ABL Nominees Pty Limited (ACN 106 756 521), ABL Custodian Service Pty Ltd (ACN 097899720) and Bendigo and Adelaide Bank Ltd (ACN 068 049 178) v Vijayalatshimi Govindasamy - [2019] NSWDC 5

District Court

New South Wales

Amendment notes

Medium Neutral Citation: ABL Nominees Pty Limited (ACN 106 756 521), ABL Custodian Service Pty Ltd (ACN 097899720) and Bendigo and Adelaide Bank Ltd (ACN 068 049 178) v Vijayalatshimi Govindasamy [2019] NSWDC 5
Hearing dates: 26 and 27 March 2018, 23 and 30 April 2018 (directions only) and 14 June 2018. Written submission by both parties dated 22 June 2018 and in reply on 6 July 2018
Date of orders: 24 January 2019
Decision date: 24 January 2019
Jurisdiction: Civil
Before: Hatzistergos DCJ
Decision:
1. Verdict for the Defendant
2. Subject to any application within fourteen days to relist the matter for any further or other order as to costs the Plaintiffs are to pay the Defendants costs

Catchwords: CONTRACTS – Construction and Interpretation - Proper construction of term for finance – whether power of attorney clause allowed for a change of lender – whether loan had been validly assigned
Legislation Cited: Conveyancing Act 1919 (NSW) s 12
Civil Procedure Act 2005 (NSW) s100
District Court Act 1973 (NSW) s 44
Justice Legislation Amendment Act (No 3) 2018 (NSW) Schedule [1.16]
Limitation Act 1969 (NSW) s 14(1)(a)
Stamp Duties Act 2008 (WA)
Uniform Civil Procedure Rules (NSW) r 14.4
Cases Cited: Alma Hill Constructions Pty Ltd v Onal (2007) 16 VR 190
Bendigo and Adelaide Bank v Howard [2018] NSWSC 383
Chapman v Colson [2015] NSWSC 120
Coshott v Lenin [2007] NSWCA 153
Dare v Pulham (1982) 189 CLR 658
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640
Fitzgerald v Masters (1956) 95 CLR 420
International Leasing Corporation (Victoria) v Aiken (1967) 2 NSWLR 426
Jones v Canavan (1972) 2 NSWLR 236
Nestle Limited v McDougall [1998] NSWCA 158
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Union Bank Australia Ltd v Rudder (1911) 13 CLR 152
Van Lynn Developments v Pelias Constructions Ltd (1969) 1 QB 607
Westscott Resources v St George Bank Ltd [1998] WASC 332
Texts Cited: G Dal Pont, Powers of Attorney (Lexis Nexis, 2011)
Seddon and Bigwood, Cheshire & Fifoot Law of Contract (11th Ed, Lexis Nexis Butterworths, 2017)
Category: Principal judgment
Parties:
ABL Nominees Pty Limited (ACN 106 756 521) (Plaintiff)
ABL Custodian Service Pty Ltd (ACN 097899720) (Plaintiff)
Bendigo and Adelaide Bank Ltd (ACN 068 049 178) (Plaintiff)
Vijayalatshimi Govindasamy (Defendant)
Representation:
Counsel:
Mr B Koch (Plaintiffs)
Mr PA Horobin (Defendant)
Solicitors:
K & L Gates (Plaintiff)
Cordato Partners (Defendant)

File Number(s): 16/57622
Publication restriction: Nil

Judgment

INTRODUCTION

The Plaintiffs bring proceedings against the Defendant in relation to 3 loans said to have been owing to either of them for agricultural investment schemes that the Defendant participated in. The Plaintiffs assert that the Defendant defaulted on the loans entitling them to bring these proceedings.
The amounts claimed are expressed as

$51,126.32 payable under the First Loan Deed to 1 January 2016 in favour of the First or Third Plaintiffs; and

$362,379.32 payable under the Second and Third Loan Deeds to 1 January 2016 in favour any of the three Plaintiffs.

Interest is also claimed in either the overdue rate set out in each Deed or pursuant to s 100 of the Civil Procedure Act 2005. [1]
1. Further Amended Statement of Claim at [82] and {83]

The Defendant did not dispute the quantum component of the claim.
The Defendant did dispute the Plaintiffs’ entitlement however asserting:

The Plaintiffs cannot establish that the loan funds were advanced by the First Plaintiff. [2]

On its proper construction the Defendant’s applications for term finance in respect of the Second and Third Loans did not elect to accept finance from the First Plaintiff but rather Great Southern Finance Pty Ltd. [3]

The Powers of Attorney given by the Defendant in her applications for term finance did not extend to authorising a lender that she had not selected, or ratifying a contrary selection. [4]

The Plaintiffs cannot establish assignment of the loans. [5]
2. Third Further Amended Defence at [6],[32] and [56]
3. Third Further Amended Defence at [28] and [52].
4. Third Further Amended Defence at [4],[5], [8],[30[ [31],[34],[54],[55] and [58]
5. Third Further Amended Defence at [18]-[24],[43] -,[49],[67]-[72],

Although an alternative claim in the case of each loan based on unjust enrichment was pleaded it was not pursued. [6]
6. Further Amended Statement of Claim at [26]-[27], [50]-[51] and [73]-[74] and Third Further Amended Defence at [26]-[27], [50]-[51], and [73]-[74].
The Defendant had pleaded that the loans the subject of the Second and Third Loan Deeds were not enforceable pursuant to s 27 of the Stamp Duties Act (WA). [7] This defence was ultimately not pursed. [8]
7. [34] [35A],[35B],[58],[59A] and [59B].
8. See Defendant’s written submissions and Submissions in Reply.
In the face of the limitation defences, the Plaintiffs indicated in submissions that they were only advancing their proceedings under three Loan Deeds. [9] The Defendant acknowledged that to the extent the claims are based on Loan Deeds no limitation issue arises as the limitation of 12 years has not expired. [10] To that extent this issue therefore assumes no further significance.
9. Plaintiffs’ submissions in reply at [16].
10. T 10.34-.40.

PROCEDURE

The matter fist came on for hearing before me on 26 March 2018. On that occasion I was handed the proposed Court Book and the matter was stood over until the following day to enable me to read it. I was further informed that the Defendant had only recently come to be represented.
On 27 March 2018 it became apparent that the matter was not in a position to proceed. For reasons given that day the matter was stood over until 23 and 24 April 2018. [11] The Defendant was given leave to file a Further Amended Defence to plead that the Second and Third Loan Deeds were not enforceable by reason of s 27 of the Stamp Duties Act 1921 (WA). The Plaintiff was granted leave to file and serve by 18 April 2018 any further evidence in relation to the stamp duty issue.
11. ABL Nominees Pty Ltd and Ors v Govindasamy, District Court of NSW, 2016/57622, Unreported, 27 March 2018
On 28 March 2018 the Supreme Court of NSW handed down its decision in Bendigo and Adelaide Bank Ltd v Howard. [12]
12. [2018] NSWSC 383.
The hearing of this matter resumed on 23 April 2018. On that occasion by consent the Plaintiff was granted leave to file in Court a Further Amended Statement of Claim and the Defendant was granted leave to file in Court a Further Amended Defence. The Plaintiff had previously filed a Reply dated 23 March 2018. Leave to rely on this document (which was not filed in accordance with UCPR 14.4) was not sought. This will be discussed later in these reasons.
The Plaintiff commenced its case reading the affidavits of Mr Stephen Flamer Smith dated 3 October 2017and 17 November 2017. These were contained in a Court Book together with a large volume of documents and were marked Exhibit A. Mr Flamer Smith was the Manager of Legal and Resolutions for the Third Plaintiff. He described the First and Second Plaintiffs as wholly owned subsidiaries of the Third Plaintiff. [13]
13. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [2]
Thereafter an issue arose as to the Plaintiffs having advanced evidence that went outside of the terms on which it was allowed to file further evidence pursuant to the orders made on 27 March 2018. That additional material was served on 18 April 2018. The Plaintiff acknowledged that it was material that sought to address issues raised in Bendigo and Adelaide Bank Ltd v Howard. [14] For reasons given on the same day the matter was then adjourned for directions to ensure readiness on 30 April 2018. [15] On that occasion the matter was listed for hearing on 14 and 15 June 2018.
14. [2018] NSWSC 383.
15. ABL Nominees Pty Ltd and Ors v Govindasamy, District Court of NSW, 2016/57622, Unreported, 23 April 2018
On 14 June 2018 the hearing resumed. Counsel for the Plaintiff accepted that a number of the paragraphs contained in Mr Flamer Smith’s affidavits previously tendered were in the nature of submissions as the construction of documents and to that extent could be given limited weight if not disregarded. [16] The Plaintiff relied on a further affidavit of Mr Flamer Smith dated 18 April 2018 [17] and an affidavit from Mr Nathaniel Stone dated 18 April 2018. [18] Mr Stone was the Senior Manager employed by the Third Plaintiff in the Balance Sheet Management Group. Both Mr Flamer Smith and Mr Stone were cross examined.
16. T 76.46-68.7.
17. Exhibit C.
18. Exhibit B.
Admitted provisionally under s 56 of the Evidence Act1995 (NSW) were of tax returns of the Defendant for the 2006 to 2010 financial years. [19] On admissibility the Plaintiff had argued that the returns demonstrated that the Defendant sought to obtain investments and tax advantages on the basis that she had been loaned the monies the subject of the loans. The Defendant argued that at best the returns disclose the Defendants subjective belief. The fact that the Plaintiff sought to offset interest payments was acknowledged in her evidence. [20] Ultimately neither party in their case advanced any argument in closing submissions based on the content of the returns to the issues that fell for determination.
19. Exhibit D.
20. T 95.19-.29
The Defendant relied on her affidavit dated 21 March 2018 [21] and was also the subject of cross examination.
21. Exhibit A.
At the conclusion of evidence the parties were directed to file written submissions. [22] Both did so on 22 June 2018 and in reply on 6 July 2018. Judgment has been reserved since then.
22. T 98.50-99.7.
Beyond the issues raised, the matter was potentially affected by the circumstances that led to the passing of the amendments to s 44 District Court Act 1973 by Schedule [1.16] of the Justice Legislation Amendment Act (No 3) 2018. [23] As amendments ultimately commenced with retrospective effect on 28 November 2018 this no longer assumes any significance.

FACTS

23. See The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194 and Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288.

