AMANDA ADELE WHITE & Anor v BANK OF NEW ZEALAND [2014] NZHC 1271

AMANDA ADELE WHITE & Anor v BANK OF NEW ZEALAND [2014] NZHC 1271 [10 June 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-002298[2014] NZHC 1271BETWEEN AMANDA ADELE WHITEFirst PlaintiffAND ANNE LEOLINE EMILY FREEMANSecond PlaintiffAND BANK OF NEW ZEALANDDefendantHearing: 17 December 2013Appearances: R S Pidgeon for the PlaintiffsB White for the DefendantJudgment: 10 June 2014RESERVED JUDGMENT OF ASSOCIATE JUDGE SARGISSONThis judgment was delivered by me on 10 June 2014 at 1.00 p.m.pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate.......................................Solicitors: Pidgeon Law, AucklandBuddle Findlay, AucklandCase officer: Sharon ChiversIntroduction[1] The plaintiffs commenced these proceedings in May 2013. Their claim against the defendant, Bank of New Zealand (BNZ), is based on two causes of action: breach of contract and unconscionable conduct. They have abandoned a third cause of action based on non est factum and propose adding a cause of action forbreach of confidence if BNZ's application fails.1[2] BNZ applies for the following:(a) A whole or partial strike out of the plaintiffs' claim; or(b) Summary judgment to dismiss the entire claim; or(c) In the event that neither application is successful, an order for security for costs amounting to $38,108.50 plus court fees and disbursements.[3] The plaintiffs oppose all applications.[4] For reasons set out later in this judgment, I find the current causes of action to be clearly untenable, and I propose to allow the strike out application withoutprejudice to the plaintiffs' right to commence a fresh application to bring an actionfor breach of confidence. In these circumstances it is unnecessary to address the summary judgment application or the application relating to security for costs.[5] I record that for jurisdictional reasons, I have heard the strike-out application in open court for chambers and the summary judgment application in open court.Background[6] The plaintiffs, Ms White and her mother, Ms Freeman, are experienced property developers who have owned approximately sixty-eight properties over the course of their property development history.2 Ms White relied on property1 Counsel for the plaintiffs advised of the abandoned cause of action and the proposal to add another at the hearing.2 Spence v Lynch [2013] NZHC 1478 at [87].development for her livelihood until relatively recently, when the plaintiffs' successturned to failure.[7] Over the period of their property development activities the plaintiffs developed a helpful commercial relationship with BNZ. During part of that period, Ms White was in a relationship with her now former partner, Mr Spence. While they were living together, Mr Spence and Ms White used BNZ as their bank.[8] The plaintiffs say that because of their good relationship and reputation with BNZ, the bank adopted a practice of oral approval for secured lending which became a standing arrangement that they came to rely on when acquiring properties.[9] In early 2009 the plaintiffs, in their capacity as trustees of the DCT Trust, decided to purchase an investment property at Greenmeadows Avenue, Manurewa. Their intention was to obtain funding from BNZ and to use their family home on Glenbrook Road as security, and over which BNZ already held a mortgage dating from January 2008.3 They also say they intended to purchase two properties on Preston Road, Papatoetoe, and a property in Harriet Place, Mangere, using the new security. They claim that BNZ gave them three orally pre-approved loans, the first to purchase the Greenmeadows property, and the second and third for the other intended purchases.[10] BNZ denies it provided pre-approved loans orally, and says that, materially, there are no written records of any such approvals or agreements.[11] On 2 April 2009 BNZ made a formal loan offer of mortgage finance for the purchase of the Greenmeadows property. It sent loan agreements and mortgage documents to the plaintiffs which they signed.4 The loan agreement (the 2009 agreement) provided for an advance of $300,000 to the Trust for the purchase of the Greenmeadows property, to be secured by a mortgage over the Glenbrook3 The certificate of title produced in evidence shows that the Glenbrook property became subject to a mortgage to BNZ on 14 January 2008.4 In her affidavit of 8 November 2013 Ms White has exhibited a copy of the 2009 agreement and mortgage documents which show both sides executed the documents.property. The plaintiffs allege (and BNZ denies) that this formalised the first of the three pre-approved loans.