Alistair McDougall Nominees Pty Ltd as trustee for the McDougall Holdings Trust v Rural Bank (A Division of Bendigo and Adelaide Bank Limited (ACN 068 049 178) [No 2]
[2025] WASC 326
•15 AUGUST 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: ALISTAIR MCDOUGALL NOMINEES PTY LTD AS TRUSTEE FOR THE MCDOUGALL HOLDINGS TRUST -v- RURAL BANK (A DIVISION OF BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178) [No 2] [2025] WASC 326
CORAM: SEAWARD J
HEARD: 22-24 & 26 APRIL 2024
14 JUNE 2024 (SUPPLEMENTARY SUBMISSIONS)
DELIVERED : 15 AUGUST 2025
FILE NO/S: CIV 1357 of 2018
BETWEEN: ALISTAIR MCDOUGALL NOMINEES PTY LTD AS TRUSTEE FOR THE MCDOUGALL HOLDINGS TRUST
Plaintiff
AND
RURAL BANK (A DIVISION OF BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178)
Defendant
RURAL BANK (A DIVISION OF BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178)
Plaintiff by Counterclaim
AND
ALISTAIR MCDOUGALL NOMINEES PTY LTD as trustee for MCDOUGALL HOLDINGS TRUST AND AS TRUSTEE FOR ALISTAIR MCDOUGALL FAMILY TRUST
First Defendant by Counterclaim
BROOK VIEW PTY LTD
Second Defendant by Counterclaim
ALISTAIR MCDOUGALL
Third Defendant by Counterclaim
Catchwords:
Contract law - Banking - Finance facility agreements - Whether the terms of the facility agreements providing for the payment of interest are void for uncertainty - Counterclaim - Where claim for default on facility agreements - Whether borrowers were in default under the facility agreements - Turns on own facts
Legislation:
Nil
Result:
Plaintiff's action dismissed
Judgment for the defendant/plaintiff by counterclaim in the counterclaim
Category: B
Representation:
Original Action
Counsel:
| Plaintiff | : | Mr J M Healy |
| Defendant | : | Mr M D Cuerden SC & Ms E L Blewett |
Solicitors:
| Plaintiff | : | Bailiwick Legal |
| Defendant | : | Corrs Chambers Westgarth |
Counterclaim
Counsel:
| Plaintiff by Counterclaim | : | Mr M D Cuerden SC & Ms E L Blewett |
| First Defendant by Counterclaim | : | Mr J M Healy |
| Second Defendant by Counterclaim | : | Mr J M Healy |
| Third Defendant by Counterclaim | : | Mr J M Healy |
Solicitors:
| Plaintiff by Counterclaim | : | Corrs Chambers Westgarth |
| First Defendant by Counterclaim | : | Bailiwick Legal |
| Second Defendant by Counterclaim | : | Bailiwick Legal |
| Third Defendant by Counterclaim | : | Bailiwick Legal |
Case(s) referred to in decision(s):
Anaconda Nickel v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101
ANZ Banking Group Ltd v Fink [2013] NSWSC 1781
Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191
Bank of Western Australia v Abdul [2012] VSC 222
Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214
Collopy v Commonwealth Bank of Australia [2019] WASCA 97
Cross v National Australia Bank Ltd (Unreported, FCA, 29 April 1994)
Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643
Doggett v Commonwealth Bank of Australia [2015] VSCA 351; (2015) 47 VR 302
Ex parte Dawes; In re Moon (1886) 17 QBD 275
George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434; (2015) 303 FLR 231
Grant v John Grant and Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112
Insurance Commission of Western Australia v Container Handlers Pty Ltd [2004] HCA 24; (2004) 218 CLR 89
McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579
Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571
Nikoloff v Perpetual Trustee Co Ltd [No 2] [2022] WASCA 16
Nikoloff v St George Bank - A Division of Westpac Banking Corporation [2022] WASCA 17
Perpetual Nominees Ltd v Parist Holdings Pty Ltd [2005] NSWSC 1345
Pilbara Iron Ore Pty Ltd v Ammon [2018] WASC 258
Reid v Commonwealth Bank of Australia [2022] NSWCA 134; (2022) 109 NSWLR 149
Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89
Teng v Clark [No 2] [2020] WASC 217
Van Duren v Hammond & Roberts Pty Ltd [No 2] [2019] WASC 246
Wright v Lemon (as Executor of the estate of Wright) [2024] WASCA 19
York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth [1949] HCA 23; (1949) 80 CLR 11
Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135; [2005] 2 Qd R 563
Table of Contents
Introduction
The parties
Background Facts
The Facilities and the Facility Agreements
Letters of offer
Effect of the various letters of offer
Bank Facility Terms
Securities
Guarantee
Demands to McDougall Nominees
Demands to Guarantors
Deed of Forbearance
Payment of Term Facility amount and interest
Payment of Trading Limit Facility Agreement interest
Sale and possession of the Properties
McDougall Nominees' case
McDougall Nominees' claim
McDougall Nominees' case
The Bank's defence
Matters not pursued at trial
Issues
Evidence
Issue 1 - are the interest rate clauses void for uncertainty?
Legal principles - contractual construction
Legal principles regarding uncertainty
Authorities concerning interest rate clauses and uncertainty
2004 Bank Facility Terms
2010 Bank Facility Terms
Interest rates
Fees and charges
Other relevant clauses
2012 Bank Facility Terms
Interest rates
Other matters
Did the Bank have the unilateral right to vary the base interest rate and the margin?
Is the Bank base interest rate an objective rate?
Did the Bank fail to publish the Bank base interest rate from time to time?
Was the Bank required to notify McDougall Nominees of any change in the Bank base interest rate percentage?
Issue 1 - conclusion
Issue 2 - if the interest rate clauses are not void for uncertainty, has the Bank failed to comply with the terms and conditions in each facility agreement requiring the Bank to notify and/or publish and/or otherwise make the interest rates available?
Publish or made available
Notification
Issue 3 - what is the correct construction of the interest rate clauses and has the Bank charged McDougall Nominees the correct interest rate?
Issue 4 - what is the effect of the Deed of Forbearance?
Terms of the Deed of Forbearance
Bank's case
McDougall Nominees' case
Construction issue
Legal Principles - construction of releases
What is the appropriate construction of the release?
What was in the objective contemplation of the parties?
Public policy issue
Conclusion
Counterclaim
McDougall Parties' case
The Bank's claim for a liquidated sum
Dobbs certificates
Term Facility
Trading Limit Facility
Challenge to the Trading Limit Facility Dobbs certificate
Trading Limit Facility - conclusion
Supplementary submissions post-trial
The Bank's claim for vacant possession
Conclusion
SEAWARD J:
Introduction
The plaintiff (and defendant by counterclaim), Alistair McDougall Nominees Pty Ltd, is the trustee for the McDougall Holdings Trust and the Alistair McDougall Family Trust.
These entities are the vehicle through which Alistair McDougall, the third defendant by counterclaim, has operated farming activities from various properties in Lake King, Pingrup and Narrogin, Western Australia. McDougall Nominees, Alistair McDougall and Brook View Pty Ltd, the second defendant by counterclaim, are the registered proprietors of these various properties.
For the purposes of operating these farming activities, McDougall Nominees has been a customer of the defendant (and plaintiff by counterclaim) Rural Bank (a Division of Bendigo and Adelaide Bank Limited), since approximately 2003. The defendant is the successor in law of Rural Bank Limited, and at various times over its history has traded under other names including Elders Rural Bank. For the purposes of these reasons, I will refer to the defendant as the Bank.
Since 2009, McDougall Nominees entered into agreements with the Bank for the provision of financial accommodation in the form of a Term Facility and a Trading Limit Facility.
In late 2017, the Bank issued notices of default to McDougall Nominees in relation to both facilities. This has resulted in McDougall Nominees commencing the present action which involves:
(1)a claim by McDougall Nominees that the interest rate clauses in the Term Facility agreements and the Trading Limit Facility agreements are void for uncertainty; or alternatively that the Bank has not complied with the terms of the facility agreements in relation to the charging of interest to McDougall Nominees; and
(2)a counterclaim by the Bank for vacant possession of the various properties and a claim for a liquidated debt, being the amount owing by McDougall Nominees on the facilities.
The matter proceeded to a contested trial. For the reasons outlined below, I have concluded that McDougall Nominees' action should be dismissed, and judgment entered for the Bank on its counterclaim.
The parties
McDougall Nominees is and was at all material times: [1]
(a)trustee of the McDougall Holdings Trust and the Alistair McDougall Family Trust; and
(b)the registered proprietor of:
(i)the property located at Lake King in Western Australia identified in [40(a)] of Exhibit 83 (McDougall Nominees - Lake King Property); and
(ii)the nine properties located at Narrogin in Western Australia identified in [40(b)] - [40(j)] of Exhibit 83 (McDougall Nominees - Narrogin Properties).
[1] Exhibit 83 [1] - [2], [39] - [40].
Brook View was at all material times the registered proprietor of:
(1)the property located at Lake King in Western Australia identified in [42(a)] of Exhibit 83 (Brook View - Lake King Property); and
(2)the 12 properties located at Narrogin and Pingrup in Western Australia identified in [42(b)] - [42(m)] of Exhibit 83 (Brook View - Narrogin and Pingrup Properties).[2]
[2] Exhibit 83 [42].
Alistair McDougall is and was at all material times:[3]
(a)a director of McDougall Nominees and Brook View;
(b)the registered proprietor of the property located at Lake King identified in [43] of Exhibit 83 (Alistair McDougall - Lake King Property); and
(c)operated, through McDougall Nominees, a farming business from the various properties identified above.
[3] Exhibit 83 [43] and [1(c)].
The Bank is and was at all material times in the business of providing financing, including to Australian farmers, and was the successor in law of Rural Bank Limited.[4]
[4] Exhibit 83 [37].
Judith Margaret McDougall is the former wife of Alistair McDougall. Mrs McDougall was also a guarantor to the various facility agreements. However, following the finalisation of Family Court proceedings in which Mrs McDougall was released from the guarantee, on the first day of trial senior counsel for the Bank sought leave to discontinue the Bank's counterclaim against Mrs McDougall with no order as to costs. On 22 April 2024, I made orders to that effect. Accordingly, in these reasons I have not made any reference to Mrs McDougall, even when Mrs McDougall was a signatory to any of the relevant documents, save for one aspect of the Bank's counterclaim.
Background Facts
There is no significant dispute between the parties as to the relevant background facts.
The respective claims of the parties primarily depend upon the construction of documents, the authenticity of which are not in dispute. McDougall Nominees' case is largely concerned with the appropriate construction of the relevant facility agreements. The Bank's defence also relies upon the construction of a Deed of Forbearance.
The Bank's counterclaim principally relies on two separate Dobbs certificates, although the Bank also submits that if it cannot rely on the Dobbs certificates, then it relies on the underlying documents.
The majority of documents were tendered by consent. McDougall Nominees called Alistair McDougall to give evidence, and the Bank called Brian Patton, Manager, Asset Management, for the Bank.
