SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2016 0032

LENA ANNIKA ANDERSON	Applicant	
		
v		
		
WESTPAC BANKING CORPORATION
(ABN 33 007 457 141)	Respondent	

S APCI 2017 0130

LENA ANNIKA ANDERSON	Appellant	
		
v		
		
WESTPAC BANKING CORPORATION
(ABN 33 007 457 141)	Respondent	

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JUDGES:	McLEISH, NIALL and ASHLEY JJA	
WHERE HELD:	MELBOURNE	
DATE OF HEARING:	15 June 2018	
DATE OF JUDGMENT:	5 September 2018	
MEDIUM NEUTRAL CITATION:	[2018] VSCA 226	
JUDGMENT APPEALED FROM:	[2016] VCC 119 (Judge Cosgrave)
[2017] VCC 1519 (Judge A M Ryan)	

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CONTRACTS – Construction – Loan agreements between appellant and bank secured by mortgage over real property – Appellant failed to pay amounts to owners corporation – Bank paid owners corporation and debited amounts from loan account – Whether bank entitled to debit amounts before asking appellant for payment – Whether appellant was in default of loan agreements and mortgage by reason of failure to pay owners corporation.

UNCONSCIONABLE CONDUCT – Bank received demand from owners corporation for unpaid amounts in respect of secured property owned by appellant – Bank paid owners corporation and debited amounts from appellant’s loan account without notice – Whether bank’s conduct inconsistent with conduct in similar transactions – Whether breach of Code of Banking Practice 2013 – Whether bank failed to properly investigate appellant’s complaint – Whether bank acted unfairly in proceedings for debt and possession – Australian Securities and Investments Commission Act 2001 (Cth) s 12CB.

PRACTICE AND PROCEDURE – Leave to appeal – Where points in proposed grounds of appeal not raised before trial judge – Where success on proposed grounds would not impugn orders made by trial judge.

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APPEARANCES:	Counsel	Solicitors	
			
