Federal Court Rejects Unconscionable Conduct Claims Against Retailers

OUTCOME: Dismissed

FEDERAL COURT OF AUSTRALIA

[NAME] & Consumer Commission v [APPELLANT] [COMPANY] [2005] FCA 1133

TRADE PRACTICES – unconscionable conduct – s 51AA and s 51AB Trade Practices Act 1974 considered – retailer and mentally incapacitated customer and multiple dealings – frequent service and telephone calls – whether retailer knew or ought to have known of customer's disadvantage TRADE PRACTICES – unconscionable conduct and the unwritten law – basis of unconscionable dealing doctrine – limits to knowledge requirement CORPORATIONS – aggregation of knowledge possessed by employees – proof of knowledge for purposes of unconscionable dealings doctrine Trade Practices Act 1974 (Cth) s 51AA, s 51AB Social Security Act 1991 (Cth)

[NAME] and Consumer Commission v [COMPANY] (2003) 214 CLR 51 cited Commercial Bank of Australia [COMPANY] v [NAME] (1983) 151 CLR 447 discussed Bridgewater v Leahy (1998) 194 CLR 457 cited Hart v O'Connor [1985] AC 1000 cited Blomley v Ryan (1956) 99 CLR 362 referred to [NAME] and Consumer Commission v [COMPANY] (2002) 117 FCR 301 cited Louth v Diprose (1992) 175 CLR 621 discussed [NAME] v Perpetual Trustees Australia [COMPANY] (1999) 75 SASR 1 cited [NAME] v Commonwealth Development Bank of Australia, SCNSW, 30 June 1989 cited [NAME] v Homan (1853) 4 HLC 997 cited [NAME] v National Australia [COMPANY] (1998) 194 CLR 395 cited [NAME] and Consumer Commission v [NAME] ([COMPANY] (2000) 104 FCR 253 cited [NAME] and Consumer Commission v [COMPANY] (No 2) (2000) 96 FCR 491 cited [NAME] v [COMPANY] (1994) 55 FCR 147 cited Jones v Dunkel (1959) 101 CLR 298 considered [NAME] v McDonald's Australia [COMPANY] (2000) ATPR 41-741 cited [NAME] ([COMPANY] v [NAME] ([COMPANY] (1999) ATPR 41-703 cited [NAME] and Consumer Commission v Keshow [2005] FCA 558 cited [COMPANY] (in prov liq) & [COMPANY] (in prov liq) (2002) 41 ACSR 72 cited [NAME] v Commonwealth (No 2)(2000) 103 FCR 1 cited [NAME] v [COMPANY] (1995) 183 CLR 563 not followed [COMPANY] v [NAME] [COMPANY] [1998] 3 VR 133 discussed [COMPANY] (1982) 1 ACLC 292 referred to Beach Petroleum N L v Johnson (1993) 115 ALR 411 cited [NAME] v Woollahra Municipal Council [1975] 2 NSWLR 447 cited Elliot v Nanda (2000) 111 FCR 240 cited Stern v McArthur (1988) 165 CLR 489 cited [COMPANY] v [COMPANY] [1970] AC 567 cited

[NAME] & CONSUMER COMMISSION v [APPELLANT] [COMPANY] (ACN [[APPELLANT]]) & [COMPANY] (TRADING AS [NAME]) (ACN [[APPELLANT]])

No S 844 of 2003

FINN J

[APPELLANT]

17 AUGUST 2005

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY S 844 OF 2003

BETWEEN: [NAME] AND CONSUMER COMMISSION

APPLICANT

[APPELLANT]

[COMPANY] (TRADING AS [NAME])

[APPELLANT] OF ORDER: 17 AUGUST 2005

[APPELLANT]

THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the [APPELLANT]'s costs of the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY S 844 OF 2003

BETWEEN: [NAME] AND CONSUMER COMMISSION

APPLICANT

AND: [APPELLANT] [COMPANY] [[APPELLANT]]

[APPELLANT]

[COMPANY] (TRADING AS [NAME])

ACN [[APPELLANT]]

[APPELLANT]

JUDGE: FINN J

DATE: 17 AUGUST 2005

PLACE: [APPELLANT] FOR

JUDGMENT A. THE PRINCIPAL CLAIM ............................................................................................. 8 1. THE APPLICABLE PRINCIPLES ................................................................................ 9 (i) Section 51AA of the Trade Practices Act .............................................................. 10 (ii) Section 51AB of the Trade Practices Act .............................................................. 23 2. [NAME] .................................................................................................................. 25 (i) Personal History ................................................................................................... 25 (ii) Personal Circumstances ........................................................................................ 38 [APPELLANT[NAME] ...................................................................... 61 [NAME]'S DEALINGS WITH [APPELLANT[NAME] (AND [NAME]) ............ 69 (i) The agreements ..................................................................................................... 75 (ii) [NAME] ......................................................................................... 120 (iii) Service Provision to [NAME] .............................................................................. 134 (iv) Telephone Calls to [APPELLANT[NAME] ......................................................................... 139 WITNESS ISSUES: ADVERSE INFERENCES .................................................................. 148 CONSIDERATION .............................................................................................................. 153

CONCLUSION ON THE PRINCIPAL CLAIM .................................................................. 197 THE ANCILLARY CLAIMS ................................................................................................ 204 (i) Raising Service Agreements without [NAME]'s knowledge or consent ................. 206 (ii) Transferring overpaid funds from one agreement to another without consent .......... 212 (iii) Accepting the return of goods ............................................................................... 216 CONCLUSIONS .................................................................................................................. 218

1 This proceeding concerns the dealings had by [NAME] with [APPELLANT] [COMPANY] ("[APPELLANT[NAME]") and [COMPANY] ("[NAME]"). [NAME] operated through the agency of [APPELLANT[NAME]. [APPELLANT[NAME] was a retailer of, and [NAME] leased out, electrical goods. [NAME] has both an intellectual disability and a schizophrenic illness. He is in receipt of a disability pension which is his sole source of income. In the period between November 1996 and October 2002 he entered into fifteen rental, two loan and nineteen service agreements with [APPELLANT[NAME] and three rental agreements with [NAME]. These all related to electrical goods. The payments he made under those agreements totalled $20,700.43. 2 The [NAME] and Consumer Commission ("the [NAME]") has proceeded against the two companies under the Trade Practices Act 1974 (Cth) ("the TP Act"). It alleges that in entering into, and in enforcing, the thirty-nine agreements the companies were guilty of unconscionable conduct for the purposes of s 51AA and s 51AB of that Act. Put shortly the matter raises issues of some importance for consumers who may not be able adequately to manage their own affairs and for retailers dealing with such persons. 3 The unconscionable conduct alleged against each of the companies in entering into their respective agreements with Mr [NAME] is pleaded in the following terms: "[Each company] knew or ought to have known from Mr [NAME] presentation and verbal skills, that:

1. Mr [NAME] was a person with an intellectual disability;

2. Mr [NAME] could not read the agreements;

3. Mr [NAME] could not understand all the terms and conditions of the agreements;

4. Mr [NAME] was unable to understand all the rights, options and benefits he had under the agreements;

5. Mr [NAME] was unable to make a worthwhile judgment about whether entering into the agreements was in his best interests; and knew or ought to have known from its records that: 6. it was unlikely to be in the best interests of Mr [APPELLANT] to enter into the agreements with [APPELLANT[NAME] [and [NAME]];

7. Mr [APPELLANT] was the recipient of a disability pension and that it was his sole source of income; and at times knew or ought to have known from its records that: 8. [NAME] completed by its employees contained information that was incorrect, unrealistic and inadequate;

9. Mr [APPELLANT] monthly liability to [APPELLANT[NAME] ranged between $267.01 and $365.61;

10. Mr [APPELLANT] monthly liability to [APPELLANT[NAME] ranged between 30.2% and 40.5% of his income;

11. Mr [APPELLANT] monthly liability to [APPELLANT[NAME] would result in financial hardship whereby he was generally unable to afford the basic necessities of living (being food, clothing, accommodation, health and travel expenses, essential utilities and general household expenses) and other incidental personal expenses;

12. Mr [APPELLANT] actual monthly payments to [APPELLANT[NAME] which were significantly greater than his monthly liability to [APPELLANT[NAME], would result in financial hardship whereby he was generally unable to afford the basic necessities of living (being food, clothing, accommodation, health and travel expenses, essential utilities and general household expenses) and other incidental personal expenses." It is alleged as well that if the companies did not know the above matters, they were recklessly indifferent to them. 4 Additional to the above ("the Principal Claim") three ancillary complaints of unconscionable conduct are made against [APPELLANT[NAME] relating to its (i) raising service agreements without Mr [NAME] consent; (ii) transferring funds from one agreement to another without his consent; and (iii) accepting the return of goods after substantial payment. I will deal with each of these separately later in these reasons. 5 The critical issues raised by the [NAME]'s pleading relate to what [APPELLANT[NAME] knew or had reason to know through its employees about Mr [NAME] capacities and personal circumstances as a result of its dealings with him and from its records. Though both Mr [APPELLANT] and a range of [APPELLANT[NAME] employees gave evidence, it is unsurprising that, with the significant period of time spanned by the agreements, the recollection of these witnesses has dimmed to the point in many instances of being either quite incomplete or non-existent. The [NAME] in consequence has attempted to structure its case in some measure around what should be inferred from the companies' own records and from Mr [NAME] banking and other records of his financial dealings and commitments. 6 One consequence of the emphasis on documentary evidence at the trial was that in [NAME] SC's closing address for the [NAME], it became apparent that the [NAME] was not seeking to mount a single claim of unconscionable conduct founded cumulatively or compositely on the twelve matters set out above which took Mr [NAME] intellectual disability as its starting point. I would note in passing that the relief sought in the Further Amended Application (par 1) and the Further Amended Statement of Claim (pars 95 and 97) both suggested the case was a composite one as did the [NAME]'s written "Outline of Opening". Rather, the [NAME] at the end was seeking to propound two distinct claims of unconscionable conduct. The first, put shortly, was the composite claim. The second was a free-standing claim that the two companies took advantage of Mr [NAME] known financial circumstances. 7 I will later indicate why I consider this new claim ought not to be accepted given what has been pleaded and the state of the evidence on financial hardship.

A. THE PRINCIPAL CLAIM 8 For ease in exposition I will refer, first, to the applicable legal principles in this matter; secondly, to Mr [NAME] condition, capacities and personal circumstances; thirdly, to the various agreements entered into and to Mr [APPELLANT] related dealings with [APPELLANT[NAME].

1. THE APPLICABLE PRINCIPLES 9 There are two distinct bodies of law to which it is necessary to make reference. The first relates to s 51AA of the TP Act; the second, to s 51AB of the Act. Before considering these sections individually, I should note that it is common ground between the parties that the prerequisites of each of them are satisfied other than whether the respondents' conduct was unconscionable for the purposes of either section.

(i) Section 51AA of the Trade Practices Act 10 This section provides: "(1) A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. (2) This section does not apply to conduct that is prohibited by section 51AB or 51AC." 11 Whatever may be the outer reach of this provision: see [NAME] and Consumer Commission v [COMPANY] (2003) 214 CLR 51 at [42]-[46]; it is accepted on both sides in this proceeding that the presently relevant species of unconscionable conduct is the unconscionable dealings doctrine expounded, in particular, by the High Court in Commercial Bank of Australia [COMPANY] v [NAME] (1983) 151 CLR 447; see also Bridgewater v Leahy (1998) 194 CLR 457; and see generally Bigwood, Exploitative Contracts, Ch 6 (2003). Put in short form, that doctrine involves the knowing exploitation by one party of the special disadvantage of another in a dealing between them: cf [COMPANY], at [5]; Bridgewater, at [75]-[76]; whether by active conduct on the exploiter's part or by "the passive acceptance of a benefit in unconscionable circumstances": Hart v O'Connor [1985] AC 1000 at 1024. 12 Where the dealing is contractual, the exploitation will often be evidenced in "an inadequacy of consideration moving from the stronger party": [NAME], at 475; and see Bigwood, at 267 ff. Nonetheless, a contractual dealing may in its context be unconscionable notwithstanding adequacy of consideration: ibid. 13 I have referred both to passive exploitation and to adequacy of consideration for this reason. In the present proceeding the unconscionable conduct alleged against [APPELLANT[NAME] relates, primarily, to passive exploitation. It does not involve any assertion of inadequacy of consideration in any particular agreement as such. 14 What can constitute being in a position of "special disadvantage" vis-ŕ-vis another has been exemplified in many cases: for a convenient collection of the cases see Bigwood, at 239-246. Of the circumstances or conditions that can so position a person in a dealing, I refer for illustrative purposes to Fullagar J's exemplifying catalogue in Blomley v Ryan (1956) 99 CLR 362 at 405: "… poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary." The important qualification in the "special disadvantage" criteria is the requirement that the "disadvantage" be "special". As [NAME] J commented in [NAME] (at 462):

