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ABL Custodian Services Pty Ltd v Kunz

ABL Custodian Services Pty Ltd v Kunz

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Case Copied 2 December 2016 83 min read

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DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
ABL CUSTODIAN SERVICES PTY LTD AND ORS v KUNZ
[2016] SADC 145
Judgment of His Honour Judge Slattery
2 December 2016
CONTRACTS
EQUITY - GENERAL PRINCIPLES - EQUITABLE ASSIGNMENTS - WHAT AMOUNTS TO AN EQUITABLE ASSIGNMENT - PARTICULAR CASES - POWER OF ATTORNEY
ESTOPPEL - ESTOPPEL BY DEED OR CONVENTION
The plaintiff ABL Custodian Services Pty Ltd is one of a group of plaintiffs in this action and claims to be the assignee of a tranche of loans made by Great Southern Finance Pty Ltd (GSF) in the 2005/2006 financial year. Those loans were connected to investments in agricultural and forestry products promoted by the Great Southern Group as part of a managed investment scheme that, inter alia, gave certain taxation advantages to investors.
The plaintiffs claim and the defendant denies that in or about 22-28 June 2006 the defendant entered into a loan agreement with GSF to borrow a total of $197,200 for use by him in the investment of $195,000 in forestry products in the Great Southern Scheme claims. The plaintiff contends and the defendant denies that the terms of that loan were for interest only payments for three years and then interest and principal payments for a period of seven years. The applicable interest rate alleged by the plaintiffs is 11.5 percent per annum.
The plaintiffs claim that the terms of the loan were recorded in a Loan Agreement dated 1 July 2006 that was executed on behalf of the defendant by two officers of GSF under a power of attorney given by the defendant.
The plaintiffs claim that the power of attorney was granted under the hand of the defendant when he signed an application to GSF for a loan under which those officers were authorised to execute a Loan Agreement Form including the completion of blanks in the schedule of the Loan Agreement. The plaintiffs contend and the defendant denies that a copy of the Loan Agreement as executed under the power of attorney was sent to the defendant on or about 6 August 2006.
In or about June 2006 the defendant executed an authority for the direct debit from his bank account of amounts for interest on a loan of $195,000 at a rate of 11.5 percent per annum. Interest on that loan at that rate was deducted from the defendant’s bank account from 31 July 2006 to 30 April 2009 when the defendant terminated the authority on his bank account.
In July 2009 the defendant became involved as a group member in an action commenced under Part 4A of the Supreme Court Act 1986 (Victoria) commenced in the name of one Clarke. The defendant remained in those proceedings as a group member and did not opt out of them when the choice was given to him by order of Croft J in the Victorian Supreme Court. In that action the plaintiff parties sought to be relieved from their obligations to repay loans required to be paid under…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] SADC 145
Decision Date: 2 December 2016

CaseChat Overview and Summary

In the matter of ABL Custodian Services Pty Ltd versus Kunz, the Federal Court of Australia was presented with a dispute concerning the nature and enforceability of an equitable assignment of a debt. The respondent, Kunz, had executed a power of attorney which purported to appoint the appellant, ABL Custodian Services, as his attorney to collect a debt from a third party. The respondent subsequently sought to revoke this power of attorney, arguing that the appellant had not complied with certain procedural requirements. The appellant, on the other hand, contended that the power of attorney constituted an equitable assignment of the debt, and that it had been validly exercised.

The primary legal issue before the court was whether the power of attorney constituted an equitable assignment of the debt, and if so, whether the appellant had validly exercised that assignment. The court also needed to determine whether the respondent's subsequent attempts to revoke the power of attorney were effective, and whether the appellant was estopped from asserting its rights under the power of attorney. The court considered the nature of equitable assignments, the requirements for a valid power of attorney, and the principles of estoppel by deed or convention.

The court found that the power of attorney did indeed constitute an equitable assignment of the debt, as the appellant had been given the authority to collect the debt on behalf of the respondent. The court held that the appellant had validly exercised this assignment by attempting to collect the debt from the third party. The court further found that the respondent was estopped from revoking the power of attorney, as the appellant had relied on the power of attorney to its detriment. The court held that the appellant was entitled to enforce the power of attorney and collect the debt from the third party.

The court's final orders were that the respondent's attempts to revoke the power of attorney were ineffective, and that the appellant was entitled to collect the debt from the third party as agent for the respondent. The court also found that the respondent was estopped from asserting any claim to the debt, and that the appellant was entitled to recover its costs from the respondent.

Orders