Federal Court of Australia

Sech Finance Pty Limited v RAMS Financial Group Pty Limited (Initial Trial) [2026] FCA 1458

ORDERS

THE COURT ORDERS THAT:

1.    The proceeding be listed, part heard, on a date to be fixed, for the purpose of hearing the parties as to the orders to be made in light of the reasons for judgment published today, including any orders as to declaratory relief, costs, mediation and the future conduct of the proceeding.

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

REASONS FOR JUDGMENT

LEE J:

A    INTRODUCTION

1    These reasons concern what remains to be decided after two proceedings against RAMS Financial Group Pty Limited (RFG), once joined for a concurrent trial, took divergent paths at the eleventh hour. The first, NSD 671 of 2024, is a representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act), brought by Top Ryde Financial Services Pty Ltd (TRFS) and Tina Wodecki on their own behalf and on behalf of group members (Class Action). The second, NSD 1363 of 2025 (Fairfield Proceeding), is brought by Sech Finance Pty Limited (Sech), as trustee for the Sech Finance Trust, and Daniel Lubarda (applicants). When the trial commenced, both proceedings remained contested and were to be determined together; events during the closing stages of the trial altered that position and left only the Fairfield controversy requiring judgment.

2    Both proceedings arose from businesses conducted as part of the RAMS franchise network. RFG operated that network and was at all material times a wholly owned subsidiary of Westpac Banking Corporation (Westpac). RAMS franchisees marketed RAMS-branded home loan products and, through authorised credit representatives, assisted customers in applying for those products. Westpac was the credit provider and made the ultimate decision whether to provide credit. The contractual arrangements governing the franchises, the relationship between RFG and Westpac, and the regulatory setting in which the businesses operated are dealt with below.

3    There was a substantial factual connexion between the proceedings. Events concerning the Fairfield franchise preceded the events which became the principal subject of the Class Action. Concerns arising from Fairfield were the genesis of an investigation within Westpac and broader consideration of the RAMS franchise network, culminating in the establishment of what was described, somewhat grandiloquently, as “Project Guardian”. Ryde was one of the franchises subsequently subjected to heightened review. The evidence concerning Fairfield, the response of Westpac and RFG to the matters identified there, and the development of the wider investigative process accordingly formed part of the joint factual history.

4    For this reason, although I had indicated before the commencement of the trial that the proceedings would be heard consecutively, it became convenient to hear them concurrently (and no party objected to that course). A substantial body of documentary evidence was tendered for the purposes of both proceedings, and several witnesses gave evidence bearing upon events relevant to each. The trial was conducted upon the basis that evidence adduced in one proceeding was evidence in the other. That course avoided the considerable duplication which would otherwise have resulted from separate trials and permitted the common factual history to be examined as a whole.

5    But after the parties had exchanged detailed written closing submissions, I was informed that the parties to the Class Action had belatedly reached an “in principle” settlement agreement, subject, as is necessarily the case in a representative proceeding under Pt IVA, to approval pursuant to s 33V of the FCA Act. I pause to remark that the hearing of that approval application has been deferred at the request of the Class Action applicants.

6    The conditional settlement of the Class Action does not, however, somehow expunge the evidentiary record created during the concurrent trial. Evidence tendered or adduced during that trial remains available in the Fairfield Proceeding to the extent it is relevant in determining the issues which remain between the applicants and RFG.

7    The task performed by these reasons is therefore appreciably narrower than that which confronted the Court when the trial began: the controversy now requiring determination concerns the circumstances in which RFG revoked the authorised credit representative arrangements (ACRAs) upon which the Fairfield franchise depended and thereafter gave notice of proposed termination of the Fairfield Franchise Agreement.

8    The applicants contend, in substance, that RFG acted contrary to an obligation of good faith when it revoked the Fairfield ACRAs and thereafter took steps directed to termination of that agreement. RFG denies that contention and says that it was entitled to act upon the serious concerns identified by Westpac, the information available to Mr Jake Bromwich, then Managing Director of RFG, and the statutory and contractual arrangements governing the relationship.

9    The parties’ cases became progressively more confined as the hearing developed. Despite the elephantine state of the written evidence, this is not a trial of every Fairfield loan file. As I will explain, the principal liability issue evolved into a consideration of what RFG did when its own decision-maker perceived a want of connexion between significant conclusions reached by Westpac and the material said to support them, was told that Westpac could provide no more, and proceeded to revoke the ACRAs and pursue termination in the circumstances described, in great detail, below.

B    NATURE OF THE PROCEEDINGS

B.1    The Class Action and its Relationship to the Fairfield Proceeding

10    The Class Action concerns the RAMS franchise business conducted by TRFS at Ryde, of which Ms Wodecki was the principal. TRFS became a RAMS franchisee in 2015, and the relationship was governed principally by a franchise agreement between TRFS and RFG, together with what was described as the RAMS Franchise Model Operations Manual (Operations Manual) and various RAMS policies (RAMS Policies), including the RAMS lending guidelines (Lending Guidelines). Some brief explanation of the nature of the Class Action is useful, not just because the two proceedings were tried together but because, as I have already noted, the events giving rise to the Class Action formed part of a sequence which began with the investigation of Fairfield.

11    In broad outline, the Class Action challenged RFG’s conduct in connexion with the heightened scrutiny to which Ryde loan applications became subject from about October 2022 and the later decisions, in September 2023, to revoke the relevant authorised credit representative arrangements and terminate the Ryde franchise. The Ryde applicants contended that the heightened scrutiny undertaken by the Secured Lending Task Force (SLTF), also referred to as “Team 6”, materially altered the practical operation of the system according to which the Ryde franchise had previously conducted its business; that RFG failed adequately to explain the changed requirements or afford TRFS and its loan writers an opportunity to answer matters identified in the review process; and that this conduct caused a substantial downturn in the business. The later termination case challenged, among other things, the use made of the results of the review process and whether the relevant decision on behalf of RFG represented a “genuine and independent” exercise of judgment.

12    It was while investigating Fairfield that Westpac developed processes which subsequently extended to other parts of the RAMS network. The evidence concerning the SLTF, the Front Book Reviews and Back Book Reviews, the way matters described as “anomalies” were identified and reported, the development of Project Guardian, and the respective roles of persons within Westpac and RFG was therefore not divisible neatly between the two proceedings.

B.2    Fairfield Proceeding

13    Like the Ryde franchise, the Fairfield business was conducted pursuant to a franchise agreement with RFG (Fairfield Franchise Agreement) and depended upon Sech, Mr Lubarda and relevant persons holding the status as authorised credit representatives necessary to undertake credit activities through the RAMS network.

14    The Fairfield Franchise Agreement was expressed to operate for a five-year term. It contained, however, provisions dealing with the continuation and termination of the representative arrangements and with circumstances in which the franchise itself could be terminated. The relationship between those provisions is at the heart of the present controversy. In short, Sech and Mr Lubarda rely upon the express obligation in cl 5.2 of the Fairfield Franchise Agreement requiring the parties to deal with each other in good faith in respect of matters arising under or in relation to the agreement or the Franchising Code of Conduct in Sch 1 to the Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth) (Franchising Code), together with the obligation of good faith imposed by cl 6 of the Franchising Code; RFG relies upon its ability to revoke the relevant authorisations and upon the contractual consequences which, it submits, followed from such revocation.

15    The evidence adduced explaining the factual history which preceded the revocation and termination process was extensive. Relevantly, it revealed that during 2022, concerns about loan applications associated with Fairfield resulted in increasingly intensive scrutiny within Westpac. Incoming applications were subjected to what were described as Front Book Reviews and applications which had previously been approved were subjected to Back Book Reviews. Those investigations identified matters which Westpac regarded as raising serious concerns concerning, among other things, the reliability of information and documents submitted in support of applications, responsible lending, referrers and regulatory and compliance risk.

16    The existence of genuine concerns within Westpac is part of the factual setting in which the impugned decision was made. As noted above, the applicants’ case as finally advanced does not, however, depend upon demonstrating, application by application, that everything identified during the Westpac investigation was mistaken. Nor does RFG ultimately put its case upon the footing that I must determine that each matter identified during the investigation was established as misconduct by Sech, Mr Lubarda or a Fairfield loan writer. During the final day of the hearing I observed (without demur) that the parties had not ultimately required me to determine whether some particular numerical level of anomalies had been “substantiated” or “established”; the evidence disclosed issues concerning a significant number of applications, some of which had not received a response, while other matters could not have been detected by a person writing the business in accordance with the Lending Guidelines and the practice which had previously operated.

B.2.1    Revocation, termination and good faith

17    Given that the applicants’ liability case is directed to the circumstances in which RFG revoked the representative arrangements and took steps to bring the franchise relationship to an end by the decision made by Mr Bromwich, unsurprisingly, they commence by referring to what they say was the commercial substance of a franchise agreement expressed to endure for five years. They accept the existence of powers relating to the ACRAs and of contractual provisions capable of bringing the franchise to an end in consequence of the exercise of those powers. Their contention is that those provisions formed part of a single contractual relationship, which included an express obligation of good faith, and could not be approached as providing RFG with an unrestricted means of bringing the five-year bargain to an end simply by first revoking the ACRAs.

18    As Mr Donaldson SC argued in final address, it is said the contemporaneous material revealed that Mr Bromwich proceeded upon the understanding that RFG possessed an “unfettered” entitlement to terminate the ACRAs and, consequentially, to take steps to terminate the franchise, rather than asking whether there was a proper occasion for exercising the relevant powers.

19    The applicants contend that RFG could take account of the information and views provided by Westpac, but was required to exercise its own judgment before employing RFG’s powers to bring its franchise relationship to an end. They say that the material communicated to Mr Bromwich did not provide an adequate basis for the decision attributed to him, that some of it was incomplete or inaccurate, and that the documentary record does not establish that he independently satisfied himself that the circumstances justified revocation and the pursuit of termination. They also rely heavily upon RFG’s failure to call Mr Bromwich (a matter to which I return when dealing with the evidence).

20    RFG rejects that characterisation. It points to Mr Bromwich’s knowledge of the Fairfield investigation from an early stage, the seriousness of the concerns communicated to him, his receipt of Westpac’s recommendation, and the steps taken by him after receiving it. RFG relies on contemporaneous documents indicating that Mr Bromwich sought more detailed information rather than simply accepting the recommendation. It further submits that the relevant touchstone is good faith rather than an objective merits review of whether the Court itself would have regarded termination as reasonable, and that the information available to Mr Bromwich was amply sufficient for him honestly to conclude that RFG should revoke the ACRAs.

21    The applicants also rely upon the absence of an opportunity to respond, which resulted in the revocation of their ACRAs and the ensuing steps directed to termination of the franchise arrangements. There is a factual dispute embedded in that proposition. RFG points out that, in the great majority of applications in which SLTF identified a matter requiring explanation or further material, the relevant loan writer was asked to provide information which could have addressed the concern and submits that on many occasions the requested material was not provided. The applicants distinguish such requests, made while processing or investigating individual customer applications, from an opportunity afforded to Sech or Mr Lubarda to understand and answer the accumulated matters which were to be relied upon as a basis for removing their authorised representative status and bringing the franchise relationship to an end.

22    As I will explain, the significance of this latter matter does not depend upon the existence of some heterodox free-standing contractual requirement of procedural fairness. The applicants put it as one circumstance bearing upon whether RFG exercised the powers available to it consistently with the express and statutory obligations of good faith, having regard to the nature of the relationship, the duration and purposes of the franchise bargain, the material upon which RFG proposed to act and the consequences of doing so. RFG answers that the contractual provisions expressly prescribed notice and remedial processes in some circumstances but not in connexion with the route to termination upon which it relies, and that an obligation of good faith cannot be used to introduce a procedural condition which the parties did not agree.

23    For completeness, I should note that a simulacrum of a statutory unconscionability case (under ss 20 and 21(1) of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth), and s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth)) was advanced separately. It travelled over much of the same factual territory, and the applicants accepted during the hearing that the statutory norm allegedly contravened imposed a more demanding standard than an obligation of good faith. It was not suggested that the case could succeed if the good faith case failed (or that it has any utility if the applicants establish a breach of contract), and I will proceed upon that basis. It was pressed so faintly, it is somewhat odd it was pressed at all.

B.2.2    Causation and loss

24    If the applicants establish liability, not insubstantial questions arise as to causation. Their primary case is that Sech would have continued to enjoy the benefit of the Fairfield franchise for the balance of its agreed term. RFG says that this counterfactual cannot be considered without regard to Westpac’s attitude to business originating from Fairfield, the matters disclosed by the investigation and subsequent events affecting the RAMS franchise network.

25    As foreshadowed above, the applicants also advance an alternative case described as the Due Process Opportunity. In substance, they contend that if RFG had dealt with them in the manner required by its obligations of good faith, they would have been informed of the matters which were being relied upon and given a meaningful opportunity to address them before the relevant powers were exercised. They say that this would have afforded them a valuable commercial opportunity to persuade RFG not to revoke the ACRAs or take steps to terminate the franchise, or otherwise to achieve an outcome under which the business continued.

26    As I will later explain, RFG disputes both the existence and value of that opportunity. It submits that the Westpac concerns were serious and extensive, that Mr Bromwich had sufficient information upon which to make his decision, and that any causal counterfactual must take account of the likelihood that Westpac would in any event have ceased to accept Fairfield-originated business. RFG also relies upon subsequent developments concerning the RAMS business as relevant to the duration and value of any opportunity which might otherwise be established.

27    The residuum of the controversy concerning the correctness of individual matters identified during the Fairfield investigation therefore has a different relevance at different stages of the analysis. The nature and reliability of the material communicated to RFG are relevant to assessing the decision made and whether it was made in good faith. If liability is established, the extent to which concerns were capable of satisfactory explanation, and the likely response of RFG and Westpac had such explanations been provided, assume some significance in determining whether the applicants lost the contractual benefit or valuable opportunity for which they contend.

28    It is common ground that the present trial dealt with liability and causation, including whether loss of the kinds alleged has been established, but did not extend to the monetary quantification of any recoverable loss. Accordingly, as RFG confirmed in a note received following the conclusion of submissions, if a relevant wrong was established, it was necessary at this trial for me to determine whether that wrong caused the applicants to lose the contractual rights or opportunities upon which they rely and to fix the probability or possibility that any lost opportunity would have eventuated.

29    One final procedural development should be mentioned. During the hearing, RFG informed the Court that it no longer pressed the additional or after-acquired grounds pleaded in [59]–[66] of its defence, described during the hearing as the “Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 defence”. The Court is therefore not required to determine whether matters identified after the revocation and termination process would independently have justified bringing the Fairfield arrangements to an end upon some basis other than that upon which RFG acted.

C    THE RELEVANT REGULATORY AND CONTRACTUAL FRAMEWORK

C.1    The Regulatory Framework

C.1.1    Licensing and authorised credit representatives

30    The contractual arrangements to which I will shortly turn operated within an extensive statutory regime governing the provision of consumer credit. The principal legislation was the National Consumer Credit Protection Act 2009 (Cth) (National Credit Act). The respective functions performed by RFG, the RAMS franchisees and Westpac reflected the distinctions drawn by that Act between the provision of credit and the provision of credit services. Those distinctions are important in understanding both the concerns which arose in relation to Fairfield and the respective responsibilities of RFG and Westpac in responding to them.

31    The National Credit Act establishes a licensing regime governing engagement in a “credit activity”. Sections 27 and 29 generally prohibit a person from engaging in a credit activity without an Australian credit licence (ACL) authorising that activity, with s 29 being a civil penalty provision: Australian Securities and Investments Commission v National Australia Bank Ltd [2020] FCA 1494 (at [83]–[84]). Section 6 relevantly provides that a person engages in a credit activity if the person is a “credit provider” under a “credit contract” or provides a “credit service”. The concepts of credit provider and credit contract are defined by s 5 and ss 3 and 4 of Sch 1, the National Credit Code. Sections 7–9 deal with the provision of a credit service.