"I qualify the word 'disadvantage' by the adjective 'special' in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party." 15 In this matter it is unnecessary to consider the possible reach of the special disadvantage requirement into what have been called circumstances of "transactional": see Bigwood, at 242 ff; or of "situational": e.g. [NAME] and Consumer Commission v [COMPANY] (2002) 117 FCR 301 at 318 disadvantage. The type of disadvantage the [NAME] alleges Mr [NAME] suffered is a well recognised one. 16 Critically for the purposes of the present application is the further requirement that unfair or unconscientious advantage is taken of the opportunity created by one party being in a position of disadvantage vis-ŕ-vis the other: [NAME] at 462. This raises the contentious question of the knowledge one party is required to have of the other's position of special disadvantage before the unconscionable dealings doctrine can be attracted. 17 Before turning to the case law on this matter, it is necessary to emphasise what I understand to be well accepted propositions. (i) It is not the function of the unconscionable dealings doctrine simply to relieve a person from an improvident bargain (i.e. "contractual imbalance": Hart v [NAME], at 1024; or from a party's failure to in fact conserve his or her own interests in a dealing. As [NAME] J observed in Louth v Diprose (1992) 175 CLR 621 at 638: "[t]he intervention of equity is not merely to relieve the plaintiff from the consequences of his own foolishness". (ii) Central to the purpose of the doctrine is to relieve against taking "unconscientious advantage": [NAME] at 462; or "exploitation" or "victimisation" of another: [NAME] v [NAME] at 1024; Bridgewater v Leahy at [75]-[76]; Louth v Diprose at 638. In short, it is to relieve against an abuse of power possessed by one party over the other by virtue of the other's position of special disadvantage. 18 For a dominant party's conduct to be characterised as unconscionable – and to be stigmatised as wrongful – that party necessarily must actually have, or must properly be able to be regarded as if he or she did have, knowledge of the other's position of special disadvantage vis-ŕ-vis him or her: [NAME] v Perpetual Trustees Australia [COMPANY] (1999) 75 SASR 1 at [584]; [NAME] v Commonwealth Development Bank of Australia, SCNSW, 30 June 1989, [NAME] J. To use the language of [NAME] J in [NAME] (at 462), it must be shown that the dominant party "knows or ought to know" of the existence of the innocent party's disabling condition or circumstance and of its effect on him or her. 19 There has been a considerable scholarly debate in this country as to the reach to be given to "ought to know". For the most part it has been argued that we should not stray too far from the standard of actual knowledge: see for example [NAME], at 250 ff. The more attenuated is the level of knowledge required, it is said, the more the doctrine itself becomes disconnected from its animating purpose of proscribing advantage taking or exploitation, the more it becomes a device for correcting defective consent or contractual imbalance: ibid; see also [NAME], "Unconscientious Dealing" in [NAME] (ed), The Principles of Equity, 146-148 (2nd ed, 2003); but contrast [NAME], "The Equitable Doctrine of Unconscionable Dealing and the Elderly in Australia" (2003) 29 Monash ULR at 342. Whatever the merits of these views [NAME] and I have in the past expressed like opinions: see for example "Equity and Contract" in [NAME] (ed) Essays on Contract, 140-142; they are not of present moment. The contours of Australian law on this matter are reasonably settled and binding on me. 20 The accepted starting point today is [NAME] case. In addition to his "know or ought to know" observation [NAME] J later elaborated on the knowledge requirement (at 467) in the following terms: "… if [NAME] having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that [NAME] cannot make a judgment as to what is in his own interests, takes unfair advantage of his ([NAME]) superior bargaining power or position by entering into that transaction, his conduct in so doing is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that that situation may exist or is aware of facts that would raise that possibility in the mind of any reasonable person, the result will be the same." Or to put the matter as [NAME] J did in the same case (at 474):

"[Was the] disability … sufficiently evident to the stronger party to make it prima facie unfair or 'unconscientious' that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it." 21 While the courts subsequently have resorted to various formulae to encapsulate the knowledge falling short of actual knowledge which will nonetheless be sufficient, sight must not be lost of what is the subject of the required knowledge (be it actual or something less). It is knowledge of a particular state of affairs which itself embodies a judgment as to the disabled party's ability to conserve his or her own affairs in the parties' dealing. It is that state of affairs which is to be "sufficiently evident" to the stronger party. If that person does not actually know of that state of affairs and is not "wilfully ignorant" of it (in the sense that he or she is intent on not knowing it despite what is evident to him or her: cf [NAME] v Homan (1853) 4 HLC 997 at 1035), that person must at least be aware of circumstances that would cause him or her or a reasonable person in his or her position to suspect from what is evident that that state of affairs may exist. 22 I have avoided resort in the above to formulaic descriptions – "constructive knowledge (or notice)" or "duty to inquire", etc. These tend to have their own provenances which can deflect attention from the inquiry required to be made – hence Kirby J's comment in [NAME] v National Australia [COMPANY] (1998) 194 CLR 395 at 430 that "[c]onstructive notice should not be sufficient for unconscientious dealing".

(ii) Section 51AB of the Trade Practices Act 23 Section 51AB(1) provides that a corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, engage in conduct that is, in all the circumstances, unconscionable. The term "unconscionable" is undefined. However, s 51AB does refer to a non-exhaustive list of matters to which the Court may have regard in determining whether a corporation has contravened s 51AB(1). 24 Unlike s 51AA, s 51AB does not limit unconscionable conduct to conduct that is unconscionable within the meaning of the unwritten law. As others have pointed out, there is no reason when construing the section to import such a limitation into it: see [NAME] and Consumer Commission v [NAME] ([COMPANY] (2000) 104 FCR 253 at [30]-[37]; [NAME] and Consumer Commission v [COMPANY] (No 2) (2000) 96 FCR 491 at [24]. Indeed the section on its face in referring to a "possible supply" travels beyond the unwritten law as I understand it. There is, in my view, no reason not to give the term its ordinary possible meanings in the context of a supply or possible supply of goods or services. These have been expressed, variously, as "serious misconduct [or] something clearly unfair or unreasonable": [NAME] v [COMPANY] (1994) 55 FCR 147 at 179; "showing no regard for conscience; irreconcilable with what is right or reasonable": [NAME] and Consumer Commission v [COMPANY] (2002) 117 FCR 301 at [44]; see also [NAME] v McDonald's Australia [COMPANY] (2000) ATPR 41-741 at [22]; or, simply, conduct that is "unfair": [NAME] ([COMPANY] v [NAME] ([COMPANY] (1999) ATPR 41-703 at [46]; and see generally [NAME] and Consumer Commission v Keshow [2005] FCA 558 at [91] ff. 25 For reasons I later give, there is probably little practical difference between s 51AA and s 51AB as applied to the conduct of [APPELLANT[NAME] that is in question in this proceedings.

2. [NAME]

(a) Personal History 26 Before outlining [NAME]'s condition, capacities and personal history, it is important that I emphasise that this case is not concerned with Mr [NAME] objective circumstances as such. Rather its concern is with how he was, or ought to have been, perceived by the [APPELLANT[NAME] employees with whom he dealt or who dealt with his affairs. As will become apparent, this difference is of fundamental importance to the proper resolution of this matter. To anticipate my conclusion, notwithstanding the significant disability and incapacities from which he suffers, these were not so made evident to [APPELLANT[NAME] as to justify the conclusion that [APPELLANT[NAME] engaged in unconscionable conduct for the purposes of s 51AA and s 51AB of the TP Act. 27 Mr [NAME] was born at Renmark, South Australia in 1942. He contracted polio when aged nine and was hospitalised for a considerable period. He had considerable educational difficulties. He left school aged fourteen having only progressed to grade five. He has never worked; he first went on the pension (as he put it) when he was seventeen and at all presently relevant times he has been the recipient of the Disability Support Pension. It would appear from information provided by [NAME] that from December 1996 (shortly after [NAME]'s first [APPELLANT[NAME] agreement) until December 2002 (when [APPELLANT[NAME] offered a settlement to Mr [APPELLANT]), Mr [APPELLANT] fortnightly pension progressed from $351.80 per fortnight to $524.00 per fortnight. I note in passing that there has been some dispute between the parties as to other benefits and concessions Mr [NAME] was said by the respondents to have received. Mr [NAME] lived with his mother until her hospitalisation in 1981. She died in 1982. 28 In mid 1966 during a period in which Mr [NAME] apparently had episodes of exhibitionism he had a psychiatric consultation at the [NAME] [APPELLANT] [COMPANY]. The note of that consultation stated that his IQ "would be somewhere in the range of 50 and 60 and he is unable to see just how seriously society views his offence". 29 During the 1980s Mr [NAME] committed a number of behavioural offences and was committed on occasion to either Hillcrest or [NAME]. Medical reports of this period described him as having mild or borderline intellectual retardation. His [NAME] was assessed in 1981 at approximately 75 to 80 and in 1984 at being in the range of 70 to 79. It was not until late 1985 after a three month stay in [COMPANY] that he was diagnosed as suffering from schizophrenia for which the anti-psychotic medication, [NAME], was prescribed. 30 Prior to 1988 and when not hospitalised, it appears Mr [NAME] resided with various of his relatives or else lived in hostels. In 1988 he made contact with his sister, [NAME], who has given evidence in this proceeding, and he moved to Sydney that year to live with her and her partner, Mr [NAME]. Mrs [NAME] weaned Mr [NAME] off [NAME] in the time he was living in Sydney as she came not to believe he was a schizophrenic. 31 Mr [NAME] left Sydney without telling Mrs [APPELLANT] or Mr [APPELLANT] in early 1991 and returned to [APPELLANT]. He was, according to Mrs [APPELLANT], "terrified of me when I raised my voice". This happened "lots of times" in early 1991 and may account for his precipitate departure from Sydney. He re-offended in [APPELLANT] and was re-committed to [COMPANY] in May 1991. He resumed medication for his psychotic condition and by March 1992 he was prescribed Fluphenazine for it. 32 Though he resided with relatives in [APPELLANT], [NAME] returned to his sister in Sydney for varying periods from late 1993 until 1996. In late 1996 he returned to [APPELLANT] to live independently. He successfully applied to the [COMPANY] for rental accommodation at a unit in [NAME] into which he moved in November 1996. Mr [NAME] was recognised by his cousin, [NAME], at [NAME] a day or two after he took up residence in his unit. Mr [NAME] and his wife, [NAME], lived around the corner from him. Mr [NAME] saw Mr [NAME] almost daily while living at [NAME] and was shown around the area including the location of shops and how to use buses by him. 33 It was on 22 November 1996 that Mr [NAME] entered into the first of the rental contracts with [APPELLANT[NAME] that are the subject of this proceeding. 34 I will outline in some detail the sequence of agreements entered into by Mr [NAME]. Here I merely note aspects of his personal history. He lived at his [NAME] unit until early June 2002. From time to time he went to Sydney to stay with Mrs [NAME] and Mr [NAME] and in June 2002 he returned to Sydney to live with them. 35 I should interpolate here that it is [APPELLANT[NAME]' evidence that, over the years, Mr [APPELLANT] had an exemplary credit paying history. There were a few times when he was behind in his payments due either to direct debit rejections or, on two occasions, to [APPELLANT[NAME]' error. This did not affect his credit rating with the company. I would also note that Mr [NAME] monthly rental liability for the most part ranged between 25 and 35 per cent of his monthly income. I draw this figure from a schedule annexed to the [NAME]'s Further Amended Statement of Claim (Schedule B) which is not reproduced in these reasons. 36 It was about the time of his return to Sydney that Mr [NAME] financial difficulties began to emerge. Mr [NAME] had several credit cards which he obtained in the early 1990s. The statements of account of one of these – variously described as a Coles, Coles/Myer, or [NAME] card – exhibits a quite significant and atypical increase in the expenses incurred by Mr [NAME] between December 2001 and June 2002 with a corresponding escalation in both the monthly balance and minimum monthly amount payable over that period. The monthly balance rose from $240.50 to $1,574.31; the minimum monthly amount payable, from $10.00 to $52.00. Mr [NAME] [NAME] account revealed a like trend in the same period. While the monthly balances did not reach the order of the [NAME] card (charges incurred contributed significantly to the balance), the minimum monthly payment by June 2002 was $48.00 from a previous norm of $10.00 monthly. 37 By September 2002 Mr [NAME] difficulties were such that he had insufficient funds in his bank account to meet direct debit payments to [APPELLANT[NAME] and his commitments on his [NAME] and [NAME] cards. [NAME] became aware of [NAME]'s [APPELLANT[NAME] agreements. She sought legal advice on Mr [NAME] behalf concerning the agreements. This resulted in exchanges with [APPELLANT[NAME]' lawyers which led ultimately to a settlement between Mr [NAME] and the two companies that was finalised on 14 January 2003.

(b) Personal Circumstances 38 It cannot seriously be disputed that Mr [NAME] suffers some level of intellectual retardation and that he has significant incapacities. As I earlier indicated, it is not necessary that I reach a definitive view on the level of his retardation and the extent of his incapacities as such. My concern rather is with what ought to have been apparent to others from how he presented, his conduct and his actions and with what these suggested about his abilities and capacity. I defer making my findings on this latter matter until later in these reasons. 39 Two expert reports were prepared for this proceeding – the one, by Dr [NAME], a psychologist who was called by the [NAME]; the other, by [NAME] [APPELLANT], a psychiatrist called by [APPELLANT[NAME]. Additionally, evidence has been given (i) by Mr [NAME]; (ii) by Mrs [NAME] and Mr [NAME] of their respective observations of Mr [APPELLANT] over the years; and (iii) by some number of [APPELLANT[NAME]' employees of their recollections of him.

Dr [NAME] 40 Dr [NAME] interviewed Mr [NAME] for 2˝ hours and administered tests to assess his intellectual functioning. Mr [NAME] reading, spelling and arithmetic were all assessed at handicap level; his oral comprehension was at a significantly below average level as was his memory. Dr [NAME] concluded that he was of very limited intellectual ability; his IQ was 64 which placed him in the bottom 1% of the population; and he had difficulty understanding the implications of his actions. Dr [NAME] considered that Mr [NAME] past diagnosis as suffering from a psychosis was probably incorrect and there was no evidence of the presence of a psychosis at the time of the interview. And given Mr [NAME] marked deficit in learning and memory, Dr [NAME] considered it to be close to impossible for him to have ever understood how to use a video recorder or more complex electronic equipment. The possibility of his reading and following instructions supplied with appliances was unlikely. 41 In a meeting with [NAME] officials and lawyers prior to his interview of Mr [NAME], Dr [NAME] expressed the view then that "in a broad sense" on the basis of what he had been told of the [NAME] case, Mr [NAME] was disabled. He agreed in cross-examination that he never changed that view. 42 In his notes of his interview with Mr [NAME] he noted that Mr [NAME] was a "fit looking man"; "fluent, clearly spoken". In this respect he described Mr [NAME] presentation, in part, as follows: "Mr [NAME] presented at the interview as a tall reasonably tidily clad individual. It is not known whether any special effort had been made by him or another person to ensure that he was dressed appropriately. The first and most obvious indication of his intellectual handicap on first meeting him was his speech. He spoke little, using only the most basic words." 43 In cross-examination he confirmed that the reference in his notes to his first impression of Mr [NAME] speaking abilities was that he was "fluent, clearly spoken". 44 In re-examination he gave the following answers upon which the respondents place considerable reliance: "Did your impression change during your two and a half hours?---Yes, it did. In what way?---He is not fluent in that sense. His speech was easily – I could understand it clearly, but he was certainly not fluent in that the amount of information he provided was limited. On formal testing of his fluency, as described before, he is extremely limited in actually generation of – spontaneous generation of words. Are you able to estimate how far into the two and a half hours was it when your first impression changed?---About 35 to 40 minutes." 45 Dr [NAME] also conceded in cross-examination that, when he read [NAME] [NAME] report he changed his view on whether Mr [NAME] suffered from schizophrenia. Nonetheless he said that if he had known this at the time, it would not have changed his opinion as to Mr [NAME] functioning. Mr [NAME] was not demonstrating any symptoms at the time. His understanding was that Mr [NAME] was on [NAME] at the time to keep himself stable. As noted below, this was incorrect. 46 Dr [NAME] agreed that a person with a disability could, by a course of conduct over life, compensate for, or tend to hide, the disability. However, he did not think Mr [NAME] history demonstrated insight into his own behaviour.

