NAB v Freeman[2001] QCA 473

SUPREME COURT OF QUEENSLAND

1. DAVIES JA: I agree with the reasons for judgment of White J and with the orders she proposes.

2. THOMAS JA: I agree with the reasons of White J and the order which she proposes.

3. WHITE J: The appellant, who argued the appeal himself, appeals on a number of grounds against the judgment given in the Trial Division in favour of the respondent (“the Bank”) which had sued on a bank facility provided to him on 19 December 1997.  Judgment was for $1,427,890.08 with costs to be assessed on an indemnity basis and an order was made that the appellant deliver up possession of certain land and livestock.  The appellant’s claims by way of counter-claim and set-off were dismissed.

4. The bill facility arose out of a mediation agreement (“the Deed of Mediation”) made on 4 December 1997 between the appellant and the Bank. The appellant sought to have the Deed of Mediation and the bill facility set aside on the grounds that his agreement was obtained by economic duress and because he was suffering a special disadvantage due to his mental incapacity of which the Bank took unconscionable advantage. If he were successful in setting aside the Deed of Mediation and the bill facility, the appellant contended that the Bank could not enforce its rights under various antecedent mortgages and loans on a variety of bases but essentially because it had represented to him that it would not do so until the drought ended and his business interests achieved a particular gross annual income or his rural property achieved its maximum stock carrying capacity neither of which had occurred. The appellant also alleged negligence by the Bank in failing to support his claim for a rural subsidy.

5. The learned trial judge found that the Deed of Mediation and the bill facility were enforceable against the appellant. He further found that no representations or agreement about deferred repayment of the borrowings as alleged had been made by officers of the Bank.

6. The appellant’s case in negligence was based on an allegation that the Bank had refused to support his interest subsidy application and he therefore had to sell breeding stock to meet the Bank’s demand to reduce one of his facilities instead of using the interest subsidy. His Honour found that there was no promise by the Bank to support the subsidy application; that even if the appellant had sold the breeding cattle, of which his Honour had some doubt, at the relevant time, it was not because of the failure to receive the subsidy; further that the appellant had failed to apply the proceeds of sale or part thereof in reduction of the facility as the Bank required.

7. For the most part these conclusions were based on detailed findings of credit in which, on every relevant issue, his Honour preferred the evidence of the Bank’s witnesses to that of the appellant. His Honour also found that whatever documentation there was supported the witnesses called by the Bank. In such circumstances an appellant faces a difficult task, Devries v Australian National Railways Commission (1993) 177 CLR 472.

8. At the hearing of the appeal the appellant was given leave to amend his grounds of appeal to add further particulars to the existing grounds without objection. He was also given leave to supplement the appeal record to add further documents which were before the court below. The court reserved its decision in respect of a Bank memorandum disclosed below but not utilised because an annotation was indecipherable and refused leave to tender a report from a parliamentary committee enquiring into banking, published after judgment.

9. A customer/banker relationship existed between the appellant and the Bank from mid-1992. The appellant was the registered lessee of just under 10,000 hectares of grazing land known as “Glassford Vale” situated approximately 100km south-west of Gladstone, used for cattle rearing, some crops, timber getting and the extraction of gravel and mining for metal (“the property”). In mid-1992 the appellant refinanced with the Bank the obligations which he had incurred with other financial institutions to operate the property. To that end he granted a mortgage to the Bank over the land. The loan was repayable on demand and if in default of the terms of the mortgage, the Bank could enter and take possession of the land. The appellant also granted the Bank various stock mortgages over cattle on the property with similar terms. The mortgages secured the appellant’s indebtedness in respect of a farm management account, a fixed rate interest only loan account, a fully drawn advance account and an overdraft account. The indebtedness was in the vicinity of $480,000 at the commencement of the appellant’s relationship with the Bank.