For the Applicant /Appellant	In person	---	
			
For the Respondent	Mr S D Hay	Gadens Lawyers	

McLEISH JA
niall ja
ASHLEY JA:
1	There are two proceedings before the Court.  The first is an appeal brought on three grounds, and an application for leave to appeal on a further six proposed grounds, from a decision of a judge of the County Court ordering judgment for the respondent, Westpac Banking Corporation (‘Bank’), against the appellant in the sum of $309,622.14.  The judge found that the appellant was indebted to the Bank in that amount under two loan agreements secured by a registered mortgage over a residential unit owned by the appellant.  The second proceeding, which the parties agree must abide the outcome in the first, is an application for leave to appeal from an order of Judge Cosgrave granting the Bank possession of that property.  
2	 The appellant was required to repay the loans and interest by monthly instalments.  The appellant stopped making repayments to the Bank in May 2014.  The Bank subsequently issued a default notice but she has made no further repayments. 
3	In answer to the Bank’s claim in debt, the appellant said that her failure to remedy the default was due to the conduct of the Bank in making a debit to her account which was the subject of a counterclaim brought by her in the County Court debt proceeding.     
4	As will become apparent, the appellant had no defence to the Bank’s claim: the appellant owed amounts to the Bank under the loan agreements that she has failed to pay.  Further, the judge correctly dismissed the appellant’s counterclaim.  
5	The appellant’s further six proposed grounds of appeal have no prospect of success and, for that reason, leave to appeal on those grounds should be refused.
	The facts
6	The following facts are drawn from the reasons for judgment of the County Court judge in the debt proceeding.  
	The loan agreements and mortgage
7	The appellant entered into two loan agreements on 21 January 2009.  The first loan agreement was a ‘no deposit home loan’ in the sum of $168,000 with a fixed interest rate.  The second loan agreement was a ‘no deposit home loan’ in the sum of $112,000 with a variable interest rate.  The term of each loan was 23 years.  
8	The loans were secured by a registered first mortgage over a residential unit (‘property’) which the appellant purchased using the moneys advanced under the loans.  The property was one of three units and certain common property, mainly comprising a shared driveway, was managed by an owners corporation.  
	Amounts claimed by the owners corporation
9	The judge’s reasons record a long-running history of conflict between the appellant and the owners corporation and its manager, Jeffrey E McLean & Co Pty Ltd (‘manager’).  That conflict resulted in two proceedings in the Victorian Civil and Administrative Tribunal (‘VCAT’).  
10	The first proceeding was brought by the owners corporation to recover unpaid fees.  On 26 July 2011, VCAT ordered the appellant to pay outstanding fees in the sum of $1,243.02 plus costs of $650.  These sums were paid by the appellant.
11	The second VCAT proceeding was brought by the appellant on 11 July 2011, alleging misconduct on the part of other lot owners, the manager, and a former manager engaged by the owners corporation.  It appears that this proceeding was protracted and expensive to run.  On 12 July 2012, at an annual general meeting of the owners corporation, the members present passed an interim special resolution raising a special levy of $12,000 per lot to cover the owners corporation’s costs in defending the proceeding.  The appellant was not present at that meeting.  Subsequently, the owners corporation demanded that the appellant pay the special levy which the appellant refused to do.
12	VCAT subsequently dismissed the appellant’s application and ordered the appellant to pay the owners corporation’s costs.  These costs were subsequently taxed in the Supreme Court in the sum of $10,325 and an order to that effect issued (‘costs order’).
	The disputed debit
13	On 25 February 2014, LMS Lawyers, acting on behalf of the owners corporation, wrote to the Bank in the following terms:
Please be advised that the Owners Corporation has obtained a Supreme Court of Victoria Costs Order against your client, the Mortgagor.  The Costs Order was made on 24 September 2013 in the amount of $10,325.00.  We enclose a copy of the said Order for your reference.
Please be advised that, as at the date of this letter, a Supreme Court Warrant of Seizure of Sale is in the process of being executed against your client’s real property … as a result of the Costs Order.
Unpaid Owners Corporation Fees
Furthermore, the Mortgagor, in her capacity as a lot owner has failed, omitted and or refused to pay the Owners Corporation fees, levies and charges.  Pursuant to section 28 of the Owners Corporation Act 2006 (Vic) … your client has an obligation to pay all outstanding fees, charges, contributions or amounts owed to the Owners Corporation for the lot in question.
The amount that is owed to the Owners Corporation by your client is presently $12,044.68.  This is comprised of unpaid Owners Corporation’s fees, interest and does not include the amount of the Costs Order.  We enclose the Owners Corporation Final Fee Notice dated 7 February 2014 for your reference.  
We are also instructed that the Owners Corporation is currently facing financial difficulties in respect of complying with its statutory obligations, including paying for appropriate insurance.
As this property is currently subject to the above mortgage, we write to put the bank on notice and would be pleased to know whether the bank intends to take any action having regard to the circumstances.
On account of the above matter, we put you on notice, that unless a payment of $22,369.68 is made within fourteen (14) days of the date of this letter, being 11 March 2014, the process of execution of the Warrant will continue.
…
14	By that letter, the owners corporation made three essential points: the appellant had failed to pay amounts to the owners corporation that were past due; the appellant owed the owners corporation $10,325 pursuant to the costs order; and the owners corporation had taken steps for recovery of these amounts by issuing a warrant for seizure and sale of the property which it intended to execute.  
15	Following receipt of that letter, but without recourse to the appellant, the Bank paid to the owners corporation the sum sought ($22,369.68) and debited that amount to the appellant’s first loan account (‘disputed debit’).  The balance of that account thereby increased from $149,320.71 to $171,069.39, but there was no alteration to the monthly repayments required to be made under the loan.  There was no change to the position of the second loan account.
16	The judge recorded that the Bank did not contact the appellant between receiving the letter from LMS Lawyers and making the disputed debit.  The evidence of Mr Curtis, called for the Bank, was that, as at 3 March 2014, the Bank’s collections area did not contact a customer when they made drawings on the customer’s account to pay rates, land tax or owners corporation fees.  He testified that the practice had changed since that time and the customer would be contacted by letter and telephone call regarding the proposed debit. If no response was received, a follow-up letter would be sent.
	Subsequent correspondence and the appellant’s complaints
17	The appellant discovered the disputed debit on 21 April 2014, some weeks after it was made.  She rang the Bank to complain and also lodged an online complaint.  In her online complaint, she stated that there was a warrant issued for $11,082.03 on 14 February 2014.  She claimed that the warrant was the subject of a police investigation on the basis that the owners corporation’s costs had already been paid by an insurer and therefore the claim was fraudulent.  She asked the Bank to repay the disputed debit and adjust interest accordingly.  A short time later, the appellant lodged a complaint with the Financial Services Ombudsman (‘FOS’).