The Facilities and the Facility Agreements
The Term Facility advanced a sum of money to McDougall Nominees and was the subject of a number of different agreements since it was originally provided by the Bank. Relevant to these proceedings are the following agreements entered into between September 2009 and June 2015, the key details of which are as follows:
| Facility | Date of agreement | Principal advanced | Term |
| 2009 Term Facility Agreement | 17/09/2009 | $3,070,000 | Repayment date being the last day of the 60th month after the month in which the advance was made (or such later date as approved) |
| 2010 Term Facility Variation Agreement Amended the 2009 Term Facility Agreement in relation to the security taken only | 18/10/2010 | ||
| 2011 Term Facility Agreement | 11/07/2011 | $3,070,000 | Repayment date being 24/09/2014 |
| 2012 Term Facility Variation Agreement Amended the 2011 Term Facility Agreement by applying the 2012 Bank Facility Terms only | 09/07/2012 | ||
| 2013 Term Facility Variation Agreement | June 2013 | $3,070,000 | Repayment date being 24/09/2014 |
| 2014 Term Facility Agreement | 02/04/2014 | $3,070,000 | Repayment date being 24/09/2014 |
| 2014 Term Facility Variation Agreement | 16/06/2014 | $3,070,000 | Repayment date being 24/04/2015 |
| 2015 Term Facility Variation Agreement | June 2015 | $3,070,000 | Repayment date being 24/04/2016 |
The Trading Limit Facility was a form of overdraft account for the operation of farming activities, to which interest, fees and charges incurred on the Term Facility were also debited. The Trading Limit Facility was also the subject of a number of different agreements since it was originally provided by the Bank. Relevant to these proceedings are the following agreements entered into between September 2009 and June 2015, the key details of which are as follows:
| Facility | Date | Principal advanced | Term |
| 2009 Trading Limit Facility Agreement | 17/09/2009 | $500,000 | The repayment date is the earlier of the following dates: the date specified in a notice from the Bank requiring repayment of the outstanding sum; or the date of demand from the Bank for repayment. |
| 2010 Trading Limit Facility Agreement | 18/10/2010 | $800,000 until 31/12/2010; then $600,000 until 31/01/2011; then $400,000 or such other amount as approved by the Bank in writing. | As above |
| 2011 Trading Limit Facility Agreement | 11/07/2011 | $900,000 until 31/12/2012; then reducing to $600,000 | The repayment date is the earlier of the following dates 29/02/2012; or the date specified by the Bank requiring repayment; or the date of demand from the Bank after the occurrence of an event of default. |
| 2012 Trading Limit Facility Variation Agreement Also amended the 2011 Term Facility Agreement by applying the 2012 Bank Facility Terms | 09/07/2012 | $1,500,000 until 31/01/2013; then reducing to $1,000,000 | The repayment date is the earlier of the following dates February 2013; or the date specified by the Bank requiring repayment; or the date of demand from the Bank after the occurrence of an event of default. |
| 2013 Trading Limit Facility Variation Agreement | June 2013 | $1,850,000 until 31/08/2013; then $2,000,000 from 01/09/2013 - 28/02/2014; and then $0 from 1/03/2014 | The repayment date is the earlier of the following dates : 30 April 2014; or the date specified by the Bank requiring repayment; or the date of demand from the Bank after the occurrence of an event of default. |
| 2014 Trading Limit Facility Agreement | 02/04/2014 | $800,000 until 28/02/2014; then $0 from 1/03/2014 | The repayment date is the earlier of the following dates: 30/04/2014; or the date specified by the Bank requiring repayment; or the date of demand from the Bank after the occurrence of an event of default. |
| 2014 Trading Limit Variation Agreement | 16/06/2014 | $1,250,000 until 28/02/2015; then $0 from 01/03/2015 | The repayment date is the earlier of the following dates : 31/03/2015; or the date specified by the Bank requiring repayment; or the date of demand from the Bank after the occurrence of an event of default. |
| 2015 Trading Limit Facility Variation Agreement | 14/05/2015 | $1,360,000 until 29/02/2016; then $1,200,000 from 1/03/2016 until the repayment date. | The repayment date is the earlier of the following dates: 31/03/2016; or the date specified by the Bank requiring repayment; or the date of demand from the Bank after the occurrence of an event of default. |
Each of the facility agreements consists of a letter of offer (and from 2011, an attached facility schedule), the relevant Bank Facility Terms and the details of any security referred to in the letter of offer.
Letters of offer
The letters of offer were often (but not in all cases) offers in relation to both the Term Facility and the Trading Limit Facility. McDougall Nominees, and the guarantors, signed the letters of offer to indicate their acceptance.
Each of the letters of offer follow a similar format and address some common matters, including:
(a)that the Bank was making an offer of a financial product to McDougall Nominees;
(b)identifying the relevant parties, including guarantors;
(c)identifying the account number for each of the Term Facility and the Trading Limit Facility. The account numbers for these two facilities remained the same in all letters of offer;
(d)that the offer was to be read with the Bank's Facility Terms;
(e)using italic typescript to identify expressions in the offer letter which were defined in the Bank's facility terms and stating that the defined words have the same meaning;
(f)identifying 'approved purpose' of the finance;
(g)specifying the amount of the facility;
(h)specifying a repayment date;
(i)specifying the interest rate and how interest was to be calculated and paid;
(j)specifying the fees payable;
(k)specifying the security to be taken and held by the Bank;
(l)specifying the debit balance of each account as at the date of the letter of offer; and
(m)specifying any special conditions.
The key terms of the letters of offer were those concerning the interest rate to be charged. Full details of the terms of each letter of offer are outlined later in these reasons, but for present purposes, it is sufficient to observe that the interest rate in each letter of offer consisted of two components: (a) a particular Bank interest rate category (Bank base interest rate) minus (b) a specific margin expressed as a percentage. For example, in the 1 July 2011 letter of offer, the interest rate is described as follows:
The Bank's Basic Standard Variable rate as published from time to time minus a margin of 5.15% per annum (currently 10.35% per annum including the margin).
The precise Bank base interest rate category varies for each letter of offer as does the precise margin percentage. However, the above formula is used in all letters of offer.
Effect of the various letters of offer
It is also helpful to record how the various letters of offer interact with each other. Over the period of time of these letters, the same two facilities and account numbers existed. The various letters of offer, and the associated Bank Facility Terms, outlined the terms and conditions that applied to each facility from time to time.
For the Term Facility, the 1 July 2011 letter of offer provided that the terms contained in the 2011 letter of offer replace the then existing terms that applied to the Term Facility under the 2009 and 2010 letters of offer.[5] The terms as contained in the 2011 letter of offer were then (relevantly) varied as follows:
(a)by the 1 May 2012 letter of offer: which applied the 2012 Bank Facility Terms (as opposed to the 2010 Bank Facility Terms), but did not otherwise materially amend the relevant terms of the Term Facility; [6] and
(b)by the 28 May 2013 letter of offer: which amended the margin percentage.[7]
[5] Exhibit 4, page 22.
[6] Exhibit 5, page 33.
[7] Exhibit 6, pages 45 - 46.
The 30 January 2014 letter of offer provided that the terms contained in the 30 January 2014 letter of offer replaced the then existing terms that applied to the Term Facility. The 30 January 2014 letter of offer did not advance a new principal or apply a new repayment date or impose a different Bank base interest rate category or the margin percentage than that which existed at this point.[8] The terms as contained in the 30 January 2014 letter of offer were then (relevantly) varied as follows:
(a)by the 5 June 2014 letter of offer: which amended the repayment date;[9] and
(b)by the 13 May 2015 letter of offer: which amended the repayment date and the margin percentage.[10]
[8] Exhibit 7, pages 58 - 59.
[9] Exhibit 8, pages 71 - 72.
[10] Exhibit 9, pages 81 - 82.
For the Trading Limit Facility, the 1 July 2011 letter of offer provided that the terms contained in the 2011 letter of offer replaced the then existing terms that applied to the Trading Limit Facility under the 2009 and 2010 letters of offer.[11] The terms as contained in the 1 July 2011 letter of offer were then varied as follows:
(a)by the 1 May 2012 letter of offer: which applied the 2012 Bank Facility Terms (as opposed to the 2010 Bank Facility Terms) and by amending the facility limit and the repayment date;[12] and
(b)by the 28 May 2013 letter of offer: which amended the facility limit and the repayment date.[13]
[11] Exhibit 4, page 22.
[12] Exhibit 5, pages 33 - 34.
[13] Exhibit 6, pages 45 - 46.
The 30 January 2014 letter of offer provided that the terms contained in the 30 January 2014 letter of offer replaced the then existing terms that applied to the Trading Limit Facility. The 30 January 2014 letter of offer advanced a lower facility limit and provided for a new repayment date, but did not apply a different Bank base interest rate category or the margin percentage to that which existed at this point.[14] The terms as contained in the 30 January 2014 letter of offer were then (relevantly) varied as follows:
(a)by the 5 June 2014 letter of offer: which amended the facility limit and the repayment date;[15] and
(b)by the 13 May 2015 letter of offer: which amended the facility limit, the repayment date and the margin percentage.[16]
[14] Exhibit 7, pages 58 - 59.
[15] Exhibit 8, pages 71 -72.
[16] Exhibit 9, pages 81 - 82.
A further feature of most of the letters of offer was the inclusion of one or more of the following:
(a)special conditions which required a review to be conducted of the farming operations in comparison to the budget for the season (eg 1 July 2011; 1 May 2012; 28 May 2013 letters of offer);
(b)concern being expressed by the Bank as to the amount of debt and the profitability of the farming operations, and the need for the borrower to develop a plan to sell off assets to ensure the total debt to the Bank is reduced (eg 1 July 2011; 1 May 2012; 28 May 2013; and 13 May 2015 letters of offer); and
(c)acknowledgement of the level of debt existing at the time of the letter of offer (eg 1 May 2012; 28 May 2013; 5 June 2014 and 13 May 2015 letters of offer).
Bank Facility Terms
The following three different Bank facility terms were applicable over the period of time covered by the agreements:
(a)2004 Bank Facility Terms:[17] applicable from 2009 to 11 July 2011;
(b)2010 Bank Facility Terms:[18] applicable from 11 July 2011 to 8 July 2012; and
(c)2012 Bank Facility Terms:[19] applicable from 9 July 2012.
[17] Exhibit 10.
[18] Exhibit 11.
[19] Exhibit 12.
The terms of the facility agreements which are relevant to the issues raised in this case are the terms concerning the interest rates applicable to the facilities; payment of fees and costs; notices; waiver; variation; severance; inconsistency; events of default; and the Dobbs certificates. These terms are discussed later in these reasons.
Securities
In accordance with the relevant letters of offer and the Bank Facility Terms, various securities were provided to the Bank.
The following securities were registered in relation to the McDougall Nominees - Narrogin Properties and the McDougall Nominees - Lake King Properties:[20]
(a)Mortgage numbers H****47 and M****14;[21]
(b)Charge numbers 12****1 and 18****2;[22] and
(c)Various charges registered on the Personal Property Securities Register.
[20] Exhibit 83 [45], [48].
[21] Exhibit 118; Exhibit 121.
[22] Exhibit 123; Exhibit 124.
The following securities were registered in relation to the Brook View - Narrogin and Pingrup Properties and the Brook View - Lake King Properties: [23]
(a)Mortgage numbers G****78 and H****46;[24]
(b)Charge numbers 77***8 and 18****3;[25] and
(c)Various charges registered on the Personal Property Securities Register.
[23] Exhibit 83 [46], [49] - [50].
[24] Exhibit 115; Exhibit 116.
[25] Exhibit 122; Exhibit 125.
Finally, Mortgage number H****48 was registered over the Alistair McDougall - Lake King Property.[26]
[26] Exhibit 83 [47]; Exhibit 117.
All the mortgages except M****14 incorporated the provisions of the Memorandum of Common Provisions filed and registered with Landgate with reference number G000129.[27] Mortgage M****14 incorporated the provisions of the Memorandum of Common Provisions filed and registered with Landgate with reference number K758583.[28]
[27] Exhibit 84.
[28] Exhibit 85.
Both Memoranda of Common Provisions contain clauses dealing with an event of default (which includes the failure of the mortgagor to pay when due any secured money) including the ability for the Bank to take possession of the mortgaged property and sell or transfer the mortgaged property. Secured money is defined as being all amounts which the mortgagor is or becomes actually or contingently liable to pay to the Bank.
Each of charges took the form of a Deed of Charge, which contain clauses of the same type and effect as applicable to the mortgages in relation to events of default, including the failure of the chargor to pay when due any secured money. Secured money is defined as being any money which the chargor is or becomes actually or contingently liable to pay to the Bank. The Deeds also contain clauses permitting the Bank to take possession of the secured property and sell or transfer the secured property.