The First loan (Beef Cattle MIS)

On 04 June 2006, the Defendant made an application to Great Southern Managers Australia Limited (‘GSMAL’) to purchase 10 droves in the 2006 Beef Cattle MIS and for finance to fund that investment. [24] On the same day, the Defendant signed an application for term finance [25] to acquire the ten droves in the 2006 Beef Cattle MIS. [26] That application was for finance from the First Plaintiff, ABL Nominees Pty Ltd, in terms of one year interest and then four years principal and interest. [27]
24. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [38], and Exhibit A-708-710.
25. Hereinafter ‘the first application for term finance’
26. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [35] and Exhibit A- p 690-707.
27. Exhibit A-p 692.
The first application for term finance was expressed to provide for the appointment of an Attorney in either the First Plaintiff or Greater Southern Finance Pty Ltd [28] or both pursuant to a Power of Attorney. [29]
28. Hereinafter ‘GSF’
29. Exhibit A-p 697 at clause 6 (i) and (ii).
On 08 June 2006, the first application for term finance was approved. [30]
30. Exhibit A-p 739. This appears accepted by the Plaintiffs in their timeline of the First Loan (See Plaintiffs’ written submissions at p2)
On or about 15 June 2006, the Plaintiffs claim that a Loan Deed in the sum of $50,000 between the First Plaintiff (as lender) and the Defendant (as borrower) was executed by GSF [31] pursuant to the Power of Attorney granted in the first application for term finance. [32] On the same day, GSMAL sent a tax invoice to the Defendant for “Cost of the 10 Drove(s) (including 10% GST)” of $55,000 and noting, “Payment by deposit or loan finance” of $50,000. [33] The Defendant admitted that the first term finance application provided for the appointment of an attorney but asserted that the execution of the First Loan Deed and related documents was contingent on finance being provided. [34]
31. Exhibit A-p 997 at p1004
32. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [48]-[49] and Exhibit A-p 997-1005.
33. Exhibit A-p 995.
34. Third Further Amended Defence at [5].
The Plaintiffs claim that on 23 June 2006 the First Loan was funded by the First Plaintiff. [35]
35. Affidavit of Stephen Flamer Smith (affirmed 17 November 2017, at [9]-[10] and Exhibit A-1006-1022D.
Clause 23 of the First Loan Deed provided that where the Lender is the First Plaintiff it may appoint GSF or any other party as the Servicer to service arrangements under the Deed including collection of monies and enforcement of rights. [36]
36. Exhibit A- p 1003.
On 30 June 2006, the First Plaintiff purported to assign all its rights in respect of the First Loan Deed to Adelaide Bank Limited [37] . This was one of 259 loans that were said to be assigned. [38] The Defendant denied the assignment and asserted that it was not given notice. [39]
37. Hereinafter ‘ABL’
38. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [71] and Exhibit A, p 990-994, 1008, 1023.
39. Third Further Amended Defence at [18].
On 27 July 2006, GSMAL issued to the Defendant a “Great Southern Beef Cattle Certificate” for 10 droves noting, “Amount Paid” of $50,000. [40]
40. Exhibit A-p 1049.
From 31 July 2006 to 30 November 2006 the Defendant made payments by direct debit, which the Plaintiffs assert were pursuant to the first loan agreement and/or First Loan Deed. [41] On 31 January 2008, a copy of the First Loan Deed was sent to the Defendant by GSF. [42]
41. Exhibit A-p 1789. Also see Third Further Amended Defence at [12].
42. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [52] and Exhibit A-p 1118.
ABL contended that it assigned rights under the First Loan Deed to the Third Plaintiff on 1 December 2008, pursuant to a transfer approved under the Finance Sector (Business Transfer and Group Restructure) Act 1999 (Cth). [43]
43. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [72]-[73] and Exhibit A-p1319-1326
On 6 February 2009, the Third Plaintiff purported to assign all of its rights under the First Loan Deed to the First Plaintiff, in its capacity as trustee of the Lighthouse Trust No. 14. [44] The Defendant did not admit this. [45]
44. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [74]-[77] and Exhibit A-p1664-1667. The Defendant’s First Loan was one of 816 loans listed in the settlement report.
45. Third Further Amended Defence at [20].
The Plaintiffs assert that in early 2009 the Defendant executed a Mortgage and Amendment Deed. [46]
46. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [17]-[18] and Exhibit A-p 1391.
On 30 April 2009, pursuant to a Replacement of Servicer Deed dated 5 February 2009, the Third Plaintiff replaced GSF as Servicer for the purposes of clause 23 of the First Loan Deed. [47]
47. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [78], Exhibit A-p 1641-1663.
Subsequent to 30 November 2009, the Plaintiffs assert that the Defendant failed to make loan repayments pursuant to the First Loan Deed. [48] The Defendant admitted not making repayments but otherwise denied it was liable. [49]
48. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [89], Exhibit A-p 1789-1795.
49. Third Further Amended Defence at [13] and affidavit of Vijayalaatshimi Govindasamy affirmed 21 March 2018 at [46]
On 10 February 2010, the Third Plaintiff made a demand to the Defendant for payment of $23,101.86 payable (as at that date) under the First Loan Deed which the Plaintiffs assert had not been met. [50] The fact that the demand was made was admitted by the Defendant [51] and acknowledged by her in evidence. [52]
50. Exhibit A -p1717-8
51. Third Further Amended Defence at [16]
52. Affidavit of Vijayalatshimi Govindasamy affirmed 21 March 2018 at [48]
On 10 December 2015 a further demand was made in respect of the First Loan by Curwood Lawyers in the sum of $50,546.87 said to be outstanding as at 1 December 2015. [53]
53. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [90], Exhibit A-p1747-8

The Second Loan (2006 Olives MIS)

The Plaintiffs assert that on 4 June 2006, the Defendant made an application to GSMAL to purchase 7 Grovelots in the 2006 Olives MIS. [54] The cost of each Grovelot was $8,000, making it a total of $56,000.
54. Hereinafter referred to as the “Grovelot Application”. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [43], Exhibit A, p 732.
On the same date, the Defendant signed an application for term finance [55] to borrow money to acquire an interest in the 2006 Olives MIS. [56] That application also included reference to finance for 33 woodlots, subject of a Third Loan referred to below in the sum of $99,000.
55. Hereinafter referred to as the second application for term finance.
56. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [40], Exhibit A, p 711-729.
The second application for term finance was expressed to provide for the appointment of an Attorney of either the First Plaintiff or GSF or both pursuant to a Power of Attorney. [57]
57. Exhibit A-p 718 at clause 6.
On 9 June 2006, the second application for term finance was approved as in respect of the Grovelots. [58]
58. Exhibit A-p 988. This appears accepted by the Plaintiffs in their timeline of the Second Loan (See Plaintiffs’ written submissions at p4)
On 15 June 2006, GSMAL sent a tax invoice to the Defendant for the “Cost of 7 Olivelots (including 10% GST)” of $61,600 and noting “Payment by deposit or loan finance” of $56,000. [59]
59. Exhibit A-p 996.
The Plaintiffs assert that the Second Loan was funded by the First Plaintiff on 23 June 2006. [60]
60. Exhibit A-p261M-N and p1006-1022D.
On 30 June 2006, the First Plaintiff purported to assign all of its rights in respect of the Second Loan Deed to ABL. [61] This was one of 259 loans that were said to be assigned. This was not admitted by the Defendant. [62]
61. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [71], [80], and Exhibit A, pp 990-4, 1011, 1023.
62. Third Further Amended Defence at [43].
From 31 July 2006 to 30 November 2006 the Defendants made payments by direct debit which the Plaintiff’s assert were pursuant to the second loan agreement and/or Second Loan Deed. [63]
63. Exhibit A-p 1796-1798; Further Amended Statement of Claim at [37] and Third Further Amended Defence at [37].
On or about 8 August 2006, the Plaintiffs claim that the Second Loan Deed in the sum of $56,685 between the First Plaintiff (as Lender) and the Defendant (as Borrower) was executed by GSF pursuant to a Power of Attorney granted in the second loan application. [64]
64. Hereinafter referred to as the “Second Loan Deed”. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [53]-[56], and Exhibit A-pp 1051-61.
Clause 30 of the Second Loan Deed provided that where the Lender is the First Plaintiff it may appoint GSF or any other party as the Servicer to service arrangements under the deed including collection of monies and enforcement of rights. [65]
65. Exhibit A-p 1003.
On 10 August 2006, GSMAL issued to the Defendant a “Great Southern Organic Olives Certificate” for 7 Grovelots noting, “Amount Paid” of $56,000. [66]
66. Exhibit A-p 1062.
With effect from 28 February 2007, the Third Plaintiff purported to assign all of its rights in respect under the Second Loan Deed to the Second Plaintiff pursuant to a sales agreement, collateral sales notice sales and settlement. [67] This was not admitted by the Defendant who also asserted that no notice was given. [68]
67. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [81], and Exhibit A-p 1072-1115, 1100-1101 and 1111.
68. Third Further Amended Defence at [46].

On 30 April 2009, pursuant to a Replacement of Servicer Deed dated 5 February 2009, the Third Plaintiff replaced GSF as Servicer for the purposes of clause 30 of the Second Loan Deed. [69]
69. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [82], and Exhibit A, p 1641-63.
On 3 June 2009, the Third Plaintiff notified the Defendant that the rights of First Plaintiff under the Second Loan Deed had been assigned to the Second Plaintiff. [70]
70. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [83], and Exhibit A, p 1699.
Subsequent to 30 November 2009, the Plaintiffs assert that the Defendant failed to make loan repayments pursuant to the Second Loan Deed. [71] The Defendant admitted not making repayments but otherwise denied it was liable. [72]
71. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [92], and Exhibit A, p 1796-1802.
72. Third Further Amended Defence at [38]. Affidavit of Vijayalaatshimi Govindasamy (affirmed 21 March 2018) at [46]
On 10 February 2010 the Second Plaintiff made a demand to the Defendant for payment of $55,573.11 payable as at that date under the Second Loan Deed which the Plaintiff assert has not been met. [73] The fact of the demand was admitted by the Defendant [74] and acknowledged by her in evidence. [75]
73. Exhibit A-p1719-20
74. Third Further Amended Defence at [41]
75. Affidavit of Vijayalaatshimi Govindasamy (affirmed 21 March 2018) at [49]
On 10 December 2015 a further demand was made on in respect of the Second and Third Loans by Curwood Lawyers on behalf of the First Plaintiff in the sum of $357,970.95 said to be outstanding as at 1 December 2015. [76]
76. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [95], and Exhibit A-p 1749-50.