[NAME] [NAME] 47 [NAME] [NAME] examination of Mr [NAME] took "probably" 1˝ hours. He did not test Mr [NAME] cognitive functioning as that had been tested extensively by Dr [NAME]. His report noted that Mr [NAME] conversation did not demonstrate any obvious thought disorder, and that he was able to conceal symptoms of his schizophrenic illness until late in the interview after rapport had been established. 48 The report reviewed past assessments that had been made of Mr [NAME] in specific clinical/psychological settings. It noted that even when accessed in a clinical situation, "there is a wide range of variation in Mr [NAME] reported IQ". It was noted that in a number of general medical settings involving specialists, no comment was made on his intellectual ability, suggesting he "could make reasoned decisions about his own health and give permission for surgery". [NAME] [NAME] stated that the general medical setting examples indicated to him – "… at times Mr [NAME] was well able to present himself in a manner which did not immediately suggest that he was markedly intellectually disabled." He considered there was convincing evidence of Mr [NAME] having a schizophrenic illness along with his "borderline" intellectual retardation. 49 Turning to Dr [NAME] report, [NAME] [NAME] indicated that it did not give due consideration to Mr [NAME] psychotic illnesses: "[t]his is probably because of Mr [NAME] capacity to conceal symptoms". Contrary to Dr [NAME] view of how Mr [NAME] presented, [NAME] [NAME] considered he presented well in the interview situation and "it was not until quite searching questions were asked that the extent of his limitations became apparent". 50 [NAME] [NAME] went on to note that Dr [NAME] indicated that Mr [NAME] "spoke little, using only the most basic words". He commented that "that was neither my assessment of his speech at interview, nor my interpretation of his detailed responses in the [268 page]transcript" of an interview of Mr [NAME] by the [NAME] with which he had been supplied. 51 The [NAME]'s final comment on the [NAME] report was that Dr [NAME]: "… has not considered sufficiently the context in which assessments are made. Previously I have referred to the fact that when Mr [NAME] was assessed in a general medical setting there was minimal reference to his intellectual capacity. Indeed, even when he had been assessed in a psychiatric/psychological setting there had been a wide difference of opinion in regard to his intellectual capacity. A psychologist and/or psychiatrist is in an enviable position of being able to ask questions of a patient/client, questions which would not be appropriate for other persons in the community to ask." 52 The report returned to the importance of the context in which an assessment occurred. Having noted what had earlier been said on this matter, the report went on: "Extending the contextual argument further, consider the situation of a shop assistant and the shop assistant's assessment of a person. A shop assistant is not in a position to make detailed enquiry about a person's cognitive or mental state functioning. Indeed, this is not expected of such a person. Furthermore, even if there were concerns about the capacity of a person, it would require a very considerable degree of cautious judgment in terms of pursuing the matter, lest offence be given or the shopper feel discriminated against." 53 [NAME] [NAME] mistakenly assumed that Dr [NAME] did not assign a specific IQ figure for Mr [NAME] (it was 64). He interpreted Dr [NAME] assessment to delineate a person of borderline intellectual ability with an IQ of 75 to 80. He previously had expressed his own view that (i) Mr [NAME] degree of intellectual retardation was "probably of the borderline degree"; and (ii) – "Mr [NAME] has been able to present in a relatively unremarkable manner. He does not have obvious behavioural manifestations of disorder and he is able to participate in conversation in quite an engaging manner. Thus I consider that his intellectual retardation is in itself not particularly obvious, but when his schizophrenic illness is more apparent, then the combination of disorders would make him more liable to engage in activity which would bring his abnormal behaviour to attention." 54 In giving evidence in chief, [NAME] [NAME] indicated that Health Insurance Commission records did not disclose that Mr [NAME] had been provided with anti-psychotic medication after 1996. He also indicated that Mr [NAME] illness, if not active at the time of Dr [NAME] tests, may have had very little effect on Mr [NAME] performance, but there may have been "subtle cognitive disturbances". Nonetheless he accepted in cross-examination that the symptoms of active schizophrenia are not necessarily able to be observed.

Mr [NAME], Mrs [NAME] and [NAME] 55 The evidence of Mr [NAME], Mrs [NAME] and Mr [NAME] is that Mr [NAME] had significant reading difficulties. Mr [NAME] stated he could "only read a little bit"; he did not read [APPELLANT[NAME] documents before signing them; and he was not able to read letters he received in Sydney from [APPELLANT[NAME] in 2002 and that [APPELLANT] read them to him (this was confirmed by Mr [APPELLANT]). 56 Mr [APPELLANT] own evidence on how he paid [APPELLANT] and electricity bills in cash exemplified his inability to do simple arithmetical calculations. He indicated he simply gave money to the person he was paying at the Post Office who would take out the money for the bills and would give him the change. He said he was not able to count the change and he hoped the person he was dealing with was honest. He also gave evidence that he did not know in dollar terms how much of his pension was going to [APPELLANT[NAME] and he never worked out how much was left over. He equally indicated when he first went to [APPELLANT[NAME] he did not think about what he could afford. 57 The evidence given by Mr [NAME], confirmed in substance by that of Mrs [NAME] and [NAME], was that he had a quite limited ability to operate ordinary machines and appliances of any complexity. He was unable to operate ATM machines; he returned the first microwave he rented after three days as he was unable to use it; and he could not use a number of the functions of VCRs he rented. 58 Finally, there is evidence that he was suggestible. He purchased a "wireless" and a fan at the suggestion of a man he was boarding with; he accepted the choices of appliance proposed by [APPELLANT[NAME] [NAME]; he obtained his [NAME] card at the suggestion of a person he boarded with; and after his neighbour told him about [APPELLANT[NAME]' direct debit system and how to arrange the service, he did "the same thing". 59 I would interpolate at this point that the above evidence, so far as it goes, provides some level of support for Dr [NAME] conclusions about Mr [APPELLANT] reading and arithmetical capacities.

The [APPELLANT[NAME] 60 I will defer consideration of the evidence of these witnesses as to how Mr [NAME] presented to them until I outline the sequence of dealings they had respectively with [NAME].

[APPELLANT[NAME] 61 The following accounts of the [NAME] and general practices of the two companies are drawn primarily from the affidavits of the [APPELLANT[NAME] personnel who gave evidence and which is précised in the respondents' closing address (at par 67 ff). The description of procedures followed in entering into a rental/leasing agreement is intended to provide some context for what later follows. It does not embody any finding of fact as to the actual practices and procedures followed in respect of any individual agreement that is disputed in this proceeding. Neither does it necessarily reflect the appreciation of those practices and procedures of all of the [APPELLANT[NAME] employees who dealt with Mr [APPELLANT] when a rental agreement was entered into. 62 [APPELLANT[NAME] has been operating in South Australia for 50 years and is the largest electrical retailer in the State. It also has agencies in New South Wales, Victoria, Queensland, Western Australia and the Northern Territory. It offers a number of methods by which customers may pay for products: (i) payment in cash; (ii) agreements to rent products with the opportunity to make an offer to acquire the product at the end of the rental term; and (iii) loan agreements with various interest rates. 63 The company maintains a call centre which has two departments, [NAME], having separate numbers. As will be seen, calls made to [APPELLANT[NAME] by Mr [APPELLANT] assume some significance in the [NAME]'s case. It claims he made 329 calls to [APPELLANT[NAME] between February 1998 and November 2001. The Finance Department call centre was usually staffed by 7 to 10 personnel who took calls from customers related to their accounts. The call centre personnel log the customer's inquiry in [APPELLANT[NAME]' system ("the [NAME]"). That system maintained a separate credit history for each account held with it by a customer. Considerable reliance has been placed on Mr [NAME] credit histories in this matter. 64 The Service Department call centre was generally staffed by 6 to 8 people who dealt with customer calls in relation to products said to be faulty or requiring a service. The call information was logged into the [NAME] for the Service Department. In the period 1996 to 2002, [APPELLANT[NAME] had 40 to 45 service technicians servicing both white and brown goods. A service facility was provided (i) for products that were the subject of rental agreements free of charge; (ii) pursuant to service agreements with [APPELLANT[NAME] for maintenance and repair for particular customer owned products; and (iii) for cash-on-delivery work otherwise provided to a customer. Service calls were instigated by calls to the Service call centre. Service technicians received job sheets the evening before a particular job was to be undertaken. As will be seen, Mr [NAME] made regular use of service technicians, three of whom have given evidence. 65 Turning to the rental and loan processes, where a customer wished to obtain a product by way of a rental or loan agreement, the sales personnel would complete an application for credit (otherwise known as a "confidential") on the basis of information provided by the customer. In the period 1996 to 1 November 1998 applications for credit were prepared manually. The salesperson would take the customer to his or her desk located in an area adjacent to the shop floor and obtain from the customer information to fill in a pre-printed form which required, among other things: (i) the customer's name and identification; (ii) the customer's address, for how long the customer had been at the address and whether the customer owned the property or was renting or boarding; (iii) the customer's previous address; (iv) employment details or source of income, family details, other relatives and friends and credit references; and (v) details of monthly expenditure including rent, car expenses, living expenses, monthly income and any other credit. I will refer later to particular aspects of the credit application form. 66 Once completed, the manual credit application was faxed from the particular retail store to [APPELLANT[NAME]' head office. The Acceptance Department would then review the application applying a manual score card system. The score card went through various criteria for which points were allotted. These criteria included ratings for "Current Customer", "CRAA Assessment", "Residential Stability" and "Employment". I would note that the points able to be scored by current customers with good ratings were numerically much greater than those able to be scored under any of the other criteria. If as a result of the application of the score card system a customer got less than 24 points the application would be rejected. Middle range points of 25 to 34 would require further investigation and a review of the application by a manager. Points above 35 would result in an approval of the application. This process generally took between 30 minutes and an hour according to one of the sales personnel who gave evidence. On about 1 November 1998 the credit application system became automated. Thereafter the customer's details were entered directly on-screen and the application was assessed electronically. Once transmitted to credit approval, the computer system applied an automated score card to the application and produced an automatic approval, review recommendation, or a decline advice depending on the points score attributed to it. If [APPELLANT[NAME] had approved another application within the previous six months, the system would automatically flag the new application for review in which case it was assessed manually. 67 Once the application for credit was approved by the acceptance department the sales personnel would prepare a rental or loan contract. I would interpolate that the standard terms and conditions of each are lengthy and complex and would not invite the close scrutiny of an ordinary purchaser. It is said by [NAME] who gave evidence that as a matter of standard practice they would go through the terms and conditions of either the rental or loan agreement, but not every provision, and would highlight the terms of the agreement including: (a) the cost of the product;

(b) the term of the rental or loan agreement;

(c) the monthly repayment and due date;

(d) the payment obligations;

(e) the residual value of the product at the end of the rental term;

(f) the ability to make an offer to purchase products at the end of the rental term;

(g) the ability to upgrade products by returning existing products and the qualifying period to do so;

(h) that the equipment would be installed by [APPELLANT[NAME] personnel at no additional charge;

(i) the service facility whereby [APPELLANT] [NAME] would attend to effect any repairs of the product during the rental term at no additional charge; and

(j) any warranty applicable to the product.

68 [NAME], as earlier noted, was not a retailer. Its business was leasing electrical goods. It traded under the business names in [COMPANY]. [APPELLANT[NAME] was its agent in South Australia from November 2001.

[NAME]'S DEALINGS WITH [APPELLANT[NAME] (AND [NAME]) 69 Because of the scope and complexity of the issues raised here, it is necessary to break down Mr [APPELLANT] dealings with [APPELLANT[NAME] into the following discrete categories: (1) dealings with sales personnel; (2) credit applications; (3) service provision by [APPELLANT[NAME]; (4) telephone calls to [APPELLANT[NAME]. 70 Before dealing with these individually, there are a number of background matters to which I need refer. First, the first four rental agreements were entered into at [APPELLANT[NAME]' Rundle Mall store, the balance at its [NAME]. To get to the [NAME], Mr [APPELLANT] had to take a bus into [APPELLANT] and then a train to [NAME] which is about 25 kilometres north east of the city. His evidence is that, on his first trip to [NAME], his cousin came with him. 71 Secondly, as will be seen, Mr [NAME] returned a number of appliances shortly prior to the expiry of the rental period and rented new like appliances in their stead. This facility (described by [APPELLANT[NAME] as "upgrading") was provided for in the rental agreements and its use was "not uncommon at all" according to [NAME], a [APPELLANT[NAME] salesman. 72 Thirdly, because I will be making reference to how [APPELLANT[NAME] employees perceived Mr [APPELLANT] in light of his presentation, voice and conduct, I should at this point foreshadow my own view of how he presented as a witness. I will later discuss this matter at greater length in the context of considering the evidence generally on how he presented. Mr [NAME] was in the witness box for over a day. While somewhat slow of speech, he was fluent and clear in what he said. His language was not that of an educated person but neither was it childlike. In some matters he displayed a considerable memory. While he gave evidence of his own limitations, I do not consider that he obviously presented as being mentally retarded by virtue of his appearance, speech or manner of communication. 73 Fourthly, the [NAME] has annexed five schedules to the Further Amended Statement of Claim which deal, variously, with the particulars of Mr [NAME] agreements with the respondents (Schedule A), particulars of his cumulative liability to the respondents on entry into each of the agreements (Schedule B), particulars of financial hardship based on his monthly income and monthly expenses (Schedule C), particulars of amounts actually paid on six particular agreements (Schedule D), and both a table of actual payments made by Mr [NAME] to the respondents each month and a table of financial hardship resulting from those actual payments (Schedule E). Though these Schedules have been of some assistance given both the number of agreements in question in this proceeding and the period of time to be considered, I have not reproduced them in these reasons. They are of considerable length and in important respects not self-explanatory. In these reasons I have used some generalisations drawn from them. 74 While some aspects of these schedules are contentious (particularly Schedule C), they provide the underpinning of the [NAME]'s case against [APPELLANT[NAME] insofar as it relies upon alleged financial hardship suffered by Mr [APPELLANT] in consequence of his ongoing liabilities to [APPELLANT[NAME]. The figures used in the Schedules have been drawn from documentary evidence insofar as these relate to Mr [NAME] pension, rent, and actual liability to, and actual payments made to, [APPELLANT[NAME] from time to time. A purpose of Schedule E in particular, when considered with Schedule C, is to demonstrate that Mr [APPELLANT] regularly paid [APPELLANT[NAME] more in a given month than was his actual rental liability for that month.