[12] Clause 9.1.2 of the 2009 agreement required that the plaintiffs confirm that since giving any security to the BNZ, there have not been any unauthorised dealings lodged on any title of property described in any security provided to the bank. It also required the plaintiffs to expressly agree to BNZ's entitlement to demand repaymentor to reduce the plaintiffs' credit limit should there be dealings lodged on the title ofany property subject to any security in the bank's favour without its prior written approval. Notably, cl 9.1.2 states:9.1.2 You confirm that you have not created or executed any furthersecurity over any part of the property described in the "Security"section of this Letter of Advice and that there have not been any other dealings lodged on any title (without limitation, for instance a caveat), without our written approval or consent, since any securityin our favour was executed by you or any Guarantor/third party andyou agree not to deal with the title of any property subject to anysecurity in our favour without our prior written consent to any such dealing and that we can demand immediate payment of any amount outstanding or reduce your credit limit if there are any dealings lodged on the title of any property subject to any security in ourfavour provided by you and/or any guarantor/third party, withoutour prior consent to any such dealing.[13] On 7 April Mr Spence's solicitor emailed BNZ and advised it that Mr Spence had placed a Notice of Claim under the Property (Relationships) Act 1976 over the Glenbrook property a year earlier, on 13 June 2008. The next day BNZ conducted a title search of the Glenbrook property which confirmed the existence of the Notice.[14] A week later Mr Spence personally emailed BNZ saying the Trust owed him money. Another week later Mr Spence and his counsel met with BNZ. No notes weretaken in that meeting. The plaintiffs say that in that meeting BNZ's representatives told Mr Spence that BNZ was unwilling to lend any further against the equity in the Glenbrook property.[15] On 27 or 28 April BNZ withdrew the loan, thereby cancelling the 2009 loan agreement, because of Mr Spence's Notice of Claim. It took the position thatMr Spence's Notice had been lodged on the title without its prior written approval, with the result that the security for its advance for the purchase of the Glenbrook property was defective and in breach of cl 9.1.2.[16] In early May, Mr Spence's Notice was removed from the title of the Glenbrook property following a successful application by Ms White, and BNZ agreed once again to provide funding for the Greenmeadows property.[17] On 19 May the plaintiffs, as trustees of the Trust, signed the new loan agreement (the replacement agreement). This time BNZ advanced $350,000 for the purchase of the Greenmeadows property and the plaintiffs provided a mortgage as security over the Glenbrook home. Additionally, Ms White had to provide a personal guarantee for $505,000, and was obliged to pay various costs. BNZ also lowered the value ratios from 80% to 70% for funding of any future properties acquired by the Trust.5[18] The plaintiffs say that BNZ also withdrew the orally pre-approved loans.[19] By 2012 the Trust was struggling and the plaintiffs were unable to sustain their property development activities. They ended up selling both the Greenmeadows and Glenbrook properties. After repaying the proceeds to BNZ they were left with nothing and are now impecunious. They hold BNZ responsible.[20] On 6 May 2013 the plaintiffs commenced this proceeding by filing their statement of claim. Their position is that they inadvertently breached cl 9.2.1 of the 2009 agreement because of Mr Spence's Notice of Claim. As Ms White indicates in her affidavit evidence, they initially understood that the Notice was not a breach of their obligations under cl 9.2.1, but now concede the contrary:6Neither my mother nor I were aware of the full meaning of the clause 9.2 [sic]. We were mistaken by the interpretation in that on our reading of clause 9.2 [sic] there was no breach of the agreed prohibition on registering charges against Glenbrook by Mr Spence taking it upon himself to lodge the Caveat.5 Plaintiffs' Second Amended Statement of Claim, 27 September 2013 at [62].6 Affidavit of Amanda Adele White Made in Support of the Plaintiffs' Notice of Opposition, dated8 November 2013 at [118].Nonetheless the plaintiffs believe the breach was not of such a substantial kind as entitle BNZ to cancel its contractual obligations under the 2009 agreement, or to withdraw the two alleged pre-approved loans. They claim that BNZ's conduct was inbreach of its contractual obligations and that it placed them in a serious position which it then took advantage of by offering them the replacement loan on onerous terms. The plaintiffs claim damages (as yet unquantified) under the Contractual Remedies Act 1979 for alleged breach of contract. They also claim damages for losses caused by alleged unconscionable conduct