Third Loan (2006 Plantations MIS)

On 4 June 2006, the Defendant made an application to GSMAL to purchase 33 Woodlots in the 2006 Plantations MIS. [77] On the same day, the Defendant signed the second application for term finance to borrow money to acquire an interest in 33 Woodlots in the 2006 Plantations MIS. [78] That application for term finance was made in conjunction with the Grovelots Application.
77. Hereinafter referred to as the “Woodlot Application”. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [45], and Exhibit A-p 735.
78. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [40], and Exhibit A, p 711-29.
The Woodlots Application related to 33 lots at $3000 each, being a total of $99,000. The Woodlots Application indicated that the Defendant wished to borrow for a 10 year terms with three years interest free with GSF. In the separate Application for Term Finance in terms of loan options, the Defendant, ticked a box for 3 years interest and 7 years principal and interest from GSF. That option however, was only available for loan terms for Woodlots only. As this was a combined loan, that option could only have been exercised with GSF as a 10 year principal and interest loan or alternatively through the First Plaintiff, with a loan for 3 years interest only and then 7 years principal and interest.
As noted earlier the second application for term finance was expressed to provide for the appointment of an Attorney of either the First Plaintiff or GSF or both pursuant to a Power of Attorney. [79]
79. Exhibit A- p718 at clause 6.
On 09 June 2006, the second loan application was approved in respect of the Woodlots. [80]
80. Exhibit A-p 989. (‘the Third Loan’). This appears accepted by the Plaintiffs in their timeline of the Third Loan (See Plaintiffs’ written submissions at p6)
On 30 June 2006, GSMAL sent a tax invoice to the Defendant for the, “Cost of 33 woodlot(s) (including 10% GST)”, in the amount of $108,900 and noting “Payment by deposit or loan finance” of $99,000. [81]
81. Exhibit A-p 1037.
On or about 1 July 2006, a Third Loan Deed in the sum of $100,115 between the First Plaintiff (as lender) and the Defendant (as borrower) was purportedly executed by GSF on behalf of the Defendant pursuant to the power of attorney granted in the second application for term finance. [82] The Defendant denied this was the case and asserted that it was an express term of the Loan Deed that the Lender would advance the loan on the date of the Plantation Land and Management Agreement. [83]
82. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [57]-[60], and Exhibit A-p 1038-1046.
83. Third Further Amended Defence at [59]
Clause 30 of the Third Loan Deed provided that where the Lender is the First Plaintiff it may appoint GSF or any other party as the Servicer to service arrangements under the deed including collection of monies and enforcement of rights. [84]
84. Exhibit A-p1045
On 27 July 2006, GSMAL issued to the Defendant a “Great Southern Plantations Project Certificate” for 33 Woodlots, noting “Amount Paid” of $99,000. [85]
85. Exhibit A-p1050.
From 31 July 2006 to 30 November 2006 the Defendants made payments by direct debit which the Plaintiffs assert were pursuant to the Third Loan Agreement and/or Third Loan Deed. [86]
86. Exhibit A-p1803.-1805.
The Plaintiffs assert that the Third Loan was funded by the First Plaintiff on 14 August 2006. [87] On the same day, the Plaintiffs assert that the First Plaintiff assigned all of its rights under the Third Loan Deed to ABL. [88] The Defendant did not admit this. [89]
87. Exhibit A-261N-261O, 1069-1070A.
88. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [84], and Exhibit A-p990-4, 1071.
89. Third Further Amended Defence at [67].
The Plaintiffs assert that on 28 February 2007ABL assigned all of its rights under the Third Loan Deed to the Second Plaintiff using the same mechanism involved in the Second Loan assignment. [90]
90. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [81]] and[85], and Exhibit A-p 1072-1115.
On 30 April 2009, pursuant to a Replacement of Servicer Deed dated 5 February 2009, the Third Plaintiff replaced GSF as Servicer for the purposes of clause 30 of the Third Loan Deed. [91]
91. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [86], and Exhibit A-p 1641-63.
On 3 June 2009, the Third Plaintiff asserts that it notified the Defendant that the rights of First Plaintiff under the Third Loan Deed had been assigned to the Second Plaintiff. [92] The Defendant denied that she was notified. [93]
92. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [83], and Exhibit A-p 1699.
93. Third Further Amended Defence at [71].
Subsequent to 30 November 2009, the Plaintiffs assert that the Defendant failed to make further loan repayments pursuant to the Third Loan Deed. [94] The Defendant admitted not making repayments but otherwise denied it was liable. [95]
94. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [94], and Exhibit A-p 1803-1809.
95. Third Further Amended Defence at [62].
On 11 January 2010 the Second Plaintiff made a demand to the Defendant for payment of $98,909.89 payable as at that date under the Third Loan Deed which the Plaintiff assert has not been met. [96] The fact of the demand was admitted by the Defendant [97] and acknowledged by her in evidence. [98]
96. Exhibit A p1711-1712.
97. Third Further Amended Defence at [65]
98. Affidavit of Vijayalatshimi Govindasamy (affirmed 21 March 2018) at [48].
On 10 December 2015 a further demand was made on in respect of the Second and Third Loans by Curwood Lawyers on behalf of the First Plaintiff in the sum of $357,970.95 said to be outstanding as at 1 December 2015. [99]
99. Affidavit of Stephen Flamer Smith (affirmed 3 October 2017) at [95], and Exhibit A-p 1749-50.

Features of the Loans

Each of the three loans asserted to have been advanced by the Plaintiffs follow a similar sequence.
First, the Defendant made applications for the relevant investment, including the number of lots to be acquired, the relevant agricultural product and identifying the finance option proposed.
Second, the Defendant made an application for term finance to fund the relevant investment. The application for term finance set out the terms on which the finance was to be provided and an attached form “Loan Deed”, to be executed on the Defendant’s part in due course. A term of the application for term finance provided that the Defendant granted a power of attorney to the Lender to execute the Loan Deed on her behalf.
Mr Stone gave evidence that in addition to retail banking, where ABL undertook all aspects of lending transaction as at 2006, ABL and its subsidiaries undertook “Program Lending” by which substantially all aspects of the lending transaction bar advancing the relevant funds was not undertaken by ABL, but by other commercial entities that offered ABL the opportunity to participate in program lending. In these cases, typically funds would be advanced for multiple loans to multiple borrowers in large tranches. [100] Mr Stone stated that there is still some vetting of the proposed loans to be undertaken to check that the loans in the tranche match the criteria for the program, but this was typically undertaken on the basis of an examination of data on the loans, rather than an investigation of any primary documentation (such as prospective borrowers loan applications). [101]
100. Exhibit B at [11].
101. Exhibit B at [12].
Mr Stone described the process for funding loans by the First Plaintiff. In particular, he stated that loans meeting particular criteria would be entered on the basis that the relevant Bank entity (in this case the First Plaintiff) was the lender (Originated loans). Loans meeting other criteria would be entered into on the basis that GSF was the lender, and then offered to ABL by way of assignment either virtually contemporaneously or at a later time (Purchased loans). [102] Mr Stone stated that although the bank funded both Originated loans and Purchased loans as part of the Great Southern Program; based on his review of the documents exhibited in Mr Flamer-Smith’s affidavit, the Defendant’s loans were all Originated loans. [103] In relation to these loans, Mr Stone stated that GSF undertook all dealings with borrowers in respect of organising the loans. [104]
102. Exhibit B at [20].
103. Exhibit B at [22].
104. Exhibit B at [20].
Mr Stone described the process as commencing with the Bank receiving from GSF an email attaching an Excel Workbook containing a tab or tabs with lists of loans which GSF proposed should be Purchased or Originated. [105] He would then review the data contained in the work book to verify the loans that were to be purchased met the “eligibility criteria”[106] in the June 2006 Loan Sale and Servicing Deed. [107] If he identified some loans as having been incorrectly categorised or they did not meet the criteria in the LSSD, he would then speak to GSF, which would sometimes lead to the removal of the loan from the list, or it would further clarify the data and remain. [108]
105. Exhibit B at [23].
106. Exhibit B at [26].
107. Hereinafter ‘LSSD.’ See Exhibit A, 740-965.
108. Exhibit B at [27].
Occasionally, an amended settlement report reflecting the agreed deletions would be forwarded. [109] On other occasions, Mr Stone or one of his colleagues amended the existing settlement report internally. After the information in the settlement report had been verified, he would then inform GSF that the bank was prepared to proceed to lend to the relevant borrowers. Following that an “Origination” Notice was required in accordance with the June 2006 LSSD. That notice indicated that GSMAL intended to originate the loan in the name of the First Plaintiff in its capacity as the trustee of the relevant trust, and each loan was identified in the Settlement Report accompanying the Origination Notice.
109. Exhibit B at [27].
Once it had been determined that a transfer of Originated loans was acceptable, it was necessary for the First Plaintiff to arrange for loan funds under the tranche to be provided This was done by means of a programme called “Quantum”, which enabled an instruction to be issued to the Swift Exchange Settlement Account maintained by ABL, with the Reserve Bank, enabling same day deposits between two accounts operated by GSMAL and GSF. [110] . Mr Stone stated that First Plaintiff was unable to make the payment itself, as it did not hold a Swift Exchange Account although ABL did have such an account. Accordingly in accordance with the practice adopted in relation to the Great Southern Program, ABL made the payments on behalf of the First Plaintiff from its Swift Account and journal entries were created to reflect that it was the First Plaintiff which actually advanced the funds. [111]
110. Exhibit B at [48]-[49].
111. Exhibit B at [49].
Although payments were made by ABL, they were made on behalf of the First Plaintiff and journal entries were created to reflect the funds were advanced by the First Plaintiff. [112]
112. Exhibit B at [49].
The Plaintiffs drew attention to the contents of the LSSD, which they assert was executed by GSF, the First Plaintiff, ABL and GSMAL. [113]
113. Exhibit A p 747.
The parties in that document were said to have set out the terms on which the “Originator” (defined as GSMAL) may originate loans on behalf of the “Lender” (defined as the First Plaintiff) in the terms on which the “Servicer” (defined as the seller, [114] being GSF [115] ) would service the loan. Relevantly, the terms of the LSSD included the following:
114. Exhibit A-p 775.
115. Exhibit A-p 752.

Clause 2.1(b) – This provided that the Originator and GSF may deliver to the lender at any time during the availability period and “origination notice” complying with the deed. [116]
116. Exhibit A-p 781.

Clause 2.6A(a) – This provided that if the lender agrees to fund the loans set out in the Settlement Report accompanying an “Origination Notice” delivered to it, it may do so by payment on the closing date of the origination amount in relation to that Origination Notice. [117]

Clause 2.6A(b) – This provided that the Originator must apply the origination amount received in accordance with clause 2.6A(a) in respect of an origination notice, to originate the loans referred to in that Origination Notice, in accordance with clause 2.18 by applying funds in accordance with the applicable loan agreement. [118]

Clause 2.18 – This provided that the Lender appointed the Originator as its agent for the sole purpose of originating any loans described in the Settlement Report accompanying an “Origination Notice” and funded by the Lender. [119]

Clause 2.19 – which subject to clause 2.19 (b) provided that ABL undertook to fund or to arrange for the First Plaintiff to fund loans offered to the First Plaintiff for origination in accordance with clause 2. [120]

Clause 7.1 – in which GSF was appointed and agreed to act as Servicer of, among other things, originated loans, which included collecting all money due under Originated loans and enforcing the provisions of originated loans (pursuant to clauses 8.3(a)-(b)). [121]
117. Exhibit A-p 784.
118. Exhibit A-p 784.
119. Exhibit A-p 781.
120. Exhibit A-p 790.
121. Exhibit A-p 805, 812.

“Originated Loan for the Purposes of the LSSD” is defined as follows:

“Originated loan’ means at any time, a loan, which in accordance with clause 2, has been originated by the Originator as agent of the Lender pursuant to an Origination Notice and funded by the Lender, but does not include (unless specifically provided otherwise) a loan which has become extinguished.” [122]
122. Exhibit A-p 769.