10. The bank officer with whom the appellant dealt at the Bundaberg office was a Mr Wayne Carlson who was in charge of rural finance for the area.  The appellant maintained that Mr Carlson, on behalf of the Bank, represented to him in 1992 and again in 1993 that the Bank would support him in his plan to build up cattle numbers which would entail holding back from sale female breeders which would reduce the property’s cash flow.  However the Bank would require interest only repayments until the number of cattle reached 2,500 or 1,000 female breeders or the operations on the property as a whole generated a gross annual income of $240,000.  The appellant maintained that in reliance on these representations he increased his borrowings to purchase more cattle and to make improvements to the property.

11. The property was declared drought stricken in mid 1993. By this time the appellant had borrowed approximately $800,000 from the Bank. He had discussed with Mr Carlson the future of the property.  He contended that Mr Carlson agreed, in effect, “to carry” him until the drought ended or he reached $240,000 gross annual income or achieved the cattle numbers mentioned above.

12. Mr Carlson denied that he had made those representations or entered into any agreement with the appellant in those terms although there were regular discussions between them about the appellant’s indebtedness, interest subsidies from the Queensland Rural Assistance Authority (“QRAA”) and the development of his cattle holdings. He said that he had discussed with the appellant the need to achieve a gross annual income of $240,000 to break even, that is, to make his interest repayments and to pay the overheads associated with running the various activities on the property.

13. The appellant received drought assistance subsidies from the QRAA from 1993 to 1996. Relevantly, to qualify for an interest subsidy the farmer’s financier had to indicate to QRAA that it would continue to support the farmer for the next 12 months. The interest subsidy operated from April to April with applications being made by the end of September of the previous year.

14. The appellant contended that his difficulties with the Bank began when Mr Carlson was replaced by a Mr John Alder in mid-1996.  Mr Alder required the appellant to reduce his bank overdraft from $120,000 to $90,000 by the end of November 1996, although Mr Carlson had already started mentioning the need to address debt reduction.  The appellant’s major complaint was that in meeting this demand he had to sell breeders.  This depleted his herd and adversely affected his capacity to adhere to his productivity plan.  He maintained that the money sought by Mr Alder could have come from the interest subsidy which he would have received the following April had the Bank given him the necessary support.  There was also some suggestion that funds might have been forthcoming at some time from timber and mineral exploration on the property of which the Bank was aware.

15. The complaint about the requirement to reduce debt was allied with the complaint about Mr Alder’s failure to support the appellant’s application for an interest subsidy for 1997. It appears that Mr Carlson had given the appellant more assistance with actually filling out the QRAA forms than Mr Alder was prepared to do, but in any event, on Mr Alder’s examination of the appellant’s accounts and because, in his opinion, the appellant had not made any firm proposal for addressing repayment of the debt, he regarded the operation as unviable and declined to guarantee the Bank’s support for the requisite 12 months. The Bank document which the appellant sought leave to tender contained a handwritten endorsement dated variously June and July 1996. It is not decipherable but the appellant said, and Mr Hanson QC for the Bank did not disagree, that it reads

“Reduction of debt is not negotiable.  Our file comments 3/1/96 remain relevant.  This is primarily a holding operation and should seasonal conditions, commodity prices not have improved by expiry date to enable commencement of a realistic amortisation program for customer .. sale of assets as is”.

16. The appellant contended that this annotation demonstrated that the Bank through Mr Alder, even though the accounts had just been renewed on an interest only basis, had a plan in place not to support him as agreed. There are two observations to make about the admissibility of this document - it could have been utilised below had it been read but, even so, its availability to his Honour could not have influenced any conclusion to which he came about this aspect of the case. Whether or not Mr Alder did “a review” of the accounts prior to making a decision about support for the appellant for the purposes of the subsidy, Mr Alder had an understanding of the appellant’s financial affairs, he noted that he had been unable to operate without incurring further debt even with subsidies in the past and there was no prospect for an improvement in the future and his Honour accepted Mr Alder’s evidence.

17. Leave should not, therefore, be given to tender the document.

18. The appellant gave evidence that he had sold 300 breeders between September and December 1996 (or in the 12 months from September 1996) realising $60,000. The evidence, as his Honour found, was far from clear that that had occurred or for the reason advanced. For example, he told his counsel in a taped conversation that he sold the breeders because he had too many and was vague as to why he did not instead sell steers. None of the money was used to reduce by $30,000, or in any amount, the overdraft as required.

