 for the sum of $74,250 was at “a gross undervalue”. The particular aspects of the manner of sale which were identified in submissions on behalf of Mr Alirezai as amounting to breach by the bank were:
“(a)failing to leave Lot 2 on the market for an extended selling period approaching twelve months;
(b)selling Lot 2 by public auction;
(c)directing the agent to mount a very limited advertising campaign;
(d)inappropriately advertising the property as mortgagee in possession with consequent downward effect on sale price;
(e)failing to advertise the subdivisional potential of the property in circumstances in which this quality was an important element of value.”
 It was for the bank to choose when it wished to sell Lot 2. The duty imposed bys85(1) of the PLA does not detract from the general law requirement that a mortgagee is entitled to sell at the time of the mortgagee’s choice and without waiting for a time which a selling owner might consider more propitious: Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd  VR 309, 313. The bank was not obliged to allow the property to “linger” on the market, as it was suggested by Mr Payne that owners of similar properties were doing, in order to achieve their price. Mr Hosking’s evidence precludes a finding that an intensive marketing campaign of 6 weeks was not a reasonable approach to achieving a sale at market value. The evidence does not support an attack on the mode of sale by public auction. Mr Hosking’s evidence showed that he undertook a vigorous advertising campaign. The fact is that Lot 2 was being sold by the mortgagee in possession. It has not been shown that advertising Lot 2 for sale by the mortgagee in possession had a downward effect on sale price, having regard to the active steps taken by Mr Hosking to market Lot 2. No breach can be shown to have been committed by not advertising the subdivisional potential of the property, when the evidence which I have accepted is that no premium would have been paid for the subdivisional potential of Lot 2 in July 1997. In any case, the zoning of Lot 2 was a matter of public record.
 In view of my conclusion as to the market value of Lot 2, Mr Alirezai cannot show that Lot 2 was sold at “a gross undervalue”. In any case there is no basis identified for attacking the manner of sale of Lot 2 which had the consequence of affecting the sale price. Mr Alirezai has not shown that the bank failed to use reasonable care to ensure that the market value of Lot 2 was obtained.
 As Mr Alirezai has been unsuccessful in both his defence and counterclaim, it follows that the orders which should be made are:
1.That the plaintiff recover against the defendant possession of the land described as Lot 6 on RP 803163 in the Country of Aubigny Parish of Drayton.
2.That the counterclaim be dismissed.
 Subject to giving the parties an opportunity to make submissions on the question of costs, my inclination is to order that the defendant pay the plaintiff’s costs, including reserved costs, of the claim to be assessed and that the plaintiff by counterclaim pay the defendants by counterclaim’s costs, including reserved costs, of the counterclaim to be assessed.
- Published Case Name:
Australia & New Zealand Banking Group Ltd v Alirezai
- Shortened Case Name:
Australia & New Zealand Banking Group Ltd v Alirezai
 QSC 175
17 Jun 2002
No Litigation History