18	The Bank responded to the appellant on 30 April 2014 advising that it was entitled to make the disputed debit by reason of cl 27 of the loan agreement.  The Bank said that it had paid the owners corporation in order to preserve the property from being seized and sold.  The Bank declined to reverse the disputed debit.  
19	On 5 May 2014, the appellant wrote to the Bank in the following terms:
1. 	The Supreme Court Taxation Order/Sheriff’s warrant for $11,082.03 is INCLUSIVE of the costs in the Fee Notice. A copy of the Warrant is attached. While the Order that gave rise to this is the subject of a police investigation it is accepted that this amount could legally have been deducted from my account on the basis that a warrant existed to seize property of this value. As the mortgagee however I should have been notified. In this case I would then have applied for an injunction until the police investigation was finalized. It should always have been my decision as to how these costs were paid.
…
20	On 6 May 2014, the appellant lodged a second complaint with the FOS in which she advised that she would place her mortgage repayments in a separate account outside the Bank until the matter was investigated.  On 18 May 2014, as foreshadowed, the appellant failed to pay the monthly repayments due under the first and second loan agreements and has not made any repayments since.
21	On 10 June 2014, the Bank wrote to the appellant reiterating its position that it was entitled to make the disputed debit.  It referred to cls 2, 17.3(a), 18.4 and 19 of the Memorandum of Common Provisions (‘MCP’) (which forms part of the mortgage).  In that letter, the Bank encouraged the appellant to recommence repayments if possible and indicated that it would be ‘happy to assess’ if she required financial assistance.
22	On or about 2 July 2014, the appellant received a notice of default from the Bank which was later withdrawn as the dispute was still under investigation by the FOS.  On the same day, the FOS reported to the appellant and the Bank that it was not apparent that the appellant’s claim could be made out and that it had therefore decided to cease consideration of the dispute.  The FOS subsequently determined that it would be appropriate for the dispute to proceed to an Ombudsman Determination and, to this end, sought further information from the Bank.
23	The Bank wrote to the FOS on 12 September 2014 and described the lack of notice to the appellant as a one-off processing error.  The Bank indicated that the normal process in respect of enforcement costs was that the Bank put the account into arrears which initiated contact to the customer by phone and email.  The Bank said it wished to resolve the dispute and agreed that it would have been polite to contact the appellant when it received the letter from LMS Lawyers.  The Bank went on to say that it was happy to help the appellant to bring her arrears up to date and was open to considering interest adjustments on the extra interest incurred while payments had not been made as a gesture of goodwill.
24	On 26 October 2014, the appellant wrote to the FOS expressing concerns about its processes and its independence from the Bank.  On 28 October 2014, the appellant sent an email to the FOS, copying in the Bank, withdrawing her dispute with the FOS due to what she said were unreasonable delays in providing a determination.  In separate correspondence, she informed the Bank that she had lodged a complaint with the Australian Securities and Investments Commission and invited the Bank to institute default action so that she could lodge a formal counterclaim for her losses.
25	On 31 October 2014, the Bank emailed the appellant noting that the case with the FOS was closed and that the Bank could commence collection activity.  
26	On 14 January 2015, the Bank served a default notice on the appellant which required her to remedy the default by 21 February 2015, failing which she would be liable to pay the Bank all money secured by the mortgage without further notice.
	The County Court proceeding
27	On 30 March 2015, the Bank filed a writ in the County Court seeking possession of the property.  The Bank brought a summary judgment application, which was dismissed on 17 August 2015.
28	On 15 October 2015, the Bank reversed the disputed debit together with interest on that amount in the sum of $1,768.25.  This was done without an admission of liability or wrongdoing.  Following the reversal, the Bank amended its pleading to include a claim for debt in addition to the order sought for possession.  On 16 October 2015, the Bank filed a second application for summary judgment seeking possession and judgment on the debt claim.  
29	On 1 March 2016, Judge Cosgrave made an order for possession in favour of the Bank, but declined to make an order in respect of the debt claim and otherwise dismissed the application.  The possession order is the subject-matter of the second proceeding before this Court.  The money judgment which is the subject-matter of the first proceeding was entered following trial by a different judge in 2017.
30	Before turning to the debt claim, it is convenient to consider the relevant terms of the loan agreements and mortgage (together, the ‘loan documentation’).
	The loan documentation
31	The terms and conditions of the two loan agreements were contained in a document entitled ‘Residential Loan Agreement General Terms and Conditions’ with an effective date of 21 July 2008.  
32	Clause 5 of that document provided as follows:
What you must pay
You must:
•	repay all amounts you borrow from us, and you must also pay us:
•	interest charges;
•	any default interest charges;
•	our fees and charges and government charges; and
•	enforcement expenses under clause 27.
You authorise us to debit these amounts to your loan account. We may do so on or after the date we pay them or the date they become due or payable by you or us (whichever is earlier).
You must pay all amounts due under this loan agreement in full without setting off amounts you believe we owe you and without counterclaiming amounts from us.
33	Clause 27 provided:
Enforcement expenses may become payable under this loan agreement and under any security in the event of a breach.
You must pay us, when we ask, any reasonable expenses we reasonably incur in enforcing this loan agreement or a security after you are in default (including in the case of a mortgage security, expenses incurred in preserving and maintaining the property such as by paying insurance, rates and taxes for the property). We may debit these expenses to your loan account so that they are included in the balance owing on your loan account. We do not have to tell you first.
34	The circumstances of default were dealt with in cl 28, relevantly in these terms:
When are you in default?
You are in default if:
• 	you do not pay on time all amounts due under this loan agreement or any security; or
•	you do something you agree not to do, or don’t do something you agree to do under this loan agreement; or
…
•	you are, or a person other than you who provides a security is, in default under a security or withdraws from it; or
…
35	Clause 29 related to default and provided that the Bank may give a notice stating that the borrower is in default.  Unless the default is corrected within the period set out in the notice or required by law then, at the end of the period and without further notice, the total amount owing becomes immediately due for payment (to the extent it is not already due for payment).  The Bank may then take action to recover that amount or enforce any security, or do both.