The Plaintiffs argued that clause 2.19(a) related to Purchased and Originated loans, not only to the latter and that the clause must be read in the context of ABL undertaking to fund loans offered for purchase by GSF; that is Purchased loans. They asserted that the clause did not suggest that ABL would fund Originated loans, but that it undertook (as its role as parent company) to arrange for the First Plaintiff fund the advances. [123]
123. Exhibit A-p7 89 at cl 2.19(a).
Under Clause 2.19 of the LSSD, there were limited circumstances under which the ABL retained the option of not funding a loan. [124]
124. Exhibit A-p 790.at clause [2.19]
A third feature of each loan was that in each case the Loan Deed provided in Clause 2(a):

“The parties agree that the lender will lend funds to the borrower on the date on which the fees are payable, as specified in item 5 of the schedule. The funds may be advanced in more than one tranche on different dates to which the borrower’s payment obligations in respect of participation in the project.”

Clause 2(b) of each Loan Deed provided:

“The borrowers irrevocably direct the lender to advance the funds on the date of advance by satisfying:
(i) The loan establishment fee included in the cost and expenses;
(ii) The fees payable under the agreement or a portion of them equal to the balance of the funds after the payment of the costs and expenses specified in clause one above’
(iii) …

The “date of advance” was defined in the definitions as “the date specified in item 5 of the schedule.”
In respect of the First Loan Deed schedule 1 stated under the heading “Date of Fees Payable to GSMAL and Date of Advance of Loan”:

The date of the Lease Management and Agistment Agreement [125]
125. Exhibit A-p 1004

A copy of the Lease Management and Agistiment Agreement for the First Loan was not available, although it is referenced as having been entered into on 15 June 2006. [126]
126. Exhibit C-SFS 4, p 505.
In respect of the Second Loan Deed, Schedule 1 stated under the heading, “Date of Fees Payable to GSMAL and Date of Advance of Loan”:

In the case of vineyards project, date of Vineyard LMA;
In the case of the Plantations Project the date of the Plantations LMA; and
In the case of the Olives Project, the Olives LMA.

On 15 June 2006, GSMAL appears to have executed on behalf of the Defendant a Lease and Management Agreement in relation to the Second Loan. [127]
127. Exhibit C-SFS4, p 95-99.
In respect of the Third Loan Deed, Schedule 1 stated under the heading “Date of Fees payable to GSMAL and Date of Advance of Loan” an identical notation to what was the Second Loan Deed.
There is evidence that monies were in fact advanced in the amounts sought to be borrowed as follows:

The First Loan - a deposit of $50,750 on 15 June 2006, noting the loan repayment schedule number “C00390” and the investment number, “G31804”. [128] These numbers can be cross checked to the loan approval form order, [129] and the tax invoice for the purchase of the droves. [130]

The Second Loan – a deposit of $56,685 on 15 June 2006. [131] A bank statement records the Defendant’s loan repayment schedule number, “001045”, as recorded in the Defendant’s loan approval form, [132] and the investment number, “G31804” as recorded in the tax invoice for the purchase of the seven olive lots. [133]

The Third Loan – the bank statements record a payment on 01 July 2006 in the sum of $100,115 by reference to a loan repayment schedule number, A52587, [134] as recorded in the loan approval form, [135] and an investment number of, G31804, as recorded in the tax invoice for the 33 Woodlots dated 30 June 2006. [136]
128. Exhibit A-p 1789.
129. Exhibit A-p 739.
130. Exhibit A-p 995.
131. Exhibit A-p 1796.
132. Exhibit A-p 988.
133. Exhibit A-p 996.
134. Exhibit A-p1083.
135. Exhibit A-p 989.
136. Exhibit A-p 1037.

The Loan Deeds referable to each loan were executed utilising the Power of Attorney that had been purportedly granted by the Defendant in the application for term finance. Each of the Loan Deeds identified the nature of the purchase, the loan amount, and the applicable interest rates. The Defendant’s evidence was that she did not receive copies of the First Loan Deed until or about 31 January 2008 and Second and Third Loan Deeds until 13 April 2016. [137]
137. Affidavit of Vijayalaatshimi Govindasamy (affirmed 21 March 2018) at [38]-[39].

The Plaintiffs assert that all of the loans were applied for by the Defendant, Loan Deeds were executed, money was advanced and the Defendant made payments until November 2009, and was thereafter in default. The Plaintiffs made a demand for the outstanding payments, but the Defendant has refused and neglected to pay the amounts owing.
The Plaintiffs assert that the failure to make loan repayments was an event of default, or to use the word of the Loan Deeds, an “acceleration event”. It is not in issue that the terms of each of the Loan Deeds provided that an “acceleration event” occurred if the borrower failed to pay any money owing on a due date for payment; and upon the happening of an “acceleration event” the lender was entitled to demand immediate payment of the money payable pursuant to the deed.
The fact that moneys were advanced to the Defendant on 15 June 2006 in the sum of $50,750 (the First Loan), on 15 June 2006 in the sum of $56,685 (the Second Loan), and on 1 July 2006 in the sum of $100,115 (the Third Loan) did not appear to be in issue. [138]
138. T 95.27-.29. See also Exhibit A-p1789, 1796 and 1803.
The Defendant however did not admit that the First Plaintiff loaned the relevant moneys as Originated loans to enable her to acquire the relevant investments. Accordingly, the Plaintiffs were put to proof in respect of the advances said to have been made.

Did the First Plaintiff make the Advances?

Plaintiff’s Contentions

The Plaintiffs contend that by clause 2 of each Loan Deed, the Defendant directed the First Plaintiff to advance funds in payment of her obligations pursuant to her application for each investment. [139] They assert that the manner in which the funding of the Defendant’s obligation to GSMAL (to purchase the 10 droves in the 2006 Beef Cattle MIS, the 7 Grovelots in the 2006 Olives MIS and 33 Woodlots in the 2006 Plantations MIS) was to be met by the First Plaintiff, was made clear on the evidence.
139. Exhibit A-p 997, 1052 and 1039.
The Plaintiffs argue that by clause 2 of each Loan Deed, [140] the Defendant directed the First Plaintiff to advance funds in payment of her obligations pursuant to the application for each investment. The manner in which the advances took place was said to be the product of a relationship between the Plaintiffs, and GSMAL and GSF, the nature of which was set out in Mr Stone’s evidence.
140. Exhibit A-p 997,1039,1052.
The Plaintiffs assert that an Origination Notice dated 22 June 2006 was signed on behalf of GSMAL and GSF, giving notice of an intention to originate loans, as agent for the First Plaintiff on 23 June 2006. The relevant loans were identified in the accompanying Settlement Report with the Lender required to make payment of $21,182,262.23 to GSMAL on 23 June 2006 if it agreed to make the loans. [141] In this instance, the Plaintiffs draw attention to the journal entries, disclosing a transfer of funds of $21,182,262.23 on 23 June 2006 from the Swift Account operated by ABL. [142]
141. Exhibit A-p 1006.
142. Exhibit A-p 1022.
They observed that the payments were transferred to three accounts, being the “Grape Applications Account”, the “Capital Applications Account”, and the “Olives Application Account”. [143]
143. Exhibit A-p 1022A-1022D.
Mr Stone gave evidence as to the transfer of funds into accounts operated by GSMAL. [144] He stated that although the funds were transferred from an ABL account, that transfer was on behalf of the First Plaintiff and the journal entries were made to that effect. [145] He contended that, that was consistent with clause 2.19(a) of the LSSD, by which ABL undertook to fund or to arrange for the First Plaintiff to fund loans offered to the First Plaintiff for origination. [146]
144. Exhibit B at [51].
145. Exhibit B at [49].
146. Exhibit A-p 790.
The Settlement Report included the First Loan [147] and the Second Loan [148] as part of the loans making up the total of the $21,182,262.23, [149] and was labelled as “Tranche 15”.
147. Exhibit A-p 1008.
148. Exhibit A-p 1011.
149. Exhibit A-p 1013.
In respect of the Third Loan the Plaintiffs point out that by Origination Notice dated 14 August 2006, [150] GSMAL gave notice that it intended to originate loans as Agent for the First Plaintiff on 14 August 2006, such loans being identified in the accompanying Settlement Report, with the lender required to make payment of $4,493,06.31 if it agreed to make the loans. [151]
150. Exhibit A-p 1063.
151. Exhibit A-p 1063.
The Settlement Report [152] included the Third Loan as part of the loans making up the total of $4,493,06.31. Journal entries from the records of the Plaintiffs disclosed that a transfer of funds in the sum of $4,493,06.31 on 14 August 2006 from an account operated by ABL were made. [153] Those transfers were made to an NAB account operated by GSF. [154] In his affidavit, Mr Stone states that the origination amount for Tranche 17 loans (which included the Third Loan) was paid to an account held by GSF, not GSMAL. This was because when the Quantum instrument was first set up, GSF’s account was set as the default account to make payments to and this would only be changed to a GSMAL scheme account if requested. [155]
152. Exhibit A-p 1065.
153. Exhibit A-p 1070.
154. Exhibit C- SFS-4 from p 74, particularly p 93-94.
155. Exhibit B at [55].
The Plaintiffs contend that even absent direct evidence of the funding arrangements, the evidence gives rise to an overwhelming inference that there was an advance for funds by the First Plaintiff giving rise to the loan obligations of the Defendant. The Plaintiffs assert that the only evidence of any party agreeing to provide any money to fund the Defendant’s investments were pursuant to the three Loan Deeds, and it was common that the Defendant did not fund those investments by herself and there is no evidence of any other party otherwise agreeing to provide funds for that purpose.
It was accepted that the Defendant in fact received the investments to which she applied. Documents were issued to the Defendant by GSMAL which confirmed that it had received the funds in respect of the relevant investment. [156] Whilst the Plaintiffs acknowledge the absence of direct evidence of transfer of funds on behalf of the First Plaintiff, it asserts that the making of the advance within the meaning of the Loan Deeds can be readily and directly inferred from the incontrovertible fact that the Defendant became a paid up member of a particular investment which she desired, and required her to obtain the funding in close connection with the dealing by the First Plaintiff to fund her in those schemes and against a background of arrangements and events calculated to achieve that result. [157]
156. Exhibit A-p 1049, 1050, 1062.
157. Plaintiff’s submissions at [33]-[36].

Defendant Submissions

The Defendant drew attention to the fact that despite the fact that the Plaintiffs pleaded in their Amended Statement of Claim that the First and Second loans had been advanced on 15 June 2006, and the third loan was advanced on 01 July 2006, [158] Mr Flamer-Smith at the hearing on 14 June 2018 amended his evidence to state that the First and Second loans had been advanced on 23 June 2006 and the Third loan had been advanced on 14 August 2006. [159]
158. Further Amended Statement of Claim at [6], [32], [56].
159. T 22.29-83.10.
It was further drawn to attention that despite Mr Stone’s evidence, the alleged journal entries asserted to evidence the transfer of funds from ABL advancing it on behalf of the First Plaintiff, were not annexed to his affidavit.

