FEDERAL COURT OF AUSTRALIA

Stuart v Rabobank Australia Ltd [2021] FCA 1388

ORDERS

THE COURT ORDERS THAT:

1.    The amended originating application dated 22 April 2021 be dismissed.

2.    The cross-claimant be awarded damages for breach of contract in the sum of $2,972,705.42 together with interest from and including 1 April 2021.

3.    Subject to any consent position with respect to the payment of the costs of the proceeding including the cross-claim:

(a)    the applicants file and serve written submissions on costs limited to three pages and any supporting evidence by 4.30 pm on Thursday, 18 November 2021;

(b)    the respondent file and serve written submissions on costs in response limited to three pages and any supporting evidence by 4.30 pm on Thursday, 25 November 2021;

(c)    the applicants file and serve any written submissions in reply on costs limited to two pages and any supporting evidence by 4.30 pm on Thursday, 2 December 2021;

(d)    written submissions must be easily legible using a font size of at least 12 points and one and a half line spacing throughout, including in any footnotes and annexures; and

(e)    the issue of costs be determined on the papers unless either party seeks an oral hearing.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

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THE COURT NOTES THAT:

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Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Table of Contents

REASONS FOR JUDGMENT

HALLEY J:

A. INTRODUCTION

1    By late 2007, after a series of successful rural property acquisitions and realisations, the applicants Mark and Catherine “Cate” Stuart (the Stuarts) by late 2007 found themselves in a position where they could no longer meet their financial commitments on their current rural property without continued extensions to their facility limit of the financing provided to them by the respondent, Rabobank Australia Ltd (Rabobank).

2    The Stuarts were confident that they could address this predicament by increasing the limit of their facility to enable them to purchase an alternative property pending the sale of their existing property. Unfortunately, the combined effect of the severe drought and the global financial crisis frustrated their efforts to sell their existing property. The Stuarts were not able to continue to meet interest payments on their facility with Rabobank and they defaulted.

3    Ultimately, both properties were sold for prices well beneath their expectations, receivers were appointed, and the Stuarts have been left with virtually nothing and a substantial debt outstanding to Rabobank.

4    In this proceeding the Stuarts seek declarations of contravention, damages, compensation and various orders relieving them from liability and setting aside facilities and mortgages against Rabobank.

5    In an attempt to address the difficult financial position they faced, in late 2007 the Stuarts embarked on a course of action to sell Evergreen, a cattle property they owned near Talwood in Queensland, and purchase a new cattle property. The farming operation conducted by the Stuarts on Evergreen had not been profitable and in around April 2008, the Stuarts agreed with Rabobank to sell Evergreen and use the proceeds of the sale to substantially reduce their existing facility with the bank with a view to them acquiring a different cattle property.

6    In May 2008, prior to the entry into any contract for the sale of Evergreen, the Stuarts entered into a contract for the purchase of Mt Morris, a cattle property near Charleville in Queensland.

7    On 11 June 2008, the Stuarts accepted a letter of offer from Rabobank dated 3 June 2008 (June 2008 Letter of Offer), pursuant to which Rabobank agreed to extend the limit of the Stuarts’ existing facility with the bank (Facility) from $1.12 million to $3.48 million to fund the purchase of Mt Morris. A term of the extension of the limit of the Facility (Facility Limit) was that the proceeds of the proposed sale of Evergreen had to be used to reduce the indebtedness of the Stuarts to Rabobank under the Facility from $3.48 million to $250,000 by 31 March 2009.

8    The Stuarts were not able to sell Evergreen by 31 March 2009.

9    Notwithstanding the requirement to reduce the outstanding balance of the Facility to $250,000 by 31 March 2009, Rabobank maintained the Facility Limit at $3.48 million until December 2009.

10    In December 2009, Rabobank increased the Facility Limit to $3.6 million, but then reduced it to $2.7 million in January 2010 following the receipt of $900,000 from the sale of part of Evergreen. In June 2010, Rabobank increased the Facility Limit to $2.75 million, then subsequently reduced it to $950,000 in December 2010 and ultimately reduced it to nil in May 2012.

11    The Facility was in default from December 2010 by reason of the Stuarts’ failure to meet an interest payment under the Facility.

12    On 9 August 2012 the parties attended a mediation (Mediation), following which they entered into a deed described as a Deed of Forbearance and Acknowledgement (Deed of Forbearance). It included a clause purporting to contain a release by the Stuarts of all claims that they might have against Rabobank with respect to, inter alia, the June 2008 Letter of Offer. The deed provided for the Stuarts to complete the marketing campaign for the sale of Mt Morris by 30 November 2012. In the event Mt Morris was not sold by this date, the Deed of Forbearance required the Stuarts to agree an acceptable amount with Rabobank in full and final satisfaction of the debt owed by them to the bank on or before 31 March 2013 while also continuing their efforts to sell Mt Morris. Neither of these two provisions was satisfied.

13    On 10 April 2013, Rabobank agreed to accept the sum of $1.5 million in full and final satisfaction of the debt owed by the Stuarts, if payment was made by 31 May 2013. The date for payment was subsequently extended to 30 August 2013. No payment was ever made by the Stuarts and, on 9 September 2013, Rabobank declared an end to its moratorium on enforcement action under the Deed of Forbearance.

14    On 7 November 2013, receivers were appointed to Mt Morris by Rabobank (Receivers). On 10 October 2014, the Receivers took possession of Mt Morris and it was sold at auction. The sale was completed in June 2015.

15    As at 31 March 2021, the outstanding balance under the Facility was $2,972,705.42 (including interest up to 31 March 2021).

16    Briefly stated, the Stuarts seek to advance the following claims against Rabobank:

(a)    15 Year Representation: The Stuarts contend that Rabobank falsely represented that the increase in the Facility to fund the purchase of Mt Morris was made on an interest only basis until the expiry of the Facility on 30 July 2019 and that representation was thereby misleading or deceptive or likely to mislead or deceive in contravention of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). It is further alleged that the 15 Year Representation was made by Rabobank knowing it to be false or was made recklessly as to its falsity;

(b)    Repayment Representation: The Stuarts contend that Rabobank falsely represented that the requirement in the Facility to repay $3.23 million on or before 31 March 2009 was a typographical error and that the representation was thereby misleading or deceptive or likely to mislead or deceive in contravention of s 12DA of the ASIC Act. It is further alleged that the Repayment Representation was made by Rabobank knowing it to be false or was made recklessly as to its falsity;

(c)    Suitable Finance Representation: The Stuarts contend that Rabobank falsely represented that the finance to be supplied by Rabobank pursuant to the June 2008 Letter of Offer was suitable finance, serviceable by the Stuarts, “right” for the farming operations of the Stuarts and that Rabobank’s All in One finance product was designed for primary producers like the Stuarts. It is alleged that the Suitable Finance Representation was thereby misleading or deceptive or likely to mislead or deceive in contravention of s 12DA of the ASIC Act. It is further alleged that Rabobank made the representation knowing it to be false or was reckless as to its falsity;

(d)    Unconscionable Provision of Finance: The Stuarts contend that Rabobank engaged in unconscionable conduct by providing finance to the Stuarts pursuant to the June 2008 Letter of Offer in breach of its lending, credit and valuation policies and that the finance was unsuitable for the Stuarts, unserviceable by them, financially imprudent, comprised asset lending and was not fit for purpose and that Rabobank took advantage of the Stuarts’ inferior bargaining position in contravention of s 12CB(1)(a) of the ASIC Act;

(e)    Carbon Farming claim: The Stuarts contend that Rabobank breached a binding contract or arrangement reached between them in relation to a proposed carbon farming initiative on Mt Morris by failing to sign an “Eligible Interest Holder Consent” form required by the Clean Energy Regulator and failing to fund the costs of the verification process required by the Clean Energy Regulator for the proposed initiative;

(f)    National Credit Code claim: The Stuarts contend that the Facility should be reopened as an unjust credit transaction pursuant to s 76 of the National Credit Code contained in sch 1 to the National Consumer Credit Protection Act 2009 (Cth) (National Credit Code), by reason of the variation to the Facility pursuant to the terms of the June 2008 Letter of Offer, inter alia, on the basis that:

(i)    the permanent repayment provision of $3.23 million by 31 March 2009 comprised a form of financial misconduct;

(ii)    there was a relative inequality of bargaining power;

(iii)    Rabobank engaged in unfair tactics;

(iv)    the provisions in the Facility, as varied in June 2008 and thereafter, were not reasonably necessary for the legitimate protection of Rabobank’s interests; and

(v)    Rabobank failed to comply with the Australian Bankers’ Association Code of Banking Practice (Code of Banking Practice) by undertaking enforcement action rather than working with the Stuarts to resolve their financial difficulties;

(g)    Deed of Forbearance claim: The Stuarts contend that the Deed of Forbearance: does not bar or release any claims made by them; is invalid and unenforceable as a result of Rabobank’s alleged financial misconduct; was rendered void by Rabobank making unauthorised alterations; was not entered into pursuant to an authorised dispute resolution scheme; and was an unjust transaction within the meaning of s 76 of the National Credit Code;

(h)    Serious Consideration Representation: The Stuarts contend that Rabobank, by its servants or agents Richard Witherow, Greg Brady and/or Lee Nevison, falsely represented that it intended to give serious consideration to an offer received from the Stuarts immediately prior to the Mediation on 9 August 2012 to refinance the Stuarts’ indebtedness to the bank and that the representation was thereby misleading or deceptive or likely to mislead or deceive in contravention of s 12DA of the ASIC Act;

(i)    Unconscionable Mediation Conduct: The Stuarts contend that Rabobank, by its servants or agents Mr Witherow, Mr Brady and/or Mr Nevison, engaged in unconscionable conduct at the Mediation on 9 August 2012 and thereafter, inter alia, by placing undue pressure and/or duress upon the Stuarts to sign the Deed of Forbearance in contravention of s 12CB(1)(a) of the ASIC Act; and

(j)    Fraud and Fraudulent Concealment: The Stuarts allege that Rabobank is precluded from relying on the limitation periods advanced by Rabobank in its defence on the grounds that the Stuarts’ claims are based in fraud or deceit or otherwise because each is a cause of action that has been fraudulently concealed, in that each wrongful act was not reasonably discoverable and fully appreciated by the Stuarts prior to June 2018.