36	The MCP was incorporated into the mortgage and imposed further obligations on the borrower.  Relevantly, the MCP provided that:
Rates, taxes and levies
2. 	You must pay on time all amounts for which you are liable as owner of the property, including rates, taxes and shared scheme levies.
Shared scheme was defined as follows:
Shared scheme means each scheme or plan regulated by a shared scheme law that affects the property. Examples of properties which are often part of a shared scheme are strata or stratum title home units and town houses and properties in integrated developments.
37	Clause 3.2(b) imposed an obligation on the borrower to comply with all laws and requirements of authorities and other obligations in connection with the secured property.  
38	Clause 17 of the MCP dealt with costs, indemnities and interest.  Clause 17.3 was in these terms: 
You indemnify us against, and you must therefore pay us for, liability, loss or costs (including consequential or economic loss) we suffer or incur:
(a)	if you default under this mortgage (in which case you will also be liable for any loss arising because we require repayment of the amount owing earlier than its due date); or
(b)	in connection with the property or our monitoring of works.
39	Clause 18 dealt with the things that the Bank may do at any time and included cl 18.4 which said:
We may do anything which you should have done under this mortgage but which you have either not done or in our opinion have not done properly. If we do so, you must pay our expenses in accordance with clause 17 or 21.
40	In terms that corresponded with cl 28 of the loan agreements, cl 19 of the MCP set out the acts of the borrower that constitute a default under the mortgage including where ‘you do something you agree not to do, or you don’t do something you agree to do, under this mortgage or an agreement covered by this mortgage’.
41	Clause 20 related to the powers of the Bank in respect of its entitlement to take action consequent upon a default.  Clause 21 provided that:
When we ask, you must pay us the reasonable expenses we reasonably incur in enforcing this mortgage after you are in default (including in preserving and maintaining the property — such as by paying insurance, rates and taxes for the property). This applies to expenses we incur before or after taking action under clause 20.
	The parties’ pleadings
42	By its amended statement of claim, the Bank pleaded that the appellant had failed to pay instalments due under the mortgage and the loan agreements and had failed to remedy the default.  As a consequence, the full amount owing under the loan agreements had become due and payable and the Bank was entitled to possession of the property.
43	By her further amended defence and counterclaim, the appellant admitted entering into the loan agreements and admitted that she had received the default notice.  She admitted that she had not remedied the default, but pleaded that this was due to the conduct of the Bank which was the subject of her counterclaim.  
44	By her counterclaim, the appellant pleaded that the Bank had unilaterally withdrawn the sum of $22,369.68 without notice or consent.  She pleaded that the Bank was not entitled to make the disputed debit under cl 27 of the loan agreement or cl 17 of the MCP because she was not in default under the loan agreements or the mortgage at the time and the Bank did not ask her before making the debit.  The appellant pleaded that she had ceased making the minimum monthly repayments due under both loan agreements until such time as the Bank rectified its breach.  
45	The appellant further alleged that the Bank had breached an implied term of the loan agreements and mortgage and that it had engaged in unconscionable conduct in breach of s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (‘ASIC Act’).  That section provides that:
(1)	A person must not, in trade or commerce, in connection with:
(a)	the supply or possible supply of financial services to a person (other than a listed public company); or
(b)	the acquisition or possible acquisition of financial services from a person (other than listed public company)
engage in conduct that is, in all the circumstances, unconscionable.
…
46	The appellant’s unconscionable conduct claim was based on the matters set out in para 70 of her further amended defence and counterclaim.  In essence, the appellant alleged that the Bank had acted unconscionably in four ways: in the performance of the contract, in the dispute resolution process, in the bringing of the proceeding in the County Court, and in the conduct of that proceeding.  
47	The appellant further pleaded that she had resigned from her employment because she was unfit to work due to medical conditions caused by the disputed debit and subsequent dispute with the Bank.
48	In her prayer for relief to the counterclaim, the appellant sought a declaration that she was liable to pay the principal amount owing and interest at the non- default rate and that she was not liable to pay the enforcement costs or interest at the default rate from 14 January 2015 (the date of the default notice).  She also sought damages, including damages pursuant to s 12GF of the ASIC Act and s 236 of the Australian Consumer Law.
	The trial judge’s reasons
	Findings on the disputed debit
49	The trial judge dealt first with the issue of whether the Bank was entitled to make the disputed debit.  
50	The judge accepted the evidence of Mrs McLean, the bookkeeper and office manager employed by the manager, to the effect that the appellant was in arrears to the owners corporation.  The judge referred also to the final fee notice annexed to the letter from LMS Lawyers and the appellant’s evidence that she refused to pay notices sent to her by the manager.  
51	The judge found that the Bank had no reason to doubt the accuracy of the matters stated in the letter and that it paid the sum demanded to prevent the property from being seized and sold.  This satisfied the requirement that the payment be reasonably incurred.  Her Honour also found that the Bank was entitled to act on the basis that the letter from LMS Lawyers accurately set out amounts owing and that the payment was therefore reasonable. 
52	The judge concluded that the appellant was in default at the relevant time because her failure to pay fees owing to the owners corporation was an event of default under cls 2 and 19 of the MCP.  In those circumstances, the Bank was entitled, acting under cl 18.4 of the MCP, to pay the outstanding fees.  The judge concluded that cls 17 and 21 of the MCP required the appellant to reimburse the Bank for the expenses that it had incurred in making the payment to the owners corporation.
53	The judge also observed that cl 5 of the loan agreement provides that the borrower has to pay various amounts, including enforcement expenses under cl 27, and that the borrower authorises the Bank to debit those amounts to the loan account.  It follows, so the judge held, that the Bank was entitled to debit the appellant’s account and, in accordance with the terms of cl 27, did not have to give her prior notice.  
54	The judge rejected the appellant’s submission that the Bank did not have to take any action because its security was never at risk as the value of the property exceeded the amount lent by the Bank.  The judge said that the Bank was entitled to preserve its security and could make the payment rather than sell the property or let another party, such as the owners corporation, seize and sell the property.  
	Findings on the alleged breach of an implied term and unconscionable conduct