(i) The agreements 75 Before referring to the evidence on a number of the agreements individually, I should refer to the history and nature of his rental and loan agreements. The service agreements, insofar as they give rise to dispute, are dealt with separately later in these reasons: see "Ancillary Claims"; although some reference will be made to them below. The following is based on Exhibit 9 and is a précise of the history set out in the respondents' closing address.

(a) Transaction history 76 On 22 November 1996 Mr [NAME] entered into a rental agreement for both a [NAME] refrigerator and a [NAME] washing machine ("the first agreement"). On 3 November 1998 Mr [NAME] returned that refrigerator (as he was entitled to do under the rental agreement at no additional cost) and replaced it with a Maytag refrigerator of similar capacity ("the seventh agreement"). On or around 4 April 2002 Mr [NAME] returned that refrigerator and replaced it with a [NAME] refrigerator of similar capacity ("the thirty-third agreement"). This agreement was terminated on or about 25 November 2002 and the refrigerator returned to [APPELLANT[NAME] in the context of the settlement. Mr [APPELLANT] paid the instalments due under these agreements either on time or in advance. On 14 April 1999 Mr [NAME] offered to purchase the [NAME] washing machine (as he was entitled to do under the agreement) and [APPELLANT[NAME] accepted the offer. On 13 September 2001 Mr [NAME] entered into a rental agreement for a new [NAME] washing machine ("the twenty-sixth agreement"). Mr [NAME] did not trade in his previous washing machine on the new washing machine. The new agreement was terminated on or about 25 November 2002 and the washing machine returned in the context of the settlement. Mr [NAME] paid the instalments due under these agreements either on time or in advance. 77 On 5 December 1996 Mr [NAME] entered into a rental agreement for a [NAME] colour television ("the second agreement"). On 17 March 1999 Mr [APPELLANT] offered to purchase the television and the [APPELLANT[COMPANY] accepted the offer. 78 On 19 February 1997 Mr [NAME] entered into a rental agreement for a hi-fi stereo video cassette recorder (VCR) ("the third agreement"). On 14 October 1999 Mr [APPELLANT] offered to purchase the VCR and [APPELLANT[NAME] accepted that offer. Mr [APPELLANT] also entered into a rental agreement for a [NAME] hi-fi stereo video cassette recorder on 24 April 2001 ("the twenty-fourth agreement"). This agreement was also terminated on or about 25 November 2002 and the VCR returned to the [APPELLANT[COMPANY]. Mr [APPELLANT] paid the instalments due under these agreements either on time or in advance. 79 On 28 May 1997 Mr [NAME] entered into a rental agreement for a microwave oven ("the fourth agreement"). Mr [NAME] returned the microwave three days later on 31 May 1997, advising that he was unhappy with its functions. Mr [NAME] paid three months' rental payments, that is about $72 (the fee for terminating the agreement before the end of the Minimum Rental Term). On 11 February 1998 Mr [NAME] entered into a rental agreement for a microwave oven ("the fifth agreement"). On 6 October 1999 Mr [NAME] offered to purchase the microwave and the offer was accepted. On 28 October 1999 Mr [NAME] entered into a rental agreement for another microwave ("the fifteenth agreement"). On or about 2 November 2000 Mr [APPELLANT] offered to purchase this microwave and [APPELLANT[NAME] accepted that offer. 80 On 1 September 1998 Mr [NAME] entered into a loan agreement for a Vax barrel vacuum cleaner ("the sixth agreement"). Mr [NAME] paid the loan in full on 25 February 2000. Mr [NAME] paid the instalments due under this loan either on time or in advance. 81 On 23 February 1999 Mr [NAME] entered into a new rental agreement for a [NAME] 48‑51cm mono colour television and cabinet ("the eighth agreement"). On 3 November 2000 Mr [NAME] traded in or exchanged that television (as he was entitled to do under his rental agreement) and replaced it with a [NAME] 62-63cm colour television ("the twentieth agreement"). At the same time Mr [APPELLANT] offered to purchase the cabinet and [APPELLANT[NAME] accepted that offer. This agreement was terminated on or about 25 November 2002 and the television returned in the context of the settlement of claims by [NAME] against the [APPELLANT[COMPANY]. Mr [APPELLANT] also entered into a rental agreement for a [NAME] 62-63cm colour stereo television on 7 April 2000 ("the sixteenth agreement"). This agreement was also terminated on or about 25 November 2002 and the television returned. Mr [NAME] paid the instalments due under these agreements either on time or in advance save for an occasion in late 2002. 82 On 14 April 1999 Mr [NAME] entered into a rental agreement for a [NAME] clothes dryer ("the tenth agreement"). On 18 September 2000 Mr [APPELLANT] offered to purchase the dryer and [APPELLANT[NAME] accepted that offer. 83 On 28 April 1999 Mr [NAME] entered into a rental agreement for a [NAME] hi-fi stereo shelf system ("the twelfth agreement"). On 23 March 2001 Mr [NAME] returned that stereo and replaced it with a [NAME] mini hi-fi system ("the twenty-third agreement"). That agreement was terminated on or about 25 November 2002 and the stereo returned in the context of the settlement with [APPELLANT[NAME]. [NAME] paid the instalments due under these agreements either on time or in advance. 84 On 2 August 2001 Mr [NAME] entered into a loan agreement for a Dimplex heater ("the twenty-fifth agreement"). Mr [NAME] made frequent repayments toward this loan. However, the account fell into arrears in mid 2002. Unlike his other accounts, Mr [NAME] fell behind with some payments on this account. Given the conduct of his other accounts it is not apparent why this was so. This loan agreement was subsequently terminated in the context of the settlement of the claims made by [NAME] against [APPELLANT[NAME], and Mr [APPELLANT] returned the heater. 85 On 22 November 2001 Mr [NAME] entered into a rental agreement for a [NAME] digital still camera ("the thirty-first agreement"). This agreement was terminated on or about 25 November 2002 and the camera returned in the context of the settlement. Mr [NAME] paid the instalments sue under the inRent agreement either on time or in advance. 86 On 14 February 2002 Mr [NAME] entered into a rental agreement for a Pioneer DVD/VCD/CD player ("the thirty-second agreement"). This agreement was terminated on or about 25 November 2002 and the DVD player returned in the context of the settlement. Mr [NAME] paid the instalments due under the agreement either on time or in advance. 87 Apart from the fifteen rental and two loan agreements, Mr [NAME] entered into nineteen annual service agreements with [APPELLANT[NAME]. This figure includes in a number of cases a sequence of successive agreements (or "renewals") in respect of the same appliance. Each agreement required Mr [NAME] to make a monthly payment of between $8.00 and $10.00. They were in respect of goods which he previously had rented and had subsequently purchased. 88 To exemplify the cumulative effect of the above sequence of rental and other agreements on Mr [NAME] relationship with the respondents, from 28 October 1999 (the date the 15th Agreement was entered into) he had at least nine agreements with the respondents. Towards the end of the relevant period (from 14 February 2002 to November 2002) Mr [NAME] had 13 current agreements with the respondents pursuant to which he was required to make monthly payments. 89 This final matter to which I should refer relates to Mr [NAME] payments to the respondents under the various agreements. He generally made fortnightly payments save that from about April 2001 his rental liabilities were directly debited from his bank account. It is apparent from the transaction histories that Mr [NAME] regularly paid more – and on occasion significantly more – than he was required to pay under many of his various agreements. The consequence of this in the case of the rental agreements was, it seems, to accelerate their payment out at which time he had the option of offering to pay a residual amount to purchase the appliance in question. A number of appliances were so bought. In the case of the service agreements which he entered into after purchasing an appliance, the effect of overpayment was to trigger a payment in full notice in [APPELLANT[NAME]' system which in turn led either to the raising of a new service agreement if there was a credit balance on the paid up agreement, or to an offer being made to enter into a new annual service contract and, if a further payment was received, to the raising of an agreement.

(b) Specific transactions 8890 By way of preface to what follows, I should indicate that six [APPELLANT] [NAME] gave evidence. Three had no recollection of Mr [NAME] at all and could only say that in dealing with him they would have followed their standard practices in explaining the agreement. The other three had varying recollections, the most explicit being [NAME] and [NAME] who were involved respectively with the last two of the rental agreements entered into by Mr [NAME]. Mr [NAME] was the salesperson for nine of the agreements, though his evidence is that he recalls serving him on four or five occasions. 8991 To the extent that these witnesses rely simply upon their own practices in explaining agreements and in filling out credit applications, I treat that evidence with some circumspection given that, as several acknowledged, Mr [NAME] was a regular customer and, at least from the time that credit applications were automated, they had on-screen access to what purported to be previous details (financial and otherwise) of Mr [NAME]. There is, in my view, a real likelihood that on occasion the explanations given as to terms and, for that matter, the inquiries made in relation to the credit application were more relaxed than may have been the case with a person without a rental history with the company. 92 I should also indicate that, while Mr [NAME] demonstrated a considerable memory of his dealings with [APPELLANT[NAME], I consider aspects of his evidence unreliable particularly in relation to the explanation given him of the rental agreements. I equally place little weight on the alleged lack of discussion both of his existing liability to [APPELLANT[NAME], or its level, at the time of some of the agreements and of whether he could afford the agreement he was then entering into. Given the function the sales personnel saw themselves as performing – they did not give credit approvals – I do not consider the context of the sales floor to be one where such discussion could have been expected as of course. 9193 Distinctly, there is some evidence which I accept that [NAME] is a "lower demographic" area; that, to use Mr [NAME] words "[a] lot of the customers at the [NAME] were on pensions"; and again to quote Mr [NAME], "[i]t is not unusual for people to deck out their whole house with appliances from [[APPELLANT[NAME]] and to spend more than $300 per month". I should also note, because the point is made by some of the [NAME] who have been called, that Mr [APPELLANT] used his pension card regularly at [APPELLANT[NAME] when providing identification. The card did not in express terms identify him as having a disability pension although it appears to have had the annotation "DSP" on its reverse side. 9294 Finally, in considering the evidence of [APPELLANT[NAME]' personnel, the respondents emphasise that none who had a recollection of Mr [NAME] were challenged in cross-examination as to their evidence that they did not know that he was intellectually disabled or unable to understand his rights and obligations, and that it was not put to the [NAME] that they took unfair advantage of him. 9395 The specific transactions now to be considered are drawn primarily (but not exclusively) from those emphasised in the [NAME]'s closing address (pars 55 to 70).

(i) First agreement – First Refrigerator and Washing Machine 9496 It was Mr [NAME] evidence that, as he had just moved into his [NAME] unit, he needed a fridge and washing machine. When he went to [APPELLANT[NAME] he told this to the salesperson (whom he identified as "[NAME]" ([NAME])). He took the washing machine which he was told was one that was "real easy to operate". Mr [NAME] has no recollection at all of dealing with Mr [NAME]. [NAME]'s evidence is that he did not read any document before he signed and he could not recall if [NAME] explained the terms and conditions to him.

(ii) Second agreement – First Television 9597 It was Mr [NAME] evidence in chief that he did not choose the first TV but that it was selected for him and was already packed up ready to be delivered when he came in to the store in response to a [APPELLANT] call from [APPELLANT[NAME]. He said he had previously told "[APPELLANT]" ([APPELLANT]) that he was only looking for a TV at the time and he did not really want one yet. He only took it because "[t]hey had it all ready". In cross-examination, he indicated he rang [APPELLANT[NAME] concerning a television; before he got the above [APPELLANT] call from [NAME] he had been into [APPELLANT[NAME] looking at televisions; and he might then have spoken to [NAME] though he could not remember. Mr [NAME] also indicated that he had no trouble with the television when it was set up in his flat: "[t]hey showed me how to operate it". It later kept on breaking down all the time. 9698 Mr [NAME], who also dealt with Mr [NAME] for the third and fourth agreements, had no recollection of Mr [NAME]. He was cross-examined on [NAME] made by Mr [NAME]. He indicated that the financial information as to expenses etc were supplied by the customer. He indicated that it was not his practice to query an "unrealistically low amount for living expenses" (for the second agreement it was $160 per month). Equally he said that if the figures given by the customer as to existing commitments to [APPELLANT[NAME] were wrong, they were the figures given and it was not his job to check them. He said in re-examination that such checking was not the role of [NAME]. The acceptance department did the checking.

(iii) Third agreement – First VCR 9799 All that need be said of this dealing is that Mr [NAME] remembered the salesman was [NAME]. His evidence is that he could only work the video function. All the other things were "too complicated". He could not even set the clock. It was Mr [NAME] who selected the VCR.

(iv) Fourth agreement – First Microwave 98100 This microwave was returned by Mr [NAME] cousin three days after it was purchased. Mr [NAME] evidence was that he could not operate it. He had previously indicated to [APPELLANT[NAME] he wanted to return it as he was not happy with its function. He said in evidence that he was not aware that if he returned it before the end of the minimum rental period, he would have to pay three months rental. [APPELLANT[NAME]' credit history of this agreement noted both Mr [NAME] reason for wanting to return the microwave and that a [APPELLANT] [NAME] offered to show him how to use it properly but the customer just wanted to return it and was "quite happy" to pay the three months rental for it. Mr [NAME] confirmed the accuracy of what was recorded. 99101 Mr [NAME] rented a second and less complex microwave ("just an ordinary microwave") in February 1998.

(v) Sixth agreement – Loan agreement for Vacuum Cleaner 100102 The salesperson who dealt with Mr [NAME] for this agreement has not been identified in evidence. Mr [NAME] evidence is that when he entered into it, the only explanation of a loan agreement was that it was the same as a rental agreement. He understood "that a loan was only having a loan of it and when you were finished you had to give it back". In re-examination he accepted that, at what I would infer was a later date, he rang up [APPELLANT[NAME] and that they told him what a loan agreement was.

(vi) Eighth agreement – [NAME] 101103 Mr [NAME] was the salesperson who dealt with Mr [NAME] for this agreement. He has no recall at all of dealing with Mr [NAME]. He was cross-examined on the credit application for this agreement. Its similarities with that for the seventh agreement are said by the applicant to be such as to give rise to the inference that the eighth was an adaptation of the seventh. The existing [APPELLANT[NAME] liability for the eighth is said to be understated by $57 per month. 102104 Mr [NAME] was also cross-examined on the figure included for living expenses in the credit application for $120.00 per month (or $27.69 a week). He said they did query low figures but they could only go on what they are told : "[t]he application approval system is not me".