17    Briefly stated, Rabobank advances the following claims in its amended statement of cross-claim:

(a)    Breach of the Facility: Rabobank contends that the Stuarts are in default under the Facility and that although it has served a valid demand for payment of all amounts outstanding (together with accrued interest), the Stuarts have failed to pay the amounts demanded and Rabobank has thereby suffered loss and damage;

(b)    Contractual Indemnity: Rabobank contends that, independently of the Breach of the Facility claim, the Stuarts are obliged to indemnify Rabobank pursuant to the indemnity contained in the standard terms to the Facility. This includes indemnity against any losses that Rabobank has suffered as a result of the Stuarts’ defaults, Rabobank’s costs of exercising its rights pursuant to those defaults and any losses that Rabobank may suffer as a result of the Stuarts bringing this proceeding; and

(c)    Misleading or Deceptive Conduct: Rabobank contends that the Stuarts made misleading or deceptive representations to it in relation to loan applications they made in May 2008 and May 2010, six Rabobank letters of offer between June 2008 and June 2010 and the mortgage that the Stuarts provided to Rabobank over Mt Morris in June 2008, and thereby engaged in misleading or deceptive conduct in contravention of s 12DA of the ASIC Act.

B. PRINCIPAL CONCLUSIONS

18    For the reasons set out below, my principal conclusions in relation to the claims advanced by the Stuarts against Rabobank are as follows:

(a)    Rabobank did not make the alleged 15 Year Representation;

(b)    Rabobank did not make the alleged Repayment Representation;

(c)    Rabobank did not make the Suitable Finance Representation;

(d)    I accept, however, that Rabobank made a representation as to the suitability of the finance offered to the Stuarts pursuant to the June 2008 Letter of Offer, but this did not extend to any representation as to the ability of the Stuarts to service their ongoing commitments under the Facility and the representation made was otherwise not misleading or deceptive or false;

(e)    Rabobank did not engage in unconscionable conduct by providing finance to the Stuarts pursuant to the June 2008 Letter of Offer;

(f)    Rabobank did not enter into any binding contract or arrangement with the Stuarts with respect to any carbon farming initiative proposed for Mt Morris;

(g)    the National Credit Code has no application to the variation to the Facility effected by the Stuarts’ acceptance of the June 2008 Letter of Offer;

(h)    the Deed of Forbearance was not a credit contract for the purposes of the National Credit Code;

(i)    in any event, all of the claims advanced by the Stuarts with respect to the variations to the Facility between June 2008 and May 2010, the Carbon Farming claim and the Mediation (other than the Unconscionable Mediation Conduct claim) were released pursuant to the terms of the Deed of Forbearance;

(j)    Rabobank did not engage in the conduct the subject of the Unconscionable Mediation Conduct claim;

(k)    in any event, the claims advanced by the Stuarts with respect to the variations to the Facility between June 2008 and May 2010 are time barred;

(l)    Rabobank did not act fraudulently or deceitfully, nor did its conduct give rise to any fraudulent concealment;

(m)    the Stuarts are in default of their contractual obligations pursuant to the Facility, as varied on and from June 2008; and

(n)    Rabobank has suffered loss and damage by reason of the Stuarts’ default.

C. DRAMATIS PERSONAE AND LAY WITNESSES

The Applicants

19    Mrs Stuart was born on a family farm in Eugowra in the Central West region of New South Wales. She married Mr Stuart in 1985 and they had four children. The Stuarts worked on several farms before acquiring a succession of their own rural properties in New South Wales and Queensland, culminating in the purchase of Mt Morris in 2008.

20    Mr Stuart has extensive experience in outback farming operations. In the period between 1990 and 1998 he undertook rural property development work for a company in southern New South Wales, including cropping and pastures, irrigation and tree clearing.

21    Mr and Mrs Stuart took on distinct roles and responsibilities in their rural property acquisition partnership. Mr Stuart concentrated on what he describes as the “groundwork” and Mrs Stuart attended to most of the “secretarial work and finances”. This is established by the contemporaneous documents and the oral evidence each of the Stuarts gave in the course of the hearing.

22    On 5 August 2004, the Stuarts refinanced their existing loan facilities with Elders Limited (Elders) and became Rabobank clients. The Stuarts obtained a $400,000 loan facility with Rabobank that was secured by a registered mortgage over Kurrajong, a cattle property in central Queensland that was owned by the Stuarts, and an associated water licence.

23    Mr and Mrs Stuart both describe their current occupations as displaced graziers. Mr Stuart is currently working as a fly-in fly-out miner in Queensland to support his family following the sales of Evergreen and Mt Morris.

24    It was readily apparent from the oral evidence of Mr and Mrs Stuart that they both hold Rabobank responsible for their current parlous financial position.

The Respondent

25    Rabobank is a foreign-owned public unlisted company. It was incorporated in 2000 as the Primary Industry Bank of Australia Ltd and changed its name to Rabobank Australia Limited in 2003. The company specialises in the provision of corporate financial services to the Australian and New Zealand food and agribusiness industries. Rabobank is part of the international Rabobank Group, which markets itself as “the world’s leading specialist in food and agribusiness banking”.

Mr Ellem and other Rabobank personnel

26    Christopher Ellem is currently employed as a machinery operator in rural Queensland. He was previously employed by Rabobank.

27    Mr Ellem commenced employment with Rabobank as a rural manager in 2002. He was based at the Dalby branch of Rabobank in central Queensland. He was the Stuarts’ relationship manager from when they first became customers of Rabobank in 2004, until he was promoted to the role of senior rural manager and moved to the Bundaberg branch of Rabobank in 2011.

28    Michael Webber was the Rabobank Dalby branch manager during the time that the Stuarts were clients of the bank. Mr Webber was Mr Ellem’s immediate manager and authorised all credit submissions put forward by Mr Ellem in his role as a “C Signatory”.

29    Greg Brady was another senior rural manager employed by Rabobank at the Dalby branch. Mr Brady started as a finance officer in August 2008, was promoted to rural manager in September 2009 and then senior rural manager in April 2013, a role that he performed until his death on 6 March 2021.

30    Mr Brady took over the portfolio of clients previously managed by Mr Ellem in approximately July 2011. This portfolio included the Stuarts. Mr Brady considered himself to be the Stuarts’ relationship manager from this time until his last dealing with them, when the Receivers were appointed to Mt Morris in 2013.

31    Richard Witherow, Peter Varnay and Bob Ole all worked within the central Special Asset Management department of Rabobank, which provided support to clients in financial distress.

Mr Couper

32    Scott Couper is a solicitor in Queensland. He has practised in commercial litigation in Australia and the United Kingdom for more than 27 years and has been a partner of Gadens Lawyers in Brisbane for at least 12 years.

33    Mr Couper has provided legal advice to Rabobank in relation to its dealings with the Stuarts since 2012. This included preparation for and attendance at the Mediation on behalf of Rabobank.

34    Mr Couper continued to represent Rabobank in the years following the Mediation, including in relation to settlement negotiations, demands for the payment of the debt owed by the Stuarts, the appointment of the Receivers to Mt Morris, settlement refinancing negotiations and the ultimate sale of Mt Morris by the Receivers in June 2015.

35    Mr Couper represented Rabobank in these proceedings, as well as in similar proceedings filed by the Stuarts in the Federal Court of Australia in 2015 (2015 Proceedings).

Ms Bowden

36    Angelea Bowden is a rural financial counsellor based in Charleville in Queensland. She is currently employed by Rural Solutions Queensland Inc, a not-for-profit organisation operating in regional Queensland. Rural Solutions Queensland Inc coordinates and manages the Rural Financial Counselling Service (Southern Queensland) (Rural Financial Counselling Service). It is a service that is funded by the Australian Federal Government. It provides free support to farmers, fishers and small rural businesses experiencing financial difficulties.

37    In her role as a rural financial counsellor, Ms Bowden regularly assists farmers with the review and preparation of financial contracts and loan applications. She also facilitates meetings with lenders and financial institutions.

38    Ms Bowden provided rural financial counselling to the Stuarts between 2010 and 2014. This included assisting the Stuarts with applications to Centrelink for financial hardship payments, representing the Stuarts at the Mediation and assisting the Stuarts to find emergency housing after Mt Morris was repossessed in 2014.

Mr Nevison

39    Lee Nevison is a nationally accredited mediator and member of the Queensland Bar Association Alternative Dispute Resolution Committee.

40    Mr Nevison acted as the independent mediator at the Mediation.

Applicants’ lay witnesses

Ms Hawking

41    Kerry Hawking is the Stuarts’ accountant. She works at Dawson & Partners, a rural accounting firm based in Cootamundra in southern New South Wales.