55	The judge rejected the appellant’s claim that the Bank had breached an implied term to act reasonably and in good faith.  Her Honour observed that the circumstances did not demonstrate any bad faith, wrongdoing or impropriety on the part of the Bank.  The judge also rejected a submission made by the appellant (but not pleaded) that the Bank was under an obligation to refer her to the Code Compliance Monitoring Committee established under the Code of Banking Practice (‘Code’).
56	The judge next addressed the appellant’s unconscionable conduct claim.  Section 12CC(1) of the ASIC Act contains a list of matters which a court may have regard to for the purpose of determining whether a person has engaged in unconscionable conduct in breach of s 12CB.  Those matters relevantly include the relative strength in bargaining position between the supplier and service recipient; the extent to which the supplier’s conduct was consistent with its conduct in similar transactions; the requirements of any industry code; the extent to which the supplier failed to disclose any intended conduct that might affect the interests of the service recipient; and the terms and conditions of the contract between the supplier and service recipient.
57	As noted above, the appellant pleaded a number of matters in relation to her unconscionable conduct claim, each of which were addressed by the judge in turn. 
58	The first matter pleaded by the appellant related to the relative strength in bargaining position of the two parties.  The judge noted that disparity in status is not, without more, a proper basis for finding unconscionable conduct and that, in her Honour’s view, the Bank was specifically authorised to make the disputed debit.  
59	The next matter relied on by the appellant was that the Bank’s conduct was not consistent with its conduct in similar transactions.  However, as the judge observed, the appellant led no evidence in support of that allegation.  The judge referred to Mr Curtis’s evidence that the conduct of the Bank had been consistent with its practice in relation to other borrowers.  Accordingly, this aspect failed for want of evidence.
60	The third matter relied on by the appellant was that the Bank had breached cls 3.2, 4.2 and 27 of the Code.  The judge found that the Bank had not engaged in any conduct which would amount to a breach of cl 3.2 (which imposes an obligation to act fairly and reasonably towards customers in a consistent and ethical manner) or cl 4.2 (which imposes an obligation to comply with the Code).  The judge noted that cl 27 (which imposes obligations in relation to increasing an existing credit facility) was not engaged because the Bank had not increased the amount of the loan but had rather debited enforcement expenses for which the appellant was liable.  
61	The fourth and fifth matters relied on by the appellant were the Bank’s unreasonable delay in disclosing its intention to make the disputed debit and its delay in reversing the debit.  The judge rejected these matters on the basis that the Bank was not obliged to inform the appellant before making the disputed debit, nor was it obliged to refund that debit.
62	The next matter relied on by the appellant was that it was unconscionable for the Bank to debit her account in circumstances where it was not authorised by the loan agreements or mortgage.  This was rejected by the judge on the basis that the appellant was in default and no prior notice was required before the debit occurred.
63	The appellant also relied on the conduct of the Bank between March 2014 and the issue of the County Court proceedings in March 2015.  The judge concluded that the Bank’s conduct over this period was not unconscionable.  The judge noted that the Bank had participated in the FOS process and, although it had maintained that it was legally entitled to make the disputed debit, it had offered to assist the appellant if she needed help making her monthly repayments.  
64	The appellant pleaded that the Bank’s conduct in the proceeding, including the making of two summary judgment applications, constituted unconscionable conduct.  The appellant also pleaded that the Bank’s conduct in reversing the disputed debit and making the second summary judgment application was an abuse of process.  The judge was not satisfied that the Bank had engaged in unconscionable conduct in prosecuting its claim in the proceeding and observed that the way it had done so was ‘unremarkable’.  Further, her Honour was not prepared to find that the making of the second application was an abuse of process, although she did note that it had led to the claim for possession and the debt claim effectively being ‘split’.  
65	Finally, the judge rejected the appellant’s allegations that the Bank had made misleading statements to the FOS and had incorrectly maintained that it was entitled to make the disputed debit.  
66	The judge concluded that the conduct of the Bank in all of the circumstances did not reveal ‘the opprobrium of unconscionability’ and accordingly held that the unconscionable conduct claim failed.
Findings on the appellant’s failure to pay
67	The judge then considered whether the appellant was entitled to cease making her loan repayments.  The judge observed that the appellant had made a unilateral decision to stop paying her monthly repayments and that this was as a result of her reaction to the events surrounding the disputed debit.  The judge concluded that, even if the Bank did breach any of its obligations by making the disputed debit, this did not relieve the appellant of her obligation to keep up the minimum monthly repayments.  
	Findings on the claim for loss of income and damages
68	The judge then dealt with the appellant’s claim for loss of income on account of her being unfit to work due to medical conditions caused by the Bank’s conduct.  After considering the evidence concerning the circumstances in which the appellant left her employment, including an email sent by the appellant to her employer, the judge concluded that the conduct of the Bank did not result in the appellant being medically unfit to work and that the appellant left her employment voluntarily.  
69	The judge rejected the appellant’s claim for damages for unconscionable conduct.  Her Honour found that, even if she had made a finding of unconscionable conduct, enforcement costs in relation to the recovery of amounts owing under the mortgage would not have been recoverable because they were incurred as a result of the appellant’s default.  
	The application for leave to appeal
70	The appellant’s written application for leave to appeal raised 11 proposed grounds of appeal.  
71	On the return of the application for leave to appeal, Whelan JA gave the appellant leave to appeal on the following three grounds (which he reformulated from the appellant’s proposed grounds):  
Ground 1:  The trial judge erred in her construction of the relevant contract between the parties in that she failed to find that expenses could only be debited after the respondent had asked the applicant to pay them.
Ground 2:  The trial judge erred in concluding that the applicant was ‘in default’ within the meaning of the relevant contract at the relevant time. 
Ground 3:  The trial judge erred in failing to find unconscionable conduct on the part of the respondent on the basis of the matters pleaded by the applicant in paragraph [70] of her further amended defence and counterclaim.
72	His Honour reserved to the hearing of the appeal an application for leave to appeal in respect of a further six proposed grounds of appeal:
Ground 3:	Error of law in relation to breach of s 17 of the National Credit Code … and s 3.1 of the Code of Banking Practice (“Banking Code”)
Ground 4: 	Errors of law and fact in finding[s] [in] relation to the disputed claim of $22,369.68;
Ground 5:	Error of law in relation to breaches of s 19 and s 35 of the Banking Code;