Determination

I accept that the evidence indicates the dates that the First Plaintiff, through ABL, transferred sums of money to the accounts of GSMAL and GSF, as Mr Stone indicated. That evidence however does not indicate that the monies were advanced to the Defendant on these days. Furthermore, the bank statements indicate that funds were deposited for the relevant investments and the investments made on the dates 15 June 2006 (in respect of the First and Second Loans) and 1 July 2006 (in respect of the Third Loan). The interest charges for these loans appear consistent with it having been advanced on 15 June 2006 (in respect of the First and Second Loans) and 1 July 2006 (in respect of the Third Loans). In respect of the First and Second Loans the Loan Approval Forms indicates that the loans were to be advanced from 15 June 2006 and the next draw date was 31 July 2006. [160] In respect of the Third Loan the Loan Approval Form indicates that the loan was to be advanced from 1 July 2006 and the next draw date was 31 July 2006. [161]
160. Exhibit A-p739 and 1034 and 1035.
161. Exhibit A-p1036.
As noted above, and confirmed by Mr Stone in his evidence, an “Originated loan” differed from a “purchased loan” in that a purchased loan had already been made and was to be sold whereas an Originated loan was a proposal for GSMAL so that it would be “presented to the First Plaintiff for origination”. [162] In this instance, in relation to the First Loan, GSF had purportedly executed the Loan Deed on 15 June 2006 on behalf of the Defendant. The Deed specified that if the proposed loan has been approved by GSF, the Lender under the deed is GSF. However if, the loan has been approved by ABL, the Lender under the deed is ABL. Notwithstanding this, the First Loan Deed is purportedly executed on behalf of the First Plaintiff and GSF under the Power of Attorney said to have be granted by the Defendant. The Schedule specified the date of the advance of the loan as the date of the Lease Management and Agistment Agreement, which was also 15 June 2006. [163]
162. Exhibit A-p 789 [2.18].
163. Exhibit C-Annexure SFS-4 p 505.
In relation to the First Loan, it is apparent that funds were advanced on 15 June 2006. [164] The payment was to facilitate the purchase prior to 22 June 2006 when funds were transferred to GSMAL on behalf of the First Plaintiff by ABL. Clearly, the funds advanced on 15 June 2006 could not have come from the First Plaintiff, as the “Originating loan” had not been accepted until 22 June 2006 and the relevant funds transferred to GSMAL on 23 June 2006. There is no evidence of funds in relation to the First Loan being transferred by the First Plaintiff prior to that date or subsequently.
164. Exhibit A-p 1789.
Similarly, in relation to the Second Loan, funds appear to have been advanced to the Defendant on 15 June 2006 to the enable the purchase to be made. [165] However, the loan was not approved by the First Plaintiff as an Originating loan until 22 June 2006 and the funds transferred to GSMAL on 23 June 2006 on behalf of the First Plaintiff by ABL. The Lease and Management Agreement which had been entered into in relation to the Second Loan, [166] recorded in the recitals that the lessor was entitled to the grant of the lease and held interest in respect of the land comprising the Olivegrove, including the Grovelot. There is no evidence of any funds in relation to the Second Loan on behalf of the Firs Plaintiff being transferred prior to 23 June 2006 or indeed subsequently
165. Exhibit A-p 1796. Exhibit C- SFS 4 p 96.
166. Exhibit C-SFS 4 p 97.
Whilst the loan advance for the Second Loan appears to have been made on 15 June 2006 and the Lease and Management Agreement executed on 15 June 2006 [167] the Second Loan Deed was not executed until 8 August 2006. The Greater Southern Organic Olives Certificate was issued on 10 August 2006. [168] Although it appears that the loan was approved on 9 June 2006, [169] and funding advanced as earlier described on 15 June 2006, the First Plaintiff’s approval of the loan as an Origination loan did not occur until 22 June 2006, and the relevant funds transferred on its behalf on 23 June 2006. In the circumstances I accept that the inference is to be drawn is that advances had been made prior to 23 June 2006 but not from the First Plaintiff. There is no evidence from the Plaintiffs of any advance made by them prior to 23 June 2006 to facilitate the Plaintiff’s purchase pursuant to the Second Loan and nor is there evidence of subsequent advance.
167. Exhibit C-SFS 4 p 96.
168. Exhibit A-p1062.
169. Exhibit A-p 988.
Similarly, in relation to the Third Loan, that is said to have been made on 14 August 2006. The finance application was approved on 9 June 2006, [170] and the relevant funds advanced on 1 July 2006. [171] The Third Loan Deed was also executed on 1 July 2006 [172] and a certificate issued on 27 July 2006. [173] However, the Third Loan was not funded by the First Plaintiff as an Originating loan until 14 August 2006, as earlier discussed.
170. Exhibit A-p 989.
171. Exhibit A-p 1803.
172. Exhibit A-p 1038-1046.
173. Exhibit A-p 1050.
The inference overwhelmingly is that the advance was made sometime before 14 August 2006, although no documentary evidence has been presented as to how this happened.
No relevant banking or financial records have been produced in relation to the funding of the loans on these earlier occasions, despite the relevant funds being advanced. In the absence of such records and in the circumstances described, an inference is not open that the funder was any of the Plaintiffs.
I would accept, as the Plaintiffs argued, that there is “evidence that is consistent with the terms of clause 2.19(a) of the LSSD by which ABL undertook to fund or arrange for ABL to fund loans offered the First Plaintiff for “origination”.
In evidence, Mr Stone conceded that those journal entries were not annexed. [174] However on the question of journal entries Mr Stone gave evidence as to the practice that ABL followed in light of the fact that the First Plaintiff did not have a Swift account and I am prepared to accept in the circumstances that the relevant transfer entry was made.
174. T 76.21-.25.
That however falls short of addressing the circumstances by which the relevant funds were advanced to the Defendant in the first instance.

First Loan Mortgage Amendment Deed

The Plaintiffs asserted that as regards to the First Loan, as a consequence of the execution of a Mortgage and Amendment Deed in early 2009, [175] there can be no issue as to the Defendant’s liability to the First Plaintiff for the amount owing. This is said to arise because of the following:
175. Exhibit A-p 1391.

By Clause 2 (e) of the Mortgage and Amendment Deed, the Defendant ratified, confirmed, acknowledged and agreed that she continues her rights, liabilities and obligations under the First Loan Deed continued in full force and effect. [176]
176. Exhibit A-p 1401.

By Clause 2 (f) of the Mortgage and Amendment Deed, the Defendant ratified, confirmed, acknowledged and agreed that she continued to be liable for all amounts owing and payable for her under the terms of the First Loan Deed. [177]

By Clause 6.1 the Defendant covenanted that she would satisfy, procure, the satisfaction of all her liabilities and obligations to the First Plaintiff under or by reason of the First Loan Deed. [178]

By Clause 22.3, which provided that a certificate in writing signed by the First Plaintiff or an officer of the First Plaintiff certifying the amount payable by the Defendant to the First Plaintiff, is “conclusive and binding on [the Defendant] … in absence of manifest error on the face of the certificate”. [179]

By Clause 22.17, which provided that the First Plaintiff “may give [the Defendant] a certificate signed by [the First Plaintiff] or [the First Plaintiff’s solicitors] about a manner or amount payable in connection with a document. This certificate is sufficient evidence of the manner or amount, unless it is proved to be incorrect”.

The Defendant was given a certificate in accordance with clauses 22.3 and 22.17 of the Mortgage and Amendment Deed, and accordingly there is no basis upon which that certificate can contain error or be incorrect.
177. Exhibit A-p 1042.
178. Exhibit A-p 1048.
179. Exhibit A-p 1427.

The Defendant points out that this was not pleaded in the Amended Statement of Claim, being a matter which should have been pleaded in accordance with UCPR 14.14. The matters were raised instead in the Plaintiff’s Reply filed 23 March 2018 to which reference was earlier made. Although leave to rely on it was not sought, no objection to the tender of the relevant material was made and no prejudice or unfairness was asserted. [180] In the circumstances I propose to deal with the matter in any event.
180. Dare v Pulham (1982) 189 CLR 658, 664 and Nestle Limited v McDougall [1998] NSWCA 158 at [21] – [23].
The Defendant argued in reply that as with the First Loan Deed, any liability that arises is contingent upon proof that the advance has been made. The Plaintiffs did not contend otherwise and I accept that is so.
Furthermore, the Defendant asserted that the Mortgage and Amendment Deed was not executed by any party other than the Defendant and there is no evidence that either GSF or the First Plaintiff had in any way given effect to the Deed. Specifically, there is no evidence that property the subject of the mortgage (being shares in GSF), were ever granted to the Defendant to enable the security to take effect.
Clause 3 of the Deed provides that with effect from the latter of the date of the document and the date on which GSL shares beneficially vest in the Mortgagor as a consequence of the approval or acceptance, the Loan Deed and the Guarantee shall be amended in the manner set out in the Schedules. That in itself does not necessarily affect the effectiveness of other aspects of the Deed.
However it bears noting that the First Loan Deed did not state the identity of the Lender except by providing for either the First Plaintiff or GSF with “delete as applicable.” There was no deletion. The identity of the Lender was otherwise to be determined by reference to clause 2 which required that the Lender advance the funds to the borrower on the date of advance. As noted earlier, that was the date of the Lease Management and Agistment agreement being 15 June 2006. As previously indicated, I am not satisfied that an advance came from the First Plaintiff at that date despite an advance being otherwise made. Whilst the First Loan Deed was professed to have been executed on behalf of the First Plaintiff, [181] it in fact had no authority to do so as the Originating loan had not been approved. It follows that the First Plaintiff was not the Lender and the said Mortgage and Amendment Deed has no effect.
181. Clause 2.18 (of the LSSD by the Originator GSF. There was evidence that one of the signatories Mr Romeo was from GSF ( See Exhibit B at [27])
The Defendant argued that to the extent that the First Plaintiff contended that the Defendant was given a certificate pursuant to clauses 22.3 and 22.17 of the Mortgage and Amendment Deed, [182] this submission was incorrect on the face of the instrument.
182. Exhibit A-p1427.
Clause 22.3 states:

“A Certificate in writing signed by the mortgagee or an officer of the mortgagee certifying the amount payable by the obligor to the mortgagee or stating any other act, matter or thing relating to this document or any transaction is conclusive and binding on the mortgagor and the guarantor in the absence of manifest error on the face of the certificate”

Clause 22.17 states:

“The mortgagee may give the mortgagor or the guarantor a certificate signed by the mortgagee or the mortgagee’s solicitors about a matter or about an amount payable in connection with this document. The certificate is sufficient evidence of the matter or amount, unless it is proved to be incorrect.