32    For present purposes, the distinction was reflected in the respective positions of Westpac and RFG. Westpac was the credit provider in respect of RAMS-branded home loans and, importantly, RFG did not lend money. RFG’s role, and that of its authorised representatives, was the provision of credit services, including credit assistance. The latter concept encompassed dealing directly with consumers and suggesting that they apply for a particular credit contract with a particular credit provider or assisting them to do so, and acting as an intermediary between a credit provider and consumer for the purpose of securing credit for the consumer.

33    Division 2 of the National Credit Act governs ACLs. By s 35, an ACL authorises its holder to engage in the credit activities specified in the licence. Westpac held an ACL permitting it to engage in credit activities as both a credit provider and provider of specified credit services. RFG held a different ACL, which permitted it to provide specified credit services in circumstances where RFG was not, and would not become, the credit provider.

34    The Act also provided the statutory basis upon which the RAMS franchisees, principals and loan writers carried on the relevant credit activities. Section 64 permitted the holder of an ACL to authorise another person, a “credit representative”, to engage in specified credit activities on behalf of the licensee. Sech and Mr Lubarda were appointed as credit representatives of RFG pursuant to that provision. Section 68(1) provided:

An authorisation under subsection 64(1) may be varied or revoked at any time by the licensee giving written notice to the credit representative.

35    In the meantime, the licensee bore statutory responsibility for the conduct of the representative and potential liability to a client for loss suffered by reason of that conduct: ss 74, 75, 77 and 78. Under the RAMS arrangements, absent the requisite authorisation as RFG’s credit representative, Sech and Mr Lubarda could not lawfully carry on the relevant credit activities unless otherwise licensed or authorised.

36    Section 334(1) of the National Credit Act is also relied upon by RFG. It relevantly provides that a provision of a contract or other instrument by which a person seeks to avoid or modify the effect of the Act is void. RFG submits that s 334 bears upon the permissible operation of any contractual term said to constrain the power of revocation conferred by s 68(1). It does not contend, however, that s 334 has the consequence that either cl 5.2 of the Fairfield Franchise Agreement or cl 6 of the Franchising Code has no operation. Its case is that s 68(1) and the obligation of good faith can operate together, with the latter requiring the statutory power to be exercised honestly and for a proper purpose but not otherwise qualifying the entitlement conferred by s 68(1). The applicants dispute that construction. They contend that neither the contractual obligation of good faith nor cl 6 of the Franchising Code avoids or modifies the effect of s 68(1), and that the exercise of the power in the circumstances of the franchise relationship remained subject to those obligations. I return to the interaction between s 68(1) and those obligations in Section F.4 below.

C.1.2    Referrers

37    Another aspect of the licensing regime concerned persons who referred potential borrowers to a licensee or its representative. Section 31 prohibited a licensee, while engaging in a credit activity, from conducting business with another person who was engaging in a credit activity without the requisite licence. An exemption was provided for certain referrers by reg 25 of the National Consumer Credit Protection Regulations 2010 (Cth), subject to conditions directed to the limited role which such a person could perform. The subject was suggested to be relevant because the nature and activities of some referrers formed part of the concerns identified during the investigation of Fairfield.

C.1.3    General conduct and responsible lending obligations

38    The National Credit Act imposed general obligations upon holders of ACLs. Section 47(1) relevantly required a licensee to do all things necessary to ensure that credit activities authorised by its licence were engaged in efficiently, honestly and fairly; to have adequate arrangements concerning conflicts of interest; to comply with the credit legislation; to take reasonable steps to ensure that its representatives complied with the credit legislation; and to ensure that its representatives were adequately trained and competent to engage in the authorised credit activities. Those obligations applied independently to RFG and Westpac as credit licensees and formed an important part of the regulatory setting.

39    Chapter 3 of the National Credit Act imposed more specific obligations concerning responsible lending. RFG’s obligations, as a provider of credit assistance, arose particularly under ss 115–118 and 123. Before providing credit assistance, it was required to undertake the inquiries, verification and preliminary assessment prescribed by those provisions, including reasonable inquiries concerning the consumer’s requirements, objectives and financial situation and reasonable steps to verify the consumer’s financial situation. The practical work involved in providing that assistance was undertaken through RFG’s authorised credit representatives, including the franchisees and loan writers operating within the RAMS network.

40    Separate responsible lending obligations applied to Westpac in its capacity as credit provider. Sections 128–131 required Westpac, before entering a credit contract, to undertake its own inquiries and verification and to make its own assessment as to suitability. It followed that the statutory functions of RFG and Westpac were related but distinct. The performance by a RAMS franchisee of the inquiries, verification and preliminary assessment required in providing credit assistance did not displace Westpac’s independent statutory obligations as lender.

41    The extent of reasonable inquiry and verification necessarily depended upon the circumstances of the particular application. As Davies J observed in Australian Securities and Investments Commission v Cash Store Pty Ltd (in liquidation) [2014] FCA 926 (at [42]):

[t]he extent to which further information and additional inquiries may be needed in order to assess the consumer’s financial capacity to service and repay the proposed loan and determine loan suitability will be a matter of degree in each particular case.

42    The Australian Securities and Investments Commission’s (ASIC) Regulatory Guide 209, published in December 2019 (RG 209), was to similar effect. It explained that it was insufficient merely to assume that information provided concerning a consumer’s financial position was true where circumstances raised doubt as to its reliability, and that the inquiries and verification reasonably required depended upon the circumstances of the particular application: RG 209.50, 209.81 and 209.83. RG 209 also emphasised the separate responsibilities of a provider of credit assistance and the lender. A lender was required to form its own view concerning the reliability and currency of information provided by a broker or other third party and, where there was reason to question that information, undertake its own inquiries and verification: RG 209.129–209.133.

43    This regulatory setting is significant in rejecting the notion that Westpac was required to accept a loan application because it had been prepared and submitted in accordance with the processes applicable to a RAMS franchisee, or that Westpac lacked power to investigate information contained in an application where it had reason to question its reliability.

C.1.4    Anti-money laundering and counter-terrorism financing

44    There was a further regulatory consideration arising under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML Act). At the relevant time Westpac was a “reporting entity” for the purposes of s 5 of the AML Act. RFG was not, because it did not provide “designated services”, a concept defined by s 6.

45    Section 41 of the AML Act imposed a suspicious matter reporting obligation upon a reporting entity. In the circumstances specified by that section, Westpac was obliged to report suspicious matters to the Australian Transaction Reports and Analysis Centre (AUSTRAC), including information suspected to be relevant to an investigation of tax evasion, an offence against Commonwealth, State or Territory law, or money laundering.

46    Of particular significance was s 123 of the AML Act, the so-called “tipping-off” provision. Subject to limited exceptions, if Westpac made or was required to make a suspicious matter report, it was prohibited from disclosing either that fact or information from which it could reasonably be inferred that the report had been, or was required to be, made. A contravention constituted an offence.

47    RFG submits that this prohibition materially constrained what Westpac could communicate to RFG and to the applicants concerning some aspects of the investigation. Although RFG was a subsidiary of Westpac, RFG contends that the corporate group exception in s 123(7) did not apply because RFG was neither a reporting entity nor an entity of the kind otherwise specified by the provision. The applicants do not dispute that genuine statutory constraints existed, although they contest the extent to which those constraints explain the information which was or was not provided in the circumstances which arose.

48    The contemporaneous dealings with AUSTRAC provide some context. In October 2022, Westpac sought an exemption which would have permitted sharing otherwise restricted information with RFG, RAMS Fairfield and Mr Lubarda. In doing so, Westpac explained that it was significantly constrained in disclosing suspected misconduct to Mr Lubarda so as to provide him with an opportunity to respond under applicable Westpac policies. For reasons not evident to me on the evidence, that application was unsuccessful. A further exemption was sought in December 2022 permitting disclosure to RFG of information concerning a RAMS franchisee or RAMS home loan application. An exemption was ultimately granted on 21 October 2024, but was confined to disclosure to specified officers and staff of RFG and its solicitors and for limited purposes.

49    These matters provide the regulatory setting in which the investigation of Fairfield, the communications between Westpac and RFG, and the subsequent decisions concerning the Fairfield ACRAs and franchise are to be understood.

C.2    The Contractual Framework

50    The principal contractual documents presently relevant are the Fairfield Franchise Agreement, the representative agreement between RFG and Sech (Sech Finance ACRA) and the representative agreement between RFG and Mr Lubarda (Lubarda ACRA): ([RAM.001.062.0202]). They formed part of an interdependent set of arrangements by which Sech conducted the RAMS Fairfield franchise and Sech and Mr Lubarda were authorised to undertake the credit activities necessary for that business.

51    The parties had been in a franchise relationship for some years before the agreement now in issue. In early 2016, RFG, Sech and Mr Lubarda entered into the original franchise arrangements, including a franchise agreement and corresponding ACRAs: ([RAM.200.108.1631]; [RAM.200.108.1623]). The earlier franchise agreement expired on 1 March 2021. On 30 November 2021 ([RAM.001.062.0211]), RFG, Sech and Mr Lubarda entered into a new franchise agreement, being the agreement I have defined as the Fairfield Franchise Agreement: ([RAM.001.062.0202]).

52    The “Start Date” of the Fairfield Franchise Agreement was 6 December 2021 and it was for a term of five years. Mr Lubarda entered into a new ACRA on 21 March 2022. The agreement in respect of which RFG gave notice of proposed termination in 2022 was therefore a new five-year franchise arrangement entered into after the parties had already conducted their relationship under earlier franchise arrangements for a number of years.

53    The franchise relationship did not operate independently of the ACRAs. As explained above, the relevant credit activities could be undertaken through the RAMS business only by persons possessing the necessary authorisation under RFG’s ACL. The Fairfield Franchise Agreement recognised this dependency by requiring compliance with the representative arrangements and by making termination of a Representative Agreement relevant to continuation of the franchise itself. The ACRAs, in turn, were how Sech and Mr Lubarda were authorised to undertake the credit activities required for operation of the franchise. It is this interrelationship which gives practical importance to the sequence adopted by RFG in October and November 2022: revocation or alternative termination of the ACRAs followed by notice of proposed termination of the Fairfield Franchise Agreement.

C.2.1    Good faith

54    As I have observed, the Fairfield Franchise Agreement contained an express obligation of good faith. Specifically, cl 5.2 (at [RAM.001.062.0232]) required the parties to:

…deal with each other in good faith in respect of any matter arising under or in relation to this Agreement or the Franchising Code.

…

55    Further, cl 19.11 (at [RAM.001.062.0263]) separately required compliance with the Franchising Code. Clause 6 of the Franchising Code relevantly provided:

6    Obligation to act in good faith

(1)    Each party to a franchise agreement must act towards another party with good faith, within the meaning of the unwritten law from time to time, in respect of any matter arising under or in relation to:

(a)    the agreement; and

(b)    this code.

This is the obligation to act in good faith.

…

(3)    Without limiting the matters to which a court may have regard for the purpose of determining whether a party to a franchise agreement has contravened subclause (1), the court may have regard to:

(a)    whether the party acted honestly and not arbitrarily; and

(b)    whether the party cooperated to achieve the purposes of the agreement.

…

(6)    To avoid doubt, the obligation to act in good faith does not prevent a party to a franchise agreement, or a person who proposes to become such a party, from acting in his, her or its legitimate commercial interests.

…

56    There is no dispute that the revocation of the ACRAs and the steps thereafter taken by RFG to terminate the Fairfield Franchise Agreement were matters arising under or in relation to the franchise relationship. What divides the parties is the content of the good faith obligation when applied to the powers upon which RFG relies.

C.2.2    The ACRAs and termination of the franchise

57    Clause 19.5 of the Fairfield Franchise Agreement (at [RAM.001.062.0261]) dealt expressly with compliance with, and termination of, representative agreements. It provided:

Compliance with representative agreements

(a)    You and each Principal must comply, and must ensure each of your Employees complies, with any Representative Agreement;

(b)    You acknowledge that:

(i)    we may terminate any Representative Agreement in our discretion; and

(ii)    termination of any Representative Agreement is separate from and independent of this Agreement save for the purposes of rights under clause 28.2(c).

…

58    The individual representative arrangements supplied an additional source of power in relation to Mr Lubarda. The Lubarda ACRA provided that RFG could, in its discretion, vary, suspend or revoke his appointment at any time on written notice. The Sech Finance ACRA contained no corresponding express provision, but RFG relies in relation to Sech upon s 68(1) of the National Credit Act and cl 19.5(b)(i) of the Fairfield Franchise Agreement. The notice given on 31 October 2022 relied upon those provisions as alternative bases for revocation of the Sech Finance ACRA and the Lubarda ACRA and, in Mr Lubarda’s case, additionally upon the express provision in his ACRA.

59    Clause 28 of the Fairfield Franchise Agreement supplied the machinery for termination of the franchise relationship. It distinguished between several circumstances. Clause 28.1 dealt with termination upon specified events; cl 28.2 dealt principally with termination for breach but also contained a separate provision dealing with termination following RFG’s exercise of the cl 19.5(b)(i) power; and cl 28.3 dealt with termination upon further specified events.

60    Clause 28.1(a)(i), which RFG invoked in the notice of 1 November 2022, provided as set out below (at [RAM.001.062.0284]). Clause 28.1(b) required seven days’ written notice of the proposed termination and the ground relied upon, while cl 28.1(c) provided that, if the franchisee notified a dispute in writing, RFG could not terminate until 28 days after notice had been given.

(a)    We may terminate this Agreement if you:

(i)    no longer hold a licence that you must hold to carry on Your Business;

…

61    Clause 28.2(a) (at [RAM.001.062.0285]) established a notice-and-remedy process where the franchisee or principal was in breach. It required, among other things, written notice of the breach and the allowance of a reasonable time in which it might be remedied. Clause 28.2(b) dealt with a second breach of the same provision or provisions and permitted the period for remedy to be shorter than that allowed for the first breach.

62    Clause 28.2(c) (at [RAM.001.062.0286]) was differently expressed:

(c)    We may terminate this agreement if we exercise our right to terminate any Representative Agreement under clause 19.5(b)(i).

…

63    The corresponding notice requirement appeared in cl 28.2(e).

64    Clause 28.3 provided a further right of termination upon specified events. Unlike cl 28.2(c), its exercise was expressly conditioned upon RFG giving “reasonable written notice which details the reasons for termination” and upon the occurrence of one of the events identified in cl 28.3(a)–(l).

65    On 31 October 2022, RFG gave notice revoking the Sech Finance ACRA and the Lubarda ACRA with immediate effect. It relied upon s 68(1) of the National Credit Act and, in the alternative, cl 19.5(b)(i) of the Fairfield Franchise Agreement and, in Mr Lubarda’s case, the additional power contained in his ACRA. On 1 November 2022, RFG gave seven days’ written notice under cl 28.1(a)(i) that it proposed to terminate the Fairfield Franchise Agreement, stating an intended effective date of 8 November 2022 and relying upon the ground that Sech no longer held a licence it was required to hold to carry on the business.

66    The contractual route by which the franchise could validly be terminated is disputed. The applicants contend that an ACRA was an authorisation under RFG’s ACL rather than itself a “licence” within cl 28.1(a)(i). They point to the language of the contractual documents, which elsewhere distinguishes between licences and authorisations, and submit that where RFG itself terminated a Representative Agreement under cl 19.5(b)(i), the provision specifically directed to the consequence for the franchise was cl 28.2(c). RFG had earlier contended that cl 28.1(a)(i) was available. By final submissions, however, it treated that question as immaterial to the result, relying upon cl 28.2(c) on the footing that, if the ACRAs had validly been revoked, that provision supplied a contractual basis for termination notwithstanding the provision identified in the termination notice.

67    A related dispute concerns the significance of the provisions in cll 28.2(a), 28.2(b) and 28.3 which expressly require notice or an opportunity to remedy a breach. RFG submits that their presence, and the absence of corresponding language in cl 28.2(c), demonstrates that the parties did not condition termination under cl 28.2(c), or the antecedent revocation of an ACRA, upon prior notice of the matters relied upon or an opportunity to answer them. The applicants’ case is that the powers upon which RFG relies remained powers exercised within a franchise relationship expressly governed by good faith, and that what good faith required in the particular circumstances is not answered merely by observing that cl 28.2(c) contains no express procedural requirement.