42    Ms Hawking has known the Stuarts for more than 25 years. She met Mr Stuart in the early 1990s when he was working on rural properties and she commenced acting as the Stuarts’ accountant when they began to purchase their own farming properties. She continues to act as their accountant to this day.

Ms Bodkin (née Christmas)

43    Prue Bodkin has ten years’ experience in the real estate sector. She was employed in various roles in Sydney in New South Wales between 2001 and 2005. In 2005, she relocated to Southern Queensland. She worked as a real estate salesperson at the St George offices of Leonard & Co Raine & Horne and GDL Real Estate between 2005 and 2010.

44    Ms Bodkin was involved in the Stuarts’ sale of Tullochard (a rural property at Mitchell in Queensland) in 2006 and their attempts to sell Evergreen in 2009 and 2010.

Mr McCallum

45    Andrew McCallum is a real estate agent based in Dalby in southern Queensland. He also worked for GDL Real Estate and was involved in the sales marketing campaigns for Mt Morris and portions of Evergreen in or about 2010.

Mr Cowley

46    Michael Cowley is a solicitor in Queensland. He is currently a director of Fox and Thomas, a law firm based in Goondiwindi in the Darling Downs region of Queensland. Mr Cowley provided legal conveyancing services to the Stuarts in relation to their purchase of Mt Morris in 2008.

Ms Beardsley (née Bonnett)

47    Ruth Beardsley is an investor and the sole director of Mintaka Investments Pty Ltd. She has been retired since 2001 and currently lives in Brisbane in Queensland.

48    Ms Beardsley has known the Stuarts since in or about 2009 when she met with Mrs Stuart to discuss the impact of carbon pricing on the farming industry in Australia. She visited the Stuarts at Mt Morris a number of times and provided them with accommodation in Brisbane during the Mediation.

49    On the morning of the Mediation, Ms Beardsley offered the Stuarts a negotiated equity share in her company’s unencumbered real property with an approximate market value of $1.3 million in exchange for a share in Mt Morris.

Mr Wass

50    Robert Wass is a multi-generational farmer who lives at Warren in the Orana region of New South Wales. He has been involved in his family’s wool and crop production agricultural business since 1975 and is currently the chairman of that business.

51    Mr Wass began corresponding with Mrs Stuart via an online agricultural forum when the Stuarts were living at Evergreen. Mr Wass began speaking with both Mr and Mrs Stuart somewhat regularly via telephone about their common experiences as primary producers with young families. The Stuarts visited Mr Wass and his wife at their property at Warren in 2008.

Mr and Mrs Brauer

52    Adrian and Wendy Brauer are farmers. They operate a cattle property near Theodore in central Queensland. The Brauers were clients of the Rabobank Dalby branch from 2005 to 2016. They suffered financial hardship in or about 2013.

53    Mrs Brauer gave evidence at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Financial Services Royal Commission) in Brisbane on 27 June 2018. Mrs Brauer outlined her family’s experiences with Rabobank and the resulting financial and personal impact on their lives. The Stuarts travelled to Brisbane to attend the Financial Services Royal Commission public hearings and claim that they personally identified with the evidence and experiences described by Mrs Brauer.

D. WITNESSES AND CREDIT ISSUES

Mrs Stuart

54    Mrs Stuart gave extensive oral evidence in support of her case. A large amount of contemporaneous documentation authored by Mrs Stuart was also tendered as evidence in this proceeding.

55    At all relevant times Mrs Stuart maintained what she described as an options book in which, inter alia, she sought to analyse the financial implications of various proposed property purchases that the Stuarts were contemplating in the period leading up to the acquisition of Mt Morris.

56    While both Mr and Mrs Stuart had many oral conversations with their accountants, solicitors and Rabobank, all written communications were exclusively conducted by Mrs Stuart. These written communications were primarily in the form of emails.

57    Mrs Stuart’s options book, contemporaneous emails and oral evidence demonstrated a relatively sophisticated appreciation of both legal and financial matters.

58    Her credit was challenged by senior counsel for Rabobank, Mr Braham SC who appeared with Mr Gray for the respondent.

59    Understandably, given she considers that Rabobank financially ruined her family, Mrs Stuart found giving evidence challenging at times. Her examination in chief had to be suspended at one point when she almost collapsed in the witness box and required treatment in hospital.

60    Unfortunately, at times her evidence in cross-examination became somewhat petulant, argumentative and rehearsed, as evident from the following exchange with senior counsel for Rabobank:

Mr BRAHAM SC: I’m exploring the recollection that you proffered up a little while ago where you say – you said you remember discussing it with Mr Ellem?---Yes, because it was a little bit of a surprise, but I accepted it - - -

All right?--- - - - afterwards.

All right. But when you say afterwards, you mean – you’re not talking about years and years afterwards, you’re talking about in the weeks afterwards?---After signing it.

After signing it?---Like a week or two week or three weeks later, whatever.

All right. And on that occasion you discussed with Mr Ellem the obligation to make the permanent repayment?---I just said it was stupid, but yes.

All right. Well, by this stage it was the fourth letter of offer you had signed from the bank, wasn’t it, that had an obligation for permanent repayment in it?---The fourth – yes, the fourth one it says, “surprise, defer, roll it over, stick with you, you’ll be right, all in one, suitable product, 15 years.” Yep, that’s the one.

All right. But at very least, you were getting used, weren’t you, to seeing that term or a term like it in the letters of offer that the bank provided you for the purposes for your credit arrangements?---Actually, no, I didn’t get used to it. Each time it was a bit of a shock because I thought once-off was simply once-off and it didn’t keep reoccurring.

All right. But by April 2008, you had had – you had seen and identified four of these one-off, permanent repayments, hadn’t you?---You’re telling me.

And I’m asking you to agree; do you agree?---If it was four, it was four.

61    A further example of her apparent advocacy, rather than genuine recollection, was her oral evidence in chief concerning the purpose of the finance to be provided pursuant to the June 2008 Letter of Offer. Mrs Stuart was taken by her counsel, Mr King, who appeared with Ms Rusiti for the applicants, to an internal Rabobank document that recorded the relevant subject for consideration to be “[i]ncrease to facility of $2,360,000 for the purpose of purchasing additional property”. It is difficult to see how this was not an accurate statement of the purpose of the proposed variation to the Facility, namely, to enable the Stuarts to purchase Mt Morris pending the sale of Evergreen.

62    Mrs Stuart, however, gave the following evidence in chief in an apparent attempt to characterise the provision of credit in a manner that would attract the operation of the National Credit Code, notwithstanding that the Stuarts intended to operate a working cattle grazing operation on Mt Morris and did not propose to live there until after the sale of Evergreen:

MR KING: Would you have a look, please, at page – I think it’s 955 in the Court Book. See, that’s an internal bank work request number 78643 which has dates apparently commencing on Wednesday, 28 May 2008; do you see that?---I do.

And when did you first see that document?---Through discovery from the bank.

Thank you. Do you see in the top under ‘Summary’ in the fifth line it refers to an apparent purpose for the Mt Morris advance; do you see that?---I do.

Increase to facility?---I do.

Is that an accurate record of the purpose of the finance which you informed Mr Ellem?---No.

And how would you describe – sorry, withdraw that. To the best of your recollection, what did you say to him was that purpose?---Well, there are a number of things that come to mind here. And that is, firstly, when we began before - - -

MR BRAHAM SC: I object.

MR KING: Yes, just - - -

HIS HONOUR: Mrs Stuart, try to concentrate a little more sharply on Mr King’s question.

MR KING: Sorry, Mrs Stuart, that’s probably my error. In – you mentioned you – I mentioned three conversations which I took you through yesterday. Was – in any one of those conversations in particular, do you recall discussing the issue that I’ve just raised with you?---Yes, I do.

And do you know which – whether it was one or all three conversations?---All three.

And just doing the best you can, can you recall what it is you said about what the purpose of the Mt Morris finance was for you and - - -?---It was personal. It was our home. I’m a generational grazier.

And did you – what were the words you actually used, to the best of your recollection?---That it was an investment in my family.

63    Again, notwithstanding the extent to which the advance funding to enable the purchase of Mt Morris pending the sale of Evergreen could reasonably be characterised as “bridging finance”, her counsel elicited this evidence from Mrs Stuart:

MR KING: Thank you. All right. Now, would you – did – the bank, in its defence, has pleaded that this was bridging finance. Did you ever have that perception?---Never. Poppycock.

Did Mr Ellem ever mention bridging finance to you?---Never.

Did Mr Webber, his manager at Dalby, ever mention that to you?---Never.

64    Considerable caution therefore needs to be exercised in accepting Mrs Stuart’s evidence, except to the extent that it is supported by contemporaneous documents or is objectively plausible. Her recollections were advanced in a litigious context, many years after conversations and events occurred.

65    The inherent difficulties in accepting such evidence were exacerbated in this case by reason of the number of dealings that the Stuarts have had with Mr Ellem involving the provision of finance pursuant to variations to the Facility, and the previous close and friendly relationship that the Stuarts had with Mr Ellem.

Mr Stuart

66    Mr Stuart found it difficult in the course of his cross-examination to focus on the questions he was asked to address. He was inclined to be argumentative and some of his evidence was at times implausible, offensive and evasive. He came across in his oral evidence as less financially and legally sophisticated than Mrs Stuart. He took every opportunity to attack Mr Ellem’s credit and advance implausible evidence that he might have thought supported his case.

67    In the course of his supplementary oral evidence in chief, after his cross-examination had commenced, Mr Stuart gave the following evidence with respect to his signature on a letter of offer from Rabobank dated 1 June 2010 regarding a variation to the Facility (June 2010 Letter of Offer):

MR KING: Would you then go across, please, to page 1995?---Yes.