There is no dispute regarding the construction of any of these security documents.
Guarantee
In accordance with the letters of offer and the applicable Bank Facility Terms, a guarantee was also provided to the Bank. On or about 17 September 2009, McDougall Nominees, Brook View and Alistair McDougall executed an Unlimited Guarantee and Indemnity in favour of the Bank (Guarantee).[29]
[29] Exhibit 50; Exhibit 83 [3].
Clause 3 of Guarantee provides that the guarantors unconditionally and irrevocably guarantee the due and punctual payment to the Bank all of the guaranteed money. Further, if the borrower does not pay to the Bank any of the guaranteed money when due, the guarantor must pay that money on demand. Clause 3.3 provides that the guarantor's liability is unlimited. The term 'guaranteed money' is broadly defined and includes all money owing, whether actually or contingently, by the borrower to the Bank.
Demands to McDougall Nominees
There is no dispute that there reached a point where McDougall Nominees was unable to reduce the amounts owing on the facilities, and then later did not make payments in accordance with the various facility agreements. As a result, the Bank issued two demands to McDougall Nominees on the basis of non‑compliance with the terms of the Trading Limit Facility.
First, the Bank issued, and McDougall Nominees received, a Notice of Demand to Debtor addressed to McDougall Nominees dated 16 February 2017.[30] That notice of demand relevantly states:
[30] Exhibit 54; Exhibit 83 [51].
(a)McDougall Nominees is in default by failing to pay the Trading Limit Facility by the repayment date of 31 March 2016;
(b)a default arising under any of the facility agreements or securities is a default under each other facility agreement;
(c)the Bank hereby terminates all the facilities; declares all moneys payable pursuant to the facilities to be immediately due and payable and demands the payment of all moneys owing by McDougall Nominees to the Bank within 21 days from the date of the notice of demand;
(d)details the total amount owing as being $4,392,859.72 comprising:
(i)$1,318,267.34 - being the amount outstanding under the Trading Limit Facility as at 8 February 2017, plus interest; and
(ii)$3,074,592.38 - being the amount outstanding under the Term Facility as at 8 February 2017, plus interest; and
(e)if McDougall Nominees defaults in payment of the monies demanded in the notice of demand, the Bank will proceed to exercise its powers and remedies under the facility agreements and securities, including the power of sale under the Transfer of Land Act 1893 (WA).
There is no dispute that McDougall Nominees did not pay the amount of $4,392,859.72 within 21 days of the notice of demand.[31]
[31] Exhibit 83 [56].
Secondly, the Bank issued, and McDougall Nominees received, a further Notice of Demand to Debtor addressed to McDougall Nominees dated 30 May 2017.[32] That second notice of demand is in similar terms to the first notice of demand, albeit it observes that McDougall Nominees failed to pay the amount specified in the first notice of demand. The second notice of demand relevantly goes on to say:
(a)without prejudice to the first notice of demand, the Bank demands payment of all moneys owing to Bank in respect of the facilities within five days from the date of the second notice of demand;
(b)details the total amount now owing as being $4,352,999 comprising:
(i)$1,267,909.74 - being the amount outstanding under the Trading Limit Facility as at 24 May 2017, plus interest; and
(ii)$3,085,089.26 - being the amount outstanding under the Term Facility as at 24 May 2017, plus interest; and
(c)if McDougall Nominees defaults in payment of the monies demanded in the notice of demand, the Bank will proceed to exercise its powers and remedies under the facility agreements and securities, including the power of sale under the Transfer of Land Act 1893 (WA).
[32] Exhibit 55; Exhibit 83 [52].
There is no dispute that McDougall Nominees did not pay the amount of $4,352,999 demanded within five days of the second notice of demand.[33]
Demands to Guarantors
[33] Exhibit 83 [57].
The Bank also issued a notice of demand to each of the guarantors on the basis of non‑compliance by McDougall Nominees with the terms of the Trading Limit Facility.
First, the Bank issued, and McDougall Nominees received, a Notice of Demand (and Intention to Sell) to Guarantor dated 13 June 2017.[34] The notice of demand relevantly states:
[34] Exhibit 58; Exhibit 83 [53].
(a)McDougall Nominees is in default of the facilities by failing to pay money to the Bank as and when due, being an event of default under the facilities;
(b)the Bank has terminated all the facilities; declared all moneys payable pursuant to the facilities to be immediately due and payable and demanded the payment of all moneys owing by McDougall Nominees to the Bank in respect of the facilities;
(c)pursuant to the Guarantee, demands that McDougall Nominees pays the Bank the amount specified in item 5 of the attached schedule within five days of the date of the notice of demand;
(d)details the total amount owing as being $4,352,999 comprising:
(i)$1,267,909.74 - being the amount outstanding under the Trading Limit Facility as at 24 May 2017, plus interest; and
(ii)$3,085,089.26 - being the amount outstanding under the Term Facility as at 24 May 2017, plus interest; and
(e)if McDougall Nominees defaults in payment of the monies demanded, the Bank will proceed to exercise its powers and remedies under the Guarantee and the security, including the power of sale under the Transfer of Land Act 1893 (WA).
Secondly, the Bank issued, and Brook View received, a Notice of Demand (and Intention to Sell) to Guarantor dated 13 June 2017.[35] The notice of demand was in identical terms of the notice of demand issued to McDougall Nominees as guarantor.
[35] Exhibit 57; Exhibit 83 [54].
Thirdly, the Bank issued, and Alistair McDougall received, a Notice of Demand (and Intention to Sell) to Guarantor dated 13 June 2017.[36] That notice of demand was also in identical terms to the notices of demand issued to the other guarantors.
[36] Exhibit 59; Exhibit 83 [55].
There is no dispute that none of McDougall Nominees, Brook View and Alistair McDougall paid the amount of $4,352,999.00 demanded in the notices of demand.[37]
Deed of Forbearance
[37] Exhibit 83 [58].
Following the default by McDougall Nominees in relation to the facilities, McDougall Nominees, Brook View, Alistair McDougall and the Bank reached an agreement whereby the Bank agreed to forbear on enforcing the relevant facility agreements for a period. That agreement was recorded in the Deed of Forbearance entered into by the parties on 3 October 2017.[38]
[38] Exhibit 53; Exhibit 83 [38].
The release contained in the Deed of Forbearance is relevant to the Bank's defence and the key provisions concerning the release are outlined later in these reasons. For the present purposes, it is sufficient to record that pursuant to cl 3, cl 4 and cl 5 and sch 1 of the Deed of Forbearance, the parties relevantly agreed as follows:
(a)the repayment date for each of the facilities was extended to 28 February 2018, or such later date as agreed in writing;
(b)the facility limit in respect of the Trading Limit Facility is $1,360,000 until 31 December 2017, and then reduced to $1,200,000 until the repayment date;
(c)the facility limit in respect of the Term Facility is $3,070,000;
(d)the Debt as at 7 July 2017 was:
(i)$3,073,936.33 for the Term Facility Account No 9*****50; and
(ii)$1,177,715.99 for the Trading Facility Limit Account No 3******43.
(e)McDougall Nominees, Brook View and Alistair McDougall agreed to apply the payment of the net proceeds of any sale of any of the properties the subject of the securities in the facility agreements and the Guarantee to the Bank in permanent reduction of the total amount owing to the Bank; and
(f)the Bank agreed to forebear from taking any further steps to enforce the 'Transaction Documents' between the date of the Deed and the earlier of the date of occurrence of an event of default and the repayment date.
By letter dated 11 December 2017, the Bank sent a notice of default to McDougall Nominees. The stated default of the Deed of Forbearance being the failure of Alistair McDougall to provide, by 8 December 2017, various items of information required under the Deed of Forbearance, including an Integrated Client Account Statement for the previous quarter and a cash flow analysis report as required. The notice required McDougall Nominees to rectify the default by 10 January 2018.[39]
Payment of Term Facility amount and interest
[39] Exhibit 60.
There is no dispute that McDougall Nominees did not pay the Term Facility amount by the final extended due date of 28 February 2018.
It is also not in dispute that in the period 24 September 2009 to 30 November 2017:
(a)the Bank varied the applicable Bank base interest rate on numerous occasions;[40] and
(b)McDougall Nominees paid the Bank the accrued interest for the Term Facility, which was charged to the Trading Limit Facility account, in the amounts calculated by the Bank. However, McDougall Nominees ceased paying interest after 30 November 2017.[41]
Payment of Trading Limit Facility Agreement interest
[40] Statement of claim [6B], [12B], [18B], [24B], [30B], Defence [6B(a)], [12B(a)], [18B(a)], [24B(a)], [30B(a)].
[41] Exhibit 83 [6], [9], [12], [15], [18].
There is no dispute that McDougall Nominees did not repay the Trading Limit Facility by the final extended due date of 28 February 2018.
It is also not in dispute that in the period 24 September 2009 and 30 November 2017:
(a)the Bank varied the applicable Bank base interest rate on numerous occasions;[42] and
(b)McDougall Nominees paid the Bank the accrued interest for the Trading Limit Facility, which was charged to the Trading Limit Facility account, in the amounts calculated by the Bank. However, McDougall Nominees ceased paying interest after 30 November 2017.[43]
Sale and possession of the Properties
[42] Statement of claim [36B], [42B], [48B], [54B], [60B], [66B]. Defence [36B(a)], [42B(a)], [48B(a)], [54B(a)], [60B(a)], [66B(a)].
[43] Exhibit 83 [21], [24], [27], [30], [33], [36].
On or about 14 May 2019, McDougall Nominees, Brook View and Alistair McDougall sold their respective interests in the properties located in Lake King. This sale occurred in accordance with orders made by the Family Court. The net proceeds of the sale in the sum of $3,767,018.36 were applied by the Bank to the Trading Limit Facility and the Term Facility.[44]
[44] Exhibit 83 [59].
McDougall Nominees remains in possession of the McDougall Nominees - Narrogin Properties,[45] and Brook View remains in possession of the Brook View - Narrogin and Pingrup Properties.
[45] Exhibit 83 [60].
McDougall Nominees' case
The pleadings were amended on multiple occasions over the history of the matter, including during the trial itself. The final versions of the pleadings are as follows:
(a)amended further re-amended statement of claim, dated 26 April 2024 (statement of claim);
(b)fourth further re-amended defence and third further re‑amended counterclaim, dated 26 April 2024 (defence and counterclaim); and
(c)plaintiff's further re-amended reply and first, second and third defendants by counterclaim further re‑amended defence to further re-amended counterclaim, dated 26 April 2024 (reply and defence to counterclaim).
McDougall Nominees' claim
McDougall Nominees' case
McDougall Nominees' case as run at trial is that it has been overcharged interest by the Bank. McDougall Nominees' case in this respect consists of the following two alternative limbs:
(1)that the interest rate clauses in each of the facility agreements are void for uncertainty; or
(2)if the interest rate clauses are not void for uncertainty, that the Bank failed to notify McDougall Nominees of the various changes in interest rates in accordance with the terms of the various facility agreements.
Turning to the first limb of McDougall Nominees' case, the submissions made by counsel for McDougall Nominees do not entirely mirror the pleaded case.