in connection with the replacement loan, plus exemplary damages.Application for Strike Out[21] The application is made under r 15.1(a) of the High Court Rules, which relevantly states:15.1 Dismissing or staying all or part of proceeding(1) The court may strike out all or part of a pleading if it—(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading[22] BNZ contends that the plaintiffs' pleading discloses no reasonably arguablecause of action for breach of contract or for unconscionable conduct.The breach of contract pleading[23] The plaintiffs' pleading in respect of the BNZ's alleged breach of contractruns to some pages and has two parts. The first part relates to the 2009 agreement and pleads essentially that having entered into that agreement, BNZ repudiated the agreement based on the plaintiffs' inadvertent breach of cl 9.1.2 (due to Mr Spence'sNotice) in circumstances where:(a) The condition in cl 9.1.2 that was breached was not an essential term and the withdrawal of the original loan and purported cancellation of the 2009 agreement was an unlawful repudiation of the agreement;(b) BNZ was aware or should have known about the hostile relations between Mr Spence and Ms White and that the Notice arose from these circumstances;(c) The Notice was unlikely to cause BNZ loss given the plaintiffs' abilityto remove it;(d) BNZ ought to have given them a chance to rebut Mr Spence'sallegations about his entitlement to encumber the title before repudiating the contract.[24] The purport of the second part of the plaintiffs' pleading is that the two orally pre-approved loans amounted to binding contracts; and that BNZ repudiated its contractual obligations by withdrawing the loans, thereby committing a breach of contract and preventing them from offering the Glenbrook property as security for further advances to acquire the Preston and Harriet properties. It further alleges that by terminating the practice of pre-approving loans, the bank deprived the plaintiffs of the means of obtaining cash flow to service the mortgage over the Glenbrook property, and prevented them making a substantial profit from the purchase and eventual sale of the Preston and Harriet properties.The unconscionable conduct pleading[25] The plaintiffs' pleading in respect of unconscionable conduct also runs to anumber of pages. The essence of it is that BNZ's conduct following repudiation ofthe 2009 agreement, in offering the replacement agreement on terms that were onerous was unconscionable because BNZ was aware, or should have been aware, of their situational disadvantage and it took advantage of this by putting them in a position where they had no alternative but to accept those terms. The plaintiffs plead that the particular circumstances of their disadvantage were:(a) That they relied on the standing arrangement for pre-approved loans as the basis for their income and were seriously and adversely affected by the steps the bank took because of Mr Spence's information,including the restriction the bank placed on the amount it would lend against their equity in the Glenbrook property;(b) The withdrawal of the two pre-approved loans;(c) The bad relationship between Mr Spence and Ms White, and the factthat Mr Spence "would benefit from BNZ taking advantage of them";(d) Their social disadvantage, in that Ms White was a solo mother of three, and her mother a disabled pensioner, while BNZ was a much stronger party financially.The grounds for striking out these pleadings[26] For the purpose of the application BNZ assumes as it must that the pleaded facts are true. Its grounds for strike out are essentially that:(a) The breach of contract cause of action, as pleaded, is untenable as:(i) The Notice of Claim was a dealing that put the plaintiffs in breach of the requirements in cl 9.1.2 which stipulates impliedly that performance of those requirements is essential. The effect of non-performance substantially reduced the benefit of the agreement to BNZ and entitled it to cancel the agreement.(ii) Additionally or alternatively, the confirmation requirements in cl 9.2.1 are a condition precedent, and as they were breached the bank was entitled to withdraw the original loan agreement and the two pre-approved loans.(iii) The claimed pre-approved loans for the Harriet and Preston properties, as pleaded, were not contracts. They lack the necessary certainty as to terms to have contractual effect.(b) The cause of action based on unconscionable conduct is untenable. The pleaded facts relied upon do not identify circumstances that could give rise to a claim of unconscionable conduct and are insufficient to establish a reasonably arguable cause of action.