(vii) Tenth Agreement – Dryer 103105 All that needs to be noted of this rental is that Mr [NAME] chose the clothes dryer himself. The reason he gave for renting it was because at [NAME] one clothesline had to be shared by eight people.

(viii) Twelfth agreement – First Hi-Fi 104106 This was the first agreement in which [NAME] was the salesperson. He could not recall selling the Hi-Fi to Mr [NAME]. His evidence is that he cannot recall when he first came to remember Mr [NAME] by sight, but he did recall dealing with him on four or five occasions (not including the present). This, nonetheless, is an appropriate point at which to outline Mr [NAME] impressions of Mr [NAME] as recorded in his affidavit: "25. Mr [NAME] was always very pleasant and polite. Mr [NAME] presentation did not change over the period I was dealing with him. In my initial dealings with Mr [NAME] I noted nothing out of the ordinary about him about which I have any recollection. After dealing with Mr [NAME] several times I noted from speaking with him that I found he was a little slow, but I don't mean that he appeared to be intellectually disabled, just that his speech was a little slow. I recall that Mr [NAME] always seemed to know what product he wanted when he came to the store." 105107 Having indicated that Mr [NAME] asked for him by name on most occasions; phoned him in advance before coming to the store on some occasions; knew on one occasion the brand he wanted ([NAME]); questioned him on occasion about products he was looking at (for example how it worked) – Mr [NAME] swore: "31. I did not suspect or know that Mr [NAME] was intellectually disabled. The fact he was a pensioner was not a cause for concern as it was not, in my experience, unusual. I deal with pensioners regularly, particularly at the [NAME]. … 32. I never had reason to doubt that Mr [NAME] knew what he was buying. I cannot recall Mr [NAME] ever suggesting that anyone might need to help him work things out or suggesting this was necessary. 33. … Mr [APPELLANT] had been dealing with [[APPELLANT[NAME]] for quite a few years and I remember that his accounts were in good shape. I recall that his accounts were never in arrears. I did not have reason to think that he would have trouble making his payments. In my observation, Mr [NAME] was an excellent customer in that he seemed to have no problems paying and paying on time.

34. I obtain the relevant information from the customer but it is not up to me to judge what an acceptable credit level is. It is totally up to the credit acceptance department to determine this. I did not ever look at Mr [APPELLANT] monthly credit with [[APPELLANT[NAME]] and think to myself 'oh gee that's high – I don't believe he has got that much'. I never had a reason to. He had been dealing with [[APPELLANT[NAME]] for a number of years, and by reference to his account history, he always paid on time and so there was never any reason to doubt him." 106108 Returning to the Hi-Fi agreement, Mr [NAME] evidence is that he indicated to the salesperson he wanted a hi-fi but not one that also played records as he did not have any.

(ix) Sixteenth agreement – Third Television 107109 Mr [NAME] said the reason he bought this larger television was because the "other TV played up … and my eyes weren't what you'd call real good, so I thought if I got a bigger screen I could see it better". He said as well of this agreement, as he did of some number of others, that no mention was made of the money he was already paying to [APPELLANT[NAME].

(x) Twentieth agreement – Fourth Television 108110 [NAME], the salesperson for this agreement, had no recollection of it. It was entered into six months after the sixteenth agreement for the third television. The reason Mr [NAME] gave for renting this television is that it was for his bedroom so he could watch it in bed. This agreement is contentious for the reason that two separate credit applications were filled out for it. The first (Exhibit I) was for a thirty-six month term with a monthly repayment rate of $60. Mr [NAME] monthly income is incorrectly stated to be $1,733.33 (which is double the correct amount) and his living expenses are stated to be $433.33. The same figures appear in the credit application for the twenty-third agreement. Again Mr [NAME] was the salesperson. 109111 The second credit application for the twentieth agreement which was later approved was for 60 months. The original of that application could not be located. A copy of the application that was put in evidence was from a printout made after Mr [APPELLANT] settlement with [APPELLANT[NAME]. It shows the same incorrect figure for income. The living expenses figure is $316 which was the default figure as at the time of the printout. 110112 The [NAME] has sought to make much of the two applications and the apparent inconsistencies between them. [APPELLANT[NAME] accepts the inaccuracy in the income figures but it also questions the accuracy of the living expenses of $443.33 in the Exhibit I application. What is notable about that figure is that it departs significantly from the living expenses figure of $120.00 that had characteristically been inserted in Mr [NAME] previous applications. After the twenty-third agreement (the next rental agreement) where the figures for income and living expenses appear to have been transposed, living expenses then revert to what appear to be default figures commencing as $300.00. The evidence of [NAME], a [APPELLANT] [NAME], is that the figure of $433.33 "would have been the calculation in the default system" at the time the application was done. However, her evidence on that system is that it was not introduced until September 2001. The twentieth agreement was entered into on 3 November 2000.

(xi) Twenty-fourth agreement – Second VCR 111113 The salesperson for this agreement was [NAME]. He remembered dealing with Mr [APPELLANT] having previously spoken to him on the [APPELLANT] about his buying a VCR. Mr [APPELLANT] evidence is that when Mr [NAME] called he knew what he wanted. He asked questions and seemed to have quite good knowledge about the product. When Mr [NAME] came to the store he asked for Mr [NAME]. In his affidavit Mr [NAME] states: "I recall that Mr [NAME] was neatly dressed. I do not recall that he had any physical disability or that there was anything unusual that stood out about him. He appeared normal and nothing about his speech or the way he spoke stood out to me." Mr [NAME] also stated that he recalled applying his usual practice in relation both to the credit application and the rental agreement: in filling out a credit application he would not question the income or living expenses provided by the customer; he would explain certain things in the rental agreement, but would go into less detail with existing customers who "generally have a good understanding of how the rental system works". He said that Mr [APPELLANT] told him he was an existing [APPELLANT[NAME] customer and "said words to the effect that he understood what I told him". 112114 In cross-examination he indicated he could not remember in any detail what he went through with Mr [NAME]. He did not discuss whether Mr [NAME] could afford to enter into the agreement. Mr [NAME] gave evidence to the same effect. As Mr [NAME] put it: "[t]hat's where our acceptance department probably comes into it".

(xii) Twenty-fifth agreement – Heater 113115 Mr [NAME] was again the salesman. He could not recall the details of the transaction. Mr [NAME] evidence is that he was told that a heater could not be rented, it had to be bought (Mr [NAME] confirmed that such was the case). He said that it was not explained to him that he would be paying interest or how much he would be paying under the loan agreement. The reason he gave the salesperson (he could not remember it was Mr [NAME]) for wanting the heater is that he had a small one at home "that wasn't doing any good". He saw the bigger one there and took it. Mr [NAME] made no use of the heater: "I found out it was very dear on power".

(xiii) Twenty-sixth agreement – Second Washing Machine 114116 The salesman was Mr [NAME] who recalled this dealing. His evidence is that [NAME] called him before coming to the store and said he wanted a new [NAME] washer. While not confirming the [APPELLANT] call [NAME] indicated he did ask about a [NAME] machine "because they're easier to operate" and he did indicate that he said he wanted "a machine that would hold everything instead of doing all the separate washes all the time". He rented the biggest machine.

(xiv) Thirty-first agreement – Digital Camera 115117 Though Mr [NAME] was the salesman for this agreement, Mr [NAME] said he did not know the person he was talking to at the store. He said he went to the store and was looking at cameras. He told the salesperson "I like cameras" and was told he could rent cameras as well. The salesperson showed him a digital camera and said: "… you can take photos and put them on the – through the – computers, I think. I can't be quite sure but I think that's what he might have meant." Mr [NAME] said in evidence-in-chief he was not able to use a digital camera; he probably did not want one; it was explained to him that under an "inRent agreement" for the camera he would not have to pay rent on the day of the agreement but at a later date; and he never used the camera as he did not know how to.

(xv) Thirty-second agreement – DVD/VCD/CD 116118 The salesman for this agreement in February 2002 (the second last of the rental agreements) was [NAME]. His evidence is that he received a telephone call from Mr [NAME] inquiring what DVD brands he recommended and he gave him information about a particular model. Mr [NAME] came to the store and asked for him. Mr [NAME] explained general features of DVD players to him; he showed several DVDs to Mr [NAME] but did not go through their features; he recommended the model he had mentioned on the [APPELLANT]; he explained how to work it; Mr [APPELLANT] was not confused and understood what he was explaining; and Mr [NAME] took that machine. Of Mr [NAME], the affidavit states: "24. I recall Mr [NAME] used a Department of Social Security pension card for identification. I photocopied the front and back of the card. The fact that he was on a pension did not concern or alarm me. A lot of the customers at the [NAME] were on pensions.

25. Mr [NAME] wasn't scruffy or badly presented. He was neatly and casually dressed and nothing stood out about him. He had a fairly normal manner for a man in his late 50's or early 60's. I do not recall him displaying any physical disability such as a limp.

26. I didn't notice anything unusual about the way Mr [NAME] spoke particularly in the context of some of the customers I had at [NAME]. … 31. To my observation, Mr [NAME] seemed to understand what I was saying to him about the product and the obligations that arose under the rental contract." 117119 As to Mr [NAME] credit application, he stated that when he brought it up on the screen it would have contained the information from the most recent agreement which he then updated with Mr [NAME]. The living expenses figure of $303.00 was generated by the [NAME]. The monthly surplus figure of $173.00 did not raise any alarm bells with him and he did not consider it at the time. As he said in his affidavit: "I had no role in the credit approval process".

(ii) [NAME] 118120 I should indicate that the [NAME] relies upon [NAME] for two purposes – first, as evidence of how Mr [NAME] presented to the relevant salesman on the day each particular application was completed; and secondly as evidence of the respondents' records from which they knew or ought to have known of financial hardship to Mr [NAME]. 119121 By way of background it is appropriate that I make some reference to Mr [NAME] actual finances over the period of his dealings with [APPELLANT[NAME]. I have already indicated that from December 1996 until December 2002 Mr [NAME] fortnightly pension progressed from $351.80 per fortnight to $524.00 per fortnight. Though there has been some dispute as to whether he was also in receipt of rent assistance during this period, it seems clear from the terms of the Social Security Act 1991 (Cth)(ss 117, 1064(1), 1064-A1, 1064-D1 and 13 "Government rent") that he was not entitled to receive this benefit and there is no evidence that he did. It is the case that Mr [NAME] would annually, request and be paid, advance payments of his pension of $500.00 which he would repay in the course of the ensuing 12 months. 120122 The above, on the evidence, would seem to constitute the totality of Mr [NAME] recurrent monetary receipts in the period of present relevance. He was, as a pensioner, also entitled to a number of concessions which included at least pharmaceutical benefits assistance and electricity and telephone concessions. According to calculations made by the [NAME] (from [NAME] and AGL invoices to Mr [APPELLANT]) the monthly average of his [APPELLANT] and electricity payments was $32.00. His monthly rental payments to the [COMPANY] ("[NAME]") for his [NAME] unit progressed from $118.73 in late November 1996 to $153.83 in late September 2002. The rental payments were deducted by [NAME] from Mr [NAME] pension and paid directly to [NAME], the balance of the pension being paid into his bank account. And as I have already indicated, his monthly rental liability to the respondents was, for the most part, in the range of 25 to 35 per cent of his monthly income from time to time. 121123 Turning to [NAME], I have referred earlier to the information required to be provided in a credit application. In the period during which the credit application was filled out manually, the application form had at its top a box headed "MTHLY PAYMENT" into which the monthly rental for the appliance in question was to be written. Near the foot of the form appeared the following box: MONTHLY EXPENDITURE Living Expenses $ MONTHLY NET INCOME $ Mortgage/Rent $ Existing RR Credit $ MONTHLY EXPENDITURE $ Car Expenses $ Other Credit $ MONTHLY SURPLUS $

After the application process was computerised the on-screen form again provided for the monthly payment to be stated near the head of the application. Towards its bottom, the following appeared:

FINANCIAL DETAILS

Mortgage/Rent Other Credit Repayments Monthly Income (Joint/Single) … … … Vehicle Expenses Existing RR Credit Monthly Expenditure … … … Living Expenses (Groceries) Proposed RR Credit Monthly Surplus … … … 122124 I would note in passing that the [NAME]'s case places some importance on the amounts inserted for "living expenses" in Mr [NAME] pre and post-computerised credit applications. While the evidence given by the salesmen as to the provenance of these figures was inconsistent I do not consider this to be of particular moment given that, for the most part, they had no independent recall of filling out the applications. What the evidence does suggest is that in some cases the sum inserted appears to have been carried forward from the previous credit application made by Mr [NAME]; in others, it appears to have been computer generated. 123125 The [NAME] relies in particular on the sums inserted for living expenses in seven of the applications. In the second agreement it was $160 per month; in the seventh, eighth, tenth, twelfth, fifteenth and sixteenth, it was $120 per month. 124126 The [NAME] also points to errors of calculation made in various (10) of the applications concerning the item "Existing RR Credit" (which was intended to record Mr [APPELLANT] existing monthly credit liability to [APPELLANT[NAME] at the time of the application). It also points to 5 applications which contained incorrect information as to Mr [NAME] income, the error on two occasions showing a monthly income about twice Mr [NAME] actual income. 125127 I do not intend to reiterate the evidence of the salesmen concerning the filling out of the various applications, other than to indicate that I accept the evidence of some of them that it was not their function to determine what was an acceptable credit level for a customer. 126128 [NAME] [APPELLANT] [NAME], the Finance Product Manager of [APPELLANT[NAME], gave evidence as to the credit application assessment procedures for the period relevant to this proceeding. From her affidavit, and from [APPELLANT[NAME]' documentation tendered by the [NAME], it is apparent that from at least May 1997 a credit policy document applied to the assessment of credit applications. That policy contained a reference to the Uniform Consumer Credit Code 1996, the substance of which (as stated in the 1997 policy document) was that: "In accordance with the requirement of the Consumer Credit Code 1996 the salesperson is required to ensure that the debtor fully understands the nature and implications of the transaction. The Consumer Credit Code 1996 also requires that reasonable inquiry be made of the debtor at the time of entering into a contract, that the debtor is able to maintain payments in accordance with the terms of the contract, without causing substantial hardship." 127129 I note in passing that both Mr [NAME] and Mr [NAME] indicated in cross-examination that they were aware of the above requirements and that Mr [NAME] accepted they were part of his obligations as a salesperson. 130 I have earlier described the procedures followed, and the scorecard system employed, in assessing credit applications. On each occasion in which Mr [NAME] made a credit application, it was granted. [NAME] [NAME] reviewed the records of Mr [NAME] credit payment history over the period of his dealings with [APPELLANT[NAME] and expressed the view that his history was "exemplary". She also gave evidence that she re-scored Mr [NAME] applications for both the manual and automated scorecard periods prior to giving evidence. In all cases his approval score exceeded the minimum score for automatic approval. [NAME] [NAME] accepted that she did not have the actual figures available for the twentieth agreement and when she was later shown the Exhibit I version of the credit application that was made for that agreement, she accepted it was not one that would have been accepted automatically because it would not have reached the "minimum monthly surplus" figure that [APPELLANT[NAME] set from time to time if its erroneous monthly income figure was halved to reflect what was Mr [APPELLANT] actual income. 130131 It was [APPELLANT[NAME]' policy (at least from mid 1997 on the evidence) that one factor in the scorecard system was that an application had the "minimum monthly surplus as defined on the scorecard". The actual surplus was calculated from the figures provided by the customer for monthly income and monthly expenditure. If the customer had "insufficient surplus" the application was rejected. 131132 The minimum monthly surplus figure was one settled upon by [APPELLANT[NAME] from time to time. No explanation was given of the basis of its calculation. From about September 2001 the possibility was removed of a person being able to reach the minimum monthly surplus by deflating his or her living expenses figure. According to [NAME] [NAME], the company introduced its minimum default figure for living expenses at that time. 132133 The final matter I would note is that the [NAME] sought to cross-examine [NAME] [APPELLANT] on matters going to whether [APPELLANT[NAME] had breached its own credit policies. This matter was not pleaded. It was not part of the case as I understood it or as the [APPELLANT] had defended it. [APPELLANT[NAME]' credit policies and approval processes were not attacked in the pleadings and evidence was not presented with that in mind. I did not permit the raising of these matters.