The Defendant asserts that the respective clauses require the certificate to be signed either by the mortgagee, an officer of the mortgagee or its solicitors. However, the Certificate in relation to the First Loan [183] was signed by Mr Flamer-Smith in circumstances where there is no evidence that he was the mortgagee, an officer of the mortgagee, or a solicitor for the mortgagee, as he is not even an employee of the First Plaintiff. [184]
183. Exhibit C-SFS 4 at p 591.
184. T 84.04-.27

In my view, clauses 22.3 and 22.17 of the Deed are to be read subject to clause 16.1. Clause 16.1 states:

“The mortgagee’s rights and remedies under this document may be exercised by any of the mortgagee’s authorised officers or any other person the mortgagee authorises, including the receiver (whether appointed by the mortgagee’s authorised officer or an instructing party’s authorised officer)”

In the Certificate, Mr Flamer-Smith purports to represent that he was authorised to issue the Certificate on behalf of the First Plaintiff. In the circumstances, it was not put to him that he lacked such authorisation. I am not persuaded that were it to be relevant the Certificate would be defective on this basis.
The Defendant further contended that whilst the Certificate states that the moneys payable exclude indemnity costs, the debts said to be owing includes legal costs accrued in the course of proceedings in the absence of any order being made for the Defendant to pay those legal costs, prior to the conclusion of the proceedings. This was acknowledged by Mr Flamer-Smith in his evidence. [185]
185. T 87.09-88.20.
Consistent with what was held in Gray v Sirtex Medical Ltd, [186] I am satisfied that the Plaintiffs’ ability to recover the costs from the Defendant depends upon the exercise of judicial discretion. Whilst such direction may be informed by contractual clauses, those clauses do not give rise to an “entitlement” that supplants the discretion of the Court. The Plaintiffs made no submission otherwise.
186. [2011] FCAFC 40, [15].
I would not have been satisfied that the Certificate reflects the amount owing at the present time in relation to the First Loan.

Did the Defendant intend to select the First Plaintiff as Lender for the Second and Third Loans?

The next argument raised by the Defendant concerns her selection of the Lender in respect of the Second and Third Loans. The Defendant argued that she ticked “finance option to obtain the loan with GSF for three years interest and then seven years principal and interest”. [187] She argues that that selection was consistent with the advice of her financial advisor who expressly advised her that GSF would be the financer of the loan. [188] Separate applications were also completed in relation to the Olive Grove Project identifying GSF or preferred financer and the term of the loan as 10 years, with 3 years as interest only. [189] One of two copies of the application does have a stamp “Preferred Financier” but it is not clear at what point it was affixed. [190] A separate application in relation to the Woodlots recorded finance from GSF alone for a term of 10 years with 3 years as interest only. [191]
187. Exhibit A-p 712.
188. Exhibit A-p 680.
189. Exhibit A-p 732.
190. Exhibit A-p 732 and 732A
191. Exhibit A-p 735.
The Defendant also completed direct debit forms that expressly stated in relation to the Second Loan, “Please only complete this form if using Greater Southern Finance” and in relation to the Third Loan, “Request an authority to debit account named to pay Greater Southern Finance Pty Ltd”.
The Defendant argued that on the face of these documents read objectively, the applications for finance were made to GSF and no-one else, which is confirmed by contemporaneous documents in which it is said that GSF acknowledged receipt of the applications shortly after they were made. [192] The Defendant also draws attention to the certificates issued by GSMAL in 2006, which indicated that the financer was GSF with no indication that the First Plaintiff had been the lender in any way. [193]
192. Exhibit A-p738-9.
193. Exhibit A-p1050 and1062.
The Defendant specifically placed reliance on Bendigo and Adelaide Bank v Howard [2018] NSWSC 383 where Davies J stated at [33]:

Whether the issues raised by these grounds of appeal are questions of law is not easy to answer. In the first place, the issue here is not what is the proper construction of a contract; the question is whether a contract has come into existence with ABL as the plaintiff maintains. That question involves an examination of a number of documents to determine if a contract exists and, if so, with what entity. To decide that matter it is necessary to determine objectively the defendant’s intention in completing the documents. Inferences may be drawn from the way the documents have been completed. That is a determination of fact: Holloway v McFeeters (1956) 94 CLR 470 at 480; Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155 at 168; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356.

In view of the above and following Bendigo and Adelaide Bank v Howard,[194] the Defendant submitted that the factual scenario being almost identical required the Court should follow the decision in that case and apply the same reasoning such that the Court would find that the Defendant made no application for a loan from the Plaintiffs in respect of either the Second or Third Loans.
194. [2018] NSWSC 383.
The Plaintiffs contend that selection made by the Defendant on the right hand side of the application forms on the Second and Third Loans involve a failure by the Defendant to properly complete the task. They asserted that the table in which the Defendant ticked the box did not correspond with the application she was making and that the option of 3 years interest and 7 years principal and interest was not open to a loan application unless it was for Woodlots only. This application involved an application for both Woodlots and Grovelots, and accordingly only the first and third tables were relevant to the investment for which the Defendant was seeking finance. That involved the option of a 10 year principal and interest loan from GSF or a 3 year interest and a 7 year principal and interest loan from the First Plaintiff.
The Plaintiffs submitted their case as to the Defendant ticking the incorrect GSF box in three ways:

The Defendant’s intention in completing the second loan application should be objectively determined to place the tick in the relevant ABLN box in relation to the combined loan (being the Second and Third loans).

Alternatively to (a), having failed to make the choice by way of a “tick” as regards to the second loan to fund the Grovelot application, the Defendant’s intention in completing the second application for term finance should be objectively determined to have been to place the tick in the relevant ABLN box in relation to the Second Loan.

In all the circumstances, the terms of the power of attorney clause in the second loan application entitled GSF to execute the Second Loan Deed and the Third Loan Deed, as it did. Further it entitled the First Plaintiff to rely upon execution of the Second Loan Deed and the Third Loan Deed as conclusive evidence that GSF was authorised to exercise the power it purported to exercise

The Plaintiffs argue that the only loan structure offered in the second application for term finance (which included Grovelots) informed the lending and investment sought by the Defendant. It was offered by the First Plaintiff in the relevant box attributable to the First Plaintiff. They argued that the ticking of the incorrect GSF box by the Defendant was both incapable of giving rise to finance for the investments applied for in the Grovelot application and the Woodlot application and was not the application for finance otherwise described in the second application for term finance itself. In particular, it did not correspond with the description of the investment and finance required to the immediate left GSF box.
The Plaintiffs acknowledge that in the case of the Woodlots application there was no other financier other than GSF. However, in the case of the combined loan, the second application for term finance did include an option for another Lender, being the First Plaintiff.
The Plaintiffs further submitted that the ticking of the incorrect GSF box was a mistake that was indisputable because the lending ostensibly selected was for Woodlots only, which was plainly wrong given that all of the objective evidence points to the fact that the Defendant sought finance for Woodlots and Grovelots. Accordingly, treating the tick and the incorrect GSF box as determinative would negate the whole of the transaction such that the conclusion that the tick of the incorrect box was a slip. It argued that the absurd meaning of the tick must therefore be displaced by a meaningful legal meaning, and on the objective evidence the only meaningful legal meaning available is that the relevant ABLN box was the intended box to be ticked. [195] To that end, it argued that the case was distinguishable from Howard, where Davies J at [46] stated that it was much more likely that, “the variable was the nature of the loan and not the identity of the lender.”
195. Plaintiffs’ Written Submissions at [75]-[76].
The Plaintiffs noted that Davies J placed considerable weight on the fact that the relevant Defendant there executed the direct debit request and expressed to be used “only… if using GSF”. [196] They acknowledged that the direct debit request for the Second Loan was in substantially similar form. [197] However, they noted that the direct debit request for the Third Loan simply said “To pay [GSF].” [198] The Plaintiffs position was that contrary to the position in Howard, there was evidence that the direct debit request was used irrespective of whether the actual lender was GSF or the First Plaintiff. Relying on the terms of the 2006 LSSD, in particular clauses 8.2(a), 8.3(a) and 8.8(a), it was argued that these clauses required the Servicer to undertake the role of servicing the loan rights, collecting the moneys due by way of direct debit and making those payments into the GSF collections account. Thereafter, the payments made into the GSF collections account were to be transferred into the ABL collections account. [199] On this basis it was argued that there was evidence that the direct debit request addressed to GSF would be utilised to whoever the eventual lender was.
196. At [40].
197. Exhibit A-p730.
198. Exhibit A-p733.
199. Exhibit C-SFS4 at p 511.
The Plaintiffs further drew attention to aspects of the arrangements for the First Loan which it said confirms as a practical matter that a direct debit form was used with a heading, “Please only use this form if using [GSF]”. The Defendant nevertheless completed the First loan Application, nominating the First Plaintiff as the lender. They also noted that the first statement of advice provided that the Defendant had two options as a loan, and she chose the option of the First Plaintiff as a 5 year loan with first year interest only. It was suggested that this indicated that the Defendant chose her desired loan terms over the identity of the lender.
On all the evidence, the Plaintiffs argued that the Defendant must have taken to have appreciated who she selected as the original lender and that the lender she chose had the complete right to assign, or otherwise transfer all of the rights at any time under the loan. [200] In light of Clause 17.1(a), it accordingly made no objective sense to prioritise the identity of the Lender over the desired loan term. As a result, the Plaintiffs assert that the Defendant made the obvious mistake of ticking the incorrect GSF box and that the Defendant had the objective intention to tick the relevant ABLN box.
200. Exhibit A-p725.
The Plaintiffs argued that the objective evidence, including the Grovelot application and the second application for term finance, makes it plain that the Defendant’s intention was to acquire the Grovelots by means of debt finance. The omission of a tick, relating to an available loan for Grovelots, must it was said be a mistake or misnomer. [201] Accordingly it argued that had the obvious mistake of omitting to tick any box in relation to the Grovelots been pointed out at the time, it is self-evident what the Defendant’s intention would have been. The Plaintiffs argue that any argument that the Defendant may put forward that it would not have elected to proceed with the relevant investment can be dismissed, as the Defendant proceeded on the same day to obtain two other investments of the same class, including changing the identity of the lender to obtain her preferred term. Similarly, it was objectively unlikely that the Defendant would have ticked any option in the first of the GSF loan application options as her preferred 10/3 loan terms were not available. It was argued that it was self-evident that had the obvious mistake of omitting to tick a box been pointed out, the Defendant would have elected to tick the relevant ABLN box and obtain a loan from the First Plaintiff to fund the acquisition of the Grovelots.
201. Plaintiffs’ written submissions at [92].

Determination

Several of the applications for Grovelots and Woodlots that were essentially duplicates. [202] The words “preferred financier” that appear on one of the Grovelots application do not appear to have been stamped on the Defendant’s initial application. [203] In any event the relevant direct debit form was expressed to be only used if “using Greater Southern Finance.” The application for Woodlots was expressed to be financed by GSF without reference to another preferred financier. The corresponding direct debit form did not have the notation that it was only to be used “if using Great Southern Finance.” The second application for term finance ticked the proposal for 3 years interest and 7 years principal and interest with GSF.
202. Exhibit A-p732-5.
203. Exhibit A-p732 and 732A.
In Bendigo and Adelaide Bank v Howard,[204] Davies J reiterated the correct approach to contractual interpretation approved by the High Court in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, where it was stated at [35]:

[T]he objective approach [is] to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean … [I]t will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. As Arden LJ observed in Re Golden Key Ltd [[2009] EWCA Civ 636 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption ‘that the parties … intended to produce a commercial result’. A commercial contract is to be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’. (footnotes omitted)
204. [2018] NSWSC 383.