Ground 6:	Error of law in relation to breaches of s 2.3 and s 25 of the Banking Code and s 12ED of the ASIC Act 2001; 
Ground 7:	Error of law in relation to breach of s 7 of the Banking Code; 
Ground 8:	Error of law in relation to breach of s 2.2 of the Banking Code 
73	His Honour dismissed the application for leave in relation to grounds 9, 10 and 11 which alleged abuse of process, judicial bias, and ‘the interests of justice’.  
Ground 1 — whether the Bank was entitled to make the disputed debit
74	The first ground of appeal contends that the trial judge erred in failing to find that the Bank could only debit expenses after it had asked the appellant to pay them.  It raises the question whether the Bank was entitled to debit the appellant’s account in order to reimburse itself for the payment to the owners corporation of the sum which that body had demanded of the appellant.  The question of construction is whether the Bank’s entitlement to debit the account was conditional upon it first having asked the appellant for payment.
75	Clause 27 of the loan agreement dealt with enforcement expenses as follows:
You must pay us, when we ask, any reasonable expenses we reasonably incur in enforcing this loan agreement or a security after you are in default (including in the case of a mortgage security, expenses incurred in preserving and maintaining the property such as by paying insurance, rates and taxes for the property).  We may debit these expenses to your loan account so that they are included in the balance owing on your loan account.  We do not have to tell you first.
76	The judge held that cl 27 of the loan agreement operated so that the Bank had an election after it had reasonably incurred an expense in enforcing the loan agreement or a security after a default.  It could either ask the customer to repay the amount, which the customer was then obliged to do, or it could debit the expense from the loan account without telling the customer in advance.  The judge held that the sentence ‘[w]e do not have to tell you first’ applied to the debiting and not to the anterior incurring of the expense.
77	The appellant submitted that the Bank’s entitlement to debit the expense to a customer’s loan account arose only after a request to pay had been made and the customer had failed to comply.  In other words, there did not need to have been a request to debit the account, but there did need to have been a request for payment.
78	The appellant also made submissions as to cl 17.2 of the MCP.  That provision relevantly permitted the Bank to ask the customer for the Bank’s reasonable costs in administering the mortgage or any agreement covered by the mortgage, including in enforcing or taking any other action in connection with the Bank’s rights.  The customer was thereupon obliged to pay such costs.  In short, the appellant’s submission was that cl 17.2 obliged the Bank to ask before the customer came under any obligation to pay costs and that the judge’s construction of cl 27 had effectively cast this provision aside.
79	The Bank submitted that the trial judge’s construction was correct.  It submitted that cl 27 imposed no obligation on the Bank to ask the customer before incurring an expense.  It was said to be clear from cl 18.4 of the MCP that the Bank was entitled to incur expenses without prior notice where the customer had failed to do anything it should have done under the mortgage, and that was said to include the payment of share scheme levies which the customer should have paid under cl 2.
80	The Bank was correct to submit that cls 2 and 18.4 of the MCP, read together, entitled it to pay share scheme levies on behalf of the appellant without asking her first.  In other words, cl 27 imposed no prior requirement that the Bank request permission before incurring an expense by making such a payment to a third party.  However, that does not resolve the issue of how the requirement to ‘ask’ operated once the expense had been incurred.
81	In our opinion, the construction of cl 27 of the loan agreement reached by the trial judge failed sufficiently to read the provision as a whole.  Although the two sentences of the relevant paragraph can be read as outlining alternative courses open to the Bank, there is no textual indication that this is the correct construction.  There are no words describing alternatives, nor is the paragraph set out in a way that might suggest such a reading.  To the contrary, the ability to debit expenses operates by reference to ‘these expenses’.  That language refers back to the reasonable expenses which the customer must pay the Bank, when it asks.
82	The judge’s construction of the provision would enable the Bank to circumvent altogether the condition that it ask for expenses to be paid before the customer is obliged to pay them.  It would be surprising if the customer was not obliged to pay the expenses because no request had been made, yet the Bank was entitled to debit the amount of the expenses from the customer’s account.  That result would give the provision an arbitrary operation, making it effectively optional for the Bank to ask the customer for the amount in question in order to recover its expenses.  The prominent positioning of the stipulation that the Bank ask first suggests that this was not the intended operation of the provision.
83	In our opinion, the fact that cl 5 of the loan agreement permits the debiting of ‘enforcement expenses’ without stipulating the need for a prior request does not alter that position.  By including ‘enforcement expenses under clause 27’ within its scope, cl 5 must be taken in its application to such expenses to be premised on compliance with the requirements of cl 27.
84	For those reasons, the appellant’s argument under ground 1 should be accepted.  However, the Bank contends that no relief flows from this conclusion.  That is because the appellant was, in any event, under an independent obligation to make the mortgage repayments and the judge’s finding to that effect has not been challenged.  In other words, the Bank submitted, the appellant defaulted under the loans and any conclusion that the Bank had previously debited her account contrary to the loan agreement could not alter that fact.  The Bank pointed out, moreover, that the disputed debit had not affected one of the two loans at all.
85	In our opinion, the Bank’s submissions are correct.  The Bank did not need to depend on a default under cl 27 of the loan agreement in order to enforce the loans.  Indeed, it could not do so, because the only obligation on the appellant under cl 27 was to pay an amount if requested to do so by the Bank, and no such request had been made.  Its entitlement to take enforcement action rested on the appellant’s failure to make repayments.
86	The appellant submitted that the Bank’s breach of cl 27 had compelled her not to meet her mortgage repayments.  But while it is understandable that the appellant felt aggrieved by the Bank’s action, neither the Bank’s action nor her sense of grievance entitled her to stop making repayments.  As the Bank pointed out, the disputed debit had not altered the amount of the monthly repayments.  The appellant remained contractually obliged to repay the mortgage and was not entitled to set that obligation off against any amount which the Bank might have owed her as a result of its own breach. 
87	In summary, while the appellant succeeds on the question of construction, that does not affect the correctness of the judgment under appeal.
Ground 2 — whether the appellant was in default of the loan agreements and mortgage