(iii) Service Provision to Mr [NAME] 133134 It is clear from the documentary evidence that over the years of his dealings with [APPELLANT[NAME] [NAME] made many calls for service of his appliances. It is equally clear from the evidence that the faults reported by Mr [NAME] were found, in the main, to be user and installation problems rather than significant faults in appliances as such. 134135 Three [APPELLANT[NAME] service technicians who serviced goods at Mr [NAME] unit gave evidence of their dealings with him. [NAME], who attended [NAME] on thirteen service calls, indicated that he considered Mr [NAME] was always neatly dressed and he kept his unit tidy and clean; he was always polite and appreciated the effort made; he was a little slow in speech but not anything out of the ordinary; he was able to explain the problems he was experiencing; and he appeared to understand the explanations given him. Mr [NAME] considered that the calls made were not out of the ordinary and were similar to those made by "a lot of people". He was unaware from his dealings with, and observations of, Mr [NAME] that he had an intellectual disability or that, as alleged by the [NAME], he could not read and understand agreements or make worthwhile judgments in his own interests or that he was unable to afford the basic necessities of life. 135136 Mr [NAME] gave evidence to like effect. He went to [NAME] on six occasions. He did not have to deal with a serious problem with an appliance. Mr [NAME] indicated that from the nature of the service calls he made, it was apparent that Mr [NAME] had difficulty setting clock timers and functions such as tuning channels. This was definitely not out of the ordinary. Calls of that type were very common in his experience and it is very typical to be called out for minor problems such as clock and timer issues. Mr [NAME] rejected the suggestion put to him in cross-examination that Mr [NAME] seemed childlike to him. He considered Mr [NAME] to be sincere, straight to the point; he was fairly precise; and he had no problem with him. 136137 The third technician, [NAME], had no specific recollection of Mr [NAME] though he recalled going to his unit on one occasion. It is unnecessary to comment further on his affidavit which is of little assistance to me. 137138 To anticipate my later finding I accept the evidence of the service technicians that they were unaware of Mr [NAME] disability and its effects. Both Mr [NAME] and Mr [NAME] gave reasonably detailed accounts of their impressions of Mr [NAME]; they were not challenged on them; and I accept what they said.

(iv) Telephone Calls to [APPELLANT[NAME] 138139 I have referred earlier to [APPELLANT[NAME]' call centre and to its two departments, [NAME]. The [NAME] has tendered [NAME]'s records itemising local calls made by Mr [NAME] from his home telephone numbers over the period 26 November 1996 and 28 November 2001. In that period almost 330 calls were made to various [APPELLANT[NAME] telephone numbers of which there were 10 during that time. The [NAME] has prepared a monthly schedule of those calls which reveals that there were 12 months in which 15 or more such calls were made. 139140 The [NAME]'s contention is that this constituted an extraordinary number of calls which must have placed [APPELLANT[NAME] on notice that Mr [APPELLANT] was a person unable to operate the goods he was renting or was unable to manage his money. The respondents correctly point out that the above calls were directed primarily to five different [APPELLANT[NAME] numbers – the [NAME] (54), [NAME] (53), Head Office (109), General Number (67) and Accounts and Deliveries (38) – and that some number of the calls had a duration of less than two minutes. 140141 [NAME] from the Service department and [NAME] from the Finance department gave evidence. They both could recall having spoken to Mr [NAME] on the telephone. Mrs [NAME] gave evidence that everybody in the Service department was asked if they recalled speaking to Mr [NAME]. She did. Mrs [NAME] gave similar evidence in relation to the Finance department. 141142 Mrs [NAME] recollection related to a call regarding a refrigerator he was renting. Her affidavit detailed the course of that call and a return call she made, the details of which are unnecessary to be reproduced here. She described him as polite; he appeared to understand what she explained to him; and she did not recall Mr [NAME] having any difficulty with speech or anything unusual. She had no problems with him and he was not a customer that was talked about in the call centre for causing any problems. She did not know any of the matters about Mr [NAME] that are alleged by the [NAME]. 142143 The service calls records of [APPELLANT[NAME] show that 73 faults were reported by Mr [APPELLANT] over the period December 1996 to May 2002. Consistent with the evidence of the technicians, the great majority of those were user problems. 143144 Mrs [NAME] dealt with account related calls. She described the usual types of inquiries made related to whether a customer could return a particular item, what options they had for upgrading an appliance and where they stood on their payments. A log of the conversation with a customer is recorded in the customer's account history which is maintained on [APPELLANT[NAME]' computer system. Mr [APPELLANT] credit histories were exhibited to her affidavit. They revealed she spoke with him on 10 occasions between 17 June 1999 and 22 November 2001. Three of these related to the offer to purchase amount for an appliance, one to the status of accounts, three to payment arrangements, one to a delivery inquiry, one to payment dates and one to a direct debit inquiry. 144145 Mr [NAME] appeared to understand explanations Mrs [NAME] gave him because he did not question what he was given as advice. His calls "were everyday calls, not unusual at all". She did not form the impression that he was intellectually handicapped or that he spoke slowly although she noted that his voice was "drony". She was not aware of the number of calls [NAME] made to [APPELLANT[NAME]. 145146 The credit histories annexed to Mrs [NAME] affidavit discloses that Mr [NAME] called the Finance department on many occasions to inquire as to the state of his accounts. They also reveal that he was almost invariably in advance. 146147 I will later refer in a little detail to the evidence of [NAME] when considering the "Ancillary Claims". [NAME] [NAME] at times of present relevance was, variously, General Manager of the Service department and Call Centre Manager. For present purposes I would merely note that she put in train the inquiries that led to the identification of service technicians, and staff in the Service department and Finance department who could recall dealing with Mr [NAME]. She supplied their names to the lawyers but she played no part in the selection of who gave evidence.

WITNESS ISSUES: ADVERSE INFERENCES 147148 Each side has complained of the failure of the other to call particular witnesses. The [NAME]'s complaints are various. First, it contends that a service technician, [APPELLANT] who still works with [APPELLANT[NAME], could have been called but was not without explanation. According to [APPELLANT[NAME]' records Mr [APPELLANT] appears to have made service calls to Mr [NAME] on 10 occasions. Secondly, the [NAME] challenges the failure to call (a) four other [NAME] who dealt with Mr [NAME] on one or more occasions; (b) [COMPANY] who answered Mr [NAME] "numerous calls"; and (c) the person responsible for processing or overseeing the procedures for approval of Mr [NAME] credit applications. 148149 The [NAME] seeks to use these failures to found a Jones v Dunkel inference against them that their evidence would not have helped the respondents' case. It is said I should take account of this in deciding whether to accept any particular evidence which has been given which relates to matters including the way Mr [APPELLANT] presented at the [APPELLANT] [NAME], in his flat or on the [APPELLANT] when he dealt with the salesmen, service technicians and [COMPANY]. 149150 I do not consider this to be a case in which every person who had dealings with Mr [NAME] over a six year period was required to be called. Given the nature of the respondents' [NAME] and the functions performed by the various classes of persons who dealt with Mr [NAME] or his applications, the likelihood of many of these having any reliable memory (significant or otherwise) of Mr [NAME] is not great. This is demonstrated in the evidence of the employees who have, in fact, given evidence. 150151 While I am prepared to accept that the reason these various persons were not called was because they would not positively advance the respondents' case, I do not infer that the failure to call them was protective of that case. This is not a case where there has been an absence of evidence from witnesses who normally the respondents would have been expected to have called: [COMPANY] (in prov liq) & [COMPANY] (in prov liq) (2002) 41 ACSR 72 at [448]. The inference I would draw from the failure to call them is that, given the nature of the various functions they performed together with the elapse of time, the persons in question would not have been able to contribute evidence useful to the resolution of the matters in issue: cf [NAME] v Commonwealth (No 2)(2000) 103 FCR 1 at 119. 151152 [APPELLANT[NAME] complains of the [NAME]'s failure to call [APPELLANT] and his wife, [NAME], who lived around the corner from Mr [NAME] at [NAME] and who saw Mr [NAME] regularly and, in Mr [NAME] case, almost daily. Again I am unprepared to draw an adverse inference from this failure. I consider it quite unlikely that their evidence would have enhanced that actually given in the [NAME]'s case. I equally consider, having regard to the issues in this case, such lay opinion evidence as they may have given would have been unlikely to have been of particular value in resolving those issues.