And you see there that there’s a reference in – sorry, your Honour. If you go across, please, to – just looking at page 1995. It’s not clear, but is that your – initial at the bottom of the page, or not?---Yes, it does look like it.

And then, the following page?---No. I never – just do an M and an S.

Just go across to page 1999. Is that your signature there?---No.

HIS HONOUR: Wait, when you say 1999, are you talking about the signature next to Mark Lindsay Stuart or are you talking about the initials of signatories at the foot of the page?

MR KING: Yes. I do apologise, your Honour. Just looking at the middle of the page, not the bottom of the page?---Yes. No.

HIS HONOUR: So you’re saying that’s not your signature?---I never use my middle initial, ever.

MR KING: Well – well .....

HIS HONOUR: Well, this evidence should have been led in chief, Mr King. If it’s seriously suggested that this is a document that does not bear Mr Stuart’s signatures, why wasn’t this evidence led in chief?

MR KING: Yes, your Honour, I’m - - -

HIS HONOUR: Or is this the first time you’ve heard that?

MR KING: I acknowledge this is the first time I’ve heard that, your Honour. It wasn’t the purpose of me leading this evidence; the purpose of me leading this evidence, I’m about to address, and that’s this: Mr Stuart, you see there, at page 1995 - - -?---Yes.

- - - the reference to “working capital”, under Loan Purpose – beside Loan Purpose?---Yes.

To what did you understand that was a reference?---It was not working capital. That was an interest repayment.

You mean, by that, a provision for an interest repayment?---Yes, that was money to pay interest.

All right. Now, I just want to ask you this question, please: if you had known at that time that the bank was proceeding in relation to the provision of its finance on the basis of the material in the credit submission to which I have referred – page 1972 and 1973 – would you have signed that letter of variation?---No. Definitely not.

That’s the only evidence, your Honour.

68    The “letter of variation”, being the June 2010 Letter of Offer, gave the Stuarts a further six months to make a $1.8 million permanent principal reduction and advanced them a further $50,000 in working capital to make an interest payment. The implausibility of Mr Stuart’s evidence that he would not have signed the document was the subject of the following exchange in cross-examination:

MR BRAHAM SC: You were asked by your counsel what you would have done, in 2010, if you had known the matters to which he drew your attention, and you said you would not have signed the credit submission. Now, is that truthful evidence?

HIS HONOUR: I think the letter of offer.

MR BRAHAM SC: The letter of offer. Is that truthful?---Yes.

Well, what would you have done instead?---I would have made the bank come back with more realistic bloody terms, wouldn’t I?

What, particularly, in the terms, in 2010, would you have wanted changed?---Ellem has lied to me.

No - - -?---I’ve - - -

- - - no?--- - - - stated it.

No, Mr Stuart, that question is not another opportunity - - -?---Right-o.

- - - for you to say something about Mr Ellem. Now, what different terms would you have required from the bank in 2010?---I would have insisted that nine months, which he lied to me about, was taken out.

Well, it was already 12 months down the track and you were – I’m sorry, it was already two years down the track and you were being given more time to repay. What different terms would you have wanted, Mr Stuart?---More terms, for the bank to steal more assets? Is that what you’re saying? Might take all my equity, which you did.

You answered a question from Mr King, a minute ago, on your oath. He said, “if you had known various matters were in the credit submission, would you have signed the letter of offer at that time”; and you said, no, you wouldn’t have?---No, and Chris Ellem, I would have made sure he was sitting in front of me.

Isn’t this the case, Mr Stuart: you’re willing to agree to any proposition Mr King puts to you, without thinking about it, without any regard to whether it’s the truth or a lie, and that’s what happened in that last piece of evidence, isn’t it?---No.

You didn’t know what you were agreeing to, when you agreed to that proposition for Mr King, didn’t you. You had no idea what you were agreeing to, did you; isn’t that right?---No. You’re wrong.

And you agreed to it because Mr King put it to you even though it made no sense to you at all - - -?---You’re wrong.

- - - isn’t that right?---You’re wrong.

And that’s the way you’ve conducted your evidence in chief, isn’t it? Agreeing to things Mr King has put to you - - -?---No.

- - - even if you don’t understand them.

MR KING: I object.

THE WITNESS: You’re wrong. I’m here because the bank stole my assets.

MR BRAHAM SC: And you’re going to say that over and over again, Mr Stuart, no doubt?---You repeat yourself, too, pretty well, sir.

HIS HONOUR: We might break then. Could we adjourn for – please adjourn the Court.

69    The extent to which Mr Stuart found it difficult to give his evidence objectively was also demonstrated in the course of an unsuccessful attempt by counsel for the Stuarts to challenge the credit of Mr Couper, the solicitor acting for Rabobank and a witness in the proceedings.

70    Counsel for the Stuarts, presumably as a result of a communication with Mr Stuart, made the following serious challenge to the credit of Mr Couper in the course of his cross-examination:

MR KING: Do you recall that yesterday, when his Honour released Mr Ellem from giving his evidence, that his Honour made plain that Mr Ellem wasn’t to speak further about his evidence to anybody?---Yes.

Did you do so?---Did I speak to Mr Ellem about his evidence?

Yes?---Certainly not.

Didn’t you follow Mr Ellem into the corridor and down the corridor to the lift?---Yes, I did.

And didn’t you say to him with respect to an aspect of his evidence, “You’ve got to,” and then you were interrupted by Mr Mark Stuart, who said, “You’re not supposed to be speaking to the witness, and you gulped, and the conversation ceased?---No, that did not happen.

71    In the course of re-examination, senior counsel for Rabobank elicited this evidence from Mr Couper:

MR BRAHAM SC: So, Mr Couper, what happened outside the courtroom yesterday afternoon, after Mr Ellem had completed his evidence and you spoke to him?---I followed him down the corridor. I wanted to make sure that he was okay to get a cab to get out to the airport, and he asked me what he would do about his witness expenses, and I said he should write to me about that. When that conversation finished, I turned around to walk back to the courtroom. Mark Stuart was on my left, and as I walked past him, he started walking with me and he said, “what are you doing, you little prick? You’re just a grub”.

And was there any other words exchanged between you and Mr Ellem or you and Mr Stuart in that period?---No.

Other lay witnesses of the Stuarts

72    The Stuarts called Ms Bowden, Mr McCallum, Mr Wass, Ms Bodkin, Mr Cowley, Ms Beardsley and Ms Hawking as lay witnesses. I found them to be candid and credible witnesses and have no reason to doubt the veracity of their evidence.

Mr Ellem

73    It was clear from Mr Ellem’s oral evidence that he only had a very limited recollection of his dealings with the Stuarts. Much of his evidence, as perhaps could be expected given the effluxion of time and the number of dealings he had with the Stuarts, was in substance evidence of his usual practice, particularly when it came to alleged conversations that he had had with the Stuarts. The weight to be given to evidence of a usual practice, and the question of whether that evidence is to be preferred, depends upon the specific nature and quality of the evidence that is given in a particular case: see Phelan v Melbourne Health [2019] VSCA 205 at [84] and the cases cited at [80]-[83] (Tate AP, Kaye JA and Zammit AJA).

74    Mr Ellem’s credit was forcefully challenged by counsel for the Stuarts, who submitted that his evidence should not be accepted on any issue unless it was corroborated by both independent documentary evidence and independent evidence of any alleged practice or system of Rabobank. If evidence was not supported in this manner, it was submitted that it should be treated as speculation and mere hope or reconstruction, referring to Connor v Blacktown District Hospital [1971] 1 NSWLR 713 (Connor v Blacktown) at 721 (Asprey JA with whom Mason JA agreed); R v Gordon (No 4) [2016] NSWSC 312 (Gordon) at [14]-[15] and [20] (Campbell J). There is no reference, however, in Connor v Blacktown or Gordon to any requirement of independent corroboration or treating uncorroborated evidence of usual practice as only speculation, mere hope or reconstruction.

75    Asprey JA explained in Connor v Blacktown at 721, quoting from McCormick, CT, Handbook on the Law of Evidence (West Publishing Company, 1954) at 341-2, that evidence of an act that is habitually done by a person under like circumstances will be received as evidence that it was done by the person on a particular occasion, subject to the Court having a discretion to exclude the evidence if it was not sufficiently regular and uniform or the circumstances were not sufficiently similar to outweigh the danger, if any, of prejudice or confusion.

76    In Gordon, Campbell J stated at [15], that evidence of a practice lays a foundation for an inference that the practice was followed on a particular day and that is the proper basis for its admissibility. However, evidence to the effect that a person believed they did something on a particular day because that was their usual practice would not be admissible, as it would be a conclusionary statement, rather than evidence of what they saw, heard or otherwise perceived: Gordon at [17].

77    In any event, to my observation, Mr Ellem was seeking at all times to be listening carefully to the questions he was asked and genuinely attempting to answer them by reference to his recollection, rather than engaging in any process of reconstruction, speculation or mere hope. He is no longer employed by Rabobank and on his own evidence left the bank in strained circumstances. He certainly did not appear to have any incentive to embellish his evidence to suit Rabobank’s position. When faced with inconsistencies or potential inconsistencies between those paragraphs of his outline that were admitted into evidence and his oral evidence, he somewhat candidly admitted that he was unable to explain the inconsistencies. He did not attempt to defend his position by engaging in any form of rationalisation or seek to diminish the significance of any concession that the cross-examiner may have believed he had obtained. His evidence on some matters was more emphatic, particularly with respect to the less plausible aspects of the cases sought to be advanced by the Stuarts, such as the typographical error in the Repayment Representation and the 15 Year Representation alleged to have been made by him to the Stuarts.