[27] I turn then to my reasons for finding that BNZ has made out its grounds for an order to strike out both of these causes of action. I begin with the legal principles that apply to the application.Relevant legal principles[28] The general principles applying to a strike out application involving no reasonably arguable cause of action are well established:7(a) Pleaded facts are assumed to be true.(b) The cause of action must be clearly untenable. The court must be certain that it cannot succeed.(c) The jurisdiction is to be exercised sparingly and only in clear cases,reflecting the Court's reluctance to terminate a claim short of trial.(d) The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.(e) The Court should be particularly slow to strike out a claim in any developing area of the law.[29] The Court of Appeal's outline of the general approach is also pertinent:8The Court is entitled to receive affidavit evidence on a striking-out application, and will do so in a proper case. It will not attempt to resolve genuinely disputed issues of fact and therefore will generally limit evidence to that which is undisputed. Normally it will not consider evidence inconsistent with the pleading, for a striking7 Couch v Attorney-General [2008] NZSC 45 at [33].8 Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566.out application is dealt with on the footing that the pleaded facts can be proved; seeElectricity Corp Ltd v Geotherm Energy Ltd [1992] 2 NZLR 641, 645-646.There may be a case where an essential factual allegation is so demonstrably contrary to indisputable fact that the matter ought not to be allowed to proceed further.[30] A claim may be struck out wholly if it discloses no reasonable cause of action,9 or it may be struck out partially, if the result will be a genuine reduction on the scope of the case.10Discussion - First Cause of Action: Breach of ContractThe 2009 agreement[31] In order for the strike out application to succeed in respect of the first cause of action, BNZ must establish that (assuming the pleaded facts are true) it is not a viable cause of action. This turns not simply on whether Mr Spence's Notice ofClaim was in breach of the requirements in cl 9.1.2 (which is not disputed), but on whether, contrary to the plaintiffs' pleading, the effect of cl 9.1.2 is indisputable: the parties stipulated that performance of the requirements in the clause is essential, thus entitling BNZ to exercise the right of cancellation for non-performance under s 7 of the Contractual Remedies Act 1979.11[32] Counsel for BNZ submits that this is a straightforward case for striking out the cause of action for breach of an essential stipulation as to performance. I agree with the submission for the brief reasons that follow.[33] First, in the text of cl 9.1.2 the cornerstone of the BNZ's lending is that the borrower must have the bank's written prior consent to all dealings affecting the title to any property described in any security the borrower has provided to the bank. Materially, this is underscored by:9 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA); Couch v Attorney-General,above n 7.10 Ferrymead Tavern Ltd v Christchurch Press Ltd (1999) 13 PRNZ 616 (HC) at 619.11 Section 7 relevantly provides that if a stipulation in a contract is broken, a party may exercise the right to cancel " if the parties have expressly or impliedly agreed that the performance of the stipulation in a contract is essential to him."a) The latter part of cl 9.1.2, which sets out the borrower's expressagreement that the bank can withdraw a loan if a dealing lacks the prior written approval of the bank. This plainly applies whether the dealing is the borrower's dealing or one made independently of the borrower, and whenever the dealing was lodged on the title.b) The first part of cl 9.1.2, which sets out the borrower's expressconfirmation that no dealings have been lodged on the title to any property given as security since the execution of any security inthe bank's favour. This further underscores the need for thebank's prior written approval to all dealings.[34] Mr Spence's Notice placed the plaintiffs in breach of cl 9.1.2 as the plaintiffs could not give the confirmation required in the first part of cl 9.1.2, and also lacked the prior written approval of the bank for that dealing. The plaintiffs' own cause ofaction essentially acknowledges the breach, and as Ms White's evidence indicates, they have come to accept that the Notice was in breach of "the agreed prohibition on registering charges".[35] The real issue then is whether the Notice breaks an essential stipulation of theparties' agreement.[36] The test found in Tramways Advertising Pty Ltd v Luna Park (NSW)12 is apposite:13The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor.[37] It is essentiality to the cancelling party that is relevant considering the entitlement to cancel for breach of an essential term,14 not the consequences of cancellation for the opposing party.1512 Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SRNSW 632.13 At 634.14 Burrows, Finn and Todd Law of Contract in New Zealand (4th ed, LexisNexis, Wellington,[38] I am satisfied that there is no room for disagreement on the issue of essentiality. The words of cl 9.1.2 clearly evince the intention of both sides that the borrower must be able to give the required confirmation, and that it must have thebank's prior written approval to any dealings on the title to the Glenbrook property. This was so important to the bank as to entitle it to withdraw the loan if such consent had not been obtained.[39] The necessary qualities of essentiality also appear plainly in the express agreement of the plaintiffs that the bank "can demand immediate payment of anyamount outstanding" if there are any unauthorised dealings lodged on the title of any property described in any security provided in the bank's favour. This is the agreement of a party who clearly understands and intends that an unencumbered security is of critical importance to the bank as a condition of its agreement to advance and maintain funding, and moreover that the bank is to have the freedom to withdraw or cancel a loan if any security provided to it is encumbered without its agreement.[40] The reasons for this stringent approach are self-evident. Unconsented dealings on the title to the security could directly impact on the reliability of a security, and it is imperative that the bank can act immediately to withdraw all or any funding it has advanced in order to safeguard its position without undue formality, if it chooses.[41] There can therefore be no doubt that the cause of action for breach of contract, insofar as it is based on wrongful repudiation of the 2009 agreement, cannot succeed. Materially, there is nothing in the plaintiffs' evidence that makes theclaim that the bank's approval (written or otherwise) was given to Mr Spence'sNotice or otherwise indicates the possibility that the cause of action might yet be capable of any amendment that could provide the basis for a viable cause of action for breach of the agreement.2012) at [18.2.2(a)].15 At [18.2.2(a)].[42] The plaintiffs' claim in relation to the 2009 agreement is untenable and may be struck out.[43] I turn next to the second part of the breach of contract cause of action. Ipause to mention that given the above findings, it is unnecessary to deal with BNZ'ssubmission that it was entitled to withdraw from the 2009 agreement on the basis that it was a condition precedent that the title of the Glenbrook property had to be free of any dealings before the agreement could become binding. I am satisfied that it is clear that there was a binding contract, and that it is the test of essentiality that is material. It is sufficient to note that the Courts now resist16 classifying contractual terms as conditions precedent or subsequent and instead seek to establish the intention of the parties and the practical effects of the particular terms.17The two Pre-Approved Loans[44] In order for the strike-out application to succeed in respect of this part of the cause of action for breach of contract, BNZ must establish that the alleged pre-approved loans as pleaded by the plaintiffs are not contracts, but inchoate agreements. It is on this basis that BNZ argues that there is no sustainablefoundation in the plaintiffs' pleading for the alleged repudiation by BNZ of itscontractual obligations.18[45] I agree with the submission counsel for BNZ makes that on the face of theplaintiffs' pleadings the pre-approved loans are not enforceable contracts, for lack of certainty. Key terms are not pleaded; notably there is no pleading of any agreement as to the amounts of each such loan, the interest rates or the dates of repayment. The pleading indicates these were oral "agreements" that were in the preliminary stage of negotiation, and I agree with counsel that had they proceeded beyond that stage key terms would have been agreed and recorded in writing. Materially, there is nothingin the plaintiffs' evidence that indicates terms might yet be capable of identification.16 At common law the Courts traditionally classified conditions as conditions precedent and conditions subsequent and treated the former as relating to an event occurring before an agreement becomes contractually binding.17 Burrows, above n 14, at [8.2].18 BNZ denies the existence of the two allegedly orally pre-approved loans, but for the purposes of a strike out application, the facts are assumed to be true as they are pleaded.[46] These alleged pre-approved loans cannot therefore be enforceable contracts, and do not provide a viable foundation for a cause of action based on BNZ's breach of contract.