In the statement of claim, the pleadings for each facility agreement where relief is sought are largely to the same effect, save for differences in the Bank base interest rate and margin figures, and any minor variations due to the precise terms of the relevant facility agreement. Adopting the pleading in relation to the 2011 Term Facility Agreement as an example, McDougall Nominees pleads that a material term of the agreement was that:
11.4 during its term [McDougall Nominees] would be required to make monthly interest only repayments calculated at the interest rate equivalent to [the Bank's] basic standard variable rate as published from time to time minus a margin of 5.15% per annum, which as at the date of [the Bank's] letter of offer meant that a total interest rate of 5.2% per annum was payable being the basic standard variable rate of 10.35% less 5.15% per annum;
11.4.1 which at the time the 2011 Term Facility Agreement was entered into was stated to be the basic standard variable rate of 10.35% per annum which was to have a 5.15% per annum margin deducted from it, being a 5.2% per annum interest rate;
11.4.2the purported ability for [the Bank] to vary the interest rate from time to time was void for uncertainty and illusory and should be severed from the 2011 Term Facility Agreement because [the Bank] had the unilateral ability to choose to vary a fundamental and vital term of the agreement without reference to any objective criteria against which the variation of the interest rate was to be determined which meant the interest rate could be set at a rate entirely of [the Bank's] choosing without any restrictions on the criteria to be applied when seeking to vary the interest rate;
11.4.3further and alternatively, if paragraph 11.4.2 is not accepted, to the extent [the Bank] was entitled to vary the interest rate from time to time then the basic standard variable rate published by [the Bank] was referenced in the monthly written statements issued by [the Bank], and the 5.15% per annum margin was to be deducted from that published rate, such that [McDougall Nominees] would only be required to make monthly interest only payments at the published rate less the 5.15% per annum margin.
The first matter to observe in relation to this pleading, is that McDougall Nominees pleads that it was a term of the 2011 Term Facility Agreement that McDougall Nominees was required to make monthly interest only repayments calculated at the Bank's basic standard variable rate as published from time to time minus a margin of 5.15% per annum.[46] McDougall Nominees pleads that this amounts to a final interest rate of 5.2% (see par 11.4). McDougall Nominees calculates this to be the final interest rate by reference to the figures referenced in the letter of offer (see par 11.4). This part of the McDougall Nominees' case involves a question of construction of the relevant portion of the letter of offer. However, in oral opening submissions, counsel for McDougall Nominees submitted that the construction pleaded in par 11.4 was not actually correct, as the letter of offer states that the interest rate could change prior to the facility agreement coming into existence. Nonetheless, McDougall Nominees relies on this construction for the following reasons:[47]
HEALY, MR: It's only advanced insofar as your Honour had to find a contractual term.
…
HEALY, MR: From the agreements. Can you – could you - as one of the alternatives to salvage a clause, could you use – could you use the contractual clause of the currently X per cent of the date of the offer letter.
…
HEALY, MR: And if your Honour was to adopt that construction, we say that the identified rate, including the margin, you need to deduct the margin off that rate.
…
HEALY, MR: So that's just put there as a – as a possible alternative. It's not a preferred construction but it's – but it's there.
[46] See statement of claim [12A.1] for rate as at 1 July 2011.
[47] ts 22 April 2024, 171.
Counsel for McDougall Nominees in his oral and written submissions explained that the first limb of its case involves the following three tiers of submissions:
(a)that the interest rate clauses of the facility agreements are void for uncertainty and illusory because the relevant terms and conditions gave the Bank the unilateral right to vary both the Bank base interest rate and the margin;[48] or
(b)if McDougall Nominees is not successful in relation to the above submission, that the interest rate clauses of the facility agreements are void for uncertainty and illusory because there is a requirement for the interest rate to be published, and there is no evidence that the interest rate was published.[49] Counsel for McDougall Nominees accepted that this submission applied only to those facility agreements where there is a requirement to publish,[50] being the 2011 Term Facility Agreement and 2011 Trading Limit Facility Agreement; or
(c)further, if McDougall Nominees is not successful in relation to the submission in (a) above, that the interest rate clauses of the facility agreements are void for uncertainty and illusory because there is a requirement for the Bank to notify McDougall Nominees of any variation in the interest rate, and there is no evidence that McDougall Nominees was so notified, and the monthly statements from the Bank do not constitute that notification.[51]
[48] ts 22 April 2024, 127 and ts 26 April 2024, 394.
[49] ts 22 April 2024, 127 and ts 26 April 2024, 396 - 397.
[50] ts 22 April 2024, 127 and ts 26 April 2024, 397, 399.
[51] ts 26 April 2024, 398 - 402.
In relation to the second (further and alternative) limb of its case, McDougall Nominees' case is that if the Bank had the ability to vary the Bank base interest rate (which is denied), the applicable interest rate consisted of:
(a)for the 2011 Term Facility Agreement and the 2011 Trading Limit Facility Agreement: the Bank base interest rate as published by the Bank and as notified in writing to McDougall Nominees, less the margin percentage;[52] and
(b)for the remaining facility agreements: the Bank base interest rate as made available by the Bank and as notified in writing to McDougall Nominees, less the margin percentage.[53]
[52] Statement of claim [12A.2].
[53] Statement of claim [18A.2], [24A.2], [30A.2], [48A.2], [54A.2], [60A.2], [66A.2].
McDougall Nominees pleaded that the Bank's case is that it gave notice of the varied interest rate to McDougall Nominees in the monthly bank statements for the respective facilities.[54] However, by providing notice in this manner, the Bank did not give notice in a manner consistent with the applicable terms and conditions of the facility agreements over the relevant period of time. In particular, at no material time prior to the commencement of these proceedings, did the Bank:
(a)for the 2011 Term Facility Agreement and the 2011 Trading Limit Facility Agreement: publish or notify in writing the Bank base interest rate or the total interest rate, and further that the ability to obtain information by telephoning the Bank was not publishing for the purposes of the relevant facility agreement;[55]
(b)for the 2013 Term Facility agreement: make available or notify in writing the Bank base interest rate or the total interest rate, and further that the ability to obtain information by telephoning the Bank was not making available for the purposes of the relevant facility agreement;[56] and
(c)for the remaining facility agreements: make available or notify in writing or advertise the Bank base interest rate or the total interest rate, and further that the ability to obtain information by telephoning the Bank was not making available for the purposes of the respective facility agreement.[57]
[54] Statement of claim [12D], [18D], [24D], [30D], [48D], [54D], [60D], [66D].
[55] Statement of claim [15G] and [51G].
[56] Statement of claim [21G].
[57] Statement of claim [27G], [33G], [57G], [63G], [69G].
The different underlined wording is reflective of the different wording of the terms and conditions in the respective facility agreements.
McDougall Nominees then further pleads that:
(a)in breach of each of the facility agreements, the Bank charged McDougall Nominees the full amount of the Bank base interest rate, without deducting the margin percentage from the relevant applicable rate;[58]
(b)in breach of each of the facility agreements, the Bank charged McDougall Nominees default interest at the full amount of the Bank base interest rate, plus 3% per annum, without deducting the margin percentage from the relevant applicable rate;[59]
(c)when McDougall Nominees paid the accrued interest charged to it by the Bank under each facility agreement, it did so in the mistaken belief that the amounts calculated and debited by the Bank were calculated correctly and were due and payable by McDougall Nominees;[60]
(d)when McDougall Nominees paid the accrued interest charged to it by the Bank under each facility agreement, it did so in:
(i)the mistaken belief that the Bank had the right to vary the interest rate;[61] or
(ii)in ignorance of the fact that the Bank had not deducted the margin percentage from the Bank base interest rate;[62] or
(iii)in ignorance of the fact that the Bank was not entitled the vary the interest rate;[63] or further and alternatively
(iv)in ignorance of the fact that the Bank had not deducted the margin percentage from the Bank base interest rate as published from time to time in the monthly written bank statements for each facility.[64]
[58] Statement of claim [13], [19], [25], [31], [49.1], [55.1], [61.1], [67.1].
[59] Statement of claim [13A], [19A], [25A], [31A], [49.2], [55.2], [61.2], [67.2].
[60] Statement of claim [14], [20], [26], [32], [38], [44], [50], [56], [62], [68].
[61] Statement of claim [14A.1], [20A.1], [26A.1], [32A.1], [38A.1], [44A.1], [50A.1], [56A.1], [62A.1], [68A.1].
[62] Statement of claim [14A2.1], [20A2.1], [26A2.1], [32A2.1], [38A2.1], [44A2.1], [50A2.1], [56A2.1], [62A2.1], [68A2.1].
[63] Statement of claim [14A2.2], [20A2.2], [26A2.2], [32A2.2], [38A2.2], [44A2.2], [50A2.2], [56A2.2], [62A2.2], [68A2.2].
[64] Statement of claim [14A2.3], [20A2.3], [26A2.3], [32A2.3], [38A2.3], [44A2.3], [50A2.3], [56A2.3], [62A2.3], [68A2.3].
McDougall Nominees' case is that by reason of making the payments of interest to the Bank, at the rates calculated by the Bank, it suffered loss and damage. Further and in the alternative, McDougall Nominees pleads that by reason of making the payments of interest to the Bank, the Bank has been unjustly enriched at the expense of and to the detriment of McDougall Nominees.[65]
[65] Statement of claim [70].
However, McDougall Nominees does not make any claim for relief in relation to the 2009 Term Facility Agreement, or the 2009 or 2010 Trading Limit Facility Agreements, accepting that claims based on each are outside the limitation period for any such claims.[66] McDougall Nominees only relies on the terms of these facility agreements only for the purposes of the question of construction of the Deed of Forbearance.[67] Further, McDougall Nominees' claim for interest under the 2011 Term Facility Agreement and the 2011 Trading Limit Facility Agreement, are limited to interest paid from 28 February 2012.[68]
[66] Reply and defence to counterclaim [5]; ts 22 April 2024, 126.
[67] ts 22 April 2024, 126.
[68] ts 26 April 2024, 394.
McDougall Nominees seeks damages or further and in the alternative judgment for the amount of overcharged interest as restitution for monies had and received, as well as interest and costs.
The Bank's defence
In its defence and counterclaim, the Bank denies that it has overcharged McDougall Nominees interest over the material period of time.
The Bank pleads that the correct interest rate under each facility agreement is the Bank base interest rate (the category being as specified in the relevant letter of offer), minus the margin percentage, also as specified in the relevant letter of offer.[69]
[69] Defence and counterclaim [12A(a)], [18A(a)], [24A(a)], [30A(a)], [48A], [54A(a)], [60A(a)], [66A(a)].
The Bank does not accept McDougall Nominees' calculation of the interest rate as pleaded in relation to each facility agreement.[70]
[70] Defence and counterclaim [11(b)], [17(b)], [23(b)], [29(b)], [47(b)], [53(b)], [59(b)], [65(b)].
Turning to the first limb of McDougall Nominees' case, the Bank denies that the interest rate clauses in the facility agreements are void for uncertainty and illusory.[71] The Bank's case is that:
[71] Defence and counterclaim [11(b)], [17(b)], [23(b)], [29(b)], [47(b)], [53(b)], [59(b)], [65(b)].
(a)in relation to each facility agreement, the specified Bank base interest rate is a benchmark rate that governed the rates of interest charged to customers of the Bank to which that rate applied;[72]
[72] Defence and counterclaim [11(b)(v)], [17(b)(v)], [23(b)(v)], [29(b)(v)], [47(b)(v)], [53(b)(v)], [59(b)(v)], [65(b)(v)].
(b)in accordance with the terms of the 2011 Term Facility Agreement and the 2011 Trading Limit Facility Agreement, the Bank published the relevant Bank base interest rate variations by making them available by telephone on a specified and widely publicised telephone number;[73]
[73] Defence and counterclaim [15D], [51D].
(c)in accordance with the terms of the remaining facility agreements, the Bank made the relevant Bank base interest rate variations available by telephone on a specified and widely publicised telephone number;[74]
(d)in accordance with the terms of the relevant facility agreement, the Bank was able to vary the Bank base interest rate percentage unilaterally, and did not require a waiver from McDougall Nominees to do so;[75]
(e)in accordance with the terms of the relevant facility agreement, the Bank was not required to give notification to McDougall Nominees in writing or at all of any variations in the Bank base interest rate percentage. However, if contrary to this submission the Bank was required to give notification to McDougall Nominees, that notification occurred by way of:
(i)the monthly bank statements from which the Bank base interest rate percentage could be deduced; [76]
(ii)by way of publication on the Bank's website; and[77]
(iii)for the 2015 Term Facility Agreement and the 2015 Trading Limit Facility Agreement, also by way of letters to McDougall Nominees and by advertisements or notices published in the Australian Financial Review;
(f)in accordance with the terms of the relevant facility agreement, the Bank was not able to vary the Bank base interest rate category unilaterally, and at no time did the Bank vary the Bank base interest rate category; and
(g)in accordance with the terms of the relevant facility agreement, the Bank was not able to vary the margin percentage unilaterally, and at no time did the Bank vary the margin percentage.