CONSIDERATION 152153 Put in composite form the [NAME]'s case is that [APPELLANT] [NAME] knew or ought to have known or were recklessly indifferent to the circumstances that, from how Mr [NAME] presented and from its own records, he suffered significant and serious disadvantages such that it was unlikely to be in his best interests to enter into his various agreements with [APPELLANT[NAME] and that incurring his monthly liabilities to them resulted in financial hardship. 153154 It is generally contended that he presented as childlike and the [APPELLANT[NAME] sales personnel ought to have been aware of this. Dr [NAME] assessment of Mr [NAME], it is said, should be accepted as accurate. Apart from the circumstances of his entry into the rental, loan and service agreements, aspects of Mr [APPELLANT] other dealings with [APPELLANT[NAME] (in relation to service calls for minor user problems, [APPELLANT] calls generally and overpayments of monthly liability) or [APPELLANT[NAME] own records of those dealings (especially in his credit histories and service records) were out of the ordinary and ought to have alerted [APPELLANT[NAME] both to his inability to conserve his own interests and to the financial hardship he suffered. As to the last of these, reliance is placed on the various calculations relating to his financial circumstances contained in Schedules C and E to the applicant's pleadings. 154155 The respondents' case, in contrast, was that Mr [NAME] presentation and verbal skills as revealed in court and to the medical witness were such that his disability was not apparent. Neither was it, nor ought it to have been, known by [APPELLANT[NAME]' employees. Reliance is placed upon [NAME] [NAME] opinion as to the importance of context in making judgments about a person's capacities. Further, it is said, there is no evidence that the terms of the agreements were inherently unfair or burdensome or that [APPELLANT[NAME] staff took unconscientious advantage of Mr [NAME]. The case of financial hardship is not supported by the evidence. The contentions as to allegedly unrealistic information in [NAME] and to inadequate monthly surpluses do not have a foundation in the evidence for a finding of unconscionable conduct by reason of the approval of credit based on the information supplied by Mr [APPELLANT]. It was not open on the pleadings to challenge [APPELLANT[NAME]' credit application and approval procedures as being inappropriate. Even accepting the figures in Schedule C, Mr [NAME] had surplus funds available for expenditure. He only fell into financial difficulties in early 2002 when he began to spend significant sums on his other credit cards. 155156 My own views are as follows. I am satisfied that Mr [NAME] suffers both from schizophrenia and intellectual retardation which is at least borderline. I similarly am satisfied that his reading, spelling and mathematical abilities are quite limited and that while he has some capacity to operate ordinary machines and appliances, it is nonetheless fairly limited. Having said this I do not unqualifiedly accept Dr [NAME] assessment of him. It involves judgments as to Mr [NAME] oral expression, comprehension, memory and capacity to compensate for his disability which are inconsistent both with my own appreciation of him from his court appearance and with what is revealed in aspects of the evidence before me. 156157 It is unnecessary that I express a definitive view on the precise extent of [NAME]'s disability. The issue before me is not whether he had the capacity to contract. Rather it is with whether those who contracted with him would have known, or ought to have known, that he was specially disadvantaged. This places the focus upon what was, or ought to have been, evident to those dealing with him about his disabilities and incapacities. 157158 Necessarily, I observed Mr [NAME] closely when he gave evidence. As I earlier indicated, while his speech was somewhat slow and his diction slightly distinctive, he was fluent and clear in what he said. His language was not that of an educated person but neither was it childlike. His dress was neat. His manner courteous. In some matters he displayed a considerable memory. While he gave evidence of his own limitations, I do not consider that he obviously or immediately presented as being mentally retarded by virtue of his appearance, speech or manner of communication. I thus agree with [NAME] [NAME] appreciation both of how Mr [NAME] could present and of his speech. I clearly disagree both with Dr [NAME] views as to his language use, presentation, memory and capacity to comprehend concepts and with the [NAME]'s characterisation of [NAME]'s performance before me. 158159 I accept [NAME]'s opinion that Mr [NAME] history in general medical settings indicated that at times he was well able to present himself in a manner which did not immediately suggest he was markedly intellectually disabled. I consider that this clearly occurred in some of his dealings with [APPELLANT[NAME] personnel as I will indicate. I equally accept [NAME] [NAME] opinion that assessments of Mr [NAME] capacities are likely to be affected by the context in which an assessment is to be made. I do not consider that his disabilities are so evident as to invite suspicion as of course, whatever the setting. 159160 Turning to Mr [APPELLANT] dealings with [APPELLANT[NAME] personnel, it is significant that none of the [NAME] who were called and who had a memory of him knew or suspected he was intellectually disabled. The evidence of what transpired as each agreement was made – to the extent that there is evidence at all – is not particularly reliable and often somewhat contradictory. Memories are unreliable and what may in fact have been reconstructed can assume the character of reality. Having said this I accept the evidence of the [NAME]' perceptions of Mr [NAME]. What they said is consistent with the view I arrived at after close observation of him. I should add, because of the attention paid to this matter by the [NAME] in its cross-examination of the [NAME], that the types of encounters they had with Mr [NAME] on the sales floor were not such as would necessarily or at all invite suspicion about his intellectual capacity. If on occasion protracted because of the time involved in obtaining credit approvals, the various encounters appear to have been routine and perfunctory in a setting which would not naturally invite critical appraisal of a person such as Mr [NAME]. 160161 On a number of occasions, Mr [NAME] explained to the salesperson the reasons for his wanting a particular appliance; on others, he specified the make of appliance he wanted; and again, on several occasions, he made prior [APPELLANT] contact concerning an appliance after which he saw the salesperson to whom he spoke. His conduct on such occasions was consistent with the projection to those with whom he dealt of an ability to determine, and to make choices about, what was in his own interests even if such was not in fact the case. 161162 Equally Mr [NAME] politeness and evident attentiveness were themselves together probably capable of conveying comprehension of explanations given to him when the contrary may well have been the case. 162163 While the [NAME] placed considerable emphasis upon Mr [NAME] inability to read and understand the terms and conditions of his various agreements, it does concede (in the particulars to par 95.3 of the Further Amended Statement of Claim) that he understood what I would regard as the central characteristics of the agreements into which he entered. Though the [APPELLANT[NAME] [NAME] gave evidence of their "usual practice" in explaining agreements to customers – evidence necessitated by a lack of memory of what they actually did with Mr [NAME] – it seems likely that, with Mr [NAME] being a regular rental customer, such explanation as was given of the general, as opposed to the specific and distinctive terms, of the various agreements he entered into was attenuated because of an assumed, though incorrect, understanding attributed to him. 163164 The manner in which [NAME] were filled out and the figures contained in them were generated have to be considered in the light of what I have already said. If Mr [NAME] had not otherwise given the [NAME] reason to suspect his disabilities, did his various credit applications do this? I limit the inquiry to his disabilities because knowledge of them is intrinsic to the [NAME]'s composite claim. 164165 By way of preface to answering this I should make the following comments. I am satisfied that the living expenses and monthly income figures that appeared in [NAME] were ultimately based upon information supplied by Mr [NAME] save where they were default figures (I except the twentieth and twenty-third agreements from this). I say "ultimately" for this reason. I consider it likely that in the "manual" application period, the living expenses figure was often carried forward from one agreement to the next. I am not prepared to infer that [APPELLANT[NAME]' [NAME] routinely put figures into [NAME] without Mr [NAME] involvement in the process. It may well have been the case that the carry forward occurred with Mr [NAME] knowledge at the time because he had been asked on each occasion whether his expenses had changed. I consider a like-process probably explains the carry forward of the default figures. 165166 It is clear from their evidence that the [NAME] called regarded themselves as amanuenses in the filling out of the application forms. Others, not they, were responsible for determining whether the application made should be approved. If they did not consider themselves the gatekeepers of the approval process, it is unsurprising they seemed not to have scrutinised critically the figures in [NAME]. I should add I do not consider the cross-examination of them on the issues of living expenses and monthly surpluses as being of assistance for present purposes. They did what they did in a particular setting on a particular basis. The cross-examination, in effect, asked them to venture opinions on matters in which they did not see themselves at the relevant time as having any real function although there is some inconsistent evidence about the querying of low living expenses figures. 166167 If the credit application forms were capable at all of generating suspicions with anyone in [APPELLANT[NAME], it could only have been with the credit assessment personnel. I will deal with them later. 167168 The final matter concerning the applications to which I need presently refer concerns the twentieth and twenty-third agreements. I do not consider that the two credit applications made for the twentieth agreement have probative value in this proceeding. The monthly income figure given is clearly inaccurate. There is sufficient uncertainty about the accuracy of the living expenses figure for me not to be able to conclude that it is accurate. It is not a default figure; it deviates significantly from what preceded it in earlier agreements; and it could, along with the monthly income figure, be ascribable to human error. 168169 I conclude, then, in relation to the [APPELLANT[NAME] sales personnel who gave evidence that Mr [NAME] disabilities and incapacities were not sufficiently evident to any of them as to fix [APPELLANT[NAME] with knowledge of those disabilities and incapacities. 169170 As I have foreshadowed when dealing with their evidence, I have reached a like conclusion in relation to the service technicians who gave evidence. The only additional comment I would make is that Mr [NAME] and Mr [NAME] both emphasised that their calls to Mr [NAME] unit were for problems which were not out of the ordinary compared with other [APPELLANT[NAME] customers. An inability to set clocks and timers on electrical appliances is not necessarily suggestive of mental incapacity. 170171 I likewise accept the evidence of the two witnesses from the call centre who gave evidence – Mrs [NAME] and Mrs [NAME] – that they had no reason to suspect he suffered the disabilities with which this proceeding is concerned. 171172 There is then no basis for finding that any of [APPELLANT[NAME] personnel who actually dealt with Mr [APPELLANT] knew or ought to have known that he was in a position of special disadvantage when entering into the various agreements. 172173 When one turns to the case as pleaded against [APPELLANT[NAME], I would, in consequence, be compelled to reject one of the foundations of the [NAME]'s case. This is, that when the companies entered into their agreements with Mr [NAME] they knew or ought to have known "from Mr [NAME] presentation and verbal skills" that he was a person with an intellectual disability; he could not read the agreements; he could not understand all the terms and conditions of the agreements; he was unable to understand all the rights etc he had under the agreements; and he was unable to make a worthwhile judgment about whether entering into the agreements was in his best interests: see Further Amended Statement of Claim pars 95.1-95.5 and 97.1-97.5. The evidence simply does not support a finding that Mr [NAME] presentation and verbal skills made those matters "sufficiently evident" (to use [NAME] shorthand description in [NAME]) to the two companies. 173174 It is then unsurprising, as the respondents have noted in final address, that the [NAME]'s case during cross-examination became focused on [APPELLANT[NAME] records concerning Mr [APPELLANT] and on the alleged financial hardship suffered by him. So emphatic was this that, as I earlier noted, the [NAME] sought in oral submissions to propound a stand alone case that the respondents took advantage of Mr [NAME] because it knew his financial circumstances and in particular that he had an inadequate monthly surplus. 174175 The use the [NAME] seeks to make of [APPELLANT[NAME]' records is somewhat more expansive than the Further Amended Statement of Claim would mandate. Be this as it may the telephone records reveal 329 calls to [APPELLANT[NAME]' various [APPELLANT] numbers between February 1998 and November 2001. It is submitted that this was an extraordinary number of calls which must have placed [APPELLANT[NAME] on notice that Mr [APPELLANT] was unable to operate the goods he was renting or was unable to manage his money. The [NAME] contends that the Service department records which record that 73 faults were reported by Mr [NAME] during the period December 1996 and May 2002 took, reveal the former of these incapacities; the credit histories, insofar as they disclose both Mr [NAME] frequent inquiries concerning both where he was up to in repaying his accounts and his regular overpayments, disclose the latter. 175176 I have a variety of difficulties with these contentions. The various communications made by Mr [NAME] to the call centre which were entered in Mr [NAME] credit and service histories were made by individual [APPELLANT[NAME] employees. The submission does not suggest that any individual operator had or ought to have had the knowledge that the [NAME] ascribes to [APPELLANT[NAME], although that operator did have at least the knowledge of what was entered at the time of its entry. Rather it seems to be based on an aggregation of what was so known by each individual call centre operator, with [APPELLANT[NAME] being ascribed such knowledge about Mr [APPELLANT] as that aggregated information might reveal. 176177 In support of this somewhat startling proposition, the [NAME] relies upon the observation made in the joint judgment of the High Court in [NAME] v [COMPANY] (1995) 183 CLR 563 at 582-583: "As Bright J said in [COMPANY] v [NAME] [(1976) 15 SASR 270 at 279]: 'Always, when beliefs or opinions or states of mind are attributed to a company it is necessary to specify some person or persons so closely and relevantly connected with the company that the state of mind of that person or those persons can be treated as being identified with the company so that their state of mind can be treated as being the state of mind of the company. This process is often necessary in cases in which companies are charged with offences such as conspiracy to defraud.' A division of function among officers of a corporation responsible for different aspects of the one transaction does not relieve the corporation from responsibility determined by reference to the knowledge possessed by each of them …" 177178 I would note a like submission in the [ADDRESS] of Appeal in [COMPANY] v [NAME] [COMPANY] [1998] 3 VR 133 in reliance on the above passage to aggregate certain facts known to various company servants and agents so as to give rise to a factual totality from which a dishonest intent, held by none of the individuals, might be inferred. The submission was rejected. In the words of [NAME] JA at 145; see also [NAME] at 160-161: "Neither that passage in [NAME] nor any other principle justifies the simple aggregation of the knowledge of a number of persons individually unaware of fraud, or facts which ought to disclose it, to create a notional person with a dishonest intent. The High Court in [NAME] was not purporting in the passage relied on to lay down any such principle but to authorise a consideration of the knowledge and circumstances of all relevant persons – including what may properly be inferred – in order to ascertain the mind of the corporation." 178179 In my view the situation is no different where the aggregated knowledge to be attributed to a company is a prerequisite to a finding that it engaged in unconscionable conduct (or an equitable fraud). The present submission cannot properly be characterised as one in which the individual operators who recorded entries etc were involved in "different aspects of one transaction". The records embody unrelated events, transactions and communications. There has not been – and on the state of the pleading could not be – any suggestion that the records sought to be aggregated have been contrivedly or artificially kept in a disaggregated form. There is, I would add, no evidence either that it was the duty of any [APPELLANT] [NAME] to monitor customer records to discern suspicious or out of the ordinary occurrences in those records or that any employee actually interrogated records in circumstances that would have alerted a reasonable person to suspicious or out of the ordinary occurrences in the records interrogated. In such circumstances, the state of mind to be attributed to [APPELLANT[NAME] can be no different from, and no less innocent than that of, the personnel who made the entries in its records. 180 Mr [NAME] pattern of overpayment may well have invited suspicion in the context of the other matters relied upon in the composite claim, had those other matters been established. Of itself, it cannot sustain the burden the [NAME] imposes on it. A practice which results in the early payment out of a rental agreement and an accelerated opportunity to purchase the appliance in question is too neutral in character for it to be able to be said, reasonably, that it made Mr [NAME] inability to conserve his own interests sufficiently evident, especially in a context in which he sustainedly met his obligations to the respondents. The overpayment on service agreements appears, as will later be seen, to have led to the raising of seven further such agreements without Mr [NAME] consent. These are dealt with separately below. Further, while the records can be said to show the pattern relied upon, that of itself does not establish that [APPELLANT[NAME] can be imputed with knowledge of that pattern and of its possible consequences for him in light of what his credit applications revealed, for the reasons I have given above in relation to aggregation of information. 179181 If the [NAME]'s submission were to be accepted to its full extent as put, it would have potentially alarming consequences for large, multi-function, corporations. It could also raise, potentially, rather significant privacy issues. 180182 In rejecting the submission in the circumstances of this matter I am not suggesting that in no circumstances can or should disaggregated information be aggregated. While I express no concluded view on this matter, I incline as have others to the view that separate information held by an officer or agent of a corporation can be aggregated with information held by another at least where the first such person has "the duty and the opportunity to communicate it to the other": [COMPANY] (1982) 1 ACLC 292 at 298; see also [COMPANY], at 161-2. 181183 The final comment I would make is this. The contexts can vary widely in which the question of attribution of knowledge to a corporation can arise in virtue of knowledge possessed by one or more of its officers and agents: cf for example, Beach Petroleum N L v Johnson (1993) 115 ALR 411 at 566; [NAME] v Woollahra Municipal Council [1975] 2 NSWLR 447 at 484-485; Elliot v Nanda (2000) 111 FCR 240. Here I confine myself to circumstances in which what is sought by the aggregation of the knowledge is to alter the character of that knowledge when it is attributed to the employer corporation where no justification for the aggregation (e.g. participation by several employees in the same transaction) has been made out. 184 There are twois one distinct matters concerning [APPELLANT[NAME]' records that requires mention. First, I have earlier referred to instances of inconsistencies and errors in some number of [NAME] submitted for approval. The [NAME] has pleaded that [APPELLANT[NAME] knew or ought to have known from its records that some credit applications submitted by its employees contained information that was incorrect, unrealistic and inadequate. Insofar as this claim relates simply to a failure to detect errors of calculation in respect of Mr [NAME] actual monthly rental liability and misstatements of Mr [NAME] monthly income, the submission is without substance. While the evidence discloses instances of human error, there is no suggestion the credit application and approval procedures were inadequate or inappropriate in the circumstances. There is no evidence in any instance of the credit approval personnel being put on inquiry by the terms of a credit application itself. There is no evidence to suggest that any particular employee had a duty to check the applications against [APPELLANT[NAME] records. This is simply no justification advanced for the submission that the respective bodies of information are able to be aggregated so as to disclose these errors. Secondly, at the risk of undue repetition, the credit histories revealing overpayments by Mr [NAME] cannot properly be aggregated with the individual credit applications to impute a knowledge to [APPELLANT[NAME] that his actual circumstances were different from, and worse than, the position stated in the application. 185 To the extent that the [NAME]'s complaint is that [NAME] revealed unrealistic and inadequate living expenses and monthly surpluses from time to time, it is, in essence, one of knowledge of financial hardship. 184186 As I have earlier indicated, the [NAME] at the end of oral submissions sought to put its case on either of two bases. The first was the composite case which focussed primarily upon what [APPELLANT[NAME] knew or ought to have known of Mr [APPELLANT] from his presentation and verbal skills but which focussed as well on the financial hardship Mr [NAME] experienced because of the level of his monthly rental liability from time to time as revealed in his credit applications. The second was a stand alone case of taking advantage of Mr [NAME] because it knew of his financial circumstances. 185187 The respondents have objected, properly in my view, to the [NAME] now seeking to make out the stand alone case. It was not pleaded as such. I have already referred to the scorecards system for the grant of credit approval used by [APPELLANT[NAME] and to the fact that approvals were given to Mr [NAME] rental and loan applications. The stand alone case, as best I understand it, necessarily involves an attack on [APPELLANT[NAME] credit application and approval procedures. Yet it has not led evidence to this end. There is nothing to suggest that these procedures were inappropriate, uncommercial or inconsistent with ordinary credit approval practices in the period from 1996 to 2002. Neither, given the manner in which the case was pleaded and opened, were the respondents given appropriate notice of the stand alone case and the corresponding opportunity to justify its credit approval procedures and the setting, for example, of minimum monthly surpluses and of default figures for living expenses. 186188 A case of inflicting financial hardship alone is a quite different one raising a quite different inquiry from one in which financial hardship is relied upon to demonstrate advantage taking where the cause of the disadvantaged position of the person suffering hardship is separately identified and is relied upon, as here, to establish why a particular person was known, or ought to have been known to be, unable to conserve his or her own interests. 187189 In a stand alone case, where all that is seemingly relied upon to prove unconscionable conduct is that the allegedly disadvantaged person overcommits himself or herself, questions of individual autonomy and of the extent of one's responsibility to one's neighbour loom large. Such issues have not been seriously agitated in the [NAME]'s late discovered case. 188190 If that case had been properly pleaded and pursued, this would have been a very different proceeding from that which I entertained. As I foreshadowed, it is far too late and unfair for the [NAME] to be allowed to run it now. 189191 My earlier findings in relation to what [APPELLANT[NAME] knew or ought to have known from Mr [APPELLANT] presentation and verbal skills and from its records other than from what was revealed in the credit application, leaves the [NAME], for practical purpose, relying upon the allegation of known financial hardship in circumstances where I have rejected the balance of their composite case. This, in my view, dooms the case as pleaded to failure in any event. 190192 Nonetheless I will make the following observations on financial hardship in the context of the composite case. If, contrary to my findings referred to above, the [NAME] had established that [APPELLANT[NAME] knew or ought to have known of Mr [APPELLANT] inability to conserve his own interests, the hardship part of that case would itself have been given colour and significance by that factual setting and by what [APPELLANT[NAME] otherwise knew or ought to have known about Mr [NAME]. Stripped of that setting and knowledge, it necessarily wears a somewhat different complexion. 191193 Considered from [APPELLANT[NAME] standpoint, Mr [APPELLANT] becomes a customer whose credit applications and the approval process reveal as being prepared to submit a significant percentage of his income from time to time to the renting and purchasing appliances from [APPELLANT[NAME]. For more than five years he maintained an exemplary credit. And in respect of each application he satisfied [APPELLANT[NAME] minimum monthly surplus requirement. Even accepting that the figures given for living expenses could be said on occasion to be unrealistically low (at least before the advent of the default figure), a hardship case necessarily had to demonstrate that a person in Mr [NAME] position, having his circumstances and needs, would generally be unable to afford the basic necessities of living from the sum represented from time to time by the aggregate of the living expenses and monthly surplus disclosed in [NAME]. Proof of that was a matter of evidence, not of judicial notice. I would note in passing that in the schedule relied upon by the [NAME] to demonstrate financial hardship based on Mr [NAME] monthly liabilities (Schedule C), that aggregate figure at its highest is $507.20; at its lowest is $350.54; and is on average $414.68. 192194 I have excluded from the above any discounting of the aggregate sum because Mr [APPELLANT] regularly paid [APPELLANT[NAME] more than his actual liability. I have done this because, as I have earlier indicated, I do not consider that that information can simply be aggregated with the information contained in the individual credit applications to fix [APPELLANT[NAME] with knowledge that Mr [APPELLANT] actual financial circumstances might be worse than revealed in his credit applications when processing those applications. 193195 The evidence that Mr [NAME] actually experienced financial hardship because of his monthly rental and loan liabilities to the respondents is quite unsatisfactory. The evidence establishes he was single; he went out only very occasionally; and he did not socialise. His needs, apparently, were few. But if, as Mr [NAME] said in evidence, he spent $30 to $40 a week on food – "[t]hat was only left" – there is little by way of explanation of how he spent the balance of the aggregate sums to which I have referred (beyond his regular overpayments to [APPELLANT[NAME] which clearly reduced his available monthly funds but for which [APPELLANT[NAME] bore no knowing responsibility). To the extent that there is evidence that Mr [NAME] fell into actual financial difficulties, this occurred in early 2002 after he made substantial commitments on his charge cards with other retailers. His actions at that time again demonstrated his inability in fact to conserve his own interests. But those difficulties were not the consequence of unconscionable conduct on the respondents' part. I should add that I have derived little assistance in this matter from Mrs [NAME] evidence of the extent to which she supported Mr [NAME] in the second half of 2002. His inability to manage his finances by that time had clearly manifested itself and led in time to the unravelling of his relationship with [APPELLANT[NAME] after it was put on notice of his disability. 194196 Mr [NAME] actual circumstances may have bordered on the straitened. But I am not satisfied on the evidence that the [NAME] has made out its case of financial hardship in fact of which [APPELLANT[NAME] was or ought to have been aware and for which it bore responsibility.