19. During 1997 the Bank continued to seek to have the appellant improve his debt position and indicated that unless an acceptable proposal was received by the end of September 1997, proceedings would be commenced.

20. The Legal Aid Office (Queensland) wrote to the Bank on behalf of the appellant on 23 September 1997 proposing a change of financiers but at a “discounted payout figure” of $360,000 to take account of the appellant’s alleged losses from the sale of the breeder cattle.  In response the Bank was not prepared to release its securities without full payment of principal and interest, and required an acceptable plan to deal with the debt.  The Bank invited the appellant to enter into a mediation.

21. The appellant contended that he had understood the mediation would deal with a limited range of issues and doubted that he had seen the document setting out the issues for resolution annexed to the signed mediation agreement. He also complained that the process was more adversarial than he believed it would be. The terms of the mediation agreement were set out in a written document signed by the parties on 27 November 1997. The issues for resolution were in schedule “A”

“1.The Plaintiff considers that it was the Bank’s responsibility to consider his Application for ARAA interest subsidy assistance in 1996 using proper and due care and diligence in each case.

2. The Plaintiff says that in October of 1996, the bank failed to observe those principles in failing to support his Application for subsidy assistance when budget cash flow figures and financial statements indicated that he was deserving of support.

3. In failing to receive interest subsidy assistance, the Plaintiff was forced to sell breeding females which has had and will continue to have a snow balling effect upon future production in cattle numbers.

4. In all, 300 females were lost to the Plaintiff’s operation resulting in an estimated loss in sales over a 3 year period of approximately $360,000.00.

5. The Bank maintains that cash flow projections provided by the Plaintiff in October of 1996 did not evidence the viability of the Plaintiff’s business even if interests subsidy had been paid in the quantum of the previous year’s subsidy.”

22. These were the issues which had been agitated between the appellant and the Bank over the past months. It is unreasonable of the appellant to argue that this meant that the question of the appellant giving up his property or repaying the debt was never intended to be the subject of the mediation agreement. Mediation had been proposed by the Bank after it had indicated in writing that it would exercise its rights under the mortgages if the debt was not paid. The mediation was proposed by the Bank, pursuant to an agreement between the Queensland Farmers Federation and the Australian Bankers’ Association. It set out broad parameters for mediation but left it to the parties to agree the terms and conditions. The Bank proposed the standard form of agreement for mediation approved by the Queensland Law Society which the appellant signed.

23. The appellant attended the mediation before Mr R.R. Douglas QC (as his Honour then was) on 4 December 1997 with his barrister and a solicitor or clerk who, it would appear, was the town agent for his own local solicitor. The Bank was represented by its solicitor and two officers. The mediation lasted a full day during which the appellant made two offers to the Bank - the payment of the debt less $360,000 and, subsequently, less $180,000 to represent the losses associated with the alleged forced sale of his breeding cattle and the Bank’s failure to support his application for interest subsidy in 1996. The Bank was not prepared to settle for less than the full amount owed but was prepared to do so on terms and at the end of the day an agreement in writing was produced which the parties executed.

24. Relevantly, the Bank agreed to re-finance all the appellant’s facilities on a commercial bill facility with interest at the Bank’s bill rate of the day, on the day of draw down and/or rollover, with a rollover period no greater than 35 days. By cl 4 the appellant was to use his best endeavours to re-finance the debt or sell the property with the written approval of the Bank before 4 March 1998 with settlement no later than 6 April 1998. In default of either re-financing or sale the appellant agreed to deliver vacant possession of the property to the Bank by 6 April 1998. By cl 7 the parties agreed

“7.1In the event that [the appellant] does not comply with the provisions of the Deed, [the appellant] agrees that the Bank is entitled to commence proceedings so that a Writ of Possession for the property may issue.

7.2[The appellant] agrees that he will not take any active part in the proceedings including, without limitation the filing of the defence of the proceedings.”

The Bank agreed not to enforce the mortgages except as provided for in the Deed.