68    The same point arises in relation to the breadth of the words used in s 68(1), cl 19.5(b)(i) and the Lubarda ACRA. RFG emphasises that the statutory authorisation could be revoked “at any time”, that cl 19.5(b)(i) referred to termination “in our discretion”, and that the Lubarda ACRA contained a similarly broad express power. It submits that these powers were not conditioned upon RFG establishing cause, undertaking an independent investigation of its own, or affording the applicants some form of hearing. Its position, as ultimately put, is that the power had to be exercised honestly and for a proper purpose and that, so understood, the statutory and contractual provisions operate consistently with the obligation of good faith.

69    The practical operation of the business depended upon Sech, Mr Lubarda and the relevant loan writers continuing to hold the authorisations necessary to engage in credit activities on behalf of RFG. RFG possessed statutory and contractual powers concerning those authorisations and contractual powers by which termination of a Representative Agreement could lead to termination of the franchise. Those powers existed within a contractual relationship in which RFG and the applicants had expressly undertaken to deal with each other in good faith. The remaining issues concern the operation of those provisions together and the manner in which RFG exercised the powers available to it in the circumstances which arose in 2022.

D    THE EVIDENCE AND FINDINGS ON DISPUTED EVIDENCE

D.1    Some Preliminary Observations

70    Evidence adduced principally in the Class Action remains somewhat useful in illuminating the origin and operation of the investigative processes first applied to Fairfield, the respective functions of Westpac and RFG, the meaning and significance of matters described contemporaneously as “anomalies”, or the reliability of conclusions derived from the investigative work upon which RFG ultimately acted. That said, the trial included detailed examination of individual loan applications from both Fairfield and Ryde, the operation of SLTF across the RAMS network, the subsequent development of Project Guardian and decisions made in 2023 concerning other franchises. Much (but not all) of that evidence was relevant to issues peculiar to the Class Action.

71    The present task is to separate the wheat from the chaff and refer to evidence concerning Ryde only where it bears materially upon the remaining Fairfield issues.

D.2    Mr Lubarda

72    The applicants called Mr Lubarda. He relied upon two affidavits, the first affirmed on 2 February 2026 and the second on 19 June 2026, and was cross-examined. His evidence dealt with his background and experience, the establishment and operation of the Fairfield business, his role as principal, the contractual and policy materials of which he was aware, the organisation and supervision of the loan-writing business, the practices which he understood were required in preparing and submitting applications, the increasingly intensive scrutiny to which Fairfield applications became subject during 2022, his communications with RFG concerning what was occurring, and the circumstances in which the Fairfield ACRAs and franchise arrangements were brought to an end.

73    A very substantial part of his affidavit evidence consisted of a retrospective examination of individual loan files which he understood had given rise to Westpac’s concerns. In laborious detail, he reviewed a schedule identifying the asserted anomalies and associated loan material and addressed, application by application, whether he considered the matter identified could have been detected by a loan writer and what explanation he or the relevant loan writer could have given had the matter been raised before the ACRAs were revoked. His second affidavit supplemented that exercise and responded to aspects of Mr Gerritsen’s evidence (discussed below). Mr Lubarda accepted in cross-examination that the exercise involved reviewing many hundreds of documents over many weeks and numerous meetings with his solicitors.

74    I tarry only to observe that it is a great pity that the limited forensic relevance of this material (which I have explained above) was not apprehended earlier. A modest body of agreed facts, preserving each party’s ultimate position, might have spared the parties an expedition through the brume of hundreds of loan files and the very considerable costs attending it.

75    Mr Lubarda made several concessions in cross-examination, which should be recorded. He accepted that he was aware of the principal contractual and policy documents governing Fairfield; that it was important for him to be sufficiently familiar with those documents to understand the loan-writing process and supervise the loan writers for whom he was responsible; that the business was required to comply with the Operations Manual and relevant policies; and that, as principal, he bore responsibility for active supervision and management of the franchise. His cross-examination also demonstrated that several of the individual applications examined by Westpac contained matters which were, at some risk of understatement, capable of legitimate inquiry and in respect of which further information could properly be sought. Consistently with these concessions, the evidence establishes beyond peradventure that there were matters associated with Fairfield applications which reasonably caused concern and justified investigation.

76    RFG also emphasises that in many individual applications a loan writer was asked to provide information or an explanation capable of addressing a matter identified by SLTF and that, in a significant number of instances, no response or no sufficient response was provided. But, as I will remark more than once, this does not resolve the different question whether Sech or Mr Lubarda was informed of the accumulated case which RFG was considering as a basis for revoking the ACRAs and terminating the franchise or afforded an opportunity to respond to that case before the decision was made. The distinction between inquiries made for the purpose of deciding what should happen to an individual customer’s application and an opportunity to address the matters said to justify bringing the franchise relationship to an end is important and must be maintained.

77    I considered Mr Lubarda to be endeavouring to give an accurate account of events from his perspective. His evidence was naturally affected by the fact that he had invested considerable time and effort in the Fairfield business and understandably regarded its termination as a profound departure from the relationship which had preceded it. Where his recollection or retrospective analysis is inconsistent with reliable contemporaneous material, I prefer the latter. Subject to those qualifications, I did not consider he sought deliberately to avoid inconvenient propositions disclosed by the documents, and his willingness to make the concessions to which I have referred was appropriate.

D.3    The RFG Witnesses and the Limits of Retrospective Reconstruction

78    RFG called Mr Owen Ballantine, Mr Sean Denney and Mr Warren Gerritsen. Mr Ballantine relied upon an affidavit affirmed on 23 March 2026, Mr Denney upon an affidavit affirmed on 13 April 2026, and Mr Gerritsen upon affidavits affirmed on 14 April and 22 July 2026. Each was cross-examined. Although significant parts of their evidence concerned Project Guardian and events occurring after the revocation of the Fairfield ACRAs and the subsequent steps directed to termination of the franchise, each gave evidence which bears upon the genesis of the Fairfield investigation, the work undertaken within Westpac, the information communicated to RFG and the relationship between the investigative process and the decision ultimately made by Mr Bromwich.

79    Mr Gerritsen was the witness most closely involved in the investigation of Fairfield. He was centrally involved in the work which developed into SLTF and in the examination of individual Fairfield applications. His evidence described the methodology employed, the information and investigative tools available within Westpac, the way potential anomalies were identified and recorded, the escalation of concerns arising from Fairfield and his involvement in communicating the results of the investigation to senior officers, including Mr Bromwich.

80    Mr Ballantine occupied senior positions within the Mortgages Business Controls and Monitoring team (BCM) and later had oversight of work performed by SLTF. His evidence assisted in explaining the institutional setting within Westpac in which the Fairfield concerns were escalated, the relationship between BCM, SLTF and other risk functions and the development, following Fairfield, of the broader governance processes which became Project Guardian. Mr Denney’s evidence was principally directed to the later period. To the extent it bears upon Fairfield, it assists in explaining the wider response which followed the Fairfield investigation and the relationship between Westpac’s risk processes and RFG’s position as franchisor.

81    Mr Gerritsen’s affidavit evidence was, even by the expansive standards of modern commercial litigation, both prolix and prodigious: his first affidavit occupied some 346 pages and 1,670 numbered paragraphs, and his second added a further 138 pages and 580 numbered paragraphs. A substantial part of this material consisted of a close retrospective examination of individual applications and the matters identified in them. At the conclusion of his cross-examination, Mr Gerritsen explained the enormous time he had spent reviewing the anomalies and working through the material with RFG’s solicitors.

82    I make no criticism of Mr Gerritsen for the diligence with which he performed that exercise. It is necessary, however, to distinguish between evidence of events in which he personally participated and a reconstruction undertaken several years later by studying a very large documentary record.

83    The point has particular significance here because the material significance of an anomaly for the present liability inquiry depends substantially upon what had been contemporaneously identified, how it had then been characterised, what had been resolved or remained unresolved, and what was communicated to the person who made the decision for RFG. A conclusion reached by Mr Gerritsen in preparing evidence in 2026 cannot, of course, retrospectively enlarge the information upon which Mr Bromwich acted.

84    Mr Gerritsen’s evidence nonetheless provided useful assistance in understanding what SLTF meant by an “anomaly”, the investigative techniques employed and the relationship between identification of an anomaly and any conclusion concerning fault or misconduct by a loan writer. The scrutiny undertaken by SLTF was not simply the application by another set of eyes of the requirements imposed upon a RAMS loan writer. Its investigators had access to information and investigative capabilities which were not available to loan writers and, in some respects, examined applications by reference to matters going beyond specific requirements contained in the Lending Guidelines. Identification of an anomaly therefore did not, without more, establish that a loan writer had failed to comply with a relevant obligation.

85    In summary, by the end of the evidence, it seemed to me evident that four general propositions must be kept distinct: first, a matter might warrant investigation without being an established irregularity; secondly, an unexplained irregularity might reveal no failure by a loan writer; thirdly, a failure by a loan writer would not necessarily establish dishonesty or other serious misconduct; and fourthly, the contemporaneous label “anomaly” answered none of those questions. These distinctions matter because, properly analysed, the number of anomalies conveyed little, without qualitative information, about what had been established, by whom, and with what consequence for the decision entrusted to Mr Bromwich.

86    The evidence of the RFG witnesses also establishes the broad process by which the Fairfield concerns travelled within Westpac and RFG, how Mr Gerritsen and others were involved in identifying and escalating concerns, and how information was communicated to Mr Bromwich and other senior officers of RFG.

87    The witnesses called by RFG gave direct evidence of their own participation in that process. In particular, Mr Gerritsen explained what information he provided to Mr Bromwich and what occurred at meetings which he attended. As my evidentiary rulings at trial made plain, however, they cannot purport to give evidence of Mr Bromwich’s uncommunicated reasoning, what weight he attached to particular matters, or the process by which he personally reached the conclusion that the Fairfield ACRAs should be revoked. To the extent that Mr Bromwich’s reasoning was communicated contemporaneously in non-privileged material, that material is available and must be assessed according to its terms; beyond it, the Court cannot provide a process of reasoning by speculative inference that the admissible evidence does not establish.

88    I regarded the RFG witnesses as generally endeavouring to assist the Court. I have placed greatest weight upon their evidence concerning matters within their actual participation or recollection and upon the contemporaneous documents.

D.4    The Contemporaneous Documents

89    The oral evidence was accompanied by a very large documentary record, the vast bulk of which does not require detailed explanation. For present purposes, the documents of greatest significance are those which record the emergence and escalation of concerns concerning Fairfield, the operation and results of the reviews of Fairfield applications, communications within Westpac and between Westpac and RFG, communications with Sech, Mr Lubarda and the Fairfield loan writers, the material provided to Mr Bromwich, his requests for further information, and the critical documents surrounding revocation of the ACRAs, the notice of proposed termination and the ensuing dispute concerning the Fairfield Franchise Agreement.

90    As I have remarked many times (for example, in Transport Workers’ Union of Australia v Qantas Airways Limited [2021] FCA 873; (2021) 308 IR 244 (at 251 [16]–[17]), those experienced in commercial litigation are aware that, in determining contested factual issues, what matters most is usually the proper construction of such contemporaneous documents as may exist and the probabilities that can be derived from those documents and any other objective facts, and that the best approach for a judge to adopt is to base factual findings on inferences drawn from the documentary evidence and known or probable facts: see also Liberty Mutual Insurance Company Australian Branch trading as Liberty Specialty Markets v Icon Co (NSW) Pty Ltd [2021] FCAFC 126; (2021) 396 ALR 193 (at 254 [239] per Allsop CJ, Besanko and Middleton JJ).

91    Indeed, in this case, the contemporaneous record assumes particular importance because the documents permit the Court to identify (with considerable precision) what information had been generated by the investigation, what was communicated to Mr Bromwich, what further information he sought and the sequence of events which culminated in revocation and termination. They also assist in distinguishing information which existed within Westpac from information which was communicated to RFG.

92    Having emphasised the importance of the contemporaneous documents, three qualifications should be noted.

93    First, it is worth emphasising (yet again) that the fact that information was known to an officer or employee within Westpac does not establish, without more, that it was known to Mr Bromwich when he acted for RFG. Further, the fact that information was communicated to him establishes that it formed part of the material available to him but does not establish the underlying truth of what was communicated.

94    Secondly, the documents must be read in context; an email or briefing paper may assume knowledge shared by its author and recipient, compress a more extensive discussion or employ terminology whose significance was understood by those involved. I therefore do not treat the absence from a particular document of a matter as necessarily proving that it played no part in events. In the rare case where oral evidence from a participant provides a supplementation of the contemporaneous record, I have considered it together with the document.

95    Thirdly, the critical email of 14 October 2022, discussed below, contained several redactions maintained by RFG on the ground of legal professional privilege and, in its unredacted portions, referred to legal advice. RFG was, of course, entitled to make the forensic decision to maintain a proper claim of privilege. I draw no inference adverse to RFG from the claim, and I neither know nor can speculate about the substance of the advice or the content of the redacted communications. The determinative questions must be resolved upon all the evidence adduced, including the unredacted portions of the email. While keeping the principled operation of the applicants’ onus in mind, if that evidence does not establish a favourable unrecorded process of reasoning for which RFG now contends, the result is a want of proof of that proposition, not a speculative inference.

96    The documents bearing directly upon the Fairfield investigation, the Westpac Recommendation, the material placed before Mr Bromwich, his response and the ultimate decisions are considered chronologically in Section E. The point for present purposes is to remark upon their signal importance as providing the means of reconstructing the decision-making process, especially here, where the relevant decision-maker was not called.

D.5    Mr Bromwich

97    As I have already noted, the applicants’ case is directed to the character of the decision Mr Bromwich made on behalf of RFG: whether he genuinely exercised RFG’s own judgment upon the material available to him, whether the decision was reached consistently with the obligation of good faith and what significance is to be attached to the Westpac recommendation and the absence of any opportunity afforded to Sech and Mr Lubarda to answer the accumulated matters upon which RFG acted.

98    The relevant principles to be applied in considering the consequences of his absence are familiar. As I recently explained in Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196 (at [188]–[203]), the principle in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 concerns the unexplained failure to call a witness from which, in appropriate circumstances, an inference may be drawn. The considerations ordinarily include whether it was expected or natural for the party to call the witness, whether the witness could elucidate a particular matter and whether the absence of the witness is unexplained: Payne v Parker [1976] 1 NSWLR 191 (at 201–202 per Glass JA, dissenting); Roberts-Smith v Fairfax Media Publications Pty Ltd (No 41) [2023] FCA 555; (2023) 417 ALR 267 (at 324 [178] per Besanko J).

99    The failure to call a witness does not establish that the witness would have given evidence positively damaging to the party who failed to call him and does not permit conjecture to take the place of proof. As explained in Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 (at 384–385 [63]–[64] per Heydon, Crennan and Bell JJ), an unexplained absence may support an inference that the evidence of the witness would not have assisted the party’s case and may permit an inference otherwise available from the proved facts to be drawn with greater confidence. The applicants continue to bear the burden of establishing the facts upon which their case depends.

100    I am amply satisfied that it was natural to expect RFG to call Mr Bromwich. He was the Managing Director who, after all, made the very decision which RFG seeks to defend, and the applicants’ case has throughout put in issue whether his decision involved the independent and genuine exercise of RFG’s judgment for which RFG contends. Mr Bromwich was uniquely placed to give direct evidence about his uncommunicated reasoning or explain why he reached the conclusion he did.

101    RFG submits that Mr Bromwich should not be regarded as a witness whom it would naturally have been expected to call. It points to the circumstances in which he ceased to perform the role of Managing Director during Project Guardian, the subsequent end of his employment and what it says was his position outside RFG’s or Westpac’s “camp” (including criticisms made of his performance in the context of unopposed regulatory action). It also submits that the business records sufficiently disclose the basis upon which the decision was made and that the applicants, who bore the onus, could themselves have sought his evidence.

102    I do not regard those matters as providing a sufficient explanation for his absence. RFG’s submission asks the metaphor of a witness being within one party’s “camp” to do the work of analysis. It cannot. The question is not speculation as to where Mr Bromwich’s sympathies lay by the time of trial, but whether he was the natural witness to explain the decision which RFG made through him and now seeks to defend. As I repeatedly stressed by my rulings during the trial, the witnesses who supplied information to him could prove what they communicated; the contemporaneous documents could prove what he said and did; but neither could give direct evidence of what conclusions he drew from the material, what significance he attached to the deficiency he had himself identified, or how, if at all, that deficiency was resolved before he decided to act. On those matters Mr Bromwich occupied a position quite unlike that of any other witness.