CONCLUSION ON THE PRINCIPAL CLAIM 195197 This proceeding has highlighted three matters. The first is the peculiar vulnerability of persons like Mr [NAME] who are unable in fact to conserve their own interests but who do not, as of course, put people with whom they deal on notice of their incapacities. They are, in consequence, attributed innocently with powers they do not possess. This can redound to their distinct disadvantage, as the circumstances of this matter demonstrate. 196198 The second matter highlighted flows from the first. It is that, in the conduct of day-to-day retail transactions and related dealings, too much cannot be expected of ordinary people doing routine jobs by way of critical appraisal of their employers' customers and their affairs. They ought not have attributed to them powers and responsibilities which are foreign to what can reasonably be expected of them in virtue of what they do in its particular setting. It is for this reason that companies can properly be expected in the protection of their own interests (and, derivatively, of the interests of those with whom they deal) to have in place appropriate risk management practices – practices now facilitated by modern technology. I would emphasise in passing that the present case as pleaded was not about the respondents' risk management practices as such. 197199 The third matter relates to the problem of attributing knowledge or a state of mind to a corporation in light of what might be inferred from aggregating information derived from a multiplicity of discrete transactions and dealings involving corporate employees who adventitiously to participate in some of those matters without suspecting in any way that anything is out of the ordinary. To permit such aggregation in circumstances such as the present for the purposes of attributing a particular state of mind to a company as a prelude to a finding of unconscionable conduct can only "eviscerate" unconscionable conduct of its meaning: cf Stern v McArthur (1988) 165 CLR 489 at 503. For the purposes of the unconscionable dealings doctrine it would result in a company being held guilty of exploitation or victimisation of another without any officer or agent of that company having any suspicion, or any reason to suspect, at all that the company was so acting. In the case of s 51AB, the company would be held to have acted unreasonably or clearly unfairly, without having reason to appreciate it was so acting. 200 It is one thing to proscribe advantage taking by a commercial enterprise of a specially disadvantaged person. It is quite another to make that enterprise in effect that other's insurer. In light of the findings I have made, the [NAME]'s principal claim must be dismissed. 200201 For the purposes of the s 51AA claim, while Mr [NAME] could be said to be in a position of special disadvantage, he was not on my findings knowingly taken advantage of by the respondents. He was not victimised or exploited. As I earlier indicated, it is not to the point that, with different risk management practices, the respondents may have been able to detect Mr [NAME] circumstances and to take steps to assist him. That is not the case before me although it has faint echo in the [NAME]'s written closing submission where it is said that corporate [NAME] and their sales agents "have a responsibility to ensure that they do not take unfair advantage of customers". This responsibility, it is said "requires [NAME] to be alert to the fact that some of their customers may be vulnerable". All I would say of this is that the positive, neighbourhood-like, obligation implicit in this stands apart from the law of unconscionable dealing as it has been conceptualised to date and it appears to be distinctly tort like in character, conjuring up as it does a negligent failure to discharge this claimed "responsibility". 201202 The unfair conduct judgment required to be made by s 51AB is similarly not open in light of my findings. Doubtless, the relative bargaining positions of the respondents and Mr [NAME] were unequal: cf s 51AB(2)(a). What the evidence does not disclose is unfair use of this by [APPELLANT[NAME]. There is little doubt that Mr [APPELLANT] did not understand the detail of the general terms and conditions of his various agreements with the respondents: [redacted] 202203 The course of events in this matter were unfortunate indeed. But the case as pleaded affords no proper reason for passing adverse judgment on the respondents under s 51AB because of their participation in those events. They have not been shown to have acted unfairly.

THE ANCILLARY CLAIMS 203204 These allege unconscionable conduct by the respondents in (i) raising service agreements without Mr [NAME] consent; (ii) transferring funds from one agreement to another without his consent; and (iii) accepting the return of goods after substantial payments had been made on them. Each of these claims presuppose that the circumstances of the Principal Claim have been established and that these are simply further exemplifications of the unconscionable conduct on [APPELLANT[NAME] part. 204205 As they must fail, given the fate of the Principal Claim, I do not intend to deal with these at length.

(i) Raising Service Agreements without Mr [NAME] knowledge or consent 205206 On seven occasions, four of which were on the same day (24 October 2002), [APPELLANT[NAME] raised new service contracts for Mr [APPELLANT] and transferred moneys overpaid on other agreements to those new contracts. The sums involved were, variously, $32, $8, $8 and, in the case of the same day agreements, $13.20 each. In none of these instances did Mr [NAME] give prior consent to the raising of the agreement or to the transfer from one account to another. All of these agreements were in substance renewals of annual service agreements that had expired. 206207 [APPELLANT[NAME] according to the evidence, made the assumption that customers wished to continue their agreements at least if they continued to make payments on the expired agreements. Mr [NAME] made no complaint concerning what had occurred and made service calls on several of them. 207208 The four agreements that were raised on the same day pose a distinct problem. Four days before they were raised, [APPELLANT[NAME] were put on notice by Mr [COUNSEL] disability lawyers acting for him and advising that all existing agreements were to be rescinded. This communication did not appear in the relevant credit histories. There had been an earlier communication from [NAME] to [APPELLANT[NAME] in September 2002, which was recorded in the relevant credit histories, which foreshadowed possible cancellation of accounts. Nonetheless the four agreements were raised, the reason for this being, apparently, that a weekly computer search identified four annual service contracts as due for expiry and the new contracts were raised accordingly. 208209 In light of my findings on the Principal Claim, I am, in the case of three of the service contracts, left only with evidence of a business practice by no means only applied to Mr [NAME] which is the subject of criticism by the [NAME]. The case has not been fought on the basis of the propriety or otherwise of that practice as such.

Accordingly, while the practice may not necessarily be above criticism, I am not prepared to conclude that of itself it is sufficient to justify stigmatising the respondents' conduct as unconscionable for s 51AB purposes. I would note that no reliance has been placed on s 51AA in respect of any of the Ancillary Claims. 209210 Though the four same day contracts raise quite different considerations, they bespeak on inadequacy in risk management practices rather than the knowing exploitation of Mr [APPELLANT]. I do not consider that [APPELLANT[NAME]' conduct in raising those agreements was clearly unfair for s 51AB purposes, although the events which transpired provided clear lessons to be learned by the respondents. The contracts should never have been raised. If the matter was to be viewed through the prism of s 51AA (which it is not) it may be able to be said that, formally, [APPELLANT[NAME] knowingly took advantage of Mr [APPELLANT] given the lawyers' communication to it of 20 September 2002. In substance, though, [APPELLANT[NAME] did not - at least simply by entering into the agreement in the manner it did. I do not have to consider what would have been the case had it sought to insist upon its rights under these agreements. 210211 I reject this claim.

(ii) Transferring overpaid funds from one agreement to another without consent 211212 Apart from the seven instances above in which funds were reallocated to new service contracts, [APPELLANT[NAME] transferred funds between agreements without Mr [NAME] actual consent. The aggregate amount so dealt with (including the seven service agreements) was $340.00 and the individual transfers only exceed $20.00 on three occasions, the largest sum being $45.20. The various transfers involved both rental and service accounts. 212213 The [NAME] has not suggested that the transfers did not at the time discharge liabilities of Mr [NAME] to the respondents. Neither was it contended that the moneys paid to satisfy a particular indebtedness was impressed with a [NAME] like trust to satisfy that and no other purpose: cf [COMPANY] v [COMPANY] [1970] AC 567. 213214 Whatever may have been the case if the sums in question had been of significant amounts, the transfers here hardly bespeak conduct that is unconscionable. On its own, the particular practice engaged in could be variously categorised as undesirable (because it iswas unauthorised and undisclosed), sensible (given the alternative of returning small sums) or of no particular significance (given the on-going debtor-creditor relationship of the parties). It would only have begun to assume the character of unconscionable conduct if the [NAME] had made out its Principal Claim. This practice could then be seen as a manifestation of that conduct. 214215 I reject this claim.

(iii) Accepting the return of goods 215216 The [NAME]'s complaint is that,on two occasions when [APPELLANT[NAME] entered into further agreements (for the second refrigerator and the fourth television) with Mr [NAME], he returned like appliances on which he had paid $2,854.30 (of a term total of $2,962.00) and $1,103.20 (of a term total of $1,269.00) respectively. As the [NAME]'s submissions make plain, this particular submission is premised on [APPELLANT[NAME]' knowledge of Mr [APPELLANT] circumstances and limitations. Had it had that knowledge, an adverse finding would have been difficult to resist. I have found to the contrary. Standing alone, the evidence returns no more than that Mr [NAME] availed of a facility provided for under his rental agreements. 216217 I reject this claim as well.

CONCLUSIONS 217218 I have rejected all of the claims made against the respondents. 218219 I will order that the application be dismissed and that the applicant pay the respondents' costs of the application. I certify that the preceding two hundred and nineteen (219) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate: Dated: 17 August 2005 [NAME]: [APPELLANT]

Solicitor for the Applicant: [redacted]

Counsel for the [APPELLANT]: [[APPELLANT]]

Solicitor for the [APPELLANT]: [[APPELLANT]]

Date of Hearing: 18, 19, 20, 21, 22, 27, 28 and 29 April 2005

Date of Judgment: 17 August 2005