FACTS:

Clint Cleano (Clint), the CEO of Cleaning R Us Pty Ltd (Cleaning R Us), has just introduced a chemical-free cleaner called Oxy CFC that he hopes would transform the fast-growing cleaning industry. He needs to achieve sales quickly because he is experiencing serious cash flow problems, so he retains the services of Fabulous Advertising Group (Fabulous Advertising), a marketing company. Clint tells the advertising company that Cleaning R Us is unable to pay up front for its services and will need credit.

Fabulous Advertising does its due diligence, obtaining a credit history from Cleaning R Us' bank, Latrobe Bank Ltd (Latrobe Bank). The bank manager, Larry prepares the credit report negligently one afternoon in his office before his appointment with an elderly gentleman, Mr Enjo who wants to borrow money from the bank. The credit report prepared by Larry does not accurately present Cleaning R Us' actual financial position.

After receiving the credit report from Latrobe Bank, Fabulous Advertising accept the contract with Cleaning R Us and provide $80,000 worth of services.

Unfortunately, Oxy CFC is a complete failure and Cleaning R Us is put into liquidation. Fabulous Advertising loses $50,000 because Cleaning R Us can only afford to pay $30,000.

In the meeting between Mr Enjo and Larry, Larry does not explain the terms and conditions of the loan thoroughly before Mr Enjo signs the loan documents. Larry knows that Mr Enjo is old (in his late 70's), with little formal education, and does not speak much English because he was an Italian migrant. Larry also does not explain to Mr Enjo that he is guaranteeing his debts by mortgaging his family home in favour of Latrobe Bank.

Six months later, Mr Enjo fails to pay the loan instalments and Latrobe Bank seeks to enforce the mortgage against Mr Enjo to seize and sell his family home.

Use only common law and/or equitable principles to answer questions 1, 2 and 3. Do not use legislation.

1. Advise Fabulous Advertising whether it should take action against Larry, the bank manager, in tort for negligent misstatement.
2. Assuming. that Larry is potentially liable in negligent misstatement, is Latrobe Bank vicariously liable to Fabulous Advertising?
3. Could Mr Enjo have the mortgage set aside on grounds of unconscionable dealing by LatrobeBank?