[47] The following statement of Lord Wright is apposite:19 I think the other reason, which is that the parties never in intention nor even in appearance reached an agreement, is a still sounder reason against enforcing the claim. In truth, in my opinion their agreement was inchoate and never got beyond negotiations. They did, indeed, accept the position that there should be some form of hire-purchase agreement, but they never went on to complete their agreement by settling between them what the terms of the hire-purchase agreement were to be.[48] For the above reasons the pleading in relation to the second part of the breach of contract cause of action may be struck out.Second Cause of Action: Unconscionable Conduct[49] To obtain an order to strike out the claim for unconscionable conduct, BNZ must show that the facts pleaded in the second cause of action disclose no reasonably arguable case for unconscionable conduct on its part.[50] The plaintiffs plead that BNZ's conduct in offering the replacementagreement on more onerous terms was unconscionable because BNZ was aware (or should have been aware) of the circumstances that created the plaintiffs' situational disadvantage.20 They say BNZ took advantage of this by putting them in a position where they had no alternative but to accept the more burdensome replacement agreement.[51] Counsel for the plaintiffs submits that such circumstances arguably support a case for unconscionable conduct. He cites Exploitative Contracts,21 where the learned author argues that though the doctrine is naturally self-limiting, thecategories of "special disadvantage" are not closed,22 and that the doctrine mayencompass a "transactional disadvantage" that applies to persons who, as a result ofthe peculiar nature of a particular transaction or situation, are unable to protect their19 G Scammell and Nephew Ltd v Ouston [1941] AC 251 (HL).20 See [26] above.21 Rick Bigwood Exploitative Contracts (Oxford University Press, Oxford, 2003).22 At 242.best interests in that situation and are taken advantage of in a way that is exploitative.[52] Counsel for BNZ submits that the cause of action should not be allowed toproceed further because the plaintiffs' personal circumstances do not amount to aspecial disadvantage, particularly in light of the fact that both plaintiffs were experienced property investors. Alternatively, she submits that even if the plaintiffswere under such a disadvantage, the pleaded facts cannot amount to BNZ's takingadvantage of the situation unconscionably.[53] I find on the facts as pleaded that the plaintiffs do not have a tenable case that they were under a special disadvantage when they entered into the replacement loan agreement. The Court of Appeal observed in Hildred v Strong, "clear, cogent, and convincing evidence" is required before such a disadvantage has legal significance.23It follows that a pleading based on such a disadvantage must set out a clear, cogent and convincing factual basis for a disadvantage of sufficient significance to impairthe plaintiffs' ability to protect their best interests.[54] In their pleading the plaintiffs do not identify factual circumstances that would suggest that they were suffering, as their counsel submits, from such a peculiar situation that they were incapable of assessing their options at the time of entering into the replacement loan. The circumstances they rely upon could not credibly have that effect on experienced property developers, which the plaintiffs claim to be. Their inability to continue to rely on the claimed standing arrangements with the bank as the basis for their income may well indicate that they were under pressure to secure a replacement loan for the Glenbrook property and a new arrangement for ongoing funding for the purchase of further properties, but that is the kind of pressure that developers commonly face and must expect. It does not constitute a peculiar situation that could on any objective basis render a developer incapable of assessing whether to proceed with a replacement loan even if on potentially onerous terms, or to look to other lenders, or to accept its losses and to cash up as the plaintiffs eventually did.23 Hildred v Strong [2007] NZCA 475 at [54].[55] Additionally, the state of the relationship between Ms White and Mr Spence may well have added to that pressure, and Mr Spence's disclosure of hisNotice of Claim was undoubtedly inconvenient for the plaintiffs. But it was incumbent on them to make the very disclosure he made. The consequences of their non-disclosure cannot be a circumstance of legal significance in the context of establishing special disadvantage (if that were the case, any party in breach of their contractual obligations could claim a legal remedy for the consequences of their own breach).