103    Mr Bromwich’s departure from RFG and the later criticism of aspects of his work do not explain his absence. No evidence whatsoever was adduced that he was unwilling to give evidence, could not be located, lacked any recollection of the events or was otherwise unavailable; nor was any practical impediment to calling him established. Delphic suggestions that he may have been unwilling to help or that he may be a witness adverse to Westpac’s interests because later, unopposed, regulatory action by ASIC necessarily called into question his performance as Managing Director were made at a very high level of generality but were unpersuasive (particularly, in the absence of specific evidence as to his non-cooperation or likely non-cooperation). In those circumstances, and given his unique capacity to explain the decision, the failure to call him is unexplained.

104    Having said this, the practical consequences of Mr Bromwich not being called remain confined. The applicants must first establish from the evidence actually adduced an inference concerning the manner in which RFG’s decision was reached. As explained below, the documentary sequence independently supports the inference that RFG proceeded upon Westpac’s assessment and recommendation while the evidentiary connexion which its own decision-maker had identified as material remained unresolved. Mr Bromwich’s unexplained absence supplies no missing fact and does not permit any inference that his evidence would have been positively adverse to RFG. It does, however, permit that otherwise available inference to be drawn with greater confidence, because he was uniquely placed to explain whether the deficiency had in fact been resolved or had otherwise ceased to matter.

105    If that use of his absence were unavailable, the result would be unchanged. The inference remains available from the contemporaneous documents themselves, and RFG cannot answer it merely by inviting the Court to assume a favourable but unproved process of reasoning which Mr Bromwich alone could have explained. I will therefore decide the case primarily upon the contemporaneous documents and the evidence of those who participated in the process, giving Mr Bromwich’s absence only the confined consequence just stated.

106    For completeness, when I refer below to document identification numbers, this is for illustrative purposes. Depending upon context, this convenient expedient should not be taken as an indication that the document identified is the only evidence relevant to any proposition or finding expressed.

E    PRINCIPAL FACTUAL FINDINGS

E.1    The Changing Regulatory and Commercial Setting

107    Before turning to the events concerning Fairfield, it is necessary to say something about the setting in which they occurred. During the hearing I used the expression “sea change” to describe what appeared to have occurred during 2022 in Westpac’s appetite for the risks associated with business originated through the RAMS franchise network and in the intensity with which that business came to be scrutinised. Having considered the evidence as a whole, I remain of the view that the expression captures an important feature of the evidence, although some care is required in identifying both the nature and the cause of the change.

108    RAMS had for many years operated through a network of franchisees whose loan writers originated home loan applications which were ultimately submitted to Westpac as credit provider. The franchisees and their loan writers operated within a system prescribed by RFG which included the Lending Guidelines, the Operations Manual, training and established processes for the submission, assessment and approval of loan applications. Applications were subject to credit assessment and could be queried or rejected, and the franchisees and loan writers were required to comply with the requirements imposed upon them. But the evidence concerning the conduct of the business before 2022 demonstrates that the level of scrutiny later applied by SLTF did not form part of the ordinary assessment of RAMS-originated applications.

109    By 2022, the regulatory setting in which Westpac and RFG operated had itself changed. The Hayne Royal Commission had been followed by legislative and regulatory changes affecting the provision and distribution of consumer credit, including the introduction of Pt 3-5A of the National Credit Act. The statutory obligations resting upon RFG as licensee and Westpac as credit provider, and the risks associated with the conduct of persons originating credit on their behalf, had assumed increased practical significance. I do not find that the 2022 Fairfield Investigation or Project Guardian was instituted as a direct response to the Royal Commission (as the evidence does not go that far). But what is tolerably plain is that the changed regulatory environment formed part of the setting in which Westpac came to reconsider the degree of oversight it exercised over the RAMS franchise network and the risks which it was prepared to accept in connexion with business originated through that network.

110    Before the events which led to Project Guardian, RAMS did not have a risk profile separate from the wider Westpac Mortgages business. Mr Ballantine’s evidence was that RAMS accounted for approximately 7% of the Mortgages portfolio and that there had been internal debate as to whether it required a separate risk profile. Some within BCM, including Ms Aitken, had expressed concern that Westpac did not have sufficient oversight of RAMS to identify conduct issues or other risks within the franchise network. By September 2022, a decision had been made to assess RAMS separately because the use of franchisees for product distribution and servicing was regarded by Westpac as presenting heightened third-party risk, including because Westpac had less direct control and oversight over those activities.

111    I am satisfied that the immediate catalyst for the practical change was Fairfield. Concerns relating to Fairfield were identified in mid-2022 and were thereafter escalated within Westpac. By August, a steering committee involving BCM, Group Investigations (GI), Risk, Financial Crime, Legal, Financial Crime Legal and SLTF had been established to share investigative findings concerning Fairfield. By September, consideration had begun to extend beyond Fairfield to the RAMS network more generally, and Mr Burton established Project Guardian in November 2022. The broader programme followed the Fairfield investigation; it did not precede the decision with which this proceeding is concerned.

112    The evidence of Mr Ballantine assists in understanding the nature of the concern which developed. He was shown material concerning Fairfield in which SLTF had identified anomalies and formed the view that the matters required escalation. The subsequent response was directed to understanding the risks presented by the RAMS business model, the adequacy of the controls operating within RFG and the extent to which conduct identified within the franchise network fell outside Westpac’s risk appetite.

113    There was, of course, nothing improper or even surprising in Westpac reconsidering those matters. It was entitled to alter its risk appetite and to subject business introduced through RAMS to greater scrutiny if it considered that regulatory, financial crime, credit or reputational risks required it to do so.

114    But on any view of it, the investigation which commenced at Fairfield involved a form of scrutiny materially more intensive than the ordinary credit assessment to which RAMS applications had previously been subjected. SLTF had access to information and investigative techniques which were not available to an individual loan writer. It examined applications for inconsistencies or potential problems which could not necessarily have been identified by a loan writer applying the Lending Guidelines and following the ordinary RAMS processes. Matters which previously might have resulted in a credit query or a request for further information could therefore become an “anomaly” forming part of a broader assessment of the risk presented by a franchise.

115    This distinction supplies the key to much of the evidence which follows. Identification of numerous anomalies under the heightened review process was capable of causing legitimate concern to Westpac, but the character and resolution of those anomalies remained relevant to what they established about Fairfield and what RFG was entitled to make of them when considering revocation of the ACRAs.

116    This change also explains an otherwise striking feature of the evidence. The franchisees unsurprisingly approached their obligations by reference to the Lending Guidelines, the Operations Manual, the training they had received and the practices which had prevailed while their applications were being submitted, assessed and approved. Westpac, having become concerned about the adequacy of those arrangements in the then regulatory environment, was now examining the business from a quite different perspective. There was therefore a genuine disjunction or asymmetry between the historical operation of the RAMS system and the investigative scrutiny which began to be applied in 2022.

117    That disjunction did not prevent Westpac from concluding that the practice involved a risk it was no longer prepared to accept. Equally, the later application of more exacting scrutiny does not establish retrospectively that conduct which had occurred under the former processes constituted a breach by a franchisee or loan writer of an obligation then imposed upon them. Those propositions are particularly important because the results of the heightened review, expressed principally through the number and character of identified anomalies, became central to the recommendation subsequently made by Westpac to Mr Bromwich.

E.2    The Earlier Fairfield Investigations

118    With that broader setting in mind, it is necessary to return to the history of the Fairfield franchise itself. The immediate events which led to the revocation of the Fairfield ACRAs and the steps thereafter taken towards termination of the Fairfield Franchise Agreement occurred during 2022, but they were preceded by investigations which later formed part of the background against which the further concerns were considered. I deal with that earlier history only to the extent necessary to understand what was known to those involved in 2022.

119    The first investigation began in 2020. Between February and June of that year, SLTF opened investigations concerning nine persons associated with Fairfield, including Mr Lubarda. In the case of Mr Lubarda, a matter was opened in April following the identification of matters which included his having been added as guarantor on five St George loan applications for customers with whom he had no apparent familial relationship, his continuing connexions with Marvel Realty and Investment Property Specialists (IPS), and the fact that, since 1 January 2019, Fairfield had written 494 loans without any recorded referrer. Investigations concerning other Fairfield staff recorded suspicions about, among other things, inflated income, documents suspected to have been fabricated, commissions involving unaccredited referrers and transactions involving Fairfield staff or customers: ([RAM.200.110.3948]; [RAM.200.110.0005]; [RAM.200.117.4568]; [RAM.200.117.6012]; [RAM.200.117.6910]; [RAM.200.118.6737]; [RAM.200.119.0369]; [RAM.200.119.5057]; [RAM.200.118.4752]). I refer to this work as the Phase 1 Fairfield Investigation.

120    On 12 June 2020, SLTF referred Mr Lubarda to GI. The referral recorded a number of serious suspicions concerning his activities and the activities of persons associated with Fairfield, including the receipt of commissions in relation to St George loans, possible non-disclosure of his relationship with IPS, possible continuing business or financial interests in Marvel Realty, transactions involving Fairfield staff, customers and real estate agents, the absence of recorded accredited referrers in a substantial number of Fairfield applications, and the use of income and rental documents suspected of manipulation. Again, these were matters identified for investigation and not findings which I make as to the conduct of Mr Lubarda. On 19 August 2020, SLTF completed what was described as an “Evidence Matrix”, recording the matters identified during Phase 1: ([RAM.200.111.4726]).

121    Further concerns arose within Westpac late in 2021. On 14 December 2021, Mr Crowhurst of GI informed Mr Gerritsen and Mr Shepley by email that Mr Trifunovic, a former Fairfield loan writer, had submitted four Westpac applications supported by accountant letters suspected to have been falsified. Mr Crowhurst recommended that Mr Trifunovic be “grey-listed”, and Mr Shepley recommended his immediate suspension pending a formal decision. In December 2021, Mr Trifunovic was grey-listed and his RFG accreditations were terminated: [RAM.200.118.3292]–[RAM.200.118.3294]; [RAM.001.147.0062].

122    The chronology at this point is significant. It will be recalled that RFG and the applicants had just entered the new five-year Fairfield Franchise Agreement as recently as late 2021. Despite this, by early February 2022, the position within RFG was that warning letters would be issued to Mr Lubarda and two Fairfield loan writers, Ms Vo and Mr Miu. Warning letters were subsequently issued to Ms Vo and Mr Miu, but a warning was not issued to Mr Lubarda because of further suspicious activity identified by SLTF and GI monitoring late in 2021: ([RAM.001.147.0045]–[RAM.001.147.0047]; [RAM.001.147.0057]–[RAM.001.147.0059]; [RAM.200.126.1931]–[RAM.200.126.1934]).

123    On 25 February 2022, St George issued letters concerning the proposed cessation of its banking relationships with Mr Lubarda and entities associated with him, generally specifying 24 March 2022 as the prospective date for closure or removal of signatory access: ([RAM.200.217.0005], [RAM.200.217.0002], [RAM.200.217.0003]). RFG thereafter stated on 28 February that the RAMS Action account would close on 28 March and confirmed that closure on 28 March; the home-loan account remained open for repayments, but without withdrawal access. A later letter reversed the decision to remove Mr Lubarda as a signatory to the IPS account. These events subsequently prompted further consideration within Westpac of Fairfield. It is unnecessary for present purposes to determine the correctness of all the matters which caused the proposed and implemented banking restrictions.

124    There is one further aspect of this history which has some relevance. On 5 April 2022, Mr Bromwich was told that Fairfield had knowingly submitted falsified information and staged wages, but replied that, to his knowledge, no such matters had been put to or substantiated against Mr Lubarda: ([RAM.002.002.6468]–[RAM.002.002.6472]). He described the broader difficulty as franchisees being exited as customers although RAMS would not, on what it knew, have exited them as franchisees: ([RAM.002.002.6468]). The exchange is evidence of Mr Bromwich’s doubt at that time about attributing misconduct to Mr Lubarda; it does not establish what conclusion he later reached in October. The parties also agreed (Agreed Background Facts (AF) Part B [28]) that Mr Bromwich’s decision to take steps directed to termination of the Fairfield Franchise Agreement was not based upon matters communicated to him before November 2021. The applicants emphasise that proposition together with the fact that RFG entered into a new five-year agreement notwithstanding the Phase 1 history: (AF Part B [4]). RFG relies upon the earlier history for a more limited purpose, as part of the background known within Westpac and, to some extent, to Mr Bromwich when the further investigation occurred.

E.3    The Phase 2 Fairfield Investigation

125    On 22 June 2022, Mr Burton, then Managing Director, Mortgages at Westpac, was informed that Mr Lubarda and Mr Trifunovic had each been “exited” as individual customers of Westpac. During August and September 2022, SLTF examined approximately 50 applications submitted by Sech on behalf of its clients: AF Part B [9]–[10].

126    An important step occurred at a meeting on 25 July 2022 attended by Mr Bromwich. Mr Burton decided to form a working group to investigate Fairfield. Among the matters identified at the meeting were concerns about the use of unaccredited referrers, conflicts of interest and the preliminary results of the sampling of Fairfield loan files, together with possible customer harm, credit licence implications and reputational risk. The following day, Ms Aitken forwarded to Mr Bromwich an email from Mr Shepley concerning the scope of the review: ([RAM.200.137.1869]).

127    These documents place Mr Bromwich within the contemporaneous sequence from the commencement of the further investigation. They establish his knowledge of the existence and broad subject matter of the review. They do not, however, establish what view he then formed concerning any allegation, still less that he had then decided that the Fairfield arrangements should be terminated.

128    From 1 August 2022, new Fairfield applications were subjected to Front Book Review. As I have already explained, this was considerably more intensive than the ordinary credit assessment process. As the reviews proceeded during August and September, SLTF identified a substantial number of matters which it described as concerns or anomalies. The distinction already drawn between identification of such a matter and establishment of wrongdoing by a loan writer applies throughout what follows.

E.4    The August Consideration of Termination

129    I am satisfied that by late August, the possibility of termination was being considered within Westpac. In a briefing memorandum dated 29 August 2022, Ms Aitken sought advice concerning whether the circumstances associated with Mr Lubarda’s exit as a Westpac customer provided a sufficient basis for termination of the Fairfield Franchise Agreement. The course ultimately taken was not supported by RFG on that basis. The memorandum also identified two other courses: a back book review of “all files originated through the Fairfield franchise since the commencement of the most recent FA in December 2021”, and continued monitoring of new applications: ([RAM.200.126.1931]–[RAM.200.126.1935]).

130    The memorandum does not, however, establish that Mr Bromwich had decided upon termination at that time, and I do not attribute to him the reasoning or purpose of its author merely because the investigation which followed ultimately resulted in a recommendation being made to him.

E.5    Heightened Review and the Position by Late September

131    The Front Book Review continued during August and September. On 16 September 2022, Mr Lubarda complained to Mr Bromwich by email about the scrutiny being applied to Fairfield applications. He said (at [RAM.200.050.0699]):

Starting the day I left on leave, all Fairfield files have been getting referred to risk which I take no issue with. I understand that there is a job to be done.

…

132    On 20 September, Mr Bromwich replied that he would follow the matter up with Westpac. Three days later, Mr Lubarda separately escalated a complaint concerning an unconditionally approved matter which had been stopped on the day of settlement and the extensive further documents then required.

133    That exchange is relevant in two respects: first, Mr Lubarda did not then dispute Westpac’s entitlement to scrutinise Fairfield applications (his complaint concerned the operation and consequences of that scrutiny); and secondly, it puts beyond doubt that Mr Bromwich was personally aware, before the recommendation was made to him, that Fairfield was concerned about the way its applications were being dealt with. Again, the documents do not reveal what view Mr Bromwich formed about that complaint.