25. By cl 9

“9.1By the execution of this Deed [the appellant] immediately, absolutely and unconditionally releases the Bank, its officers and agents, from all claims which [the appellant] now has, or but for this Deed might have had against the Bank, its officers and agents, in respect of the Facilities, the Mortgages, the Proceedings or any other matters referred to in the Recitals TO THE INTENT THAT this Deed may be pleaded by the Bank as a complete and absolute bar to any claims by [the appellant] in respect of the matters released by this Deed.

9.2Clause 9.1 above applies to the Bank mutatis mutandis.”

26. Two weeks later the appellant executed the bill facility at the office of his solicitor in Bundaberg which included terms that it was secured by the mortgage over the land and the stock mortgages. It was available to the appellant until 6 April 1998 whereupon he was obliged to pay the face value of any bill of exchange drawn under it. It was an event of default under the bill facility if the appellant failed to comply with the provisions of the Deed of Mediation or failed to pay to the Bank the face value of any bill of exchange drawn under the bill facility. If an event of default occurred the Bank could serve a notice of termination whereupon all amounts outstanding under the bill facility were immediately due and payable.

27. The appellant attempted unsuccessfully to re-finance and at 4 March 1998 was in default under the Deed of Mediation and therefore under the bill facility. On 7 April 1998 the Bank sent a notice of termination of the bill facility, the bill having expired on 6 April 1998.  The appellant failed to pay the Bank the value of the bill of exchange on its maturity date.

28. There was no dispute that the appellant was in default under the bill facility.

Setting aside the Deed of Mediation

29. The appellant raises a number of grounds as to why the learned trial judge’s findings about the mediation ought to be set aside. At trial the appellant advanced his contention that the Deed of Mediation was voidable on the basis of economic duress and his position of special disadvantage vis-a-vis the Bank. His case with respect to economic duress was expressed in the amended defence and counter-claim as follows:

“43(a)The defendant was in a poor financial position, in part by reason of the conduct of the plaintiff as pleaded above;

2. The defendant was in a weak bargaining position, in that the rights of the plaintiff were largely enshrined in its written loan and mortgage documentation, whereas the claims of the defendant were largely based on unwritten promises from Mr Carlson made years before, to which claims the plaintiff refused to give any credence;

3. The plaintiff was in a strong financial position and in a strong bargaining position;

4. The defendant’s legal advisers’ preparation for the mediation had been hurried and they had not become aware of the strength of the claims the defendant had against the plaintiff;

5. The defendant was under considerable pressure from the plaintiff, by reason of the plaintiff’s stance that unless some agreement was reached at the mediation, the plaintiff would proceed immediately to sell up the defendant.”

30. The appellant alleged that during the mediation he suffered from stress and anxiety and was thereby mentally unable to cope with the pressure; was unable to think clearly or to understand the documentation shown to him and the Bank was or ought to have been aware of those matters.

31. Psychiatric evidence was adduced at the trial from Dr P Mulholland who had given a report to use in resisting a summary judgment application by the Bank. The appellant had told Dr Mulholland of his behaviour at the mediation which, had it occurred, as his Honour commented, would have been readily observable to persons in his presence or company on the day of the mediation. He told Dr Mulholland that he was raising his voice and at times screaming and shouting; “speaking disjointedly and … incoherently”; “unable to express [himself] properly”; “shaking”; “attacking people at the mediation, especially the Bank’s representatives”; “foaming at the mouth at some stages and … constantly wiping the sides of his mouth”; “completely exhausted”; “extremely agitated”; “sweating so much that the sweat was running all over [his] glasses which [he] was continually cleaning”; “constantly mopping [his] brow with [his] handkerchief which had become wet as a result”; “gesturing in an accentuated way by bringing [his] hands down on the mediation table and throwing them all over the place”.