78    Much of the attack on the credit of Mr Ellem was directed at his evidence that he visited Mt Morris in 2008 prior to the issue of the June 2008 Letter of Offer. In his written outline that was admitted into evidence Mr Ellem stated at [62]:

I refer to a Property Inspection/Valuation Report on “Mt Morris” by a Mr Swalling dated 5 June 2007. Mr Swalling was Branch Manager in Longreach and later was in credit in the Brisbane office of the Bank. My recollection is that Mr Swalling prepared the valuation from information that I provided to him. I relied on this valuation as well as my own checks. This document is in the Court Book, pages 525 and 526.

79    Mr Ellem, however, gave the following evidence in cross-examination:

MR KING: Could you have a look, please, at – so let me ask you this. When do you say, if at all, you visited the farm Mt Morris? When was – do you say you visited?---Yes.

When was the first time?---Prior to submitting to credit for the loan application.

Just prior to it, in May 2008?---I think so.

Well, would you have a look, please, at page 525 of the Court Book – in Volume 1, your Honour. Is that document familiar to you?---It looks like a property inspection report prepared by Craig Swalling.

Yes.

…

Yes, was Mr Swalling in credit in Brisbane at that time?---I don’t think so.

So did you have any involvement in the preparation of this report?---No.

If you have a look at paragraph 62 of your statement, according to your statement, you said that Mr Swalling prepared the valuation from information you provided to him?---Okay.

Which is right: the evidence you’ve just given in the box or what you’ve said in your statement?---My memory may be incorrect.

Can you please assist the court by telling us which is correct?---I don’t know.

80    It can perhaps readily be accepted that it was most unlikely that Mr Ellem had provided any material to Mr Swalling with respect to the Property Inspection/Valuation Reports of Mt Morris that were generated from his 5 June 2007 inspection and valuation. Much of the apparent force in the challenge to Mr Ellem’s credit on the issue of an inspection of Mt Morris prior to the June 2008 Letter of Offer is diminished when one has regard to a subsequent Property Inspection/Valuation Report for Mt Morris that was run on 14 September 2011 and records an inspection date by Mr Ellem of 1 May 2008 (2011 Ellem Mt Morris Valuation). The criticisms made of this report by counsel for the Stuarts on the basis that it records Mr and Mrs Stuart as the registered proprietors prior to their acquisition of Mt Morris and a valuation of $1.8 million for Mt Morris, rather than the $2.2 million used in the credit submission in May 2008, are misconceived. The copy of the 2011 Ellem Mt Morris Valuation in evidence was printed on 14 September 2011 at the time of the preparation of the credit submission by Mr Brady, which recommended that the account strategy for the Stuarts include a sale of Mt Morris. By this time the Stuarts had been the registered proprietors for more than three years and both the credit submission and the version of the 2011 Ellem Mt Morris Valuation printed on 14 September 2011 expressly refer to an external valuation of Mt Morris provided by Herron Todd White in May 2011. The compelling inference is that the 2011 Ellem Mt Morris Valuation had been updated to reflect events since the stipulated inspection date of 1 May 2008.

81    Further evidence that Mr Ellem inspected Mt Morris prior to the June 2008 Letter of Offer is provided in the handwritten notes of Mrs Stuart that were tendered from her options book. Her notes on 10 April 2008 recorded:

10th HAPPY TO LOOK AT IT AT 2.2

RANG Keith – checked above details asked

about $ pr hd & terms of (RATE) 1,500 hd adjusted

Inspection on 18th with Chris

NEED to check equipement (didn’t before)

A list of equipement & house/quarters [illegible]

Need to check feed/fences after flood.

82    In context, I am satisfied that “Keith” is a reference to Keith Richardson, Kevin Bredhauer’s selling agent, “Chris” is a reference to Mr Ellem and “Inspection on 18th with Chris” is a reference to a proposed inspection of Mt Morris by the Stuarts with Mr Ellem on 18 April 2008. Mr Bredhauer and his then wife Sharon Bredhauer were the registered proprietors of Mt Morris at the time. The Bredhauers were also customers of Rabobank.

83    Ultimately, equally misconceived was the challenge to Mr Ellem’s credit directed at the circumstances surrounding the signing of the loan application in relation to the June 2008 Letter of Offer. Counsel for the Stuarts submitted in their closing written submissions that Mr Ellem’s evidence that he arranged for the loan application to be signed on the date that it bears, namely 28 May 2008, was false and hence “his strenuous assertions that he did not have the loan application form with him, or if he did the Stuarts did not sign it in mid-May at his farm visit … should be rejected”.

84    The principal focus of the attack on Mr Ellem’s credit in this respect was his denial that the Stuarts signed the loan application in “mid-May” 2008, namely at a time prior to their entry into the contract for the purchase of Mt Morris.

85    Counsel for the Stuarts submitted in their closing written submissions that:

One explanation is that, as the Stuarts have maintained throughout their oral testimony, that prior to signing the contract for sale, he came to the farm with bank documents and that they signed the loan applications in blank which he took away [Ex R 9]. It follows his evidence at Tr 876/14 to the Court was false. The letter of 3 June 2008 also makes his evidence on this topic false, but for a different reason. [MFI – 47] does not have an original fully completed loan application in it, which would be expected if the returned envelope from the Stuarts contained the completed loan application form.

86    However, Rabobank’s letter to the Stuarts of 3 June 2008, as explained below, demonstrates that contrary to its usual procedures Rabobank did not have a signed loan application form prior to the issue of the June 2008 Letter of Offer. Hence it was not possible for the Stuarts to have signed the loan application either in mid-May 2008 or on 28 May 2008.

87    In the circumstances, I am not prepared to accede to the submission by counsel for the Stuarts that I only accept the evidence of Mr Ellem to the extent that it satisfies the two stipulated conditions identified above.

Mr Couper

88    Mr Couper gave evidence of his involvement in Rabobank’s legal dealings with the Stuarts, primarily in relation to the Mediation.

89    I found Mr Couper to be a candid and credible witness and have no reason to doubt the veracity of his evidence.

Mr Brady

90    Mr Brady died on 6 March 2021. Prior to his death on 25 November 2019, Mr Brady provided an outline of evidence in relation to these proceedings to Craig Melrose, a solicitor at Gadens in Brisbane.

91    On 16 September 2020, Mr Brady confirmed via email to Mr Melrose that he had reviewed the Stuarts’ outlines of evidence in reply. Mr Brady advised that his outline of evidence dated 25 November 2019 represented the evidence he intended to give in these proceedings and he did not wish to provide any further outline of evidence in response to the Stuarts’ outlines of evidence in reply.

92    The authenticity of Mr Brady’s outline of evidence was established by Mr Melrose in an affidavit. I have no reason to doubt the veracity or credibility of Mr Brady’s evidence.

The expert reports of Mr White and Mr Green

93    The Stuarts relied on an expert report prepared by Stuart White dated 25 October 2020.

94    Mr White currently operates a business advisory firm specialising in business planning, financial management and financial modelling for business projections. He has previously been an auditor and chartered accountant at KPMG, CEO of Macquarie Premium Funding and executive chairman of a financial technology start-up enterprise. At the commencement of his report, Mr White notes: “Whilst I have not had direct experience with Rural Lending per se, I consider my qualifications and experience relevant to these circumstances …”

95    Mr White was asked to address the following questions in his report (I note that there was no question numbered one):

2.     In assessing the Stuarts’ credit application in May 2008 to vary the All in One account with RBL [Rabobank] in respect of the purchase of Mt Morris and in offering them finance on or prior to 2 June 2008 in your view did RBL breach its own guidelines and/or did it other act imprudently? [All In One Facility – Variation]

3.     Whether in your view the All in One account as amended in June 2008 for the purpose of the purchase of Mt Morris by the Stuarts was suitable finance for the Stuarts? [All In One Facility – Suitability]

4.     Whether in your view the All in One account as amended in June 2008 for the purpose of the purchase of Mt Morris by the Stuarts remained after its amendment a 15-year Interest Only facility? [All In One Facility – 15 Year Interest Only]

5.     What in your view was the loss of the Stuarts having regards to the particulars of loss claimed:

a)     On the assumption that the Stuarts did not proceed with the purchase of Mt Morris;

b)     On the assumption that the Stuarts did go ahead with Mt Morris? [Loss Estimates]

96    Rabobank retained Geoff Green to prepare a report in response to the report prepared by Mr White in respect of Questions 2 to 4. Mr Green was not asked to address Question 5 dealing with loss estimates.

97    Mr Green is a chartered accountant. At the time of writing his report dated 5 February 2021, he had 12 years’ credit and risk experience at the National Australia Bank (NAB) and two and a half years’ experience with the Australia and New Zealand Banking Group (ANZ). His experience at NAB included a role as an Agribusiness Leader in the Strategic Business Services division of the bank, which manages problem loans. Mr Green has also directly managed several Queensland cattle farming and other agribusiness enterprises.

98    Mr White and Mr Green conferred with each other prior to the commencement of the hearing and produced a joint report dated 31 March 2021.

