Arwon Finance Pty Ltd v Wilson - [2019] WASC 244

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   ARWON FINANCE PTY LTD -v- WILSON [2019] WASC 244
CORAM:   KENNETH MARTIN J
HEARD:   29 & 30 APRIL 2019
DELIVERED          :   5 JULY 2019
FILE NO/S:   CIV 2225 of 2017
BETWEEN:   ARWON FINANCE PTY LTD
Plaintiff
AND
FRANK CULLITY WILSON
Defendant

Catchwords:

Loan - Recovery action - Promissory estoppel - Defence - Evaluation of estoppel requirements - Assumption held regarding recovery and recourse to security by foreclosure - Express terms of loan agreement - Insider's corporate knowledge of recovery policy used to found assumption by ex-director and senior administrator - Failure to establish representation or reliance on assumption - No position of detriment established

Legislation:

Corporations Act 2001 (Cth)

Result:

Judgment for the plaintiff

Category: B

Representation:

Counsel:

Plaintiff	:	Mr S K Dharmananda SC & Mr V N Ghosh
Defendant	:	Mr I R Pike SC & Mr T C Russell

Solicitors:

Plaintiff	:	Allens
Defendant	:	McInnes Wilson Lawyers

Case(s) referred to in decision(s):

Australian Goldfields NL v North Australian Diamonds [2009] WASCA 98; (2009) 40 WAR 191
Bell Group Ltd (in liquidation) v Westpac Banking Corporation [No 9] [2008] WASC 239; 39 WAR 1
Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2014] WASCA 180; (2014) 47 WAR 522
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1
Grundt v The Great Boulder Proprietary Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641
Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160
Legione v Hateley (1983) 152 CLR 406
Merilla Pty Ltd v Commonwealth of Australia [2015] WASC 309
State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Westpac Banking Corporation v The Bell Group (in liq) [No 3] [2012] WASCA 157; (2012) 44 WAR 1
Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] AC 741

TABLE OF CONTENTS

Introduction

The Loan

Background to the proceedings

The last defence: promissory estoppel

Personal insights to the defendant - Mr Wilson

Quintis and Arwon

Mr Wilson's 'recoverability assumption'

The pleadings

Promissory estoppel defence - 3FAD plea 2(a)(i)

Promissory estoppel defence – 3FAD pleas 2(a)(ii) and (iii)

Promissory estoppel defence - 3FAD plea 2(b)

Promissory estoppel defence - 3FAD plea 2(c)

Promissory estoppel defence - 3FAD plea 2(d)

Equitable (promissory) estoppel: basic principles

Key facts and materials underlying the present dispute

ATO private taxation ruling sought by Mr Wilson

The Policy of Arwon (codified in 2013)

The terms of Mr Wilson's Loan Agreement with Arwon

Further trial evidence of Mr Wilson

Mr Wilson's evidence-in-chief

Background and the structure of Arwon and Quintis

The Loan

Change in Quintis strategy regarding direct ownership of sandalwood plantations

Implementation of foreclosure strategy

The Arwon Loan Policy document

High net worth individuals and a put option

No distinction between sophisticated and retail borrowers

Enforcement of…

Grounds of appeal

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

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

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

Consideration

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

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

Keep reading for free

Create a free CaseChat account to read Arwon Finance Pty Ltd v Wilson and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2019] WASC 244
Decision Date: 5 JULY 2019

CaseChat Overview and Summary

Arwon Finance Pty Ltd, the plaintiff, filed a recovery action against Wilson, the defendant, in relation to a loan. The case concerned the application of promissory estoppel as a defence by Wilson, who was an ex-director and senior administrator of a company that had taken out the loan. The court had to determine whether Wilson could rely on promissory estoppel to prevent Arwon Finance from recovering the loan and resorting to security by foreclosure. The legal issues focused on whether Wilson's assumption about the recovery policy was induced by Arwon Finance, whether Wilson relied on this assumption to his detriment, and whether it would be unconscionable for Arwon Finance to ignore this assumption.

The court examined the six criteria for promissory estoppel as outlined by Owen J in Bell Group Ltd (in liquidation) v Westpac Banking Corporation [No9]. Wilson argued that Arwon Finance's insider's knowledge of the recovery policy had induced his assumption. However, the court found that Wilson had failed to establish that Arwon Finance had made a representation or that Wilson relied on any assumption to his detriment. Additionally, Wilson could not demonstrate that his position had been detrimentally affected due to the alleged assumption. Consequently, the court ruled that Wilson could not rely on promissory estoppel as a defence to prevent Arwon Finance from enforcing the loan agreement.

The court concluded that Wilson's defence based on promissory estoppel was unsuccessful. The plaintiff, Arwon Finance, was entitled to recover the loan and resort to security by foreclosure. The court did not find any unconscionable conduct by Arwon Finance that would warrant the application of promissory estoppel. The final orders of the court were that Arwon Finance was entitled to recover the loan amount from Wilson and could proceed with foreclosure on the security provided for the loan.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

In those reasons, I cited a comprehensive explanation of estoppel principles by Owen J in Bell Group Ltd (in liquidation) v Westpac Banking Corporation [No9] [2008] WASC 239; 39 WAR 1 (Bell [No 9]) and commencing as regards equitable estoppel principles at [3535] (page 474 of the WAR). Owen J's reasons at [3539] in turn summarised what his Honour there referred to as a 'seminal description' of the doctrine of promissory estoppel by Brennan J (as he then was) in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, 428. Addressing Brennan J's well known six criteria, Owen J had paraphrased them as follows:1.The plaintiff has assumed that a particular legal relationship then existed between the plaintiff and the defendant or has expected that a particular relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship.2.The defendant has induced the plaintiff to adopt that assumption or expectation.3.The plaintiff has acted or abstained from acting in reliance on the assumption or expectation.4.The defendant knew or intended him to do so.5.The plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled.6.The defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. Within the same reasons Owen J at [3537], from an historical perspective, explained that the decision in Waltons Stores v Maher had seen the High Court of Australia move a step beyond the position it had earlier recognised in Legione v Hateley (1983) 152 CLR 406, by acknowledging an application of the promissory estoppel doctrine to relationships outside a pre‑existing contract. In State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170, 193 McHugh JA (then sitting as a Justice of Appeal in the New South Wales Supreme Court) had anticipated the same extension as an aftermath to Legione v Hateley. Referring to the joint reasons of Mason CJ and Wilson J in Waltons Stores v Maher at page 404, Owen J in Bell [No 9] at [3537] observed that the High Court of Australia had:... identified a common thread from previous authority, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment. The basis for intervention was that one party to a transaction had a basic assumption in relation to which the other party to the transaction had 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left to ignore it', citing Dixon J in Grundt at 675. Their Honours explained that equity comes to the relief of such a plaintiff on the ground that it would be unconscionable conduct on the part of the other party to ignore the assumption.Owen J also noted that the joint reasons of Mason CJ and Wilson J in Waltons Stores v Maher at page 408 said:[T]he doctrine of promissory estoppel extends to the enforcement of voluntary promises on the footing that a departure from the basic assumptions underlying the transaction between the parties must be unconscionable. But mere reliance on an executory promise would not necessarily amount to unconscionable conduct. Something more would be required. That 'something' might be the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of that first party.