In my view the documents read objectively are applications for finance made to GSF and no-one else.
This is affirmed by the fact that the Defendant also completed a direct debit form, which in respect of the Second Loan was expressly stated to be completed if the lender was GSF where the application form did provide an option for a preferred financier. The application for the Woodlots however was confined to identifying GSF as the Lender. In those circumstances despite the direct debit form not having the limitation on its use (depending on the Lender) it has to be seen in its context.
Applying Electricity Generation Corporation v Woodside Energy Ltd, I am unable to accept that the direct debit request on the Second Loan is of no assistance to ascertain the parties’ intention in circumstances that assert its use irrespective of the lender in accordance with the LSSD. The Plaintiffs’ attempted to distinguish Davies J decision in Howard based on his Honours reference at [42]:

Neither the Product Disclosure Statement nor the pro-forma request assists the plaintiff. Further, there was no evidence, despite clause 8.3 of the Loan Sale and Servicing Deed (to which reference will be made) that the direct debit request form was used irrespective of the lender.

Those comments however need to be seen in their context. At [71] Davies J went on to observe:

In my opinion, ABL cannot rely, as against the defendant, on provisions in the Loan Sale and Servicing Deed, which it is entitled to rely on against GSF. GSF may well warrant to ABL under clause 5.1(c) that the loan it approved to the defendant is enforceable, but the defendant is not a party to that Deed. If GSF did not have the authority from the defendant to execute the loan deed naming ABL as the lender, ABL can be in no better position as against the defendant, who had only given authority for a power of attorney to GSF as the lender. ABL may well have a claim against GSF pursuant to clause 5.1(c) and possibly 5.2 where, as here, GSF acted beyond its authority from the defendant, but it does not thereby acquire rights against the defendant.

There is nothing on the face of the investment applications, applications for term finance and direct debit forms to indicate that the labelling was not of significance to the transactions.
In relation to the Woodlots application, I have drawn attention to the contents of the form identifying GSF as the financier. In those circumstances, the absence of a restriction on the use on the direct debit form is of little consequence.
To these matters it is also necessary to have regard to the substantive application for term finance.
I accept that from an objective standpoint that what the Defendant sought in completing the documentation may on its face have been impossible to achieve. There is a possibility that if informed that a 3/10 loan was not available with GSF, she might have entered into a 10 year principal and interest loan with GSF or a 3/10 loan with the First Plaintiff, or she may have decided not to go ahead with any investment.
The Plaintiffs argued that the Defendant almost certainly desired an interest only loan with three years followed by principal and interest for 7 years, with a direct result that the Defendant intended the First Plaintiff as the lender. However, the execution of the direct debit forms together with the corresponding applications and applications for finance make it more likely that the priority was the identity of the lender rather than the nature of the loan. It follows that I am unable to accept that the likelihood points in favour of the Plaintiffs’ construction.
The Plaintiffs sought to argue that when completing her first application for term finance which contained an option of finance from GSF for a 5 year loan principal and interest or from the First Plaintiff by a 5 year loan with the first year interest, only the Defendant chose the latter. This was said to reflect her prioritisation of the desired loan terms over the identity of the lender. [205] It was suggested that the inference might be drawn that the terms rather than the identity of the Lender was her priority in respect of the Second and Third Loans.
205. Exhibit A-p 675.
In my view nothing is to be drawn in respect of the Second and Third Loans from the fact that in respect of the First Loan the Defendant applied for finance via GSF for a 5 year loan consistent with the Statement of Advice that she received. [206] That was a separate transaction for a different investment.
206. Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].

Power of Attorney

The Plaintiffs argue that if the second application for term finance was not construed in the manner for which the Plaintiffs contended, then it was necessary to consider the scope of the Power of Attorney conferred by the Defendant to GSF under the second application for term finance.

They argued that by signing the second application for term finance, the Defendant conferred a power of attorney by deed on GSF irrespective of the identity of the lender between itself and the First Plaintiff. [207] Accordingly it was contended that pursuant to the Power of Attorney granted in the applications for term finance on 1 July 2006 and 08 August 2006, the Second and Third Loan Deeds were executed by GSF on behalf of the Defendant in favour of the First Plaintiff as lender to borrow money as the Defendant had sought 3 years interest and 7 years principal and interest. It was argued that the purpose of the second application for term finance and the Power of Attorney taken together with the applications for the Grovelot and the Woodlot Applications was to procure finance for the investment which the Defendant sought. In these circumstances, it was contented that the Court may read an obvious mistake in the written expression of the parties as corrected in accordance with the approach taken in Fitzgerald v Masters. [208]
207. Exhibit A-p718 cl 6(a)(i)-(ii).
208. (1956) 95 CLR 420.
To that end, it argued that the object of the second application for term finance considered with the Grovelot application and the Woodlot application was to procure investments in the 2006 Olives MIS and the 2006 Plantations MIS by way of loans on 10/3 terms, irrespective of the identity of the lender. The Plaintiffs drew attention to the express terms of Clause 6 which conferred a broad based power of attorney. That Power of Attorney clause reads as follows:

By signing this finance application, the Borrower and the Guarantor (if any) (Appointor) agree to appoint:

where Great Southern Finance Pty Ltd (GSF) is the lender under the proposed loan, GSF and each director, company secretary and attorney of GSF, jointly and severally; or

where ABL Nominees Pty Ltd (ABL) is the lender under the proposed loan, each of ABL and GSF and each director, company secretary and attorney of ABL or GSF, jointly and severally, to be attorney for this Appointor (Attorney) on the terms specified herein and to exercise the powers as follows:

to enter into and execute a Loan Deed in the form attached to this finance application (Loan Deed) on behalf of the Appointer. A Loan Deed will be in the same form as the Loan Deed attached to this finance application despite any formatting changes to the document;

to date the Loan Deed and complete the blank spaces in the schedule thereto consistent with the provisions of this finance application;

to make and initial any necessary alterations to the Loan Deed which are not prejudicial to the interests of the Appointor in the considered opinion of the Attorney;

to do anything in relation to the property secured under the Loan Deed which the owner of that property would be entitled to do;

to make, do and sign all acts, deeds and things as may be necessary to procure the stamping and registration of the Loan Deed with the power to instruct the Attorney’s solicitors to assist the Attorney in this regards; and

to enter into and execute on the Appointor’s behalf, any documents connected with, or related to, the Loan Deed.

The Appointor agrees at all times to keep the Attorney indemnified against all claims, demands, costs, expenses, damages and losses of any type arising as a result of the exercise of the Power of Attorney granted.

…

The Appointor undertakes to ratify all that the Attorney lawfully does or causes to be done under the Power of Attorney granted.

…

…

Any person dealing with the Attorney or a person purporting to be an Attorney under the Power of Attorney is entitled to rely on execution of any document by that person as conclusive evidence that

The person holds the office set out in the Power of Attorney

The Power of Attorney has come into effect

The Power of Attorney has not been revoked

The right or power being exercised or being purported to be exercised is properly exercised and that the circumstances have arisen to authorise the exercise of that right and power; and

They are not required to make any enquiries in respect of any of the above matters.

The Power of Attorney is executed as a deed.

The Plaintiffs particularly drew attention to clauses 6(a)(iii), 6(a)(v), 6(d) and 6(g). They argued that the second application for term finance identified two lenders, one of whom could in fact satisfy the investment terms nominated by the Defendant. GSF, as agent of the Defendant was said to be entitled to bind the Defendant by express or implied authority.
The Plaintiff’s further contended in the alternative, that it is possible to draw a distinction between the Second Loan Deed and the Third Loan Deed. [209] They asserted that this was because, in relation to the Second Load Deed and the investment in the 2006 Olives MIS:

the Grovelot Application is an application by the Defendant for 7 Grovelots at a cost of $56,000 and an application “to Great Southern Finance Pty Ltd, or to a preferred financier of GSMAL” to borrow that sum on 10/3 terms; [210]

in the second application for term finance the Defendant set out her intention to acquire 7 Grovelots at a cost of $56,000 but did not tick any “LOAN OPTION” relevant to that intention. [211]
209. Plaintiffs’ written submissions at [105].
210. Exhibit A-p732.
211. Exhibit A-p 712.

The Plaintiffs contend that what GSF did was to exercise all means necessary to obtain the object that the Defendant intended, despite the obvious mistake which meant that it was incapable of the stated object being otherwise achieved.
The Plaintiffs particularly relied on statements made by Asprey JA in Jones v Canavan. [212]
212. (1972) 2 NSWLR 236, 247-8.
The Plaintiffs further argued that by clause 6(g) of the Power of Attorney clause, the Defendant agreed in clear and express terms that the First Plaintiff, as a person dealing with GSF as attorney, was entitled to rely upon execution of a document by GSF as conclusive evidence of the matters set out at (g)(i)-(iv) and that the First Plaintiff was not required to make any enquiries in respect of those matters. Accordingly, it was not open to the Defendant to contest the authority of GSF to execute the Second Loan Deed and the Third Loan Deed.
The Plaintiffs further contend that recourse may also be had to clause 6(d) by which the Defendant undertook “to ratify all that the Attorney does or causes to be done under the Power of Attorney”. Accordingly, in the event that GSF acted outside its actual or implied authority to procure and perfect a loan to the Defendant, ratification is a complete answer to any finding of want of authority on the party of GSF as an attorney. [213]
213. Plaintiffs’ written submissions at [109]-[111].
The Defendant argued that the Power of Attorney was conferred in favour of GSF only and that the Power of Attorney did not allow the selection of another lender such that the Second and Third Loan Deeds were not validly executed. Further that it was not open to use the ratification clause as the Plaintiff contended for similar reasons to those given in Howard by Davies J. [214]
214. Defendant’ written submissions at [33]-[44] and in Reply at [25]-[33]

Determination

I accept that the power granted to GSF under the Power of Attorney was limited to its express terms. It was required to complete the Loan Deed in accordance with the direction of the Defendant. To the extent that the intention of the Power of Attorney is required to be assessed, the intention is that of the principal. [215] I do not accept that the Power of Attorney operated to permit GSF the discretion to enter into the Loan Deed with the Lender of its choice.
215. G Dal Pont, Powers of Attorney (Lexis Nexis, 2011), [6.6].
A similar argument was raised in Howard. Davies J considered that documents forwarded to GSF, being the investment application, the finance application and the direct debit requests which formed the basis of instructions to GSF, did not bring the case within the terms of Jones v Canavan. [216]
216. (1972) 2 NSWLR 236. See Howard at [71].
I adopt His Honours analysis.
The Plaintiff argued that Davies J in Howard was plainly wrong on the question on the interpretation of clause 6(d) of the Power of Attorney clause which in certain circumstances permitted ratification. His Honour in that respect held at [77]:

This clause cannot be used to ratify any act done by GSF, because appointing ABL as lender was not a power given to GSF under the Power of Attorney. The ratification cannot effectively authorise the doing of an act inconsistent with the authority given. This is emphasised by clause 6(d) of the finance application which provides:
The Appointor undertakes to ratify all that the attorney lawfully does or causes to be done under the Power of Attorney granted.