88	The second ground of appeal contends that the trial judge erred in concluding that the appellant was ‘in default’ under the relevant contract at the relevant time.  It may be noted at the outset that, in light of the appellant’s failure to meet her repayment obligations, success on this ground would also not avail the appellant.  However, since leave has been granted and the matter was fully argued, the ground should be dealt with.
89	The argument in this context was that the appellant was not in default as a result of not having paid the amounts demanded from her by the owners corporation.  The appellant submitted that there had been no court order that she pay the levies.  The order went only as to costs.  As a result, cl 2 of the MCP was not engaged.
90	The judge proceeded on the basis that the appellant had not been in default in failing to pay the special levy of $12,000, on the assumption she was prepared to make that the owners corporation had failed to meet statutory requirements in respect of that levy.  The judge regarded the costs order as falling within cl 2 on the basis that the liability to pay costs fell on the appellant ‘as owner’.  The judge also accepted evidence of Mrs McLean, the manager’s bookkeeper and office manager, that the appellant was in default at the date of the disputed debit in respect of outstanding rates and interest, leaving aside the costs order and the special levy.  The result was that the appellant was in default at the time of the disputed debit, but not in an amount as high as the owners corporation had claimed.
91	These findings point to a further breach by the Bank of cl 27, to the extent that it debited the appellant’s account for expenses it had incurred on her behalf without having had the right to do so.  But this does not gainsay that the appellant was still obliged to pay owners corporation fees and charges and had not done so.  Such amounts plainly fall within cl 2 of the MCP.  In the circumstances, it is not necessary to decide whether the appellant was correct to submit that the costs order fell outside that provision.  The appellant had been in default under cl 2 and this attracted the entitlement of the Bank to make good that default under cl 18.4 of the MCP.  This constituted a default by the appellant within the meaning of cl 28 of the loan agreement (which extends to being in default under a security), entitling the Bank to proceed under cl 27 of the loan agreement in respect of its expenses.
92	The appellant took issue with the judge’s account of the evidence of Mrs McLean.  However, she did not show that there was any reason to doubt that the evidence had been given as the judge described.  There is no basis for disturbing the judge’s finding of fact in reliance on that evidence. 
93	For these reasons, ground 2 must fail.
Ground 3 — whether the Bank engaged in unconscionable conduct
94	Ground 3 relates to whether the judge was correct to dismiss the appellant’s claim of unconscionable conduct on the part of the Bank.  
95	Under this ground, the appellant submitted that the trial judge had failed to properly investigate the factual basis of her claim.  She referred to para 70 of her amended defence and counterclaim and drew attention to matters there relied on which were said to be pertinent to the consideration of the factors relevant to a determination as to unconscionability listed in s 12CC of the ASIC Act.
96	In particular, the appellant referred to the relative strength of the parties and her sense of being overwhelmed, an allegation that the Bank’s conduct in making the disputed debit was inconsistent with its conduct in similar transactions, allegations of unethical non-compliance with the Code, an alleged failure to investigate the matter properly in accordance with internal dispute procedures, and the allegedly unfair conduct of the proceedings.  The appellant also submitted that the Bank’s actions had not been reasonably necessary for the protection of its security interest.   
97	For the reasons that follow, the judge was plainly correct in concluding that the Bank did not act unconscionably and, in any event, that the appellant failed to establish any loss from the Bank’s alleged conduct.
98	As the judge observed in her reasons, in order to make out a claim of unconscionable conduct, the appellant was required to establish that, in all of the circumstances, the Bank had acted in a way that involved a ’high level of moral obloquy’.  The essence of unconscionable conduct is that it involves unethical conduct which includes ‘some degree of moral tainting … of a kind that permits the opprobrium of unconscionability to characterise the [relevant] conduct’.
99	In examining the conduct of the Bank at the time it made the disputed debit and subsequently, it is necessary to have regard to all of the circumstances.  First, the Bank was faced with a demand for payment in respect of a secured property and a threat to execute a warrant of seizure and sale.  It was entirely reasonable for the Bank to be concerned about its security in circumstances where there was a threat by a creditor to sell the property.  Further, the amount owing to the owners corporation was of a kind that the appellant had agreed, under the MCP and loan agreement, that she would pay on time.
100	The Bank’s debiting of the loan account without notifying the appellant was erroneous.  However, it is a long way short of conduct that was morally tainted.  Further, the debiting of the account did not cause any immediate consequences for the appellant given that her monthly instalments remained the same.  The appellant was entitled to dispute the debit with the Bank, but she was not entitled to simply stop making any repayments owing under both loan agreements.
101	The judge was also correct in concluding that the conduct of the litigation by the Bank was not unconscionable.  The Bank was faced with a legitimate complaint about its conduct in paying the owners corporation and debiting the loan account.  However, by refusing to make any further repayments under the loan agreements and, in effect, inviting the Bank to issue proceedings so that the appellant could counterclaim, the Bank was left with little or no alternative but to start proceedings seeking possession and to recover the amounts owing.  The decision to initiate two summary judgment applications is fairly seen as an attempt by the Bank to enforce its rights with as little expense and delay as possible.  Given that much of the expense of the litigation will fall at the feet of the appellant, an early resolution would also have been of benefit to the appellant.  In any event, the summary judgment applications were not unconscionable.  
102	Even if the conduct of the Bank were unconscionable and therefore in breach of s 12CB of the ASIC Act, the appellant failed to establish any loss.  The Bank’s breach would not have had the consequence that the appellant would be relieved from her obligation to make monthly repayments under the loan agreements or, in the event of default, to repay the entire amount owing.  As noted above, the judge rejected the appellant’s claim that she had suffered loss of income as a result of the Bank’s conduct.  There was plainly a strong factual basis for that conclusion, and the appellant has not sought leave to appeal that finding.  
103	We would add that the appellant’s conduct in refusing to make any repayments on the loans which were undoubtedly owing or to tender the loan amount in satisfaction of her debt formed an important part of the context in which the Bank’s conduct fell to be considered.  There was a high degree of artificiality in fastening on the disputed debit as justification for refusing to continue to make the repayments she was contractually obliged to make.
104	It follows that the appellant has failed to establish her three grounds of appeal.  It is now necessary to deal with her application for leave to appeal in respect of the six proposed grounds which Whelan JA referred to the bench hearing the appeal.