134    On 29 September 2022, the Head of Legal, Mortgages and RAMS informed Mr Burton that approximately 96% of Fairfield applications received during August and September had been deferred for further credit checks because of identified anomalies. The themes identified by the Head of Financial Crime, Consumer and Business Banking (CBB), included inflated income, staged wages, fictitious pay-as-you-go statements and company financials, overstated savings, serviceability concerns, unexplained movements of substantial sums between customers and misrepresented living arrangements: ([RAM.200.126.1707]).

135    The communication demonstrates the seriousness with which these matters were being regarded within Westpac. For the reasons already explained, it does not establish that each of the matters listed had been proved, that each was attributable to a Fairfield loan writer, or that Mr Bromwich had seen the underlying material.

136    On 30 September 2022, a draft Risk Memorandum prepared for Westpac’s Group Chief Risk Officer identified risks said to arise from the Fairfield anomalies and conduct issues, including possible credit licence and responsible lending breaches, customer deception, Banking Code breaches and reputational risk. Mr Burton approved the final version, which was subsequently shared with the Group Chief Risk Officer on 5 October, with a short form provided to the Chief Executive, Consumer and Business Banking: ([RAM.200.126.2214]; [RAM.200.126.2216]–[RAM.200.126.2221]).

E.6    30 September 2022: Westpac Reaches Its Position

137    On 30 September 2022, Ms Aitken reported to Mr Burton that, since 1 August, 46 Fairfield applications had been reviewed, two had been allowed to proceed to approval and the remainder had been deferred with further questions pending from the loan writer or applicant. She also recorded that no further information had then been received concerning those deferred applications. Ms Aitken recommended that Westpac cease considering and accepting loan applications from Fairfield: ([RAM.200.195.0064]; [RAM.200.166.0010]).

138    The evidence does not establish that Westpac had, as at 30 September, formally determined that it would accept no further Fairfield applications, but it does make plain that the senior officer responsible for the relevant Westpac function had reached a strongly adverse view about continued acceptance of Fairfield business.

139    Later that day, Mr Burton spoke with Mr Bromwich and sent him an email containing what has conveniently been called the Westpac Recommendation. Its terms are sufficiently important to warrant setting out the material part (at [RAM.001.004.2546]):

Since August 2022, Westpac has been undertaking heightened monitoring and review over new loan applications that have been submitted through the RAMS Fairfield franchise. Through this work, a high proportion of loan applications have been identified with anomalies and an overwhelming majority of those loan applications have been deferred for further credit checks, none of which have currently proceeded past this point and satisfied the additional checks. This has led to concerns regarding the operation of the RAMS Fairfield franchise and the appropriateness of the conduct of Daniel Lubarda and the loan writers employed by Sech Finance.

Based on these concerns, the ongoing operation of the Fairfield franchise which involves Westpac continuing as the credit provider on loans introduced by the franchise has the potential to negatively impact Westpac’s ability to appropriately manage risk and comply with it’s [sic] regulatory obligations. I note that RAMS will have it’s [sic] own license obligations that it must consider, including the suitability of the people and entities sitting on it’s [sic] license as its representatives.

As a result, it is recommended that RAMS should consider removing Sech Finance and Daniel Lubarda from its Credit License and following that, terminate the Franchise Agreement with Sech Finance and Daniel Lubarda (as the RAMS Fairfield Franchisee and principal).

…

140    The Westpac Recommendation identified, at a high level, the results of the heightened monitoring and the risks perceived by Westpac. The email itself did not identify the 46 applications, specify the individual anomalies, identify which were thought attributable to a loan writer, or attach the evidence underlying them. It expressly contemplated a further meeting involving those overseeing the file reviews and Legal. It is direct evidence of what the email communicated to Mr Bromwich on 30 September (but is not evidence that Westpac’s concerns were objectively correct and does not record what conclusion, if any, Mr Bromwich personally drew from the email or the earlier conversation that day).

E.7    The 4 October Meeting and 5 October Briefing

141    On 4 October 2022, Mr Burton, Mr Bromwich and Mr Gerritsen met to discuss Fairfield. Mr Bromwich was told of SLTF’s findings from the Front Book Reviews of 51 Fairfield applications and that 88% had been declined or deferred. Mr Gerritsen explained the principal kinds of anomalies detected. Mr Bromwich asked for more granular information and a briefing note: AF Part B [20], Gerritsen 1 [130], ([LAY.030.003.0038]).

142    The request for more information is highly significant as part of the sequence and establishes that Mr Bromwich did not simply implement the recommendation when it was conveyed to him. But, at the risk of repetition, it does not, of course, establish what conclusion he had provisionally reached, whether he had reached one at all, or precisely what information he considered necessary before deciding what to do.

143    On 5 October 2022, Mr Bromwich received the requested briefing note. It recorded that 51 Fairfield applications had been reviewed between 1 August and 30 September and that concerns had been raised or potential anomalies identified in 45 of them. It also recorded that, in each of those cases, the loan writer had been asked to obtain and provide an explanation or additional information from the customer: AF Part B [21]; ([RAM.002.004.4682]–[RAM.002.004.4684]).

144    The briefing note correctly explained that the review involved a more “in depth examination of each loan application than is undertaken in the standard credit assessment process”. As at 4 October, responses had been received in respect of only six applications. Two had been permitted to proceed, two had been withdrawn and two had been declined: ([RAM.002.004.4684]).

145    The categories identified in the briefing note included potential wage and deposit staging, potential unauthorised commissions or service fees paid by or on behalf of applicants, suspected false payslips and other supporting documents, suspected false financials and potential misrepresentations concerning residential status: ([RAM.002.004.4684]). The briefing note was reporting investigative concerns and was not expressed as a concluded finding that 45 applications involved misconduct, or that Mr Lubarda or a Fairfield loan writer was responsible for each matter identified.

146    The applicants point to two further features of the briefing material. Some matters referred to had arisen in investigations concerning other matters and were therefore not necessarily the product of the Front Book Review itself. Further, the three example files summarised in the attachment did not contain allegations of wage or deposit staging or unauthorised commissions, and the applicants submit that none of those examples identified misconduct by Mr Lubarda or a current Fairfield loan writer: ([RAM.002.004.4686]).

147    The briefing note, however, conveyed information which was plainly serious. A very large proportion of applications had generated concerns or potential anomalies under an intensive review process, the categories included matters which, if substantiated and attributable to persons associated with Fairfield, could engage serious regulatory concerns, and responses had then been received in only six cases. What it did not do was bridge, in respect of most of those applications, the gap between the identification of a concern and an established failure by Sech, Mr Lubarda or a Fairfield loan writer.

148    The documentary sequence now reaches its critical point. Later, on 5 October, after receiving the briefing note, Mr Bromwich sent an email asking for further information. He accurately observed (at [RAM.200.050.1307]):

some of the categories of concern relate to pretty serious potential misconduct, [but] I can’t get the link from a statement saying have [sic] a concern and evidence that supports/links to that? If I can it makes the decision much quicker.

…

149    That email is direct evidence of Mr Bromwich’s contemporaneous reaction to the briefing. I am satisfied it demonstrates that he recognised that some categories, if substantiated, involved potentially serious misconduct, but also that he perceived a gap between the statement of concern and the evidence supporting or linking the concern to the matter in question. It would go beyond the evidence to find from this email that he had reached a concluded view regarding termination. What can confidently be found is that the information provided by 5 October had caused him to seek the evidentiary connexion which he could not then see.

150    On 10 October 2022, Mr Gerritsen responded to Mr Bromwich’s request and told him that all the information Westpac was able to share had been provided. He continued (at [RAM.200.050.1307]):

It is now for you to decide if you have enough information to make a decision.

…

151    The exchange is short, but it brings the reality of the situation into sharp relief. By 10 October, Mr Bromwich had asked to see the connexion between the categories of concern and supporting evidence. Westpac’s response was that it had provided all current information which it considered itself able to share and that the decision whether that was sufficient was his. There is a want of any evidence explaining what Mr Bromwich then thought about the adequacy of the information, what further material he would have wished to see, or direct evidence as to whether the concern expressed on 5 October had somehow been resolved.

152    RFG submits that the limitation upon disclosure must be considered against the AML Act and the risk of impermissible disclosure of suspicious matter information. That may explain why Westpac considered itself unable to provide particular information, but it does not alter the fact that Mr Bromwich sought substantiation and was told that the material capable of being shared had been provided and that the decision was for him.

E.8    The Decision of 14 October 2022

153    Four days later, no further substantiating material appears in the evidence. Subject to the qualification concerning privileged communications explained in Section D.4, the documentary record next contains Mr Bromwich’s decision to proceed. Mr Bromwich informed Mr Burton by email that he would make the decision to revoke the ACRAs of Sech and Mr Lubarda and terminate the Fairfield Franchise Agreement pursuant to Westpac’s recommendation. In doing so, he referred to Westpac’s position (at [RAM.001.004.2545]):

…that the conduct (and evidence they hold to substantiate that) is serious enough that they recommend that cause [sic] of action, and previous concerns raised.

154    He also expressly recorded that:

As discussed, it is unfortunate that the SLTF team that do investigations on behalf of RAMS are unable to provide me the evidence or details…

155    The email was partly redacted on the ground of legal professional privilege. It also bore the notation “Privileged & Confidential: For advice also”, while the attachment was described as “Advice re termination (for RFG)”. The words “For advice also” are obscure, particularly because the email was not, on its face, addressed to a solicitor for the purpose of obtaining advice. They may have been intended to indicate that the email formed part of an internal chain by which legal advice already obtained was conveyed or considered, or through which further advice was sought. The claim of privilege was not challenged, and I therefore proceed upon the basis that the communications obscured by the redactions contained, recorded or conveyed legal advice. That explains why parts of the documentary sequence are unavailable to the Court; however, as I explain below, it does not permit a conclusion that the advice supplied the evidentiary connexion which Mr Bromwich had earlier said he could not see.

156    A further chronological feature should be mentioned. The pdf attachment described as “Advice re termination (for RFG)” was dated 27 September 2022, three days before the Westpac Recommendation of 30 September. Its contents are not before the Court, and its title does not establish either that a decision had then been made or the nature of the advice conveyed. It does show, however, that advice directed specifically to the possible termination of Fairfield, and described as being for RFG, had been prepared before the formal recommendation later sent to Mr Bromwich. Moreover, the email itself distinguished the making of the decision from its implementation. Under the heading “Enacting the decision & support needed”, Mr Bromwich sought Westpac’s assistance with the documentation, notices and processes required to execute the course he had selected. For all I know, the privileged passages may therefore have concerned the contractual route, the preparation of notices, ASIC reference-check obligations or other steps required to implement any decision, rather than the factual substantiation of the suspected conduct. For the reasons already given, I draw no inference adverse to RFG from the maintenance of the claim and cannot speculate about what the privileged communications contained.

157    The words in evidence establish that Mr Bromwich knew Westpac represented that it held evidence which it regarded as substantiating conduct sufficiently serious to warrant the recommended course. They also establish that he regarded it as unfortunate that the SLTF investigators could not provide him with the evidence or details.

158    What the email does not establish is equally important. It does not identify findings made by Mr Bromwich concerning any particular loan application. It does not identify which alleged conduct he regarded as established, which persons he regarded as responsible for it, or how he resolved the gap he had identified on 5 October between the categories of concern and the supporting evidence. It does not follow from those omissions that he made no assessment, but there is simply no direct evidence from him concerning those matters.

159    The applicants submit that the email shows an absence of any real conclusion by Mr Bromwich and that he acted upon Westpac’s recommendation without independently satisfying himself that circumstances justified depriving them of the balance of the five-year agreement. RFG submits that the sequence demonstrates the opposite: Mr Bromwich did not reflexively act upon the recommendation, but asked for more granular information, pressed for the underlying evidentiary connexion and acted only after being told that Westpac had supplied everything it was able to share. Those are competing submissions about the significance of proved facts to which I will return.

160    The applicants also rely upon the terms in which Mr Bromwich referred to the consequences for Westpac of continuing the relationship and contend that the email shows him proceeding upon Westpac’s assessment of the risks. RFG, for its part, emphasises that Westpac was RFG’s parent and sole credit provider and that the commercial and regulatory position taken by Westpac was necessarily a matter of considerable significance to RFG. Again, the significance of those matters for the obligation of good faith is considered below. For present purposes, the email records what Mr Bromwich said when communicating his decision: ([RAM.001.004.2545]).

E.9    The Opportunity Afforded to Fairfield

161    The parties’ dispute concerning an opportunity to respond requires the distinction to be restated between, on the one hand, the repeated requests made to Fairfield loan writers for information concerning individual applications and, on the other, the absence of any occasion upon which Sech and Mr Lubarda were apprised of, and invited to answer, the combined case relied upon as a basis for revoking the ACRAs and terminating the franchise.

162    What is not in dispute is that the contemporaneous record does not disclose that, before the decision was made, Sech or Mr Lubarda was provided with the Westpac Recommendation, the 5 October briefing note, the 45-of-51 statistic as a proposed basis for revocation, or a statement identifying the accumulated matters upon which RFG was contemplating bringing the franchise relationship to an end: ([RAM.001.004.2545]; [RAM.002.004.4684]).

163    The two opportunities are far from identical. A request to a loan writer for information required to determine whether a particular customer’s application should proceed does not inform Sech or Mr Lubarda that the existence or non-resolution of that matter is being accumulated with other matters and considered as a reason to revoke their authorisations and terminate the franchise. The significance for good faith of RFG proceeding without affording such an opportunity is a liability question; whether an opportunity would probably have made any difference is a question of causation. The finding I presently make is confined to the nature of the opportunities which the documents show were afforded.

E.10    The Revocation and Termination

164    On 20 October 2022, Mr Gerritsen provided Ms Aitken with a summary of the Phase 2 file reviews and outcomes and recommended revoking or terminating the ACRAs of all Fairfield loan writers and grey-listing them. Again, to the extent the summary contained material not already communicated to Mr Bromwich, it cannot provide a retrospective evidentiary foundation for the decision he had communicated six days earlier.

165    On 31 October 2022, RFG wrote to Sech and Mr Lubarda revoking their ACRAs. The letter relied upon three alternative bases: s 68 of the National Credit Act; cl 19.5(b)(i) of the Fairfield Franchise Agreement; and, in Mr Lubarda’s case, the express provision of the Lubarda ACRA permitting revocation or variation at any time upon written notice: ([RAM.002.002.6776]–[RAM.002.002.6777]).

166    The letter explained RFG’s decision in the following terms:

In light of investigations by Westpac Banking Corporation, and the serious concerns that have arisen as a result, RFG considers that the risks of continuing to deal with Sech Finance and you can no longer be sufficiently mitigated, and has therefore elected to exercise its discretion to revoke, and in the alternative terminate, the Sech Finance ACRA and the Lubarda ACRA.

167    This contemporaneous statement by RFG of the basis upon which it acted is expressed in terms of the Westpac investigations, the serious concerns which had arisen from them and RFG’s assessment that the risks of continuing to deal with Sech and Mr Lubarda could no longer be sufficiently mitigated. It does not identify any particular anomaly as having been established, or state that Sech or Mr Lubarda had been found to have engaged in fraud, wage staging, falsification of documents or some other identified misconduct.

168    On 1 November 2022, RFG gave Sech seven days’ written notice under cl 28.1(a)(i) that it proposed to terminate the Fairfield Franchise Agreement, stating an intended effective date of 8 November and relying upon the revocation on the previous day of the Fairfield ACRAs as meaning that Sech no longer held a licence required to carry on the business: ([RAM.200.050.4142]); AF Part B [11]–[14], [26]–[27]. On 7 November, the applicants notified a dispute, expressly invoking cl 28.1(c) and disputing both the revocations and the proposed termination. Subsequent correspondence recorded competing positions concerning the operation and timing of termination. RFG maintained that termination would occur at the end of 29 November, but then agreed conditionally that it would not take effect until the earlier of two business days after mediation or 16 December. On 16 December, the applicants maintained that the purported termination was invalid, described that date only as the date upon which RFG said its termination took effect, complied with separation steps under protest and reserved their rights. Nothing presently turns upon identifying a single legally effective termination date, and I do not determine that question.