[56] I also accept the plaintiffs' "social disadvantage" would be an added difficulty for them, but this too is not the kind of problem that could have the legal consequences that the plaintiffs contend. Many commonly deal with solo parenthood and retirement. But the pressure it might cause would not normally be overwhelming for experienced property developers (or others in business) who would routinely contend with stressful situations in managing their affairs. And, materially, there is nothing cogent in the pleading (or indeed in the plaintiffs'evidence) that identifies that these difficulties were elevated to such magnitude as to render the plaintiffs incapable of making commercial decisions. Indeed, there is no pleading that any of the circumstances relied upon put the plaintiffs in such a peculiar situation as to significantly reduce or destroy their capacity to make judgments on business matters as usual. The fact that they felt compelled to accept the replacement loan agreement is not the same as having significantly diminishedcapacity to protect one's best interests.[57] For these reasons I do not accept that the plaintiffs have laid a sufficient factual foundation in their pleading for the claim that they were under a situational disadvantage.[58] This brings me to the remaining limb of unconscionable conduct: that BNZunconscionably took advantage of the plaintiffs' special disadvantage by puttingthem in a position where they had no alternative but to accept the terms of the more burdensome replacement agreement.[59] Even accepting momentarily that the circumstances the plaintiffs rely upon might cause situational disadvantage, the pleaded facts do not identify conduct on the part of the bank that left the plaintiffs with no alternative but to accept the more onerous terms of the replacement loan. The plaintiffs say that the terms of the replacement loan agreement were onerous, but they do not plead that they would have been treated any better by another bank, or indeed plead that they looked elsewhere for less onerous terms of borrowing to fund the Greenmeadows property purchase, despite being free to do so. As experienced developers there is no basis to infer they did not know how to seek out other options. The inference is that other lenders would have offered the same or similar terms as BNZ. Conversely, there is no available inference on the pleaded facts of exploitation or unconscionability.[60] In short, this case is not one of those rare cases where the claim of special disadvantage might be relied upon. There is nothing identified to suggest that the plaintiffs were incapable of assessing the risks of entering into the replacement loan agreement. They have failed to identify circumstances that left them unable to assess and to protect their best interests in the face of conduct that might possibly support a case for unconscionable conduct.[61] I am satisfied that the circumstances the plaintiffs rely upon fail to lay a sustainable factual foundation for the cause of action. They do not point to special disadvantage or exploitative behaviour.[62] Accordingly, there is no tenable cause of action in unconscionable conduct and it may be struck out.Proposed Cause of Action: Breach of Confidence[63] In submissions counsel for the plaintiffs indicated that if their claims are not struck out, they intend to add a cause of action in breach of confidence. Counsel's submission is that BNZ disclosed the Trust's confidential information to Mr Spenceon 23 April 2009 in breach of its contractual duty of confidentiality. The file note from the meeting states that BNZ's representatives advised Mr Spence:We will not be proceeding with any further increases using the equity from Glenbrook Road.[64] High Court Rule 15.1 applies only to causes of action put forward in theparty's pleadings, not in the submissions. A party seeking to ward off a strike-out application by amendment should have the proposed amendment formulated for the Court to consider in the course of argument.24 As counsel did not present the proposed amendment, I disregard it.[65] Without wishing to express any determinative view on the arguability of a cause of action in breach of confidence, it remains open to the plaintiffs to file a separate proceeding based on breach of confidence. However, I decline to consider it in the context of the present application.Result[66] I allow the defendant's strike-out application. The plaintiffs' statement ofclaim is struck out in its entirety, but without prejudice to the plaintiffs' right tocommence a fresh action for breach of confidence.[67] Costs are reserved. If either side seeks costs, it may file and serve a memorandum within 10 working days of the date of this judgment, failing which costs will lie where they fall._____________________Associate Judge Sargisson24 McGechan on Procedure (online loose leaf ed, Brookers) at [HR 15.1.08(2)].