“Lawfully” must mean acting within the bounds of the appointment made so far as the law accords recognition to the appointment.

The Plaintiffs’ argument asserted that it was open to use the power of ratification in a situation where a person purports to do something on behalf of the principal, but without authority to do so. In this respect, reliance was placed on Union Bank Australia Ltd v Rudder. [217] That case however, did not involve the construction of a power of attorney.
217. (1911) 13 CLR 152.
To adopt the Plaintiffs’ interpretation would, in effect, ignore the use of the word “lawfully” in Clause 6(d) which was identical to the clause considered in Howard. In my view Davies J’s reasoning is plainly correct.
In my view the Plaintiff’s arguments on the use of the power of attorney must fail.

Were the Loans Assigned by the First Plaintiff?

The Plaintiffs relied on the evidence of Mr Steven Flamer-Smith to establish assignment of each of the relevant loans. The Defendant asserts that as the First Plaintiff never had any rights or interests to assign because it was not the lender, ABL was not capable of assigning rights it did not possess as part of its amalgamation which led to the formation of a Third Plaintiff in 2009.
Beyond that, the Defendant asserts that the analysis of documents relied upon by the Plaintiff as evidence of the assignments do not support the conclusion that the First Plaintiff advanced the loans or that the Second and Third Plaintiffs had been validly assigned the rights and interests.
In this respect, attention was drawn to the Sales Notice, which states that the offer may be accepted by ABL by paying the stated purchase price to the First Plaintiff on 23 June 2006. [218] The Defendant‘s reference in this regard focusses on the First and Second Loans which were the subject of that sales notice. [219]
218. Exhibit A-p 1023
219. Defendant’s submissions at [83]. The Sales notice in respect of the Third Loan proposes a cut of date of 14 August 2006; see Exhibit A-p 1071.
The Defendant argues that the First Plaintiff’s letter dated 14 June 2006 letter makes clear that the “Loans” referred to were defined by the LSSD originally dated 24 June 2004 but subsequently amended. [220] In circumstances where the undated Sales Notice [221] provided that the terms used in it have the same meaning as defined in the 14 June 2006 letter “loans” were not described as either a Purchased loan or an Originated loan and the Plaintiffs have not pleaded a case that suggests that either of those two defined terms applied to the Defendant’s loans. The Defendant contends that the documents relied on as proof of assignment are not applicable to the loans in issue. [222]
220. Exhibit A-p747-885.
221. Exhibit A-p994.
222. Plaintiffs’ written submissions 22 June 2018 at [45].
Consequently, it was argued that the Second and Third Plaintiffs have no basis for claiming an interest in those loans.
The Defendant argues that an offer to assign even if subsequently accepted by the offeree is not evidence of an assignment. Accordingly no assignment of the debt from the Defendant was ever brought into existence for the purposes of section 12 of the Conveyancing Act 1919 (NSW), which requires that the assignment be evidenced in writing and that it be “by writing under the hand of the assignor”.
Further, under the said section 12 a debtor must be given notice of the assignment and in this regard, the Defendant observed that the Plaintiffs relied on the letter written by the Third Plaintiff and sent to the Defendant dated 03 June 2009. [223] This was referenced to the first loan. It was argued that the notice was not accurate and it must be accurate to state the date on which the assignment took effect. [224] The Defendant argued that on the Plaintiffs’ own case the assignment was alleged to have occurred in 2006, not 30 April 2009. The Plaintiffs accepted that this letter is factually wrong and cannot be relevantly notice of anything.
223. Exhibit A-p1698.
224. International Leasing Corporation (Victoria) v Aiken (1967) 2 NSWLR 426, 449-50; Van Lynn Developments v Pelias Constructions Ltd (1969) 1 QB 607, 612; Westscott Resources v St George Bank Ltd [1998] WASC 332.
Mr Flamer Smith in evidence stated that due to an administrative error the amount in the First Sale Notice incorrectly refers to the “Purchase Price” as $4,615,073.00 when it should have referred to the “Purchase Price” as being $16,567,189.23. However he asserts that that was the amount paid by ABL on 23 June 2006 to effect the assignment which included the First and Second Loans. [225]
225. Affidavit of Stephen Flamer- Smith, 3 October 2017 at [71] and [80].
Mr Flamer Smith further stated that in accordance with the letter of 14 June 2006 and the Third Sales Notice, [226] the assignment which included the Third Loan took place by ABL paying the purchase price of $3,739759.32. [227]
226. Exhibit A-p 1071.
227. Affidavit of Stephen Flamer- Smith, 3 October 2017 at [84].
Mr Flamer Smith was not challenged on his evidence as to the assignment of the loans.
The Plaintiff asserted that as regards to the Second and Third Loans notice of the assignment to the Second Plaintiff was provided by a letter from the Third Plaintiff to the Defendant dated 3 June 2009. [228] The date in the third paragraph as the date of transfer to the Second Plaintiff (3 June 2009) was acknowledged to be wrong. [229]
228. Exhibit A-p 1699. Although the wrong date is given in the third paragraph.
229. Plaintiffs’ written submissions 22 June 2018 at [44].
The Plaintiffs argue that the questions of notice (and the question of the efficacy of the various assignments) do not matter in substance as each of the persons with potential entitlement to claim under the First Loan Deed at any time since 2006 are parties to the proceedings and the Plaintiffs will be bound by the Court’s findings. To the extent that the assignment is not made out (which is denied), it was contended that the original lender is a party to the proceedings and will be entitled to judgment.
In submissions in reply, the Plaintiffs reiterated these submissions and asserted that an equitable assignment outside the statutory provisions of section 12 of the Conveyancing Act 1919 (NSW) may be effective. [230] A similar argument was raised in Howard where Davies J accepted that even if the assignment was not made out at law, it can be effective in equity where the assignment was made for good consideration.
230. Seddon and Bigwood, Cheshire & Fifoot Law of Contract (11th Ed, Lexis Nexis Butterworths, 2017), 839. See also Alma Hill Constructions Pty Ltd v Onal (2007) 16 VR 190 at [13].
There is force in the Defendant’s submissions to the extent that they rely on the statutory requirements for assignment.
For reasons given earlier however I do not accept that the First Plaintiff has established that it was the Lender such that it was capable of effecting an assignment. Had the position been otherwise then there would have been more force to the Plaintiffs’ arguments as to the assignments being valid in equity and that the question matters little in circumstances where all relevant parties capable of bringing proceedings were parties.

COSTS

The Defendant would ordinarily be entitled to her costs. There are two sets of reserved costs arising from adjournments for reasons earlier referred to. The costs incurred by reason of the adjournment on 27 March 2018 were brought about by the need for an Amended Defence to plead the issues earlier identified. Both parties ultimately sought leave to rely on amended pleadings. [231] However the Plaintiff utilised the opportunity to prepare further affidavit evidence going beyond the issues in respect of which leave was granted. That led to a further adjournment on 23 April 2018 and the consequent need for directions on 30 April 2018. Accordingly I propose to make the usual costs order whilst allowing the parties to argue otherwise should that be necessary.
231. T 54.12-.13.

ORDERS

In the circumstances I make the following orders:

Verdict for the Defendant

Subject to any application to my Associate within fourteen days to relist the matter for any further or other order as to costs the Plaintiffs are to pay the Defendants costs

**********

Endnotes

Amendments

29 January 2019 - Minor typographical errors amended

Decision last updated: 29 January 2019

Medium Neutral Citation:	ABL Nominees Pty Limited (ACN 106 756 521), ABL Custodian Service Pty Ltd (ACN 097899720) and Bendigo and Adelaide Bank Ltd (ACN 068 049 178) v Vijayalatshimi Govindasamy [2019] NSWDC 5
Hearing dates:	26 and 27 March 2018, 23 and 30 April 2018 (directions only) and 14 June 2018. Written submission by both parties dated 22 June 2018 and in reply on 6 July 2018
Date of orders:	24 January 2019
Decision date:	24 January 2019
Jurisdiction:	Civil
Before:	Hatzistergos DCJ
Decision:	1. Verdict for the Defendant 2. Subject to any application within fourteen days to relist the matter for any further or other order as to costs the Plaintiffs are to pay the Defendants costs
Catchwords:	CONTRACTS – Construction and Interpretation - Proper construction of term for finance – whether power of attorney clause allowed for a change of lender – whether loan had been validly assigned
Legislation Cited:	Conveyancing Act 1919 (NSW) s 12 Civil Procedure Act 2005 (NSW) s100 District Court Act 1973 (NSW) s 44 Justice Legislation Amendment Act (No 3) 2018 (NSW) Schedule [1.16] Limitation Act 1969 (NSW) s 14(1)(a) Stamp Duties Act 2008 (WA) Uniform Civil Procedure Rules (NSW) r 14.4
Cases Cited:	Alma Hill Constructions Pty Ltd v Onal (2007) 16 VR 190 Bendigo and Adelaide Bank v Howard [2018] NSWSC 383 Chapman v Colson [2015] NSWSC 120 Coshott v Lenin [2007] NSWCA 153 Dare v Pulham (1982) 189 CLR 658 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 Fitzgerald v Masters (1956) 95 CLR 420 International Leasing Corporation (Victoria) v Aiken (1967) 2 NSWLR 426 Jones v Canavan (1972) 2 NSWLR 236 Nestle Limited v McDougall [1998] NSWCA 158 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Union Bank Australia Ltd v Rudder (1911) 13 CLR 152 Van Lynn Developments v Pelias Constructions Ltd (1969) 1 QB 607 Westscott Resources v St George Bank Ltd [1998] WASC 332
Texts Cited:	G Dal Pont, Powers of Attorney (Lexis Nexis, 2011) Seddon and Bigwood, Cheshire & Fifoot Law of Contract (11th Ed, Lexis Nexis Butterworths, 2017)
Category:	Principal judgment
Parties:	ABL Nominees Pty Limited (ACN 106 756 521) (Plaintiff) ABL Custodian Service Pty Ltd (ACN 097899720) (Plaintiff) Bendigo and Adelaide Bank Ltd (ACN 068 049 178) (Plaintiff) Vijayalatshimi Govindasamy (Defendant)
Representation:	Counsel: Mr B Koch (Plaintiffs) Mr PA Horobin (Defendant) Solicitors: K & L Gates (Plaintiff) Cordato Partners (Defendant)
File Number(s):	16/57622
Publication restriction:	Nil