	The proposed grounds of appeal
105	In a document filed shortly before the hearing of the appeal, the appellant grouped the proposed grounds of appeal as follows:  
(a)	First, proposed grounds 3, 5, 6, 7 and 8 alleged that the judge erred in failing to find that the Bank had breached its responsibilities under the Code.  In that regard, the appellant relied on cls 2, 7, 19, 25 and 35 of the 2004 Code.  
(b)	Second, it was contended that proposed grounds 3 and 6 had additional aspects relating to the National Credit Code and the ASIC Act respectively.  
(c)	Third, proposed ground 4 alleged that the judge erred in failing to find that the claim made by LMS Lawyers on behalf of the owners corporation failed to comply with the Owners Corporation Act 2006.
106	The Bank submitted that all of the proposed grounds were not pleaded or considered by the judge and should not be permitted to be run on appeal.  Alternatively, it was submitted that leave to appeal should be refused because the proposed grounds are without merit.
107	It is convenient to deal with the proposed grounds within the groupings suggested by the appellant.
	Proposed grounds 3, 5, 6, 7 and 8
108	Each of these five proposed grounds alleges that the judge should have found that the Bank breached certain provisions of the Code.  As the judge noted in her reasons, the relevant version of the Code is the 2013 Code.  The Code is voluntary and sets out standards of good banking practice which banks who subscribe to it agree to follow in dealing with customers and guarantors.  The Bank is a signatory to the Code.  
109	The appellant asserts that the judge was in error in failing to find the Bank breached cls 2.1, 2.2, 2.3, 3.1, 7, 19, 25 and 35 of the 2004 Code (each of which has counterparts in the 2013 Code).  Each of these clauses imposed obligations on the Bank.  It is not necessary to set out these clauses out in full and the following summary is sufficient:
(d)	cl 2.1 relevantly provided that the bank will provide information to the customer in plain language;
(e)	cl 2.2 provided that the bank will act fairly and reasonably towards the customer in a consistent and ethical manner and will consider the customer’s conduct, the bank’s conduct, and the contract between them;
(f)	cl 2.3 provided the bank will have regard to its prudential obligations;
(g)	cl 3.1 provided that the bank will comply with all relevant laws relating to banking services, including those concerning financial products and services;
(h)	cl 7 provided that the bank will ensure its staff are trained so that they can competently and efficiently discharge their functions and provide banking services they are authorised to provide and have an adequate knowledge of the provisions of the Code;
(i)	cl 19 provided that the bank will promptly process instructions to cancel a direct debit;
(j)	cl 25 provided that, before the bank offers or gives the customer a credit facility (or increases an existing credit facility), the bank will exercise the care and skill of a diligent and prudent banker in selecting and applying credit assessment methods and in forming an opinion about the customer’s ability to repay the credit.  It also provides that, with the agreement of the customer, the bank will try to help the customer overcome financial difficulties with any credit facility that the customer has; and
(k)	cl 35 provided for an internal dispute resolution process.
110	In relation to proposed ground 3, which alleges a breach of cl 3.1 of the 2004 Code, it is further alleged that the Bank breached s 17 of the National Credit Code on the basis that it increased the appellant’s loan without her knowledge or consent.  
111	In relation to proposed ground 6, which alleges a breach of cls 2.3 and 25 of the 2004 Code, it is further alleged that the Bank breached its obligations by failing to comply with s 12ED of the ASIC Act.
112	The appellant did not plead, in her further amended defence and counterclaim, a breach of the Code, s 17 of the National Credit Code, or s 12ED of the ASIC Act.  Although the appellant referred to s 17 of the National Credit Code and s 12ED of the ASIC Act in an earlier version of her pleadings, these references were deleted in the final version which was signed by counsel then acting for the appellant.  
113	In our view, the appellant should not be permitted to raise these grounds on appeal.  The principles applicable to raising a new ground are clear.  The general rule is that a party is bound by the way he or she conducted the case at trial.  It is only in exceptional circumstances that a party will be permitted to ‘raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so’.  In Glass (a pseudonym) v Chief Examiner, this Court said:
If the facts are not in dispute, or if the new argument concerns a question of law or construction of a document alone, then it is still a discretionary matter for the Court as to whether to entertain the argument on appeal or not.  Relevant to the exercise of that discretion are expediency and the interests of justice.  With the introduction of the Civil Procedure Act 2010, it will also be necessary for the Court to consider the effect that permitting the new argument to be run will have on the just, efficient, timely and cost-effective resolution of the real issues in dispute between the parties.  Other matters may also be relevant.
114	In our view, there are no exceptional circumstances in this case that justify the appellant being granted leave to raise new grounds.  
115	The chief difficulty confronting the appellant is that she has not established how a proven breach of the Code on the part of the Bank would either impugn the orders made by the judge or assist her in establishing her unconscionable conduct claim.  The question whether the Bank breached the Code does not exist in isolation but can only be relevant to either a defence or a cause of action pleaded by the appellant.  Recognising that the appellant is unrepresented, some leeway should be accorded to her in the formulation of her grounds of appeal.  However, such an approach cannot overcome the failure of the appellant to demonstrate any relationship between any alleged breach of the Code and the orders made by the judge.
116	Proposed ground 3 alleges that, by debiting the loan account, the Bank increased the appellant’s loan in breach of cl 3.1 of the Code and s 17 of the National Credit Code.  This argument assumes that cl 3.1 forms part of the contract between the appellant and the Bank with the result that s 17 of the National Credit Code is incorporated into the contract, and that the debiting of the account increased the loan.  Even if these assumptions are accepted, it would not follow that the appellant was entitled to stop paying the instalments due under the loan agreements.  It might, as the judge correctly observed, have had the consequence that the Bank may not have been entitled to recover the disputed debit or interest upon it, but the Bank has not sought to do so.  A breach of s 17 of the National Credit Code would therefore not assist the appellant.
	Proposed ground 4
117	As noted above, proposed ground 4 alleges that the claim made on behalf of the owners corporation was in breach of the Owners Corporation Act. Again, even if that were so, it would provide no answer to the judge’s orders and provide no basis for a finding that the Bank acted in an unconscionable way.
	Conclusion
118	The application for leave to appeal in relation to proposed grounds 3 to 8 should be refused.  We would dismiss the appeal in relation to the three grounds in respect of which leave was granted by Whelan JA.  The application for leave to appeal against the possession order made by Judge Cosgrave must be refused.