32. The learned trial judge carefully analysed Dr Mulholland’s evidence including that a person could suffer from a “chronic adjustment disorder” but be able to keep those thoughts and feelings to himself and not be detectable at all to persons able to observe that person. Dr Mulholland was shown paragraphs of the appellant’s affidavit sworn two weeks after he had interviewed him on 15 June 1998 and agreed that the content of the affidavit demonstrated a detailed recollection of what had gone on at the mediation. He was also taken through the chronology of the mediation with the offers made by the appellant and concluded that the appellant was capable of rational thought in the pursuit of his own self interest. His Honour concluded that Dr Mulholland’s view ultimately was that the appellant was functioning satisfactorily at the time when the negotiations, upon his instructions, were being conducted. There is no error in that conclusion.

33. The appellant called Dr J Cameron, a consultant neurologist, who had prepared a report for the summary judgment application. From what the appellant had told him in a consultation in June 1998 Dr Cameron had concluded that the appellant was suffering “a very acute anxiety disturbance at the time he was involved in dealings with the … Bank in early December 1997” and that the appellant was compromised at the time of signing the Deed of Mediation. Dr Cameron agreed in oral evidence that his opinion was dependent upon what the appellant had told him.

34. The appellant was the only witness who gave evidence that he exhibited symptoms of the kind which both medical specialists said indicated that he was incapable of protecting his own interests. Those symptoms, as his Honour found, would have been observable by any persons if in his presence while he was displaying them. But no other witness did so.

35. The experienced mediator observed and spoke with the appellant throughout the day. He had a good recollection at the trial of what had transpired. He did not observe any of the symptoms about which the appellant gave evidence or of which he had spoken to the two medical specialists.

36. Although from time to time, the mediator said, the appellant raised his voice he did not scream or shout. The mediator said that the appellant became upset at times but he did not speak incoherently or disjointedly. The only time that the mediator observed agitation by the appellant was when he showed his dislike for the Bank and its officers. At no time did the mediator think that the appellant was not in a fit state to make a rational decision on the mediation nor did the appellant’s barrister make any such suggestion or seek an adjournment. The mediator said the appellant at no time expressed any doubt as to whether he should sign the Deed of Mediation.

37. His Honour noted that the appellant did not call either his counsel or the solicitor who attended at the mediation with him and who had had ample opportunity to observe his condition and symptoms, if any, during that day. The appellant had consulted with his counsel in his chambers on the day before the mediation after he had driven to Brisbane. A transcript of that consultation was introduced into evidence during cross-examination of the appellant, without objection, as exhibit 6. The issues which they discussed were those which were dealt with during the mediation and were consistent with the appellant’s stance with the Bank over the past months.

38. The Bank’s solicitor and one of the two Bank officers who attended at the mediation and who had signed the Deed of Mediation with the defendant, gave evidence that they observed no symptoms of mental incapacity of the kind which the appellant described.

39. His Honour concluded

“The reliability of [the appellant’s] evidence upon trial must be assessed in the light of the evidence given by the solicitor for [the Bank], one of the officers of the [Bank] attending the mediation and the mediator, and in the light of his failure to call either his counsel or solicitor who attended at the mediation and had the opportunity to observe the symptoms which he said he displayed.

None of the persons who attended the mediation and who gave evidence gave any support whatever to the symptomatology of helplessness, mental instability, anxiety, etc to which the [appellant] swore.  In fact, the effect of the evidence was that no such symptomatology was observed by them at any time during the mediation.  In particular, the mediator himself who had much more contact with the [appellant] than did any of the bank officers during the bigger part of the day of the mediation said that he observed no such symptomatology.” [45] and [46].

40. His Honour considered the evidence of the mediator and the other witnesses very carefully. It could not be said that his Honour misused his position of advantage in assessing the witnesses or failed to take advantage of that position. This was not a case of drawing inferences from established facts, Brunskill v Sovereign Marine & General Insurance Co. (1985) 62 ALR 53, and neither could it be said that his Honour’s assessment of credibility was inconsistent with facts incontrovertibly established by the evidence, Devries v Australian National Railway Commission (1993) 177 CLR 572 at 579.

41. The appellant contended that the learned trial judge applied the wrong test when he relied on a passage from Imperial Loan Co. v Stone [1892] 1 QB 599 per Lopes LJ at 603 that

“A defendant who seeks to avoid a contract on the ground of his insanity must plead and prove not merely his incapacity but also the plaintiff’s knowledge of that fact and unless he proves these two things he cannot succeed.”