E.11    General Findings Bearing upon Good Faith

169    It is worth pausing to draw all these findings, primarily drawn from the documentary evidence, together.

170    The sequence can now be reduced to its essentials:

(1)    Westpac had substantial grounds for investigating Fairfield;

(2)    the material generated by the investigation raised matters capable of giving rise to serious regulatory and commercial concern;

(3)    Westpac did not act improperly merely by conducting the Phase 2 Fairfield Investigation or by subjecting Fairfield applications to heightened scrutiny;

(4)    individual Fairfield loan writers were given opportunities to answer requests concerning particular applications, although many such requests remained unanswered at relevant times;

(5)    by 30 September Westpac had reached a strongly adverse position, and Ms Aitken had recommended that Westpac cease considering and accepting Fairfield applications;

(6)    Mr Burton conveyed to Mr Bromwich a separate recommendation that RFG consider removing Sech and Mr Lubarda from its ACL and then terminate the franchise;

(7)    Mr Bromwich did not immediately implement the recommendation and, on 4 October, asked for more granular information and, on 5 October, identified the absence of the evidentiary connexion between the statement of concern and evidence supporting it;

(8)    on 10 October Mr Bromwich was told that all the information Westpac considered itself able to share had been provided and that it was for him to decide;

(9)    RFG obtained or considered legal advice concerning the proposed termination, including advice prepared before the Westpac Recommendation; and

(10)    on 14 October Mr Bromwich said he would make the decision to revoke the ACRAs and terminate the franchise, while recording that it was unfortunate that SLTF could not provide him with the evidence or details.

171    Two further important matters, both evident from the contemporaneous material and the findings above, should be added to this summary.

172    First, as I have noted, there is no documentary evidence explaining what conclusion Mr Bromwich personally reached concerning any particular alleged anomaly, what he understood the material held by Westpac to establish, whether he regarded misconduct by Sech or Mr Lubarda as proved, what weight he placed upon the inability to obtain the underlying evidence, or how he resolved the concern he had expressed on 5 October.

173    Secondly, before the decision of Mr Bromwich was made, Sech and Mr Lubarda were not apprised of, nor invited to answer, the accumulated case which Westpac had presented to RFG as warranting consideration of revocation and termination.

174    What now remains for determination below is the legal significance of these findings.

F    GOOD FAITH

F.1    The Sources and Content of the Obligation

175    The legal question I have identified (that is, whether, in revoking the Fairfield ACRAs and thereafter pursuing termination of the Fairfield Franchise Agreement, RFG acted contrary to the express obligation of good faith which governed its relationship with Sech and Mr Lubarda) is narrower than the complex pleadings and the bulky evidentiary record might suggest.

176    The existence of the express obligations means, of course, that it is unnecessary in this case to enter the wider and still unsettled debate concerning the circumstances in which an obligation of good faith is to be implied into commercial contracts.

177    The express provisions (which I have detailed above) are important in two respects: first, the inquiry is directed to good faith in connexion with the particular bargain made between these parties; and secondly, the Code itself supplies some guidance as to the content of the standard, by directing attention to honesty, absence of arbitrariness and co-operation to achieve the purposes of the agreement, while expressly preserving the entitlement of each party to pursue its legitimate commercial interests. The conventional obligation of co-operation relied upon by the applicants does not require separate treatment as a source of some wider constraint upon RFG. Its relevance here is sufficiently accommodated by the terms of cl 6(3) and by the requirement to construe and apply the bargain as a whole.

178    As I raised during oral submissions, the very recently published second edition of Elisabeth Peden, Daniel Reede and Jerry Leung, Good Faith in the Performance of Contracts (LexisNexis, 2nd ed, 2026) (Peden, Reede and Leung), contains a detailed examination of the Australian authorities. It is of considerable assistance in identifying both the recurring ideas associated with good faith and the care required before those ideas are converted into rules of universal application. The authors distinguish good faith as an informing principle of contract law from a general rule imposed upon every contract and from a term which the parties have expressly or impliedly adopted. They emphasise that the content of an express promise of good faith is determined by ordinary principles of construction: the ordinary meaning of the expression supplies the starting point, but the text, context and purpose of the particular bargain determine whether the promise extends beyond subjective honesty of purpose or intention.

179    In the present case, it is the provisions to which I have referred, construed in the context of the interdependent franchise and representative arrangements as a whole, which give the obligation its content: Peden, Reede and Leung at 181–186.

180    That caution is consistent with the approach taken by Allsop CJ in Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 236 FCR 199. The Chief Justice described the usual content of good faith as including honesty and fidelity to the bargain, an obligation not to undermine the bargain or the substance of the contractual benefit for which the parties contracted, and reasonableness and fair dealing having regard to the parties’ interests and the provisions, aims and purposes of the contract: (at 273 [288]–[289] per Allsop CJ). The formulation does not require one party to subordinate its legitimate interests to those of the other. Its focus is upon performance of the bargain according to its terms and purposes. As his Honour put it, good faith is “rooted in the bargain and requires behaviour to support it, not undermine it”. An earlier illustration in the franchising context is Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NSWCA 187; (2001) 69 NSWLR 558 (at 573–574 [183]–[187] per Sheller, Beazley and Stein JJA), where the Court held that broad contractual powers could not be exercised for a purpose extraneous to the contract, such as to thwart the franchisee’s contractual rights, while recognising that the franchisor remained entitled to protect its own legitimate interests.

181    The same need to keep the inquiry anchored to the bargain is apparent in the authorities concerning the Franchising Code. As Colvin J explained in Australian Competition and Consumer Commission v Geowash Pty Ltd (No 3) [2019] FCA 72; (2019) 368 ALR 441, good faith is not a general overarching obligation divorced from the matter arising under or in relation to the franchise agreement. Among the matters which may bear upon its application are honesty, arbitrariness, co-operation and the purpose for which a contractual power is exercised. RFG relies upon Geowash Pty Ltd (No 3) in submitting that the obligation precludes dishonesty, caprice, improper purpose, trickery and sharp practice, but does not convert every exercise of a broad contractual power into one requiring sufficient cause to be demonstrated to the satisfaction of a court. At the level of principle, this is common ground, as the applicants do not contend that RFG was required to sacrifice its legitimate commercial interests; their case is that RFG was required genuinely to exercise the powers which it possessed consistently with the bargain of which those powers formed part.

182    Put more completely, the determinative question can then be stated as whether, having regard to the terms, purposes and commercial setting of the Fairfield Franchise Agreement, RFG exercised the powers with which this case is concerned for purposes consistent with the bargain and with fidelity to it. Expressions such as proper purpose, absence of arbitrariness and reasonableness identify considerations which may bear upon that inquiry.

F.2    Good Faith and Discretionary Contractual Powers

183    Obviously enough, the present controversy concerns the exercise of powers of considerable breadth. Section 68(1) of the National Credit Act permitted RFG to revoke an authorisation under s 64(1) “at any time” by giving written notice to the credit representative. Clause 19.5(b)(i) of the Fairfield Franchise Agreement conferred upon RFG a discretion to terminate a Representative Agreement, and the Lubarda ACRA itself contained an express power of revocation. For the reasons explained in Section C, the consequence upon which RFG ultimately relies in relation to the Fairfield Franchise Agreement is cl 28.2(c).

184    The breadth of those powers is important in identifying the content of good faith. A court cannot replace a broad contractual discretion with a power exercisable only upon sufficient cause, substitute its judgment for that of the person upon whom the parties conferred the power, or treat the pursuit of the legitimate interests protected by a termination power as inconsistent, without more, with good faith. Nor, however, does the description of a power as broad resolve all issues of construction.

185    Peden, Reede and Leung examine honesty and proper purpose as recurring considerations in construing and applying contractual powers and discuss their connexion with the conventional obligation of co-operation: at 180–186, 200–205. Their analysis reinforces the anterior point that the inquiry remains one of construction. A power conferred in broad language is available for the purposes for which, upon the proper construction of the contract, it was conferred; broad language does not itself authorise an exercise foreign to the bargain.

186    Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd [2025] NSWCA 196 and Adventure World Travel Pty Ltd v Newsom [2014] NSWCA 174; (2014) 86 NSWLR 515 provide examples of the way in which contractual powers may be constrained by the purposes for which they were conferred. In Adventure World Travel, an express termination power was construed as subject to a proper-purpose limitation: (at 521–523 [26]–[33] per Meagher JA, McColl and Leeming JJA agreeing). Leeming JA, with whom McColl JA agreed, also regarded the conventional obligation derived from Butt v M’Donald (1896) 7 QLJ 68 at 70–71 as pointing in the same direction: (at 525 [47]). Peden, Reede and Leung discuss these authorities as demonstrating the connexion between proper purpose, co-operation and the construction of contractual powers: at 180–181, 200–205.

187    Peden, Reede and Leung helpfully explain, in discussing powers expressed to depend upon a contractual decision-maker forming an opinion, satisfaction or belief, that the specified state of mind must ordinarily be held and genuinely arrived at: at 183. They discuss Bartlett v Australia & New Zealand Banking Group Ltd [2016] NSWCA 30; (2016) 92 NSWLR 639 in that context. Such provisions therefore require a process capable of producing the contractual state of mind upon which the power is expressed to depend. Given that the powers presently in question are not expressed in those terms, it would be erroneous to transpose the principles applicable to a Bartlett-type provision and to hold that RFG was required to reach some particular state of satisfaction before it could act.

188    The present relevance of those authorities is that RFG itself, through the person acting on its behalf, had to exercise the power which RFG possessed. There is no doubt that where the exercise of such a power is governed by an express obligation of good faith, the power must actually be exercised by the contracting party honestly and for the purposes for which the bargain permits it to be exercised.

189    Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd [2019] NSWCA 87; (2019) 373 ALR 591 illustrates a related point. There, a show cause process was undertaken after the party issuing the notice had already resolved to terminate irrespective of anything which might be said in response: (at 619 [153], 620 [159]–[160] per Gleeson JA with Meagher and McCallum JJA agreeing). The conclusion of bad faith did not depend upon importing into the contract some general administrative-law requirement of procedural fairness. A process ostensibly directed to determining whether cause could be shown could not honestly be undertaken with the outcome already determined. Peden, Reede and Leung discuss the case as an illustration of the close relationship between honesty of purpose and proper purpose: at 184.

190    The distinction is important in cases, such as the present, where there is no contractual show cause procedure attaching to the powers exercised. Bundanoon Sandstone therefore does not establish that Sech and Mr Lubarda were entitled to such a procedure. Its relevance is in demonstrating why the character of the process by which a contractual power is exercised may bear upon good faith without converting contractual good faith into something analogous to public law procedural fairness.

F.3    Reasonableness and Merits Review

191    The position concerning reasonableness matters because the applicants have described their case as involving whether RFG came to “an objectively reasonable view that it should revoke the ACRAs, and whether that view was reached independently upon the information available to it”. RFG submits that objective unreasonableness is insufficient of itself to establish absence of good faith and that the Court must not undertake a merits review of Mr Bromwich’s decision.

192    I accept the substance of RFG’s submission. Good faith does not impose a general requirement that every exercise of a contractual power be objectively reasonable according to a standard selected by the Court: Peden, Reede and Leung at 187–199; also see Geowash Pty Ltd (No 3) (per Colvin J). Objective unreasonableness is not, without more, sufficient to establish absence of good faith.

193    I made a similar point in BUPA HI Pty Ltd v Andrew Chang Services Pty Ltd [2018] FCA 2033 (at [119]–[122]). The relevant inquiry is not a merits review in which the Court substitutes its assessment for that of the contractually designated decision-maker. RFG is therefore clearly correct to submit that the question is not whether, upon the material described in Section E, I would have revoked the ACRAs or whether I consider that course to have been the preferable or objectively reasonable commercial response.

194    Reasonableness may nonetheless have evidentiary significance. A decision or process which is arbitrary in operation, unexplained by the purposes for which the power was conferred, or lacking a rational connexion with the material said to inform it may support an inference concerning whether the contracting party genuinely exercised the power. Put another way, its relevance is evidentiary and does not supply an independent standard by which the Court may decide whether the contractual decision was fair or preferable.

195    This also identifies the proper way to understand that aspect of the applicants’ case I regard as open. To the extent they submit that RFG was obliged to reach an objectively reasonable conclusion as an independent legal condition of the exercise of the powers, I would not accept the proposition in that form. Their more substantial contention is that the information actually available to Mr Bromwich, his expressed concern about the absence of substantiation, the response he received and the course thereafter taken bear evidentially upon whether RFG genuinely exercised its own contractual power in good faith. That is a contention which, it seems to me, falls within the proper scope of the obligation.

F.4    The Statutory Power, the Contractual Powers and the Five-Year Bargain

196    It is next necessary to consider the relationship between s 68 of the National Credit Act, the contractual powers and the obligations of good faith. The parties’ positions narrowed considerably by final submissions. The applicants contend that s 68 is facultative: it supplies the power to revoke an ACRA but says nothing which excludes the operation of otherwise applicable contractual or statutory norms governing the conduct of RFG. They submit that s 334 does not produce a different result because neither cl 5.2 nor cl 6 avoids or modifies the effect of s 68.

197    RFG’s final position was not that s 334 rendered cl 5.2 or cl 6 ineffective. It accepted that the provisions could operate harmoniously but submitted that good faith could not be used to transform a statutory power exercisable “at any time” and a contractual discretion into powers exercisable only for sufficient cause or following a procedure which neither the statute nor the contract prescribed.

198    In the light of the way the controversy has narrowed, it is unnecessary to resolve any broader question concerning the operation of s 334. Section 68 conferred upon RFG the statutory capacity to revoke an ACRA at any time by written notice. Clause 5.2 and cl 6 did not purport to remove, avoid or modify that capacity, with the result that s 334 did not prevent those obligations from governing RFG’s conduct when it exercised the power in performing and bringing to an end a franchise relationship independently governed by obligations of good faith. To conclude that an otherwise applicable obligation of good faith governed the exercise of the power is not to deny that the power existed or to substitute a different power. The content of the obligation, and therefore the extent of the constraint it imposed in the circumstances, remains the critical question.

199    As I have already noted, the five-year term of the Fairfield Franchise Agreement forms an important part of the context in which that question is answered. The applicants submit that a bargain for a five-year franchise could not sensibly be understood as permitting RFG to bring the relationship to an end at will merely by first revoking the ACRAs. RFG answers that the five-year term was always subject to the termination machinery in the agreement and to the statutory power in s 68, and that it never promised that the franchise would necessarily continue for five years.

200    RFG rightly stresses that the five-year term did not amount to an unconditional promise that the relationship would subsist throughout that period; it fell to be read with the provisions permitting revocation and termination. Those powers took their content from the agreement as a whole, including its establishment of a commercial relationship for a specified term, the dependence of performance upon the continuance of the ACRAs, and the express requirement that the parties deal with each other in good faith. Their exercise was capable, as RFG must have appreciated, of depriving Sech of the practical means of performing the franchise and of bringing the substance of the five-year bargain to an end. The gravity and practical finality of that consequence are circumstances bearing upon what fidelity to this particular bargain required in the course by which RFG exercised them.

201    The same conclusion follows from cl 6 of the Franchising Code. RFG was entitled to protect its legitimate commercial and regulatory interests. The “sea change” I have described did not freeze the RAMS system at the standards or risk appetite which prevailed when the Fairfield Franchise Agreement was entered. Good faith did not prevent Westpac or RFG from increasing scrutiny, responding to newly perceived risks or changing the level of risk they were prepared to accept. Clause 6(6) expressly preserves legitimate commercial interests.

F.5    Reliance upon Westpac and the Exercise of RFG’s Power

202    The legal significance of Westpac’s inability to provide further material depended upon what the obligation of good faith required of RFG once its own decision-maker had identified the missing evidentiary connexion as material.

203    Contrary to some suggestions of the applicants, there was nothing in the obligation of good faith which required RFG to disregard, or give only limited weight to, Westpac’s views. Westpac was, after all, the credit provider upon which the RAMS lending business wholly depended. It had undertaken the investigation through specialist personnel with access to information and systems which RFG and the Fairfield loan writers did not possess, and its assessment of the credit, regulatory, financial crime and reputational risks presented by Fairfield was plainly capable of being a matter of very substantial importance to RFG.