[74] Defence and counterclaim [21C], [27C], [33C], [57C], [63C], [69C].
[75] Defence and counterclaim [11(e)], [11A], [17(e)], [17A], [29(e)], [29A], [47(e)], [47A], [53(e)], [53A], [59(e)], [60A], [65(e)], [65A].
[76] Defence and counterclaim [12A], [12D], [14B], [15D], [18A], [18D], [20B], [21C], [24A], [24D], [26B], [27C], [30A], [30D], [32B], [33C], [48A], [48D], [50B], [51D], [54A], [54D], [56B], [57C], [60A], [60D], [62B], [63C], [66A], [66D], [68B], [69C].
[77] Defence and counterclaim [12A], [12D], [14B], [15D], [18A], [18D], [20B], [21C], [24A], [24D], [26B], [27C], [30A], [30D], [32B], [33C], [48A], [48D], [50B], [51D], [54A], [54D], [56B], [57C], [60A], [60D], [62B], [63C], [66A], [66D], [68B], [69C].
Turning to the second limb of McDougall Nominees' case, the Bank's case is that it published or otherwise made available the Bank base interest rate from time to time by it being publicly available by calling the relevant Bank telephone number. Further, the Bank denies that it was required to notify McDougall Nominees of any changes in the Bank base interest rate, but says that if it was, it did so notify McDougall Nominees by way of monthly bank statements, or notifications on the Bank website or, from October 2018, by way of letters and advertisements.
The Bank also denies that McDougall Nominees paid any of the interest payments to the Bank under any form of mistake and denies that there has been any unjust enrichment by the Bank.[78]
[78] Defence and counterclaim [70] - [72].
The Bank also pleads that, even if McDougall Nominees is successful in relation to any of its claims, McDougall Nominees released the Bank from any claims regarding the interest paid by McDougall Nominees to the Bank. In this regard, the Bank relies upon cl 8.1 of the Deed of Forbearance, and pleads that McDougall Nominees released the Bank from the date of the expiry of the Forbearance Period, being relevantly the date on which the Bank gave notice of the occurrence of an event of default under the Deed, being 11 December 2017, or alternatively the repayment date under the Deed.[79]
[79] Defence and counterclaim [73] - [79].
In response, McDougall Nominees' case in relation to the Deed of Forbearance is that:[80]
(a)as a matter of proper construction, the Deed of Forbearance only applies to the 2014 and 2015 facility agreements; and
(b)cl 8.1 of the Deed of Forbearance, being a release which on its proper construction had operative effect on and from a future date, is contrary to public policy.
Matters not pursued at trial
[80] Reply and defence to counterclaim [2]; ts 22 April 2024, 201 - 202, 204 - 205.
There were some issues on the pleadings that were not pursued by McDougall Nominees at trial.
First, McDougall Nominees pleaded that a material term of each facility agreement was that the plaintiff would be required to pay an overdrawn account fee and a dishonour fee. McDougall Nominees pleaded that each of these fees were a penalty and also that the Bank had been unjustly enriched by McDougall Nominees' payment of these fees. However, McDougall Nominees did not pursue this issue at trial.[81]
[81] ts 22 April 2024, 174.
Secondly, to the extent the pleadings reveal an issue between the parties as to the precise date each facility agreement was entered into, and therefore the date at which new interest rates would take effect, McDougall Nominees accepted at trial that the correct date was the date identified by the Bank in its defence and counterclaim, being the date McDougall Nominees signed the relevant letter of offer, and not the date of the letter of offer itself.[82]
[82] ts 22 April 2024, 145.
Issues
The following issues arise for consideration in McDougall Nominees' claim:
1.Are the interest rate clauses in each of the facilities void for uncertainty?
2.If the interest rate clauses are not void for uncertainty, has the Bank failed to comply with the terms and conditions in each facility requiring the Bank to notify and/or publish and/or otherwise make the interest rates available?
3.What is the correct construction of the interest rate clauses and has the Bank charged McDougall Nominees the correct interest rate?
4.What is the effect of the Deed of Forbearance?
Evidence
Before considering each of the issues, it is convenient to make some observations regarding the oral evidence given by the two witnesses and to address one further evidentiary issue.
Alistair McDougall gave evidence as to matters including the history of the facilities, his views in relation to the interest payments and why he paid them and the background leading to the Deed of Forbearance. Counsel for Mr McDougall Nominees accepted that Mr McDougall's subjective evidence as to what he intended when signing the Deed of Forbearance is not relevant to the construction of the individual clauses of the Deed. However, Mr McDougall's evidence is relied upon for the purposes of identifying the objective intention of the parties as to what was intended to be covered by the release contained in the Deed of Forbearance.[83]
[83] ts 23 April 2024, 143 - 144.
Counsel for Mr McDougall and McDougall Nominees accepted that at times Mr McDougall was not a reliable witness. That concession is properly made. Mr McDougall frequently did not directly answer questions put to him in cross examination, and instead gave answers or additional information which he clearly felt to be supportive of his case or in a manner that was advocating for his case. On occasions, Mr McDougall declined to make appropriate concessions. However, I do not find that Mr McDougall was deliberately giving false evidence. Rather, I find that Mr McDougall had a tendency to interpret past events and give evidence in a way which he considered to be favourable to his case. Ultimately, Mr McDougall's evidence was only relied upon by the parties in limited respects. The relevance of some aspects of Mr McDougall's evidence is objected to by the Bank. However, the parties agreed that the evidence should be lead, and then considered in the context of the issues ultimately in dispute in my reasons. Given the nature of the trial, including the counterclaim, I considered this to be an appropriate course of action in this case. I have considered aspects of Mr McDougall's evidence, to the extent it is relevant and relied upon, in the context of each of the issues in this case.
Mr Patton gave evidence regarding his signing of the respective Dobbs certificates, and where the information contained in those certificates was sourced. Mr Patton also gave evidence concerning the various base variable interest rate categories offered by the Bank, the credit score needed in order to qualify for the respective base interest rate category and the percentage interest rates that applied to each base interest rate category over the period of time. Mr Patton also gave evidence as to how a person could ascertain what the interest rate was for any base interest rate category at any one time. I found Mr Patton to be a credible and reliable witness. Relevant aspects of Mr Patton's evidence are considered in the context of considering each of the issues in this case.
Finally, it was originally proposed that expert evidence would be called at the trial in relation to the quantification of McDougall Nominees' claim. However, at a pre-trial hearing on 17 April 2024, the parties explained that this expert evidence was directed solely toward the quantification of the amount of interest that McDougall Nominees claimed it should not have paid, if its claims were upheld. It was accepted by both parties that the quantification of that amount (if any) would depend upon my findings as to the construction of the facility documents. The parties therefore submitted that it would be more efficient for this question to be the subject of conferral by the parties after delivery of my reasons, and if differences remained between the parties following that conferral, that further evidence be heard at that later point in time. At the conclusion of that directions hearing, I concluded that this was the appropriate way to proceed. Accordingly, no expert quantification evidence was lead at trial and the need to do so will be further considered in the course of considering my orders following delivery of my reasons for decision.
Issue 1 - are the interest rate clauses void for uncertainty?
The question as to whether the interest rate clauses in the various facility agreements are void for uncertainty first requires consideration of the precise terms of the agreements, and in particular the provisions relating to the payment of interest and amendments or variations to the Bank Facility Terms.
The terms vary depending upon the terms of both the respective letter of offer and which of the relevant Bank Facility Terms are applicable.
Prior to considering the various letters of offer and Bank Facility Terms, it is convenient to first detail the relevant legal principles applicable when interpreting and construing commercial agreements, and the authorities concerning uncertainty.
Legal principles - contractual construction
The legal principles regarding contractual construction are well known, and were recently outlined by Buss P in Wright v Lemon as follows:[84]
[84] Wright v Lemon (as Executor of the estate of Wright) [2024] WASCA 19 [529] - [535] (Vaughan & Hall JJA agreeing) (authorities and citations omitted).
The proper construction of a commercial contract is to be determined objectively having regard to its text, context and purpose or objects. The provisions of the contract are to be understood objectively by reference to what a reasonable businessperson would have understood them to mean. The hypothetical reasonable businessperson must be placed in the position of the parties. The court considers from that perspective the circumstances surrounding the contract and the commercial purpose or objects sought to be achieved by it.
In Electricity Generation Corporation [35], French CJ, Hayne, Crennan and Kiefel JJ made these observations in relation to ascertaining what the hypothetical reasonable businessperson would have understood by the terms of a commercial contract:
[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)
A commercial contract must be construed as a whole. The words of a clause in the contract are to be given the most appropriate meaning which they can legitimately bear. A court must have regard to all of the provisions of the contract with a view to achieving harmony among them. If more than one construction of a clause is open having regard to the text, context and purpose or objects of the contract as a whole, the court will prefer a construction that will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust.
In Fitzgerald v Masters, Dixon CJ and Fullagar J said, '[w]ords may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency'.
Where a word or an expression is defined in a commercial contract the court will give effect to the definition. The proper course is to read the text of the definition into the relevant clause and then to construe the relevant clause having regard to the contract as a whole. Ordinarily, the purpose of a definition in a commercial contract is to attribute the meaning agreed upon by the parties to the relevant word or expression and to avoid unnecessary and lengthy repetition of the text of the definition in the contract.
The surrounding circumstances known to the parties may be used in construing a commercial contract. However, the subjective intentions of the parties may not be used in construing the contract.
The principles that apply in the construction of a contract apply to instruments generally (including deeds), subject to any particular rules of construction which have been developed in relation to a particular kind of provision or instrument.
Legal principles regarding uncertainty
By way of overview, a contract (or an essential term thereof) will be void for uncertainty if:[85]
(a) all the essential and critical terms of the bargain have not been agreed upon; or
(b) the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intention.
[85] Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [6]; Teng v Clark [No 2] [2020] WASC 217 [32] ‑ [35] and the authorities referred to therein.
Uncertainty may arise in a number of different ways, including if the term in question is:[86]
unintelligible; if it is meaningless; if a court is unable to select between a variety of meanings fairly attributable to it, and the circumstances are not such that one or other party to the contract may elect between meanings; where the court is unable to discern the concept which the parties had in mind; or where the terms of the contract require further agreement between the parties in order to implement its terms.
[86] Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339 [96(a)].
There can also be a degree of overlap between intention to create legal relations and uncertainty.[87] However if, as in the present case, there is no challenge to contractual intention, courts should be astute to adopt a construction which will preserve the validity of the contract.[88] A court will also be reluctant to hold a provision in a contract void for uncertainty where the term is contained in a contract which is no longer executory but has been partly performed.[89]
Authorities concerning interest rate clauses and uncertainty
[87] Anaconda Nickel v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 [21] ‑ [33]; Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [137].
[88] Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [7] citing Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571.
[89] York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth [1949] HCA 23; (1949) 80 CLR 11, 53; Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339 [96] - [98] and the authorities cited therein.
The parties referred to a number of authorities that considered the concept of uncertainty in the context of interest rate clauses in loan agreements. Some of those authorities were helpfully summarised by Tottle J in Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh (McCagh) as follows:[90]
[90] Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339 [100] ‑ [104].