The appellant submitted that the correct test was stated by Drummond J in Begbie v State Bank of New South Wales Ltd (1994) ATPR 41-288 at p 41, 896

“It is also clear from the statements in Amadio that if one person has actual knowledge that another occupies a position of special disadvantage in relation to an intended transaction or, without actual knowledge is aware of the possibility that the situation of special disadvantage may exist or is aware of facts that would raise that possibility in the mind of a reasonable person, then that person's conduct in entering into the transaction from which he benefits against such a background of knowledge or awareness on his part will be unconscionable”. 

42. The appellant’s case was rather different. He contended that there was overt conduct by him such as to indicate that his capacity to exercise judgment about his own best interests was flawed and that that conduct was readily observable to persons in his presence on the day of the mediation. That his Honour considered both the common law rules about the effect of unsoundness of mind on the enforcibility of a contract and equitable considerations is apparent from these passages in his reasons for judgment

“Looking at the evidence given by persons who attended the mediation and considering the terms of the lengthy discussion the defendant had with his legal representative the day before the mediation which is recorded in Exhibit 6, and considering the negotiations that took place at the instance of defendant at the mediation and the fact that he signed the required bill facility a fortnight later in the office of his solicitor, I am unpersuaded upon the whole of the evidence that:-

1. The defendant did have any incapacity or had a reduced capacity to protect his own interests or to understand the effect of the agreement he made reflected in the Deed of Mediation which resulted from mental abnormality whether or not due to anxiety or undue pressure brought to bear upon him by the plaintiff in an unconscionable way or indeed that any such pressure was brought to bear upon him at any material time.

2. That he gave any observable indication whatever to the mediator, the officers of the bank, or to anybody else for that matter who attended upon the mediation that he had any such incapacity or reduced capacity.  In Imperial Loan Co v Stone [1892] QB 599 Lopes LJ pointed out at 603:-

“A defendant who seeks to avoid a contract on the ground of his insanity must plead and prove not merely his incapacity but also the plaintiff’s knowledge of that fact and unless he proves these two things he cannot succeed.”

In my view, the defendant has simply failed to establish any facts whatever which could justify a finding that the Mediation Deed and/or the bill facility which he signed as a consequence of that agreement was voidable at his option.” [78] [79] .

43. The approach to economic duress as a means of setting aside an agreement was expressed by McHugh JA in Crescendo Management v Westpac (1988) 19 NSWLR 40 at 46

“The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether the pressure went beyond what the law is prepared to countenance as legitimate?  Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct.  But the categories are no closed.  Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.”

His Honour referred to the dissenting advice of Lord Wilberforce and Lord Simon of Glaisdale in Barton v Armstrong [1976] AC 104 at 121 where their Lordships said

“… in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressuring, so that one can say that the actor had no choice but to act.  Absence of choice in this sense does not negate consent in law:  for this the pressure must be one of a kind which the law does not regard as illegitimate.  Thus, out of the various means by which consent may be obtained, advice, persuasion, influence, inducement, representation, commercial pressure – the law has come to select some which it will not accept as a reason for voluntary action:  fraud, abuse of relation of confidence, undue influence, duress or coercion.”

44. As was noted by Kiefel J in Westpac v Cockerill (1998) 152 ALR 267 at 290 relief will not be granted only on the basis of an inequality “even a great inequality, of bargaining position”.  Here the inequality of the bargaining position did not flow from disparity substantially brought about by the Bank’s antecedent conduct.  Although the learned trial judge did not make detailed findings directly on this point he found that there had been no agreement or representations, as alleged, made by Mr Carlson, and the Bank’s approach to the appellant’s financial difficulties was as described by Mr Alder and not by the appellant.  His conclusion that the appellant had not entered into the Deed of Mediation “due to … undue pressure brought to bear upon him by the [Bank] in an unconscionable way …” was clearly open on the evidence.