204    I reject any notion that an obligation of good faith required RFG to reproduce the work of SLTF before it could take that assessment into account.

F.6    Good Faith in the Circumstances of the Decision Making

205    It follows that the remaining question of principle concerns the applicants’ contention that they should have been afforded an opportunity to address the accumulated case before their ACRAs were revoked. Again, care is required in identifying the precise legal proposition.

206    RFG points, with some force, to the fact that elsewhere in cl 28 the parties expressly provided machinery requiring notice and an opportunity to remedy particular defaults and that good faith cannot be used to write the procedural machinery of cl 28.2(a), cl 28.2(b) or cl 28.3 into provisions from which the parties omitted it. But it does not follow axiomatically, as RFG would have it, that the absence of an opportunity to respond is necessarily irrelevant to the content of a good faith obligation depending upon the circumstances. The Franchising Code expressly directs attention to whether a party co-operated to achieve the purposes of the agreement. The authorities concerning good faith similarly require attention to fidelity to the bargain and the character of the exercise of the contractual power. Again, depending upon the circumstances, the fact that a party acted upon serious adverse material without permitting the counterparty to address it may bear upon those questions, even though the contract did not create an independent procedural entitlement to be heard.

207    The distinction can be illustrated by Bundanoon Sandstone. Although that case does not, of course, establish a general right to procedural fairness, it does demonstrate that the process by which a contractual power is exercised may bear upon whether the power was exercised for its contractual purpose. Here, the relevance of RFG’s failure to seek a response from Sech and Mr Lubarda arose from the particular course of RFG’s own decision-making.

F.7     A Summary and the Question Which Remains

208    The relevant legal principles may therefore be brought together and restated to reflect the circumstances of this case as follows.

209    RFG possessed broad powers to revoke the ACRAs. Good faith did not convert their exercise into a merits review, require RFG to reproduce Westpac’s investigation, or oblige it to subordinate its legitimate commercial and regulatory interests. Nor did the five-year term guarantee continuation of the franchise notwithstanding the revocation and termination provisions.

210    Those powers were, however, exercised within a contractual relationship expressly governed by good faith and the Franchising Code. RFG was required to exercise its own powers for purposes consistent with, and with fidelity to, the bargain. In doing so, it was entitled to place substantial reliance upon Westpac. Although the absence of an express requirement to afford a hearing precludes the imposition of a free-standing procedural entitlement, the circumstances in which RFG acted (including whether Sech and Mr Lubarda had an opportunity to address the accumulated case) may bear upon the character of its exercise of the powers.

211    The decisive question is whether, upon the whole of the evidence, and especially the contemporaneous record, RFG exercised in good faith its powers to revoke the Fairfield ACRAs and thereafter pursue termination of the Fairfield Franchise Agreement. That inquiry requires attention to the information available to Mr Bromwich, the weight properly available to be placed upon Westpac’s recommendation, his request for further substantiation and the response, what may be inferred about the decision he then made, and the absence of any opportunity for Sech and Mr Lubarda to address the accumulated case before he made it. I now turn to those matters.

G    THE DETERMINATION OF LIABILITY

G.1    Timing and the Relevance of Duration

212    On 31 October 2022, RFG gave notice revoking the ACRAs pursuant to s 68 of the National Credit Act and, in the alternative, cl 19.5(b)(i) of the Fairfield Franchise Agreement; in Mr Lubarda’s case, it also relied upon the express power in his ACRA. The following day, it gave seven days’ written notice under cl 28.1(a)(i) of its proposed termination of the Fairfield Franchise Agreement, with effect from 8 November. The applicants notified a dispute on 7 November and invoked cl 28.1(c). By final submissions, RFG relied instead upon cl 28.2(c), contending that the course taken in revoking the ACRAs engaged that provision and supplied a contractual basis for termination notwithstanding the provision identified in the notice.

213    Clause 28.1(b) required seven days’ written notice of the proposed termination and the ground relied upon, while cl 28.1(c) prevented termination, following written notification of a dispute, until 28 days after the notice of termination. RFG did not ultimately treat the franchise as having terminated on 8 November. It later maintained that termination would occur at the end of 29 November and then agreed, conditionally, that termination would not take effect until the earlier of two business days after mediation or 16 December.

214    On 16 December, the applicants maintained that the purported termination was invalid and acted under protest. Clause 29 of the Franchising Code, in the form applicable to the Fairfield Franchise Agreement, also required seven days’ written notice where termination was proposed upon the ground that the franchisee no longer held a licence necessary to carry on the franchised business. Nothing presently turns upon identifying a single legally effective termination date, and I express no concluded view as to the contractual mechanism, the application of cl 29 or the date upon which any termination took effect. Those matters may affect a premise upon which loss is quantified, and I will hear the parties before settling it.

215    I should, however, reject, to the extent the suggestion remained part of the applicants’ final case, the proposition that the five-year term permitted RFG to exercise the relevant powers only upon proof of a contractual default sufficiently serious to justify termination. The term was subject to the powers described in Section C, while s 68 of the National Credit Act separately conferred upon RFG the statutory capacity to revoke an authorisation by written notice.

G.2    Five Matters the Record Establishes about RFG’s Decision

216    At the risk of some repetition, it is worth pausing to identify five matters emerging from the documents which inform my conclusion.

217    First, the significance of Mr Bromwich’s response of 5 October lies in his identification, as material to RFG’s decision, of a want of connexion between the serious potential misconduct described at a high level and the evidence said to support or link it. His question identified the deficiency which the subsequent course was required either to resolve or confront.

218    Secondly, the subsequent course did not resolve that deficiency. Westpac said that it could provide no further information and left the decision to Mr Bromwich. When he acted four days later, he recorded both his reliance upon Westpac’s assessment and the inability of the SLTF investigators to provide the evidence or details he had sought. No non-privileged evidence establishes that the evidentiary deficiency he had identified was resolved in the interval.

219    Thirdly, the documents support the narrower inference that Mr Bromwich regarded Westpac’s assessment and recommendation as sufficient for RFG to proceed notwithstanding that unresolved deficiency. That inference is independently available from the proved documentary sequence. Because Mr Bromwich was uniquely placed to explain whether the deficiency had been resolved or had otherwise ceased to matter, his unexplained absence permits the inference to be drawn with greater confidence. I do not infer that his evidence would have been positively adverse to RFG or treat his absence as supplying proof otherwise lacking. If that forensic consequence of his absence were unavailable, the documentary inference would remain.

220    Fourthly, the notice issued on 31 October 2022 records RFG’s conclusion that, in light of Westpac’s investigations and the serious concerns said to have arisen, the risks of continuing to deal with the Fairfield applicants could no longer be sufficiently mitigated. It identifies no intervening material or step by which the deficiency was resolved and therefore does not alter what the preceding documents establish about the process by which the conclusion was reached.

221    Fifthly, the documents do not establish that Mr Bromwich considered Westpac legally entitled to insist upon termination, that Westpac purported to exercise RFG’s powers, or that he formed no judgment of his own. The finding is the more confined one stated above: RFG proceeded upon Westpac’s assessment and recommendation while the evidentiary connexion which its own decision-maker had identified as material remained unresolved.

G.3    Westpac’s Recommendation and RFG’s Exercise of Its Own Power

222    It also seems to me material that in the very email communicating his decision, Mr Bromwich described SLTF as the team conducting investigations “on behalf of RAMS”. That contemporaneous characterisation indicates that he understood the investigative function as being performed for RFG. The investigators acting in that capacity were, however, unable to provide RFG’s decision-maker with the evidence or details upon which their recommendation depended. In those circumstances, there remained an obvious source from which information bearing upon at least some of those concerns could have been sought: Sech, Mr Lubarda and the relevant Fairfield loan writers.

223    I recognise, of course, that there were legal constraints upon the information Westpac could disclose, and good faith could not require either RFG or Westpac to disclose a suspicious matter report, the fact that such a report had been or was required to be made, or information from which the formation or communication of the relevant suspicion could reasonably be inferred. Internal circulation of the 5 October briefing note does not itself establish that its contents could lawfully have been communicated to Sech or Mr Lubarda, and the capacity to ask questions concerning individual applications does not necessarily establish that the aggregated 45-of-51 position could have been disclosed without engaging s 123.

224    The counterfactual must therefore be confined to information which RFG was legally permitted to communicate. The evidence permits a finding that RFG could at least have informed Sech and Mr Lubarda that revocation was under consideration because a substantial number of applications had generated unresolved concerns about the reliability and completeness of supporting information; identified, without disclosing protected suspicious-matter information, categories of concern already raised through ordinary application-level requests; and invited a response concerning Fairfield’s practices, supervision and proposed remedial measures.

G.4    Conclusion on Good Faith

225    I conclude that, in the particular circumstances, RFG did not exercise its powers in the manner required by good faith. Its decision-maker identified a want of connexion between grave concerns and the information said to support them and RFG completed its consideration of the matter while a deficiency which its decision-maker regarded as material remained unresolved.

226    The breach should be stated no more broadly. To repeat, I make no finding that Mr Bromwich acted dishonestly, capriciously or for an ulterior purpose, or that RFG was bound to reject Westpac’s assessment, undertake a separate investigation, disclose protected information or reach an objectively reasonable decision. The confined conclusion is that RFG’s completion of its evaluative process in the circumstances just described lacked the fidelity to the bargain required by cl 5.2 of the Fairfield Franchise Agreement and cl 6 of the Franchising Code.

227    As I have explained, the consequence of the decision sharpened the significance of the unresolved deficiency. That consequence did not alter the legal conditions governing the powers, but formed part of the contractual setting in which RFG proceeded while a matter identified by its own decision-maker as material remained unresolved.

228    It follows that the applicants establish their case under cl 5.2 of the Fairfield Franchise Agreement and cl 6 of the Franchising Code in the confined respect identified.

229    Two points should be made about this conclusion for the avoidance of doubt.

230    First, my conclusion rests primarily upon the affirmative inference drawn from the contemporaneous record. As I have explained, the documentary sequence itself supports the conclusion that RFG proceeded upon Westpac’s assessment and recommendation while the evidentiary connexion identified by its own decision-maker remained unresolved. Mr Bromwich’s unexplained absence neither fills an evidentiary gap nor authorises speculation about what he would have said; it permits that otherwise available inference to be drawn with greater confidence. If that use of his absence were unavailable, the conclusion would still be the same. As the High Court explained in Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345 (at 412–414 [165]–[170] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ), the controversy must be decided upon the evidence adduced, without discounting cogent evidence, altering the burden of proof or speculating about evidence which might have been called. The documents support the inference; RFG’s asserted but unproved account of Mr Bromwich’s uncommunicated reasoning does not make it disappear.

231    Secondly, the conclusion should not obscure the distinction between breach and causation. The omission to seek a response formed part of the circumstances in which RFG completed its evaluative process while the identified deficiency remained unresolved. In the counterfactual, Sech and Mr Lubarda would have had an opportunity to persuade; they were not entitled to success in the persuasion. Whether a course consistent with good faith would have caused either RFG or Westpac to alter course, and thereby produced a materially better commercial outcome, is a different question.

G.5     Unconscionability and Co-operation

232    Although the breach of contract finding makes the applicants’ alternative case unnecessary to determine, I will deal very briefly with statutory unconscionability because it was maintained (just) and the conclusion is clear. The claim goes nowhere. I am unpersuaded that the conduct which I have found to constitute a breach of good faith was unconscionable within the meaning of the statutory provisions relied upon. RFG acted in response to genuine and serious concerns raised by Westpac and was entitled to protect its own legitimate interests and to take account of its regulatory and commercial interests. The deficiency lay in the process adopted after Mr Bromwich had identified the gap in the material before him. The applicants have not come close to establishing the additional character of conduct contrary to conscience necessary for their statutory unconscionability case.

233    Nor does the implied obligation of co-operation add anything material. To the extent an obligation of co-operation was engaged, the conduct relevant to it is adequately dealt with by the express obligation of good faith.

H    CAUSATION AND LOSS

H.1    The Relevant Counterfactual

234    The conclusion just reached makes it necessary to identify with some precision the counterfactual. In Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369; (2024) 422 ALR 507 (at 705 [974]), I observed that counterfactual reasoning requires a choice as to the fact or facts to be changed and that, generally, the task is best approached by doing as little violence to the known facts as possible. Brereton J recently preferred a different formulation in Metro Environmental Logistics Pty Ltd v Newcastle Port Corporation trading as Port Authority of New South Wales [2026] NSWSC 791 (at [263]), drawing upon Lord Leggatt’s reasoning in Rukhadze v Recovery Partners GP Ltd [2025] UKSC 10; [2026] AC 209 (at [163]). His Lordship stated that the hypothetical scenario is constructed by changing the defendant’s conduct to the minimum extent necessary to achieve compliance with the duty.

235    With respect, I do not understand there to be any material difference between the two formulations. The latter is not understood to carry the implication that the actual world is thereafter to be treated as evidentially insubstantial. Lord Leggatt’s formulation identifies the necessary first step. The Court must identify the particular duty breached and the conduct constituting that breach and then alter that conduct no further than is necessary to produce lawful performance. But the correlative proposition is supplied by Lewis v Australian Capital Territory [2020] HCA 26; (2020) 271 CLR 192 (at 261–262 [178]–[180] per Edelman J). The counterfactual directs the Court to change one thing at a time. The change is the removal of the wrongful act, and no other fact or circumstance is changed save those constituting the wrong. That discipline prevents the compensatory inquiry from attributing to the breach consequences generated by further, adventitious changes to history.

236    The respective formulations therefore address opposite sides of the same inquiry. Rukhadze identifies what must be changed; Lewis identifies what must ordinarily remain fixed (and the expression used in Lehrmann describes the same logical restraint). A counterfactual necessarily departs from reality, but only to the extent required to remove the wrong.

237    The counterfactual therefore does not remove the Phase 2 Fairfield Investigation, Westpac’s accumulated concerns, or the heightened scrutiny of Fairfield applications. It changes only the conduct constituting the breach. Before deciding whether to revoke the ACRAs, RFG informs Sech and Mr Lubarda, to the extent lawfully possible, of the substance of the accumulated concerns, gives them a reasonable opportunity to respond, and genuinely considers that response. Westpac remains entitled to form and act upon its own view of Fairfield risk and to determine the conditions upon which, if at all, it will provide credit for Fairfield-originated applications.

238    The applicants advanced their loss case in several related ways. They contended that they lost the benefit of continuing to operate the franchise for the balance of the term, an opportunity to seek an extension or renewal, and, alternatively, the Due Process Opportunity, being the opportunity to have the Westpac Recommendation assessed by RFG in accordance with the obligations upon which they relied. The last formulation corresponds with the breach I have found. It focusses upon the consequences of the omitted process, rather than assuming that the removal of that omission would also eliminate independent concerns or compel a different commercial outcome.

H.2    The Applicants’ Case as to the Value of the Opportunity

239    The applicants stress that the Phase 2 investigation identified anomalies and matters requiring further inquiry, but did not demonstrate misconduct by Mr Lubarda and, on their analysis, demonstrated little misconduct by the Fairfield loan writers. They rely upon the detailed explanations given by Mr Lubarda in his second affidavit, the parties’ schedule recording their competing positions on the sampled loan files (Scott Schedule), and the evidence elicited from Mr Gerritsen concerning particular applications. They also emphasise that the RAMS credit team had approved 21 of the 41 applications in the Scott Schedule. As I have said, it is unnecessary to determine each disputed anomaly: the liability conclusion turns upon the material available to RFG when it acted, while the causation inquiry requires an assessment of whether the accumulated concerns were capable of a response that might have produced a commercially useful continuation.

240    It is sufficient to note that the applicants submit that the Due Process Opportunity was of real value and that a reasonable franchisor, presented with the information produced by Phase 2 and Mr Lubarda’s explanations, would not have terminated the franchise but would have addressed any residual risk by changes to the Lending Guidelines, further training or other remedial measures. They rely in this regard upon Mr Bromwich’s later reference, on 18 November 2022, to training and process changes. Because that material post-dated the 14 October decision, it may bear upon the counterfactual or his later understanding, but not upon the factual basis available when the decision was made. The applicants say that, for present purposes, it is enough that there was a material possibility that the franchise rights would not have been lost in November 2022.