There are a number of decisions in which the question of whether terms for the payment of interest in loan agreements or mortgages are void for uncertainty has been considered. In Kabwand Pty Ltd v National Australia Bank Ltd (Kabwand) the borrowers contended that the following term was void for uncertainty:
Interest shall initially be calculated at the rate set out in Item 3 in the Schedule but the Bank may at any time hereafter at its sole discretion vary either by way of increase or decrease the said rate of interest conforming with general movements in the Bank's interest rates without any obligation on the Bank to notify you of such variation.
The court identified three distinct principles that were of potential application. They were expressed as follows:
(a) A failure by parties to a contract to agree upon a fundamental term means that there is no contract at all, a consequence that also arises if the terms they do agree on 'are so vague that no precise meaning can be attributed to them'.
(b) A contract will be unenforceable if one of the parties is left to choose whether or not to perform it though in such a case the court said that the reason why there is no contract may not depend on certainty, rather it is that the consideration given is illusory.
(c) There can be no concluded bargain if a vital matter has been left to the determination of one of the parties.
In Kabwand the court reached the following conclusion:
Whatever may be the case where a loan agreement provides that the lender may select any interest rate it pleases, the present is not that case. Here the rate of increase or decrease of interest must conform to the general rates of interest charged to customers of the bank, that is to say there is an objective market standard to be applied at all times. In these circumstances we do not think that it can be said that any of the three principles sought to be applied have application. As the trial Judge said, and we agree, the present clauses as to interest are 'not to be construed as giving to the cross-claimant a power at large. A borrower may challenge any increase on the basis that it has been fixed otherwise than in conformity with the general movements referred to'.
The principles stated in Kabwand were applied by Adams J in Australian and New Zealand Banking Group Ltd v Fink, who held, on a summary judgment application, that a contractual provision for interest to be charged by reference to an 'ANZ Home Loan Index' was not void for uncertainty.
In Nikoloff v Perpetual Trustee Company Ltd [No 2], the Court of Appeal referred to the discussion of the principles in Kabwand. The Court of Appeal referred in particular to the third principle and held that a term which provided for the payment of interest at the lender's 'specialist lending variable rate' which was defined as 'the rate we publish from time to time as our advertised 'specialist lending variable rate' or a name we substitute for that name' was not void for uncertainty and was not conditioned by an implied term that the contractual power to vary the interest rate was limited to rates set by the Reserve Bank of Australia. In addition to referring to the principles in Kabwand, the Court of Appeal referred to a number of decisions in which it had been held that provisions conferring an open ended and unconfined discretion to vary interest rates without constraint or reference criteria were, or might be, invalid. The Court of Appeal observed:
The above cases support an argument that a contractual provision giving a lender an unfettered power to fix interest rates without constraint or reference criteria (including a lender's own benchmark rates) may be void for uncertainty. The open question of whether or not such a provision is void is not appropriately resolved on a summary judgment application.
However, nothing in those decisions indicates that a lender may not be empowered to vary an interest rate by reference to a general market rate advertised as available to all qualified customers taking up certain categories of loan. As a matter of practice, that is the common means by which financial institutions provide variable interest rate loans.
The acting master found that the present case clearly fell within the category illustrated by the decision in Kabwand, observing:
The 'specialist lending variable rate' does not apply solely to the loan in question but [to] all customers of [Perpetual] taking a loan of the same kind and so, to adopt the language of Kabwand at [50382], this clause requires the interest rate to 'conform to the general rates of interest charged to customers of the bank, that is to say there is an objective market standard to be applied at all times'.
In this case, as in Kabwand, borrowers under a specialist lending variable rate 'may challenge any increase in the rate of interest applied on the basis that it has been fixed otherwise than in conformity with the general movements referred to'. It follows that it is not arguable that the provisions of the loan agreement as to interest are void for uncertainty. (citations omitted)
We see no error in that approach. The acting master correctly held that the provisions for interest are not arguably void for uncertainty.
McCagh itself concerned the same Bank as in the present case, and also involved term and trading limit facilities for the purposes of farming activities. In McCagh, whilst the defendant borrowers were originally represented and filed pleadings, the defendants later ceased being represented and did not attend or participate in the trial. The Bank sought vacant possession and judgment in the sum of the unrepaid loan amounts plus interest.
On the pleadings, the principal ground of defence in that case was that the interest rate clauses were void for uncertainty. The defendants' case in McCagh was that:[91]
(a) one of the specific Bank base interest rates referred to in the facilities, being the 'variable secured seasonal rate' did not exist as the Bank did not publish or offer a variable rate of interest to its customers titled 'variable secured seasonal rate of interest';
(b) the 'variable secured seasonal rate' and the other Bank base interest rate referred to in the facilities, being 'the seasonal account secured basic rate', were varied without notice to the defendants;
(c) neither the 'variable secured seasonal rate' nor 'the seasonal account secured basic rate' were capable of being determined by the defendants by reference to any document published or produced by the Bank and the 'seasonal account secured basic rate' was incapable of being determined by the defendants by reference to any formula that was published, produced or made available to the defendants; and
(d) as a consequence of (a) to (c) the provision for interest in the Bank's letters of offer was void for uncertainty.
[91] Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339 [93].
Tottle J explained the defendants' case in McCagh as follows:[92]
The defendants' pleaded contentions were directed primarily to engaging the first and third principles stated in Kabwand. Thus, the defendants contended in effect that in the absence of an interest rate in RBL's records answering the description 'variable secured seasonal rate', the term for payment of interest at 'the Bank's variable secured seasonal rate' less a margin was unenforceable because the expression had no meaning. Secondly, the defendants contended the absence of a reference in the Trading Limit Facility to any objective criteria governing the variation of interest rates meant that RBL had an open ended and unconfined discretion to vary interest rates, the effect of which was there was no concluded bargain in relation to interest.
[92] Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339 [118].
Tottle J concluded that each of the Bank base interest rates were a general market rate available to customers who wanted a facility of the nature to which the base rate applied, and who satisfied the relevant credit criteria for such a facility. Tottle J also concluded that any uncertainty surrounding the description of the base interest rate was overstated; that a similarly worded base interest rate existed; and the interest rates being charged by the Bank to the borrowers matched this base interest rate.[93]
[93] Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339 [110].
Tottle J concluded that the Bank's discretion to vary the interest rate under the trading limit facility was not at large and the interest rate could only be varied in accordance with variations in the base rates that governed the rate of interest charged to customers with facilities to which those base rates applied.[94]
[94] Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339 [124].
Finally, in relation to the question of the lack of notice, Tottle J concluded that:[95]
(a)the absence of notice by the Bank to the defendants of the variations in the Bank base interest rates did not make the interest rate terms uncertain;
(b)the terms did not, in any event, require notice of variation in the interest rates to be given to the defendants; and
(c)as the defendants did not participate in the trial, there was no evidence that notice was not given by the Bank. In any event, any absence of notice was 'perhaps relevant only' to the defendants' further claims of misleading and deceptive conduct or statutory unconscionability. Given the defendants also received monthly statements from the Bank which clearly stated the rate at which interest was being charged (and from which variations could be discerned) any lack of notice was only of limited significance.
[95] Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCagh [2022] WASC 339 [125].
In ANZ Banking Group Ltd v Fink,[96] Adams J considered the application of the principles detailed in Kabwand Pty Ltd v National Australia Bank Ltd[97] and concluded that an interest rate clause which contained a variable rate expressed as 'the ANZ Home Loan Index … less an interest margin of 0.7% per annum' was not uncertain. Adams J reasoned as follows:[98]
Since the Index obviously does not apply solely to the loan in question but to all customers of ANZ taking a loan of the same kind, to adopt to the language of Kabwand at [50382] this clause requires the interest rate to 'conform to the general rates of interest charged to customers of the bank, that is to say there is an objective market standard to be applied at all times'. ANZ was not able to exercise an unfettered discretion to charge whatever rate it wished and, as the trial judge said in Kabwand (ibid at [50382]), the borrowers, 'may challenge any increase on the basis that it has been fixed otherwise than in conformity with the general movements referred to.'
[96] ANZ Banking Group Ltd v Fink [2013] NSWSC 1781.
[97] Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950.
[98] ANZ Banking Group Ltd v Fink [2013] NSWSC 1781 [23].
Whilst in Kabwand, Nikoloff v Perpetual Trustee Co Ltd [No 2],[99] McCagh and Fink the respective interest rate clauses were not void for uncertainty, the position has not been the same on other occasions.
[99] Nikoloff v Perpetual Trustee Co Ltd [No 2] [2022] WASCA 16.
McDougall Nominees referred to the decision of Nikoloff v St George Bank - A Division of Westpac Banking Corporation,[100] in which the appellant borrower successfully appealed a decision to refuse to set aside the respondent bank's order for summary judgment in a mortgagee possession action. Whilst a number of the submissions advanced by the appellant were rejected, the Court of Appeal ultimately decided that it could not be concluded that there was no real question to be tried as to the bank's preferred construction of its power to change the interest rate charged under the loan agreement. The Court of Appeal concluded that there was a real question to be tried as to whether bank enjoyed an unfettered discretion to change the interest rate charged to the appellant from time to time without constraint or objective reference criteria.[101] As the appeal concerned a summary judgment application, the Court of Appeal did not go on to form any final conclusions as to the appropriate construction of the interest rate clause in that case. However, McDougall Nominees relies on this case for two purposes, being (a) that it is at all times necessary to have regard to the wording of the particular clause and (b) that the present case is another example of there being an unfettered discretion to change the interest rate without regard to objective criteria.[102]
[100] Nikoloff v St George Bank - A Division of Westpac Banking Corporation [2022] WASCA 17.
[101] Nikoloff v St George Bank - A Division of Westpac Banking Corporation [2022] WASCA 17 [46] ‑ [47].
[102] ts 22 April 2024, 134 - 136.
Public policy issue
McDougall Nominees' case is that the release does not take effect until a time in the future. This much may be accepted and is consistent with the wording of cl 8.1 of the Deed of Forbearance, which provides that the release does not come into operation until the expiry of the Forbearance Period.
McDougall Nominees accepts that a deed of release can release a future claim.[168] However, McDougall Nominees submits that the wording of cl 8.1 is such that there is a period of time between the execution of the Deed of Forbearance, and the date upon which the release takes effect, and that cl 8.1 purports to release future potential breaches by the Bank during this period of time.
[168] ts 26 April 2024, 418.
McDougall Nominees submits that to do so is contrary to public policy as the effect of cl 8.1 is for the Bank to decide upon questions of future potential breaches by the Bank under the facility documents and the Deed of Forbearance, and in doing so oust the jurisdiction of the court to determine those future disputes. That is, cl 8.1 contains an impermissible stipulation that the parties will not resort to the jurisdiction of the court on questions relating to the performance of the facility documents and the Deed of Forbearance, including on questions of law, arising during this period.
In support, McDougall Nominees relies on the decisions of Dobbs v National Bank of Australasia Ltd[169] and Zeke Services Pty Ltd v Traffic Technologies Ltd,[170] each of which provide that an agreement not to sue on a contract is void, and go on to consider the application of this principle to various examples.
[169] Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643, 652 - 653 and 656.
[170] Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135; [2005] 2 Qd R 563.
I do not accept that cl 8.1 ousts the jurisdiction of the court in any way. There is nothing in the wording of the clause that purports to prevent the court from considering any action commenced by the Obligors alleging a breach of the terms of the facility documents or the Deed of Forbearance (or any other claim by the Obligors against the Bank) during this period of time. There is also nothing in the wording of cl 8.1 that purports to prevent the court from considering the effect of the release contained in cl 8.1 in the context of any such claims (if pleaded in response). Neither Dobbs v National Bank of Australasia Ltd[171] and Zeke Services Pty Ltd v Traffic Technologies Ltd[172] are inconsistent with this conclusion.
[171] Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643, 652 - 653 and 656.
[172] Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135; [2005] 2 Qd R 563.