99    In their joint report, Mr White and Mr Green agreed that:

(a)    Kurrajong, Tullochard, Evergreen and Mt Morris were all cattle farming properties;

(b)    the approval of the credit submission for the Mt Morris advance in May 2008 was prompt;

(c)    the Facility remained an interest only facility after the Mt Morris advance;

(d)    the credit assessment documents of Rabobank included the formal credit submission, the work flow request and other information that the credit team already had access to (eg through the CMS or CRE system), or may have requested the originating team to provide (eg client financial statements); and

(e)    the Stuarts’ historical business model of buying and selling properties was relevant to the assessment of their capacity to comply with the condition to sell Evergreen by 31 March 2009.

100    There were five principal areas of disagreement between Mr White and Mr Green.

101    First, while both experts agreed that the Facility remained an interest only facility after the advance to permit the Stuarts to purchase Mt Morris, they disagreed as to whether the periodic reviews had any effect on the term of the Facility. Mr White was of the view that the reviews permitted the term of the Facility to be shortened at Rabobank’s sole discretion, while Mr Green considered that the review provisions were standard provisions that did not falsify the proposition that, from its inception, the Facility was a 15 year interest only facility. Ultimately, I consider that this is largely a matter for me to determine, but as I explain later in these reasons, Mr Green’s evidence was of assistance in determining this issue.

102    Second, the experts disagreed as to whether Rabobank breached its own guidelines in the assessment and approval of the Mt Morris advance. Mr White found that various specified policies were mandatory, while Mr Green found that they were not mandatory and that some of the policies specifically permitted non-compliance. I did not derive any real assistance from either expert on this issue. The experts sought to construe the language of the Rabobank policies in seeking to characterise whether the policies were mandatory or discretionary. I do not consider that this is an appropriate matter for expert evidence. Moreover, for reasons developed below, whether policies were mandatory or discretionary and whether, in any event, Rabobank complied with those policies does not answer the question of whether Rabobank acted unconscionably.

103    Third, Mr White and Mr Green disagreed as to whether Rabobank acted imprudently in the assessment and approval of the May 2008 Credit Submission (see [341] below) for the increase to the Facility Limit to facilitate the purchase by the Stuarts of Mt Morris. Mr White contended that Rabobank acted imprudently, citing deficiencies in the serviceability assessment that “resulted in this risk of default being materially mis-judged”. These deficiencies included breaches of Rabobank’s policies, a lack of consideration of actual events that did not reflect assumptions, a lack of consideration of the net decline in the Stuarts’ equity, insufficient cash flow from Mt Morris to cover drawings and information deficiencies. Mr White concluded that the credit assessment deficiencies, taken collectively, were material enough to have resulted in a different credit outcome. On the contrary, Mr Green did not believe that Rabobank acted imprudently, stating that any deficiencies in the credit submission would not have led to a different outcome. Overall, Mr Green characterised the Mt Morris advance as “a simple transaction that was clearly to the benefit of the Stuarts”.

104    I did not find this conflicting evidence of much assistance. It was largely directed at measuring the materiality of the alleged deficiencies by speculating on whether or not Rabobank would have declined to approve the May 2008 Credit Submission had the deficiencies not occurred. This is inherently a counterfactual question that could only be answered by drawing inferences from a large quantity of conflicting evidence from which an informed but ultimately impressionistic view is required. Ultimately, it is again a matter for the Court to determine, not an expert issue.

105    Perhaps this is most clearly demonstrated in the approach taken to the valuations of Evergreen and Mt Morris in the May 2008 Credit Submission. Formal valuations were not obtained by Rabobank of these properties, but the objective evidence taken as a whole (in particular, the evidence of Ms Bodkin given in cross-examination that was not considered by the experts) suggests that the values attributed to those properties in the May 2008 Credit Submission and the likely timeframe for selling Evergreen would generally have been consistent with values and estimated timeframes that would have been provided if formal valuations had been obtained.

106    Fourth, the experts disagreed as to whether or not the Mt Morris advance was suitable finance. Mr White concluded that it was not while Mr Green found that it was. Mr White gave three reasons as to why it was not suitable finance:

(1)    it was reasonably foreseeable that the Stuarts would be unable to comply with the terms and conditions of the Facility because the net proceeds from the sale of Evergreen were unlikely to equate to $3.23 million;

(2)    it was reasonably foreseeable that the Facility would not meet the objectives of the Stuarts due to insufficient projected cash flow from Mt Morris; and

(3)    the acquisition of Mt Morris elevated the risks of the Stuarts’ financial situation.

107    Both experts acknowledged that each had used a different definition of “suitable”: Mr White used the definition given in the National Credit Code while Mr Green used the definition of “suitable” in the ordinary sense of the word.

108    Again, these are inherently factual issues for the Court to determine having regard to all the evidence, rather than expert issues. Further, their resolution is not assisted by experts using definitions derived from a specific statutory context or by resorting to notions of the “ordinary sense” of a word.

109    Fifth, in regard to whether Rabobank understood that the Stuarts’ primary business was cattle farming in the assessment and approval of Mt Morris, Mr White was of the opinion that it did and that Rabobank’s categorisation of the Stuarts’ enterprise as cattle farming was demonstrated in the credit assessment documents. However, Mr Green found that there was nothing to suggest that the Stuarts were operating their properties to maximise income from cattle production itself; rather, the success of the Stuarts as cattle farmers was also as a consequence of their improvement of properties. Again, I did not find this evidence to be of any real probative value. The issue was of only tangential relevance and any necessary characterisation would ultimately be a matter of fact to be determined by the Court, not experts expressing opinions by reference to limited assumptions.

110    Both experts were cross-examined at some length following a concurrent evidence session. Senior counsel for Rabobank sought to discredit the evidence of Mr White, noting, among other matters, that Mr White had never worked in a bank and that he did not have experience in the sort of lending that was the subject of these proceedings. Given Mr White’s relative lack of such experience compared with Mr Green, I would have generally preferred the evidence of Mr Green but given my views on the relevance of their expert evidence this was of little significance for the determination of the issues in this proceeding.

111    Much of the cross-examination of Mr White and Mr Green only served to highlight the inherent lack of utility in asking experts to address what are innately counterfactual issues or to express opinions by drawing inferences from contested evidence as to the suitability of, or deficiencies in, credit assessments.

E. EVIDENTIARY ISSUES

112    A number of evidentiary issues arose in the course of the hearing of these proceedings. I address these issues below.

Admissibility of McGovern and Keogh reports

113    The Stuarts sought to rely on opinion evidence from an economist, Dr Mark McGovern, and a carbon farming consultant, Benedict Keogh.

114    Section 79(1) of the Evidence Act 1995 (Cth) (Evidence Act) operates as an exception to the opinion rule in s 76(1), which provides that: “[e]vidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed”.

115    Section 79(1) relevantly provides:

If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.

116    When considering the operation of s 79(1), it is necessary to identify why the evidence is relevant having regard to s 55(1) of the Evidence Act. This requires an identification of the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving: Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 (Dasreef) at [31]. To put it another way, “[e]xpert evidence is inadmissible unless the facts on which the opinion is based are stated by the expert – by way of proof if the expert can admissibly prove them, otherwise as assumptions to be proved in other ways”: Dasreef at [64].

117    Section 79(1) has two requirements. First, that the witness has specialised knowledge based on their training, study or experience, and second, that the opinion expressed is based wholly or substantially on that knowledge. Regarding the second requirement, the opinion must be presented in a way that makes it possible for the Court to ascertain whether the opinion was based on that knowledge: Honeysett v The Queen (2014) 253 CLR 122; [2014] HCA 29 (Honeysett) at [24]. A failure to express an opinion in such a way is a matter that goes to the admissibility of the evidence, not its weight: Dasreef at [42].

118    In the course of the hearing I found that the reports prepared by Dr McGovern and Mr Keogh failed to satisfy the requirements of s 79(1) and were thus inadmissible. I rejected the proposed tender of them by the Stuarts. I will now give my reasons for doing so.

Dr McGovern’s reports

119    Dr McGovern has been a visiting fellow in economics and finance at the Queensland University of Technology (QUT) since his retirement from research and lecturing at QUT in 2016, which spanned 27 years. He has specialised knowledge based on his training, study and experience as an economist, but not with respect to banking practice and procedures. Dr McGovern prepared two reports, the first entitled “Response to Instructions: Stuart partnership and Rabobank” (First Report) and the second entitled “Response to the Report of Mr Green: Stuart partnership and Rabobank” (Response).

120    The letter of instruction dated 9 September 2020 attached to the First Report asked Dr McGovern to answer the following questions (“RBL” being Rabobank):

1.    Whether an All In One account was suitable finance of a bank for the Stuarts?

2.    Was the All In One account bridging finance?

3.    Was the credit supplied to the Stuarts under the All in One account credit to which [the National Credit Code] applied?

4.    Did RBL act unreasonably or unconscionably towards the Stuarts in varying the All In One credit account in June 2008, or at other times?

5.    Whether over the life of the loan RBL failed to act reasonably and /or work with the Stuarts’ financial difficulty in:

a.    Objecting to the sale of Evergreen;

b.    Refusing to support Stuarts’ application to QRAA to restock and offers of agistment;

c.    Refusing consent to Stuarts’ Carbon Farming project and other income sources.

d.    Whether there was any other issue which contributed to the demise of their farming enterprise?

121    The Stuarts confirmed in the course of the determination of the admissibility of Dr McGovern’s First Report that his answer to Question 3 would not be pressed or otherwise relied upon.

122    The First Report failed to comply with well-established principles regarding the admissibility of expert reports.

123    First, the questions that Dr McGovern was asked to address were inherently fact specific and the focus on reasonableness in Questions 4 and 5 required the making of normative judgments. These are fundamentally matters for the Court. For any opinions to be of assistance to the Court in addressing the questions pressed by the Stuarts, the Court would need to be satisfied that the expert had relevant specialised knowledge, the factual basis upon which the expert was proceeding was clearly articulated and the reasoning process of the expert was transparently exposed.