241    There is force in part of that submission. The material before the Court demonstrates that several matters which appeared anomalous under the intensive scrutiny applied by the SLTF did not establish misconduct by a Fairfield loan writer. As emerged as common ground, some depended upon information or investigative techniques which were not available to the loan writer when the application was prepared. The retrospective explanations given by Mr Lubarda are not all without substance. Had the accumulated concerns been put to him contemporaneously, there is a real possibility that he could have provided explanations concerning at least some of them, proposed changes to practices, accepted further supervision or training, or otherwise sought to persuade RFG that immediate revocation was unnecessary.

242    That is why, after some reflection, I do not accept RFG’s submission that the opportunity was worthless. It is not fanciful nor wholly speculative to suppose that a proper process could have resulted in immediate revocation being deferred or avoided for some period.

243    But the applicants’ submission then travels significantly too far. It tends to equate an ability to answer allegations of misconduct by individual loan writers with an ability to remove the problem which confronted Westpac. Those were not the same thing. What the Phase 2 investigation disclosed, on the applicants’ own case, was a risk that a significant proportion of applicants might be submitting inaccurate information in support of loan applications. Even if Mr Lubarda could demonstrate that a loan writer had acted consistently with the Lending Guidelines and could not reasonably have detected a particular anomaly, that did not require Westpac to disregard what its more intensive investigation had revealed about the risks associated with business coming through the Fairfield channel.

244    The reliance upon the earlier approval of applications by the RAMS credit team encounters the same difficulty. It assists the applicants in resisting an inference that the mere presence of a later-detected anomaly established misconduct by the loan writer. It has considerably less force in predicting Westpac’s future conduct. The Front Book Review was deliberately more intensive than the ordinary credit process and drew upon information and investigative techniques which were not part of the historical assessment of applications. The fact that an application had survived the earlier process did not oblige Westpac to disregard a risk subsequently identified.

245    I also do not accept the applicants’ proposition that the proper counterfactual assumes that a reasonable franchisor, having received Mr Lubarda’s responses, would not have contemplated termination and would instead have adopted training or modifications to the Lending Guidelines. That assumes too much about the substantive outcome of the process which should have occurred. The breach I have found required a meaningful opportunity to answer the accumulated case and genuine consideration of that answer, but it did not require RFG to be persuaded by the answer. Plainly, it remained entirely open, consistently with good faith, for RFG to conclude after that process that the ACRAs should be revoked.

H.3    Westpac’s Likely Position

246    By the time of the breach, Westpac’s considered position was strongly adverse to Fairfield for reasons which existed independently of RFG’s failure to afford the Due Process Opportunity. I do not accept RFG’s submission that cessation of Fairfield-originated business was near enough to certain (because Westpac had not made or communicated a formal and irrevocable decision) but its recommendation and the surrounding evidence make continued heightened scrutiny highly likely.

247    RFG’s alternative submission is, however, compelling. Even if Westpac did not impose an absolute prohibition upon Fairfield-originated applications, there is every reason to conclude that the heightened scrutiny would have continued. Nothing in the response which Fairfield might have made to RFG would have deprived Westpac of its entitlement to maintain that scrutiny, and nothing in the evidence suggests that Westpac was likely in the short term to restore Fairfield to the ordinary processing arrangements which had previously applied.

248    The practical consequences were substantial. As we know, as at 30 September, only two of 46 reviewed applications had been allowed to proceed to approval. The 5 October briefing note recorded concerns or potential anomalies in 45 of 51 applications reviewed between 1 August and 30 September. By 15 November, six of those 51 applications had been approved, two had been declined and 43 remained deferred. RFG’s rhetorical observation that “two loan applications approved in two months is not a business” overstates the matter as a finding, because deferred applications were not necessarily incapable of eventual approval, but it identifies a real commercial difficulty. A franchise operating under those conditions was a materially different and much less valuable business from one whose applications proceeded through the ordinary credit process.

249    The failure of Fairfield loan writers to answer, or answer fully, many application-level requests weighs against the likelihood of a comprehensive response. As I have explained, however, its force is limited because an inquiry about an individual loan carried a different incentive from notice that the franchise itself was at risk.

H.4    Subsequent Events and the Likely Duration of Any Continuation

250    Subsequent events may shed light upon what probably would have occurred in the counterfactual in which the proper process had been followed.

251    The evidence does not disclose a subsequent softening of Westpac’s concerns. RFG relies upon the subsequent GI conclusion concerning Mr Lubarda’s oversight, the grey-listing of Fairfield loan writers from 2 November and the consideration of a Back Book Review in circumstances where an initial sample of 13 settled applications had each produced matters warranting further questions. The applicants object that later and unparticularised suspicions could not be used to establish misconduct or fitness and that they had not been afforded a proper opportunity to meet such allegations. Consistently with that objection and with the limitations upon the use of the evidence, I do not treat those matters as proof of misconduct or as independent grounds justifying termination. I use the GI conclusion and the results recorded from the sample only as evidence of the assessments subsequently made within Westpac and of the likelihood that its adverse position would persist. So understood, those matters do not demonstrate that the course implemented from late October 2022 was inevitable, but they make it far less likely that a response by the applicants would have restored a stable commercial relationship in which Fairfield could operate on anything resembling its previous footing.

252    There is a further temporal limitation upon the continuation of the historical RAMS business model. The Fairfield Franchise Agreement was due to expire in December 2026, but RAMS ceased accepting new home loan applications on 6 August 2024. The RAMS loan book was sold in November 2025, with completion occurring in August 2026. The cessation of new originations necessarily limits the value of the counterfactual business after August 2024, but it does not, without more, resolve the possible relevance of trail commissions or other rights attaching to loans already written. That matter may be irrelevant, but it was not the subject of detailed submissions at the initial trial, and it is neither necessary nor appropriate to determine it now.

253    If the proceeding does not settle, I will hear the parties as to the relevance of any residual value attaching after August 2024 when considering the terms of any reference, or other procedure, by which quantum is to be determined. The applicants’ separate contention that RFG might have obtained alternative Approved Products, or permitted Fairfield to obtain them, stands differently. The evidence does not establish a real, as distinct from highly speculative, possibility that any such products would have been approved and made commercially available to Fairfield after August 2024. I therefore reject that aspect of the damages case.

H.5    Extension or Renewal

254    In the light of the above, the ambitious claim based upon an opportunity to seek an extension or renewal beyond the existing term is misconceived (and can be dealt with shortly).

255    Any consideration of renewal would have arisen as the term approached expiry in December 2026. By then RAMS had been closed to new home loan applications for more than two years and the loan book had been sold. Quite apart from the history of Fairfield, there would have been no continuing new-home-lending franchise of the kind contemplated by the Fairfield Franchise Agreement to renew.

H.6    The Due Process Opportunity

256    It follows that the remaining question is the value of the Due Process Opportunity and the compensable loss is the value of the opportunity for a better economic outcome which the proper process afforded.

257    The applicants bear the onus of proving, on the balance of probabilities, that RFG’s breach caused the loss of an identified commercial opportunity and that the opportunity possessed real and non-negligible value. That inquiry is anterior to valuation. It is not enough to identify a merely conceivable course of events; nor is it necessary to prove that the beneficial outcome itself would probably have occurred. Despite some apparent suggestion in submissions to the contrary, Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17; (2024) 281 CLR 39 supplies no presumption that such an opportunity existed. Its relevance is confined to the treatment of evidential uncertainty produced by breach: once causation and compensable loss are proved, uncertainty occasioned by the wrong is not necessarily an answer to assessment.

258    I am satisfied on the balance of probabilities that RFG’s breach caused the loss of such an opportunity. It was real and possessed more than negligible value because there was a genuine prospect that a meaningful response would have caused immediate revocation to be avoided or deferred and Fairfield to continue for some commercially useful period. Once the loss of an identified opportunity of some value is proved, its value is assessed by reference to the probabilities and possibilities bearing upon its realisation: Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 (at 348, 355 per Mason CJ, Dawson, Toohey and Gaudron JJ, 364–368 per Brennan J); Badenach v Calvert [2016] HCA 18; (2016) 257 CLR 440 (at 454–455 [39]–[41] per French CJ, Kiefel and Keane JJ); Berry v CCL Secure Pty Ltd [2020] HCA 27; (2020) 271 CLR 151 (at 174–175 [36] per Bell, Keane and Nettle JJ).

259    That conclusion rests upon several features of the evidence. A number of anomalies did not establish loan-writer misconduct; Mr Lubarda demonstrated that he could have provided substantive explanations concerning a number of matters; RFG had not itself concluded, before the Westpac Recommendation, that the franchise must be terminated; Mr Bromwich initially sought further information rather than immediately acting upon the recommendation; and a meaningful response might rationally have led to further inquiry, training, changes in practice, additional controls, conditional continuation, or a period of continued operation while the position was assessed.

260    The opportunity was, however, of quite limited value. Westpac’s concerns were genuine and serious; its attitude towards Fairfield had become strongly adverse independently of RFG’s breach; it was entitled to maintain heightened scrutiny whatever response the applicants made to RFG; and that scrutiny had already had a profound effect upon the progression of Fairfield applications. A significant number of individual requests for further information had not been satisfactorily answered, subsequent events revealed no material softening in Westpac’s position, and any continuation was temporally confined by the closure of the RAMS channel for originating new home loans in August 2024 (subject to the separate issue whether rights attached to the pre-existing book continued to carry residual value thereafter).

261    It is no doubt already apparent that I am wholly unpersuaded by the applicants’ contention that the lost opportunity should be valued by reference to an ordinary Fairfield franchise continuing for the balance of the term, subject only to conventional contingencies. Any business surviving the proper process would have remained subject to heightened scrutiny, with a correspondingly impaired capacity to generate new lending revenue.

262    The evidence therefore leaves a real, though limited, possibility that a proper response would have caused RFG to defer revocation, seek further information, impose conditions or permit Fairfield to continue while the concerns were addressed.

H.7    Assessment of the Chance

263    Having found that the breach caused the loss of an identified commercial opportunity of more than negligible value, the remaining task is one of valuation. That task is undertaken by informed estimation, having regard to the probabilities and possibilities disclosed by the whole of the evidence. It does not admit of spurious mathematical exactness: Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 (at 639–640 per Brennan and Dawson JJ, 640–643 per Deane, Gaudron and McHugh JJ); Sellars (at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ, 368 per Brennan J); Berry (at 174–175 [36] per Bell, Keane and Nettle JJ). As I observed in Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; (2019) 377 ALR 234 (at 327 [368]), the expression of such an evaluative conclusion as a percentage may give it a patina of precision which the underlying evidence does not warrant. The percentage is a means of stating the result of an evaluative exercise, not a representation that the exercise is somehow arithmetical.

264    The considerations identified above support a probability within the range of 10% to 15% that the proper process would have produced a commercially useful continuation of Fairfield under heightened scrutiny. The matters supporting a chance at least at the lower end of that range are that some anomalies were capable of explanation, Mr Lubarda could have proposed remedial measures, RFG had not independently resolved upon revocation before the Westpac Recommendation, and Mr Bromwich initially sought further information rather than acting immediately. The matters which prevent any higher assessment are Westpac’s already adverse position, the small proportion of applications progressing under heightened scrutiny, the number of unanswered application-level requests, the likelihood that heightened scrutiny would continue, and the later closure of the RAMS new-origination channel. Those competing considerations do not admit of further differentiation.

265    I assess that probability at 12.5%. Having concluded that the appropriate evaluative range is 10% to 15%, and the evidence supplies no principled basis for placing the chance nearer either boundary of that range, I adopt its midpoint. The 12.5% represents the probability that, had the proper process been followed, Fairfield would have continued for a commercially useful period. But it does not measure what the business would have earned during that continuation.

266    Quantum must therefore be assessed by first determining the value of Fairfield’s performance in the counterfactual identified above and then applying the 12.5% probability once to that value. The counterfactual valuation must proceed upon the premises that heightened scrutiny continued, Fairfield’s capacity to originate business was impaired, and new RAMS home-loan originations ceased by August 2024 (while leaving for determination the reserved question of any residual value thereafter attached to the pre-existing loan book). Once those matters have been reflected in the counterfactual valuation, they must not be used again to impose a further undifferentiated discount.

I    CONCLUSION AND RELIEF

267    The applicants have therefore been vindicated on part of their case.

268    The breach caused the applicants to lose an identified commercial opportunity of non-negligible value: the opportunity that proper process would have produced a commercially useful continuation of the franchise under heightened scrutiny. I assess the probability of that counterfactual occurring at 12.5%.

269    These conclusions leave unresolved the operation of cl 28.1(c) following the applicants’ notice of dispute, the application and consequence of cl 29 of the Franchising Code, the date and contractual mechanism by which any termination took effect, the form of relief, and the monetary valuation of the limited opportunity which was lost.

270    The parties will have the opportunity to make oral submissions as to whether it is appropriate or useful for the Court now to make a declaration recording the contravention of the obligation of good faith and, if so, as to its precise terms. There may be utility in a declaration which records the confined nature of the breach, but I would prefer to hear the parties before settling its terms. It may also be preferable to defer declaratory relief until all final orders are made, thereby avoiding any unnecessary bifurcation of any appeal.

271    My preliminary view is that costs ought to follow the event and the applicants should have their costs of the initial trial. They have established a breach upon which their entitlement to relief depends and that it caused the loss of an opportunity of some value. That said, these reasons demonstrate that many costs have been incurred by both parties unnecessarily and the applicants’ success on causation is substantially more limited than the case they advanced. Those (and other) considerations may bear upon the form of any costs order (including any communications which are now admissible under s 131(2)(f) of the Evidence Act 1995 (Cth)). I will hear the parties before making any costs order.

272    There is then the question of how the remaining monetary exercise should be undertaken. The parties have already incurred very substantial costs in these proceedings. The amount ultimately recoverable is likely to be very modest when compared both with those costs and with the further costs which would be generated by a conventional contested hearing involving competing expert evidence directed to the quantification of the lost opportunity.

273    In those circumstances, this is a case which cries out for an attempt to resolve the remaining dispute by agreement. I propose to order that the parties participate in a mediation before further substantial steps are taken towards a hearing on quantum (being a mediation conducted by a senior, experienced mediator and to be attended, in person, by Mr Lubarda and a sufficiently senior representative who can make decisions on behalf of RFG).

274    The parties are now in a materially better position to assess their respective interests at that mediation because the principal uncertainties concerning liability and causation have been resolved. I entreat the parties to approach the mediation, and any preceding discussions, with a sober appreciation of what remains at stake.

275    If the mediation does not result in a resolution, the proceeding should return for case management. Subject to hearing from the parties, my present inclination is that the remaining valuation exercise may be more efficiently undertaken, at least in the first instance, by a referee rather than by immediately fixing a further trial.

276    The remaining monetary exercise is to assess Fairfield’s counterfactual financial performance under continued heightened scrutiny and then to apply the 12.5% probability once to that conditional value. If the matter does not settle, the parties may address the possible residual value when the Court settles the terms of any reference or other procedure for determining quantum.

277    If a reference is to be made, the preferable course would be for the parties first to confer and seek to agree upon the questions to be put to the referee and for those questions to be settled by the Court. The questions should be framed to require the referee to faithfully apply the findings in these reasons. Obviously enough, they will not provide an occasion to reopen whether the applicants would have been subject to heightened scrutiny, whether there was a valuable renewal opportunity, the percentage chance I have assessed, or the other matters determined in Section H.

278    I will list the matter on a convenient date within the next fortnight to consider agreed or competing short minutes addressing whether declaratory relief should now be granted and, if so, its form; the costs of the initial trial; arrangements for a mediation to occur as soon as practicable; and the procedural course to be adopted if the mediation is unsuccessful, including whether the remaining question of quantum should be referred to a referee. I will also hear submissions as to whether, when and how I ought to determine whether an effective revocation enlivened cl 28.2(c) of the Fairfield Franchise Agreement; the operation of cl 28.1(c) following the applicants’ notice of dispute; the application of cl 29 of the Franchising Code to the notice of 1 November 2022; and the precise date upon which any termination took effect.

Associate:

Dated: 6 October 2026