In any event, in the present case, it is not alleged by McDougall Nominees that the Bank breached the terms of the facility documents or the Deed of Forbearance in the period of time between signing the Deed of Forbearance and the expiry of the Forbearance Period which raises a question regarding the construction of the facility documents or the Deed of Forbearance.
Conclusion
For the above reasons, in the event that McDougall Nominees had established any of its claims against the Bank, I would have been satisfied that McDougall Nominees released the Bank in relation to these claims in the Deed of Forbearance, and that this is a complete defence by the Bank to McDougall Nominees' claims.
Counterclaim
The Bank counterclaims seeking:
(1)judgment against McDougall Nominees, Brook View and Alistair McDougall, in the amount of:[173]
(a)$505,174.97 (plus interest) being the debt owed by McDougall Nominees on the Term Facility; and
(b)$2,570,801.42 (plus interest and certain costs) being the amount owed by McDougall Nominees on the Trading Limit Facility; and
(2)vacant possession of the McDougall Nominees - Narrogin Properties and the Brook View - Narrogin and Pingrup Properties.
[173] These being the final figures as contained in the Dobbs certificates.
The defendants to the counterclaim are McDougall Nominees, Brook View and Alistair McDougall. All three were represented by the same solicitors and counsel. For ease of reading in these reasons, I will refer to the McDougall Parties when I am referring to the position and submissions of all three defendants to the counterclaim. I will refer to the individual defendants to the counterclaim by their own names when I am referring to an individual defendant to the counterclaim.
McDougall Parties' case
The McDougall Parties' defence to the counterclaim consists of two submissions:
(1)the claims made by McDougall Nominees in its case against the Bank in relation to the interest rate clauses of each of the facility agreements, being that the interest clauses are void for uncertainty, or alternatively that the Bank failed to notify McDougall Nominees of the various changes in interest rates in accordance with the terms. The McDougall Parties rely on this in defence to both the vacant possession and liquidated debt claims, including as one reason why it says both Dobbs certificates are incorrect; and
(2)that the Bank cannot rely upon the Dobbs certificate for the Trading Limit Facility to prove its claim for a debt for a second reason, being that the McDougall Parties are able to show that there is an error in certificate as it includes legal fees which they submit McDougall Nominees is not required to pay.
The McDougall Parties accept that the first aspect of their defence goes no further than the various matters of construction McDougall Nominees has raised in its case against the Bank. The McDougall Parties accepts that if I find against McDougall Nominees on these matters of construction, then this aspect of their defence to the counterclaim will fail.[174] For the reasons outlined earlier, I have found against McDougall Nominees in relation to its construction claims and therefore I also find against the McDougall Parties in relation to this aspect of their defence to the counterclaim.
[174] ts 26 April 2024, 426 - 427.
In relation to the second aspect of their defence, the McDougall Parties submit that the Dobbs certificate in relation to the Trading Limit Facility is incorrect, as the Bank has impermissibly charged legal fees it incurred in respect of Family Court proceedings between Alistair McDougall and Judith McDougall, to which the Bank was joined, along with McDougall Nominees. This aspect of the McDougall Parties' defence only relates to the Dobbs certificate concerning the Trading Limit Facility, as this was the facility to which the Family Court legal fees were debited by the Bank.
The Bank's claim for a liquidated sum
Dobbs certificates
The Bank relies upon two 'Dobbs certificates' to prove its claim for the amounts due under the facilities. The Dobbs certificates are provided for in cl 13.1 of the 2012 Bank Facility Terms, which provides as follows:
A certificate signed by the Bank or any authorised officer stating an amount owing to the Bank at a particular date or as to any other matter or thing, is conclusive evidence against the borrower and the guarantor (as the case may be) unless proved incorrect.
There are clauses to similar effect in cl 13.1 of the 2010 Bank Facility Terms; cl 11.1 of the Guarantee;[175] and cl 19 of each Memorandum of Common Provisions applicable to the various mortgages.[176]
[175] Exhibit 50.
[176] Exhibits 84 and 85.
Mr Patton signed two such certificates - one concerning the Term Facility dated 15 April 2024,[177] and one concerning the Trading Limit Facility dated 19 April 2024.[178] Mr Patton's job title is that of Manager, Asset Management and therefore he is an authorised officer of the Bank for the purposes of the various clauses providing for the Dobbs certificates.
[177] Exhibit 88.
[178] Exhibit 89.
The use of the term 'Dobbs certificate' is derived from the decision of the High Court in Dobbs v National Bank of Australasia Ltd.[179] In that case, the High Court concluded that a contractual provision which made the certificate of some person conclusive of some possible question did not constitute an attempt to oust the jurisdiction of the court. Referring to a clause expressed in terms very similar to cl 13.1 of the 2012 Bank Facility Terms, Rich, Dixon, Evatt and McTiernan JJ concluded:[180]
The bank could recover without the production of a certificate if, by ordinary legal evidence, it proved the actual indebtedness of the customer. But the clause, if valid, enables the bank by producing a certificate to dispense with such proof. It means that, for the purpose of fixing the liability of a surety, the customer's indebtedness may be ascertained conclusively by a certificate. It was contended, however, for the appellant that, upon its true construction, the clause did not make the certificate conclusive of the legal existence of the debt but only of the amount. It is not easy to see how the amount can be certified unless the certifier forms some conclusion as to what items ought to be taken into account, and such a conclusion goes to the existence of the indebtedness. Perhaps such a clause should not be interpreted as covering all grounds which go to the validity of a debt; for instance, illegality, a matter considered in Swan v. Blair. But the manifest object of the clause was to provide a ready means of establishing the existence and amount of the guaranteed debt and avoiding an inquiry upon legal evidence into the debits going to make up the indebtedness. The clause means what it says, that a certificate of the balance due to the bank by the customer shall be conclusive evidence of his indebtedness to the bank. (citations omitted)
[179] Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643.
[180] Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643, 651.
A Dobbs certificate is conclusive as to both the legal existence of the debt and of the amount owing,[181] and the onus lies on the McDougall Parties to demonstrate by acceptable evidence that the certificate is incorrect.[182] This was accepted by the McDougall Parties.[183]
Term Facility
[181] Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214 [39] ‑ [43]; Rural Bank (A Division of Bendigo and Adelaide Bank Ltd v McCagh [2022] WASC 339 [131] ‑ [136]; Bank of Western Australia v Abdul [2012] VSC 222 [16] ‑ [19].
[182] Collopy v Commonwealth Bank of Australia [2019] WASCA 97 [58]; George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434; (2015) 303 FLR 231 [247].
[183] ts 26 April 2024, 419 - 420.
In the certificate concerning the Term Facility, Mr Patton certifies that as at 15 April 2024:
(a)the amount payable by McDougall Nominees and the guarantors to the Bank under the Term Loan Facility, the various mortgages, the various charges and the Guarantee is $505,174.97;
(b)interest continues to accrue on the amount referred to in paragraph (a) above in the sum of $156.66 per day at the rate of the Bank's basic standard variable rate less a margin of 5.90% per annum;
(c)the Bank's basic standard variable rate varied as set out in the rate change history chart attached to the certificate; and
(d)the Bank caused demands dated 13 June 2017 to be issued and served in accordance with the terms of the Guarantee and the various mortgages, and the guarantors did not pay the amount demanded then in the sum of $4,352,999.00.
As there is no further challenge to the Dobbs certificate for the Term Facility, I therefore find that on 15 April 2024, the McDougall Parties were indebted to the Bank in the sum of $505,174.97 and interest has continued to accrue on that sum at a daily rate of $156.66 per day at the rate of the Bank's basic standard variable rate less a margin of 5.90% per annum.
Trading Limit Facility
The certificate concerning the Trading Limit Facility, is in similar terms, and Mr Patton certifies that as at 19 April 2024:
(a)the amount payable by McDougall Nominees and the guarantors to the Bank under the Trading Limit Facility Agreement, various mortgages, the various charges and the Guarantee is $2,570,801.42 (excluding legal costs and other expenses incurred by the Bank from 1 April 2024 which are to be debited to the Trading Limit Facility);
(b)interest continues to accrue on the amount referred to in paragraph (a) above at the rate of the Bank's seasonal account secured basic rate less a margin of 3.90% per annum, being, as at the date of the certificate, the sum of $922.81 per day;
(c)the Bank's seasonal account secured basic rate varied as set out in the rate change history chart attached to the certificate; and
(d)the Bank caused demands dated 13 June 2017 to be issued and served in accordance with the terms of the Guarantee and the mortgages, and the guarantors did not pay the amount demanded then in the sum of $4,352,999.00.
Challenge to the Trading Limit Facility Dobbs certificate
The McDougall Parties challenge the correctness of the Dobbs certificate for the Trading Limit Facility on the basis that the amount certified includes legal fees incurred by the Bank in the Family Court proceedings between Mr and Mrs McDougall.
Mr Patton gave evidence that the Bank engaged Corrs Chambers Westgarth to act on its behalf in the Family Court proceedings; the Bank was joined to those Family Court proceedings by Mrs McDougall; Mrs McDougall was seeking to be discharged from the Guarantee; Corrs Chambers Westgarth charged the Bank legal fees; those legal fees were then charged against the Trading Limit Facility; and those legal fees are included in the amount claimed in the Dobbs certificate signed by Mr Patton.[184]
[184] ts, 24 April 2024, 328 - 330, 355 - 356.
The McDougall Parties submit that these are not costs which are payable by McDougall Nominees. The Bank submits that these costs fall within the scope of cl 3.7(e) of the 2012 Bank Facility Terms and are payable by McDougall Nominees, and therefore there is no error in the Dobbs certificate.
The resolution of this question is a matter of construction of the 2012 Bank Facility Terms. Clause 3.7 relevantly provides as follows:
The borrower must pay on demand all other costs, charges, duties and expenses including reasonable legal costs (on a full indemnity basis), registration costs, discharge costs, stamp duty, government charges, court fees and valuation costs specified in any relevant document or which are incurred by the Bank in connection with:
…
(e)the enforcement and attempted enforcement or preservation by the Bank of its rights under any relevant document or any material document, including any legal recovery costs (such as mediation costs) and any costs associated with restructuring or amending the facilities;
The term 'relevant document' is defined in cl 15.1 as including the 'securities', which is in turn defined as:
any security agreement, mortgage, charge, lien, indemnity, guarantee, guarantee and indemnity and other security interest described in the letter of offer or held by the Bank which secures or guarantees an obligation or liability of the borrower or a guarantor to the Bank together with any document required in connection with, or to give effect to, a transaction contemplated by any of them.
The Bank submits that the Family Court legal fees fall within cl 3.7(e) of the 2012 Bank Facility Terms as the costs were incurred by the Bank in the enforcement and attempted enforcement or preservation by the Bank of its rights under the securities and the Guarantee.
The McDougall Parties submit that the dispute between Mrs McDougall (as guarantor) and the Bank in the Family Court proceedings is a separate dispute to that between the Bank and McDougall Nominees and is governed by the terms of the Guarantee, and does not concern McDougall Nominees' obligations as borrower. Accordingly, the McDougall Parties submit that the costs incurred by the Bank in relation to that separate dispute are not costs which McDougall Nominees, as borrower, is required to pay under cl 3.7(e) of the 2012 Bank Facility Terms.
Further, the McDougall Parties rely on cl 5.5 of the Guarantee, which provides that the guarantor must pay to the Bank reasonable legal costs (on a full indemnity basis) incurred by the Bank in connection with various matters including the exercise or attempted exercise or preservation by the Bank of its rights under the Guarantee.
The McDougall Parties submit that it is not a commercially sensible construction to load a borrower who is complying with all of their obligations with the costs associated with a guarantor's actions alone, over which it has no control and in circumstances which have nothing to do with the borrower's obligations, and in circumstances where the Bank may recover those costs from the guarantor. The McDougall Parties submit that it is a commercially absurd construction to construe cl 3.7(e) in this manner.[185]
[185] ts 26 April 2024, 424.