124    Second, while Dr McGovern has specialised knowledge based on his training, study and experience as an economist, that specialised knowledge was of limited, if any, relevance to the questions he was asked to address in his reports. Specifically, it was not established that he had any specialised knowledge based on his training, study and experience with respect to banking practice and procedures.

125    Third, the assumptions that Dr McGovern was asked to make for the purpose of preparing the First Report were not identified and no attempt was made to identify with any specificity the documents with which he had been provided. His letter of instruction simply stated: “I have separately supplied you with a copy of the pleadings in the matter, the Bank’s discovery and lay statements of witnesses”.

126    The letter of instruction itself presented further difficulties. First, the pleadings and discovery provided to Dr McGovern were as they existed in September 2020 (presumably Dr McGovern was given outlines of evidence that existed prior to that date). Second, some of the lay witnesses were never called to give evidence. Third, Mrs Stuart largely gave her evidence in chief orally and it is unknown how consistent this evidence was with the outlines of evidence given to Dr McGovern.

127    Despite his role as an economist, Dr McGovern makes very little reference to economic theory. When he does make reference to economic theory it does not appear to have been used to explain or understand the issues he was asked to address. For example, in his First Report Dr McGovern writes under the heading “Approach adopted” that he assumed his role “is to frame the facts and connect the incidents as best I can so as to assist the Court in its determining of the validity of representations and claims using apt areas of Law”. However, Dr McGovern went on to say that his work draws on “different but complementary areas to Law” where “Business, Economics and Finance together provide perspectives and insights on human actions, events and impacts”.

128    Fourth, there is limited, if any, disclosure of Dr McGovern’s reasoning process, or the basis on which he formed his opinions. This makes it difficult to ascertain whether Dr McGovern has utilised, wholly or partially, his specialised knowledge when coming to his conclusions. For example, under the heading “Question 5. RBL failures?” and in coming to the conclusion that “[m]any failures are evident, and of importance also are other issues and failures”, Dr McGovern writes:

Situation

a.     No party was perfect, nor should we expect them to be. A range of possibilities, adversities and failures attend any project, and working with another party over 15 years for mutually beneficial outcomes is difficult.

b.     Any investment project faces not just recognised risks but also uncertainties. Idiosyncratic exposures exist along with asymmetries in information, insight, capacity and power.

c.     Still we each try to do our best, informed and hopefully supported by shared conventions, beliefs and laws.

d.     Dealing fairly, reasonably, conscionably and lawfully with “an other” should all be convergent in actions, to at least some extent.

e.     Resilience, and indeed survival, require an ability to adapt when adversities arise. Situations and adaptations that cause untoward damage to another should be avoided.

f.     Essentially, in this case two quite different enterprises were engaged in a joint venture

i.     One had an excess of funds, the other of labour

ii.    Each could profit by investing some excess for mutual benefit

iii.     A relationship formed in 2004, but the commitment of one faltered…

… and the rest you know

129    It does not appear that Dr McGovern is applying specialised knowledge based on his training, study and experience. Rather it appears that he is expressing general opinions divorced from that training, study and experience. This together with the lack of identification of the First Report’s underlying assumptions and facts dictates the conclusion that the opinions in the First Report are not expressed in a form that makes it possible to ascertain whether the opinions were based on Dr McGovern’s specialised knowledge: Honeysett at [24]. In the First Report, Dr McGovern also gives opinions about ultimate issues in dispute, including the suitability of the Stuarts’ finance, whether certain representations were made by Rabobank, whether those representations may be true or misleading and whether Rabobank’s conduct was unconscionable. All of these are questions for the Court.

130    A further deficiency is that Dr McGovern appears to have based his First Report solely on the characterisation of the representations pleaded by the Stuarts in their statement of claim. Dr McGovern does not address a point that was argued extensively in the defence (and we know Dr McGovern was provided with the pleadings); namely, the express term in the June 2008 Letter of Offer that there be a substantial repayment within approximately nine months. It thus appears that Dr McGovern ignored any defence Rabobank might advance and simply assumed that the pleadings of the Stuarts were factually correct.

131    The First Report therefore is inadmissible as it does not satisfy the requirements of the exception to the opinion rule provided in s 79(1) of the Evidence Act.

132    The Response suffers from similar deficiencies to the First Report. Again, the Response does not identify the facts (assumed or otherwise) on which Dr McGovern relied to form his opinions. In addition, unlike the First Report, there does not even appear to have been any specific instructions given to Dr McGovern in order for him to prepare the Response. The only clarity provided is the following statement: “My purpose in developing this Report is to provide an objective and impartial assessment of the Response of Mr Green to aspects of the Report of Mr White relevant to my First Report”. However, this does not identify any assumptions or facts on which the Response is based and therefore does not permit any analysis of Dr McGovern’s reasoning process, which would assist the Court in ascertaining how his specialised knowledge has been applied to any assumed facts.

133    Further, in a similar manner to the First Report, Dr McGovern proffers opinions in the Response on a range of matters outside his specialised expertise in economics, including: Rabobank’s conduct, internal processes and procedures; negligence, hearsay, conflicts of interest and agency; agricultural real estate valuation; and the nature of the Stuarts’ business. Again, Dr McGovern expresses opinions in the Response about legal norms and standards.

134    Therefore, for essentially the same reasons outlined above regarding the First Report, the Response is inadmissible as it does not satisfy the requirements of the exception to the opinion rule provided in s 79(1) of the Evidence Act.

Mr Keogh’s report

135    In the last week of the hearing counsel for the Stuarts sought belatedly to tender an expert report of Mr Keogh dated 26 April 2021 (Keogh Report).

136    According to his curriculum vitae supplied to the Court, Mr Keogh is a “career professional in the agricultural market with extensive experience in the practical development and implementation of carbon farming projects”, having obtained a Bachelor of Applied Science in Natural Resource Management and a Diploma in Forestry from the University of Melbourne. Mr Keogh was involved in the Stuarts’ proposed carbon farming scheme as the founder and managing director of Australian Carbon Traders Pty Ltd. Relevantly, he provided the Stuarts with a project assessment report dated 19 February 2013 that contained a preliminary estimate that the project presented a positive profile that warranted further investment. In a letter to the Stuarts dated 1 August 2013, Mr Keogh discussed the form and prospects of the carbon farming scheme, as well as applicable policies.

137    The letter of instruction dated 23 April 2021 annexed to his report (Keogh instruction letter) asked Mr Keogh the following questions under the heading “Report Requirements” (I note that the questions were identified by letters, but the cross-references were to numbered paragraphs, hence, by way of example, the reference to “3 above” is a reference to “c above”):

a.    Do you adhere to the opinions which you expressed in your project assessment report to the Applicants dated 19 February 2013 (copy attached, together with the CFI Mapping Tool dated 18 February 2013)?

b.    Having regard to your knowledge and experience of and in the carbon market since that time, do you have any reason for altering the opinions expressed in the report referred to in 1 above?

c.    Do you adhere to the opinions which you expressed in your letter to the Applicants dated 1 August 2013 (copy attached)?

d.    Having regard to your knowledge and experience of and in the carbon market since that time, do you have any reason for altering the opinions expressed in the report referred to in 3 above?

e.    We note that in your letter to the Applicants of 1 August 2013, referred to in 3 above, you include an estimate of the returns for the financial years ended 30 June 2010 to 30 June 2050. We note that those returns are based on an estimated carbon price. Having regard to your knowledge and experience of and in the carbon market since that time, in your report please provide your expert opinion as to the actual returns that would have been generated for the financial years 30 June 2014 to 30 June 2020, inclusive, on the assumption that the Applicants had proceeded with the carbon farming initiative on Mt Morris.

f.    In addition to 5 above, your expert opinion as to the estimated returns that would have been generated for the financial years 30 June 2021 to 30 June 2050, inclusive, on the assumption that the Applicants had proceeded with the carbon farming initiative on Mt Morris.

138    The Keogh instruction letter also set out the following factual assumptions on which Mr Keogh was to rely:

1.    The Stuarts were interested in conducting carbon farming on Mt Morris

2.    A trial area of 114 hectares was established in January 2013 to examine the potential of carbon farming on Mt Morris

3.    A further area of 5,000 hectares was surveyed to be set aside for the carbon farming project to proceed on Mt Morris

4.    That area of 5,000 hectares was utilised for the carbon farming project on Mt Morris

5.    That the carbon farming project on Mt Morris continued to be managed in a competent and compliant manner from inception to 30 June 2050.

139    As explained above, an expert report must be presented in a form which makes it possible to ascertain whether an opinion is wholly or substantially based on the specialised knowledge of the expert: Honeysett at [24]; Dasreef at [36]. The form of Mr Keogh’s report makes this impossible.

140    The Keogh Report could fairly be described as a bundle of documents, comprising:

(a)    a six page report that is not paginated (Primary Report), containing a one page summary of the background of Mr Keogh’s involvement with the Stuarts, a two page list of Mr Keogh’s career and expertise and a three page section entitled “Factual Assumptions”;

(b)    the Keogh instruction letter;

(c)    a two page Carbon Farming Initiative (CFI) Mapping Tool Carbon Estimation Area Summary Report dated 18 February 2013 and a Mt Morris project assessment report prepared by Mr Keogh for the Stuarts dated 19 February 2013 (incorrectly stated in his 26 April 2021 report to be dated 18 February 2013);

(d)    a five page curriculum vitae of Mr Keogh; and

(e)    the Expert Evidence Practice Note and the Expert Code of Conduct.