45. The appellant does not appeal against the finding below that the bill facility ought not to be set aside but the orders sought by him do so. His Honour noted that the appellant had executed that document some two weeks later in the office of his solicitor and there was no evidence to indicate that at that time he suffered from any of the incapacitating disabilities of which he had complained at the mediation. There is no basis to disturb his Honour's findings on the validity of the bill facility executed by the appellant.

The Appellant’s Counter-Claim

46. To a large extent the appellant’s oral submissions on appeal revolved around his action against the Bank based upon misleading and deceptive conduct and/or equitable estoppel and negligence and that his Honour erred in not making the necessary findings of fact to support those allegations. In summary the appellant contended that the learned trial judge should have found that a series of representations were made to the him by the Bank acting through Mr Carlson and that through Mr Alder, the Bank unconscientiously repudiated those representations or promises and, further, made no reasonable effort to support the appellant’s application for interest subsidy through QRAA.  By his amended grounds of appeal  the appellant contended that the learned trial judge ought to have found that Mr Alder represented to QRAA that he would do a review of the appellant’s finance facilities in May 1997 but did not do so and that if he had, he would have supported the appellant’s application for the subsidy.  If he had received the subsidy the appellant’s facilities would not have been in default and there would have been no mediation. 

47. In view of his Honour’s conclusion about the enforcibility of the Deed of Mediation and the bill facility he did not deal in detail with the matters upon which the appellant sought to rely to avoid his obligations under the various facilities made available to him by the Bank. Nonetheless, his Honour summarised the evidence about the alleged representations and the course of the relationship with Mr Alder. His Honour found both the evidence of Mr Carlson and Mr Alder persuasive and supported in essence by the contemporaneous correspondence. His Honour thought the lack of any reference to the representations in correspondence emanating from the appellant at any time prior to the mediation significant. He noted that the appellant led no contemporaneous sales dockets or other documentary evidence to support his oral evidence that he had sold 300 head of breeders to accommodate the Bank’s requirements. These were conclusions open to his Honour and a perusal of the whole of the evidence does not suggest that any other conclusion presents itself.

48. Another matter which the appellant agitated on appeal concerned the letter of demand of 21 April 1998 sent by the Bank, allegedly deliberately for a false amount. Had his Honour made this finding, the appellant submitted, then he would have concluded that the appellant was not then in default. It is irrelevant to any issue before his Honour or this court. The appellant paid the amount of $2,205 into his accounts with the Bank on 6 April 1996, on his explanation, as an interest payment to extend the bill facility. That was the date the bill facility was terminated in accordance with the terms of the Deed of Mediation which required the appellant to re-finance the debt or exchange Bank approved contracts of sale for the property no later than 4 March 1998.  If neither occurred the appellant was to deliver vacant possession of the property by 6 April 1998.  It is not the case, as the appellant contended, that had the sum been credited to his account on the day it was paid in, he would not have been in default.  It was held in suspense until the notice of demand was attended to and subsequently credited to the amount outstanding.

49. The appellant also contends that the Bank misrepresented to him that at the time of the mediation the value of the property, stock, plant and machinery was $1.6 million.  The Bank had a valuation from Herron Todd White dated 8 December 1997 that the valuation based on fair market value in aggregation was $1.5 million, in subdivision was $1.6 million and at a forced sale $1.3 million.  The submission was not developed and it is not apparent what use his Honour might have made of such a finding since it can have had no effect on his conclusion.

50. By ground 10 of the amended grounds of appeal the appellant contends that the learned trial judge ought not to have granted an application by the Bank to amend its reply and answer in para 22(a) to add the words “and relies on the release referred to in paragraph 46(b)(1)(i)” [of the amended defence and counter-claim].

51. The appellant had referred to the Deed of Mediation in his amended defence and counter-claim and in para 46(b) described the benefits conferred on the Bank by its terms including

“(1)an absolute and unconditional release by [the appellant] of all and any claims [the appellant] might have against [the Bank]”.

The application to amend came at the end of the trial.  The appellant’s counsel was instructed to oppose leave being given but offered no basis for doing so.  The learned trial judge thought the amendment probably unnecessary but allowed it.  There was no prejudice to the appellant in so doing.  At most it tidied up what was quite clear on the existing pleadings.  There was no error in allowing the amendments.