I do not accept the McDougall Parties' submission.
I am satisfied that on the plain meaning of the text of cl 3.7(e) of the 2012 Bank Facility Terms (when read with the relevant definitions) that the legal fees incurred by the Bank in the Family Court proceedings fall within the scope of that subsection. The Bank was joined to the Family Court proceedings in which Mrs McDougall was seeking to be discharged from the Guarantee. In these circumstances, the Bank's involvement in those proceedings, and in incurring legal fees, can properly be described as being incurred by the Bank in connection with the enforcement and attempted enforcement or preservation by the Bank of its rights under the Guarantee. The Guarantee is a relevant document under cl 3.7 of the 2012 Bank Facility Terms.
The Bank's construction is consistent with the plain text of cl 3.7(e) and is not inconsistent with any of the other provisions of the 2012 Bank Facility Terms. The provision of a guarantee was one of the requirements of the Bank providing the financial accommodation. A similar clause to cl 3.7(e) can also be found in the various mortgages,[186] and the Guarantee contains a provision requiring the guarantor to pay the Bank's reasonable legal expenses incurred in connection with the exercise or attempted exercise or preservation by the Bank of its rights under the Guarantee. The effect of these documents as a whole is to ensure that the Bank is not out of pocket any costs or legal expenses associated with providing the financial accommodation.
[186] Exhibit 84, cl 17; Exhibit 85, cl 18.
There is nothing uncommercial about the Bank's construction or anything commercially absurd about this construction. Rather, it is consistent with the commercial approach being adopted that in consideration for the Bank providing the financial accommodation, it would not be out of pocket any costs and expenses, including legal expenses, associated with providing the financial accommodation.
Finally, there is no dispute that the legal costs were incurred by the Bank. Whilst Mr Patton was cross‑examined as to whether the Bank had provided any evidence that the legal fees were reasonable, there is no claim by the McDougall Parties that the legal fees were not reasonable, and no evidence has been led in that regard by the McDougall Parties.
In these circumstances, I find that the McDougall Parties have not discharged its onus of proving that the Dobbs certificate is incorrect.
Trading Limit Facility - conclusion
I therefore find that on 19 April 2024, the McDougall Parties were indebted to the Bank in the sum of $2,570,801.42 (excluding legal costs and other expenses incurred by the Bank from 1 April 2024 which are to be debited to the Trading Limit Facility), and interest has continued to accrue on that sum at the rate of the Bank's seasonal account secured basic rate less a margin of 3.90% per annum, being, as at the date of the certificate, the sum of $922.81 per day.
Supplementary submissions post-trial
During its oral closing submissions on the counterclaim, the McDougall Parties submitted that if they were successful in demonstrating that the Dobbs certificates were wrong, then the Bank's claim for vacant possession would also fall away.[187]
[187] ts 26 April 2024, 426 and 447 - 448.
During its oral closing submissions on the counterclaim, the Bank submitted that its case regarding vacant possession was independent of its claim for a liquidated debt.[188]
[188] ts 26 April 2024, 432.
At the conclusion of oral closing submissions on 26 April 2024, I reserved my decision.
On 29 April 2024, after I reserved my decision, the Bank filed submissions seeking leave to rely on additional written submissions (which were included). The McDougall Parties sought leave to file written submissions in response, which was granted, and then an oral hearing was held on 14 June 2024.
At that hearing, it became apparent that the parties had filed submissions about two different points. The Bank's submissions[189] addressed the oral submission made by counsel for the McDougall Parties that if they were successful in proving the Dobbs certificates were incorrect, then the Bank's application for vacant possession would fall away. The Bank's submissions dealt with whether this was a fundamental departure from how the McDougall Parties had run their case, and submitted that the Bank was not prevented from establishing vacant possession based on the other documents tendered, including the admissions contained in the statement of agreed facts.
[189] Defendant's/plaintiff's by counterclaim application for leave to make supplementary submissions and proposed supplementary submissions in response to submissions made by the plaintiff/defendants by counterclaim in reply in closing address, dated 29 April 2024.
However, the McDougall Parties' submissions[190] addressed whether the Bank was entitled to prove the quantum of its claim for a liquidated debt by a means other than the Dobbs certificates. This was also a matter on which the parties made oral closing submissions. The Bank submitted that it could prove its case (at least in relation to its claim for a money judgment for the amount owing on Trading Limit Facility) by relying on the bank statements and other documents. The McDougall Parties, in turn, submitted that the Bank ought not be permitted to do so as it had opened its case on the basis that it would rely on the Dobbs certificates, and the McDougall Parties had made forensic decisions on that basis. I note that at times the McDougall Parties have described this part of the Bank's claim as being a claim for damages. It is not a claim for damages. It is and has always been a claim for a liquidated debt.
[190] Plaintiff's/first to third defendants' by counterclaim submissions in response to defendant's/plaintiff's by counterclaim application for leave to make supplementary submissions, dated 7 June 2024.
Both parties agreed that as the need to consider the Bank's application for leave to make further submissions would depend upon the findings I made regarding the Dobbs certificates, and even then would require me to consider all the matters raised in the written submissions, that the appropriate course was to reserve my decision in relation to the Bank's application and determine it (if necessary) in my final written reasons.
For the reasons I have outlined above, I have found that the McDougall Parties have not discharged their onus of proving that the Dobbs certificates were incorrect. Accordingly, no question arises as to the ability of the Bank to prove the quantum of its claim for a liquidated debt based on the documents tendered and admissions made.
As to the question of the Bank's claim for vacant possession, the McDougall Parties submitted in their oral closing submissions on the counterclaim (both in 'chief' and in 'reply') that the Bank's claim for vacant possession would fall away and have no purpose if the McDougall Parties succeeded in proving the Dobbs certificates to be incorrect:[191]
Paragraph 25 of the [Bank's written closing] submissions says the bank has not sought to prove the precise quantum of its debt other than way of Dobbs certificate. However, the bank's claim for vacant possession does not depend on quantification of the debt.
…
We say that, ultimately, your Honour, if the Dobbs certificate fails, and the bank hasn't proved an amount owing, then the vacant possession falls away, and the bank's security should be released over the properties. That's – I don't think them having vacant possession over a claim and they haven't been able to establish damages is an answer because vacant possession and selling the property is in relation to recover a debt. If it doesn't have a debt, then it can't take those enforcement steps.
…
Well, at the end of the day, we say once the Bank – the Bank proves no loss, at zero. Well, what has it got vacant possession to do? So it comes back to that issue to say it is completely void. Now, for example, your Honour, if my learned friend's argument about the term facility is correct and my construction point is wrong and there's a $500,000 debt there, because the legal fees don't affect that.
Then, you know, it flows from that because there's a debt owed, subject to whatever – if my client has got anywhere with its construction arguments, then there might be an offset in there, but that's an issue for another day. But we say we're materially prejudiced for the Bank now to say, 'We can elect to go get a money judgment,' because we've run a case based on a particular way that has been understood and opened on
[191] ts 26 April 2024, 426 and 447 - 448.
It is not clear to me that, even if the McDougall Parties had been successful in proving the Dobbs certificate for either of the facilities to be incorrect, that this necessarily means that the Bank's claim for vacant possession 'falls away' or has no work to do. Further, the legal basis upon which the McDougall Parties submit that the claim for vacant possession was 'completely void' was not explained.
For the reasons set out below, I am satisfied that the Bank has proven its case in relation to vacant possession of the various properties.
I am also satisfied that the parties proceeded on the basis that the Dobbs certificate would be relied on by the Bank to prove the existence of the McDougall Parties' indebtedness and the quantum of its claim; and that aside from McDougall Nominees' submissions regarding the construction of the interest rate clauses, and the specific issue regarding the accuracy of the Trading Limit Facility Dobbs certificate, there was no dispute as to the existence and non‑payment of demands from the Bank, or the existence or enforceability of the securities.[192]
[192] Plaintiff's/first to third defendants' by counterclaim opening submissions, dated 8 April 2024 [27] and [33]; ts 22 April 2024, 167 - 168, ts 24 April 2024, 282, ts 26 April 2024, 446; Defendant's/plaintiff's by counterclaim outline of closing, dated 15 April 2024 [25]; Exhibit 83.
For these reasons, although it is not necessary for me to determine this issue as raised by the McDougall Parties, my preliminary view is that even if the Bank had not been successful in its claim for a liquidated debt, it could still have proceeded to prove its case for vacant possession.
The Bank's claim for vacant possession
The Bank's claim for vacant possession proceeds on the basis that:
(a)by way of the 30 January 2014 letter of offer, as varied by the 5 June 2014 letter of offer and the 13 May 2015 letter of offer, the Bank entered into a written loan agreement by which the Bank agreed to (and did) provide financial accommodation to McDougall Nominees in the form of the Term Facility and Trading Limit Facility;
(b)the facility limit for the Term Facility was $3,070,000 and McDougall Nominees was required to repay the amount advanced on 24 April 2016;
(c)the facility limit for the Trading Limit Facility was $1,200,000 after 1 March 2016, and McDougall Nominees was required to repay the amount advanced on the earlier of:
(i)31 March 2016; or
(ii)the date specified in a notice given by the Bank requiring repayment; or
(iii)the date of a demand made by the Bank for repayment of the occurrence of an event of default;
(d)the Guarantee and the mortgages and charges referred to earlier in these reasons were entered into in relation to the various properties identified for the purposes of securing the financial accommodation advanced to McDougall Nominees;
(e)on or around 16 February 2017, the Bank issued to the McDougall Nominees the notice of demand referred to earlier in these reasons, and McDougall Nominees failed to pay to the Bank the amounts specified in that notice of demand;
(f)on or around 30 May 2017, the Bank issued to McDougall Nominees the second notice of demand referred to earlier in these reasons, and McDougall Nominees failed to pay to the Bank the amounts specified in that demand;
(g)on or around 13 June 2017, the Bank issued to the McDougall Parties the notices of demand referred to in these reasons, and the McDougall Parties failed to pay to the Bank the amounts specified in those respective notices of demand;
(h) on or about 3 October 2017, the Bank and the McDougall Parties entered into the Deed of Forbearance. By letter dated 11 December 2017, the Bank sent a notice of default to McDougall Nominees. Further, McDougall Nominees did not repay the amount owing under the facilities by the extended due date of 28 February 2018;
(i)on or about 14 May 2019, the McDougall Parties sold and settled their respective interest in the properties in Lake King and the Bank applied the net proceeds of those sales in part satisfaction of the amounts owing on the Term Facility and the Trading Limit Facility;
(j)the failure of the McDougall Parties to pay the amounts demanded by the Bank constituted an event of default on the part of the respective McDougall Parties under the respective mortgages and charges; and
(k)upon the occurrence of an event of default under the respective mortgages and charges, the Bank is entitled to exercise the power to take possession of the whole or any part of the McDougall Nominees - Narrogin Properties and the Brook View - Narrogin and Pingrup Properties.
Subject to the McDougall Parties' defences, which I have dismissed, there is no remaining dispute as to any of the matters contained in the previous paragraph.
Whilst there has been part payment of the amount demanded following the sale of the Lake King properties, the onus was on the McDougall Parties to allege and prove payment of the amount demanded.[193] The McDougall Parties did not plead or attempt to prove that they had fully discharged their obligation to make repayment of the financial accommodation to the Bank.
[193] Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560, 569 - 570.
In these circumstances, I find that McDougall Nominees is required to give vacant possession of the McDougall Nominees - Narrogin Properties to the Bank and that Brook View is required to give vacant possession of the Brook View - Narrogin and Pingrup Properties to the Bank.
Conclusion
For the above reasons, McDougall Nominees' action should be dismissed, and judgment entered for the Bank on its counterclaim. I will hear further from the parties as to the precise orders to give effect to my reasons, and as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
HY
Associate to the Honourable Justice Seaward
15 AUGUST 2025
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