141    The section in the Primary Report entitled “Factual Assumptions” sets out the questions Mr Keogh had been asked to address with short form answers that included references to his creation of a “Reforestation Modelling Tool”, downloading location specific attributes from a government server, executing the model and then exporting results to Microsoft Excel. From this, Mr Keogh calculated that between 2010 and 2020, the Stuarts would have received approximately 93,000 Australian carbon credits at a rate of $10.00 each, in aggregate $930,000.

142    The “Reforestation Modelling Tool” was not included in the proposed tender, nor were any Microsoft Excel calculations or the underlying data that was relied upon.

143    The “Factual Assumptions” section of the Primary Report also included the following responses to the questions concerning Mr Keogh’s project assessment report dated 19 February 2013:

4.1     Do you adhere to the opinions which you expressed in your project assessment report to the Applicants dated 19 February 2013 [copy was attached, together with the CFI Mapping Tool dated 18 February 2013]?

i.     The report prepared on the 18th February 2013 was done on the best available information at the time, it weas [sic] completed as a [preliminary estimate to determine if the project area warranted further investigation, based on the outcomes of the assessment and as expressed in the report the project presented a positive profile that warranted further investment. The information provided in that report was prepared with due care and would be considered correct at that time given the rules of the CFI at that time.

…

4.3    Do you adhere to the opinions which you expressed in your letter to the Applicants dated 1 August 2013?

    i.     Yes.

144    As can be seen from the above summary and extracts from the Keogh Report, it does not comply with established procedures and principles for the admission of expert evidence. It barely rises above mere assertion and to the extent that any reasoning is provided, the underlying calculations and data are not provided or identified with any specificity. I therefore rejected the tender of the Keogh Report.

145    Furthermore, the Keogh Report was sought to be tendered very late in the proceedings, such that it would have been manifestly prejudicial to Rabobank if it had to cross-examine Mr Keogh without being able to obtain access to and been given an opportunity to respond in a substantive manner to the undisclosed calculations undertaken by Mr Keogh in response to the Keogh instruction letter.

Admissibility of hardship evidence

146    At the conclusion of the expert evidence in this proceeding, counsel for the Stuarts made an application to reopen their case to read an affidavit of the Stuarts’ solicitor Keith Spencer, which was said to annex a personal hardship statement of Mrs Stuart entitled “Catherine Enid Stuart - PERSONAL HARDSHIP Statement 6 October 2019”. The statement was extracted from the affidavit of Mr Spencer and marked for identification. Part A of the document, being just over one page, contained a numbered list setting out the tasks Mrs Stuart would attend to on the farm each day. Part B of the document, around 53 pages in length, set out a table containing a schedule of “Hardship Events”, being descriptions of events occurring between 2011 and 2019 that Mrs Stuart found to be distressing. For example, the table begins by recounting that the Stuarts’ daughter suffered a serious spinal injury and had subsequent hospital stays and physiotherapy appointments. The table also includes descriptions of events surrounding the sale of the Stuarts’ various properties and the Mediation.

147    Counsel for the Stuarts also sought to read a short affidavit of Mr Stuart sworn on 8 April 2021 that had previously been relied upon in support of an interlocutory application for impecunious access to the transcript of the hearing.

148    When asked as to what issue in the proceedings these documents were relevant, counsel for the Stuarts stated that it “goes to hardship and also the issue of evidence supporting her case … on the delay question”. Counsel clarified that the reference to the delay question was the amendment to the pleadings in the course of the final hearing to raise discretionary relief, namely, injunctive and declaratory relief.

149    When asked why the statement of Mrs Stuart was not led in chief, counsel for the Stuarts responded that the “full panoply of the issues regarding the relevance of the hardship question wasn’t to the fore” and although it was not dealt with specifically in relation to the personal hardship of Mrs Stuart, it was dealt with “in some detail in different contexts”. He also submitted that “in terms of reopening, the only ground upon which I can rely upon is simply oversight in the context of preparing a complex matter with a lot of factual material and many witnesses in different parts of the country adducing evidence and the other exigencies of the case”. Counsel for the Stuarts contended that there was no prejudice to Rabobank.

150    Counsel for the Stuarts also acknowledged that the statement ought to have been led in evidence in chief, but stated “when it came to the cross-examination of both Mr and Mrs Stuart, none of the discretionary issues were the subject of cross-examination”. Counsel for the Stuarts submitted the statement should be received subject to relevance.

151    I did not allow the Stuarts’ application to reopen their case. The orders for the efficient conduct of this hearing required evidence to be advanced initially by way of outlines of evidence. That evidence was then given orally or, alternatively, given by witnesses swearing to the content of their outlines of evidence with respect to particular paragraphs. Mr and Mrs Stuart had already been cross-examined at length. The potential additional evidence that would be admitted may well have led to the need to recall both Mr and Mrs Stuart for further cross-examination and result in significant additional hearing time, in circumstances where the final hearing had already been extended beyond the dates originally listed.

152    Moreover, leave to file an amended originating process and statement of claim to raise the discretionary issues was granted expressly on the basis of counsel for the Stuarts’ confirmation that the amendments would not give rise to the need for the Stuarts to rely on any additional evidence.

Weight to be given to testimonial evidence

153    I have alluded above to the limitations in the probative value of testimonial evidence of all witnesses, given the amount of time that has elapsed since the events in question and the Stuarts’ belief that Rabobank, and in particular Mr Ellem, was responsible for the Stuarts’ current financial predicament.

154    The following observations of Lee J in Webb v GetSwift Limited (No 5) [2019] FCA 1533 at [17]-[18] about the weight to be given to testimonial evidence are equally relevant in the present case:

17    As those experienced in commercial litigation in general, and in securities class actions in particular, would readily appreciate, what matters most in the determination of the issues in cases such as this is the analysis of such contemporaneous notes and documents as may exist and the probabilities that can be derived from these documents and any other objective facts. Take the example of the dealings between GetSwift and the customers: there is likely to be a documentary record both within the business records of GetSwift and their contractual counterparty which records dealings between them which go beyond the agreement itself. Additionally, experience suggests that it is also likely that there will be informal email exchanges, both between GetSwift and the customers, and within the relevant organisations.

18     As Leggatt J said in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [15]-[23], there are a number of difficulties with oral evidence based on recollection of events given the unreliability of human memory. Moreover, considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. As his Lordship noted, a witness is asked to make a statement, often when considerable time has already elapsed since the relevant events. The statement is usually drafted by a solicitor who is inevitably conscious of the significance for the case of what the witness does or does not say. The statement is often made after the memory of the witness has been “refreshed” by reading documents. The documents considered can often include argumentative material as well as documents that the witness did not see at the time and which came into existence after the events which the witness is being asked to recall. It may go through several iterations before it is finished. As Lord Buckmaster famously said, the truth “may sometimes leak out from an affidavit, like water from the bottom of a well”. This may be overly cynical, but the surest guide for deciding the case will be as identified by Leggatt J at [22]:

… the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on the witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.

155    In these proceedings witnesses gave their evidence partly orally by reference to written outlines and partly by the tender of extracts from written outlines, the truth of which they confirmed in their oral evidence. In my view the cautions expressed above in relation to securities class actions regarding affidavits and written statements apply equally to the present circumstances.

156    A significant quantity of contemporaneous emails, letters and other documents were tendered in the course of the hearing. Taken together, these contemporaneous materials illuminate and put into context many of the events and issues that the parties seek to agitate in these proceedings.

157    To the extent that there are discrepancies or inconsistencies between the testimonial evidence in this case and inferences that can be drawn fairly from contemporaneous documents and known or probable facts, I have given more weight to the contemporaneous documents.

Jones v Dunkel inferences

158    The Stuarts pressed the Court to draw Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 at 320 (Jones v Dunkel) inferences with respect to the absence of Mr Webber, Mr Witherow, Mr Nevison and Mr Ole. Rabobank served outlines of evidence from each of those people pursuant to orders made by Rares J, but the bank ultimately decided not to call any of them as witnesses. In addition, the Stuarts pressed for Jones v Dunkel inferences to be drawn with respect to the Rabobank credit committee (Rabobank Credit Committee) members who reviewed the May 2008 Credit Submission and the May 2010 Credit Submission.

159    The specific inferences that are sought in respect of each of the Rabobank employees is that their evidence would not have assisted Rabobank’s case both as to what they observed and the evidence, practice and systems of Rabobank. These inferences, as submitted, would assist the Stuarts on the following “key findings”:

(a)    consistently with the Stuarts’ evidence, Mr Ellem did take with him to Evergreen in mid-May 2008 a draft letter of offer and a loan application form;

(b)    Mr Ellem made the Repayment Representation;

(c)    Mr Ellem recklessly represented to the Rabobank Credit Committee in the May 2008 Credit Submission that he had inspected Mt Morris for the purposes of the internal valuation dated 5 June 2007; and

(d)    both Mr Webber and Mr Gray were aware of the unreliability of the 5 June 2007 valuation of Mt Morris and failed in their supervisory and decision-making roles.

160    The Stuarts also press for Jones v Dunkel inferences to be drawn with respect to the Stuarts’ evidence as to what occurred at the Mediation and the failure of Rabobank to produce the contemporaneous diary notes of Mr Ellem (other than four irrelevant entries) in circumstances where Mr Ellem’s evidence was that he maintained a regular work diary when he worked at the Dalby branch.