52. By ground 11 of the amended grounds of appeal the appellant complains of the order that costs against him were to be assessed on an indemnity basis. The award of costs is discretionary, r 689(1) Uniform Civil Procedure Rules.  By s 253 of the Supreme Court Act 1995

“No order made by any judge . . . as to costs only which by law are left to the discretion of the judge shall be subject to any appeal except by leave of the judge making such order.”

Leave to appeal against the order about costs made below was not obtained from the learned trial judge.  There is thus a statutory restriction on any appeal against that order, Re Golden Casket Art Union Office [1995] 2 Qd R 346 at 348-9.  But even had leave been sought and granted his Honour’s approach was correct.

53. By r 704(1) of the Uniform Civil Procedure Rules (“UCPR”) a court may order costs to be assessed on an indemnity basis.  Such costs equate to the former solicitor and client costs, r 704(3).  By item 8 of the Memorandum of Mortgage between the appellant and the Bank the appellant covenanted to repay the sums advanced in accordance with the schedule.  By cl 34 of the schedule “the monies hereby secured” included in (e) “the amount of any costs … incurred by the Bank … and also the amount of any charges and disbursements for legal advice and assistance to the Bank as between solicitor and client”.

54. The application for costs to be assessed on the indemnity basis was, by inference, made when judgment was delivered on 11 October 2000. The transcript at R 365 suggests that further submissions from counsel were made after his Honour had ordered the appellant to pay the Bank’s costs “to be assessed”. His Honour then ordered that those costs “be assessed [on] an indemnity basis”. There are no reasons transcribed in the record.

55. At general law a mortgagee is entitled to “party and party costs” only (which equate under the UCPR to assessment on the standard basis), AGC (Advances) Ltd v West; Cranston (1986) 5 NSWLR 301 at 305 per Hodgson J and Sandtara Pty Ltd v Australian European Finance Corporation Ltd (1990) 20 NSWLR 82 at 97 per Cole J.  That principle is subject to specific agreement, ibid.  In AGC (Advances) Ltd Hodgson J allowed costs on a solicitor and client basis where that expression, as here, appeared in the mortgage.

56. There was no error in the exercise of his Honour’s discretion in ordering costs on the indemnity basis.

57. In ground 12 of the amended grounds of appeal the appellant complains of a failure by the learned trial judge to grant an adjournment of the trial.

58. The application made by the appellant’s counsel was to stand the matter down for two days. The problem appeared to arise because the appellant had changed solicitors about a month earlier and he had deposed that he was not ready for trial. However, counsel indicated that the real difficulty lay with the issue of quantum. The application to adjourn was opposed. The learned trial judge proposed, without dissent from the appellant’s counsel, that the Bank could proceed with its case which would be short and formal and then the appellant, whose evidence it was said would substantially follow that of his extensive affidavit filed in the Bank’s summary judgment application, would give evidence and other witnesses relating to the issue of liability would be called. His Honour proposed

“If something goes wrong, an adjournment could be sought, if witnesses have to be met and interviewed and further enquiries have to be made.”

In response counsel for the Bank agreed that there could be an adjournment of a “couple of days if needs be” for the appellant to be ready to proceed on the quantum issue.

59. There was no further request for adjournment of the trial and in accordance with the course proposed by his Honour and agreed to by both counsel, evidence on quantum was heard at the conclusion of the evidence on liability and after approximately a half day adjournment, from the afternoon of the third day until 10.00 a.m. the following day, as requested by counsel for the appellant. There was no suggestion that the appellant’s case was in any way compromised by the course that the trial had taken.

60. His Honour’s exercise of discretion that the trial should proceed on its listed date brought about no disadvantage to the appellant that was articulated before his Honour. Since his Honour expressed the view that if any problems arose in the course of the trial he would be sympathetic to an application there was no prejudice to the appellant and his Honour’s approach was entirely correct.

61. There is no substance in any of the grounds of appeal raised by the appellant in the extensive written submissions or in his oral submissions. The appeal should be dismissed with costs.