Bendigo and Adelaide Bank Limited & ANOR. v Ling - [2016] SADC 34

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
BENDIGO AND ADELAIDE BANK LIMITED & ANOR. v LING
[2016] SADC 34
Judgment of His Honour Judge Slattery
8 April 2016
EQUITY - GENERAL PRINCIPLES - EQUITABLE ASSIGNMENTS
On 29 June 2014 the defendant Mr Ling, a resident of Cairns, Queensland, borrowed $201,000 from Great Southern Finance Pty Ltd (GSF) for the purpose of financing an investment by him in the purchase of 67 wood lots in a managed investment scheme promoted by Great Southern Managers Australia Ltd (GSMAL). The loan was initially for a period of seven years but in 2008, it was extended for a period of a further three years to terminate in 2014. As part of that variation, the defendant agreed to pay an increased level of interest on the outstanding balance of the loan.
On or about 29 June 2014, 67 wood lots consisting of some 0.33 hectares each were transferred to the defendant by GSMAL and as a consequence the defendant obtained and claimed a tax deduction for the 2003/2004 financial year in the sum of $201,000. The defendant intended to achieve both the tax deduction and the reduction of his own marginal tax rate to 30 cents through this investment. He also obtained an ongoing deduction for the interest cost of the loan repayments made by him.
The defendant continued to pay both interest and capital amounts on the loan until 15 December 2009 when he unilaterally terminated the repayments. At that time, he assumed that he was entitled to do so if he assessed that the investment in the wood lots was not successful; this assumption was confirmed by the defendant’s accountant on whose advice on that and on all other topics the defendant relied at the time of the investment in 2004 and the termination of payments in 2009.
In June 2004 the predecessor bank of the plaintiff, Adelaide Bank Limited, entered into a Loan Sales and Service Deed (LSSD) with GSF and ABL Custodians Services Pty Ltd (Custodians) in its capacity as the trustee of the Light House Warehouse Trust No. 7. Under the LSSD, GSF had the right to put all or part of its loan portfolio to the bank for purchase on the basis that the bank would take an assignment of the loans between GSF and nominated borrowers. The arrangement for purchase of the loans from Queensland borrowers was that stamp duty on the assignment could be minimised by a written offer and acceptance by payment by a trust through a trustee.
Under a sale notice dated 21 December 2005, GSF put to Custodians for purchase a bundle of loans, one of which included the loan to the defendant. However at that time, Custodians had retired as trustee of the trust and ABL Nominees Pty Ltd (Nominees) had been appointed trustee of the trust under a Deed of Retirement and Appointment dated 19 July 2005.
On 5 February 2009 GSF, Nominees, GSMAL and the bank executed a Replacement of Servicer Deed which recited the sale of the loans from GSF, gave power to the bank and Nominees to take any action to perfect and protect title to the purchased loans and the bank acquired all of the rights, powers and discretions of GSF as the servicer (which means the rights of management and collection) of the loan under the LSSD.
The defendant was notified of the change of servicer’s entity to the bank by letter of 30 April 2009. The defendant then made payments on the loan to the bank after that date until 15 December 2009. On that date Mr Ling unilaterally decided to withhold any further payments of principal and interest on the loan.
The bank claims for payment of the outstanding loan and interest as the legal assignee of the defendant’s loan or alternatively, as the equitable assignee of the loan given by GSF to the defendant.
Whether, in the context of the contractual arrangements made between the bank and GSF and Custodians, and the change of trustee to Nominees, there should be a rectification of the notice of GSF to Custodians dated 21 December 2005 to remove the name of Custodians and substitute the name of the new trustee, Nominees, as was the parties’ intention?
Whether in the alternative, the proper plaintiff in this action is the plaintiff Custodians as the recipient of the sale notice of GSF dated 21 December 2005?
The defendant contends that:
(a) No loan was ever made by GSF to him or on his behalf and no funds in his name were ever received by GSMAL. As a consequence, there is no perfected transaction for the purchase of wood lots.
(b) If such a loan existed, there was no effective assignment of such a loan to the bank or any entity controlled by the bank;
(c) If there was such an assignment it means that the bank is subject to the equities between GSF and GSMAL that may entitle the defendant to avoid the loan agreement;
(d) A statutory basis exists to set aside the loan transaction under s1022C Corporations Act and s12GM(7) ASIC Act and s87 Trade Practices Act (1975).
(e) In providing the loans, GSF was required to make a Financial Services Licence under s911A Corporations Act because the making of a loan by GSF was the provision of a financial service for s765A, 766A, 766B, 766C, 766D and 766E Corporations Act; and there was no right of restitution belonging to the bank;
(f) The defendant was entitled to an order for rescission of the loan arrangements (with a non-licensee) under s925A Corporations Act;
(g) The bank was in no different position than GSF and GSMAL, the conduct of which should be viewed together and as constituting misleading conduct;
(h) The bank was burdened with the deleterious effect of the conduct of GSF and GSMAL and the defendant was entitled to an order under s87 Trade Practices Act varying the liability of the defendant under the loan contract to nil;
(i) The interest rate charged by GSF on the loan agreement, as established or as varied, was a penalty and is unenforceable.
Held:
1. On 29 June 2004 a loan was provided by GSF to the defendant in the sum of $201,000 under the terms of a loan agreement later executed by the parties;
2. The funds comprising the loan were used by the defendant to purchase wood lots in a managed investment scheme promoted by GSMAL;
3. In December 2009 the defendant breached the terms of the loan agreement by failing or refusing to make payments of principal and interest after that date;
4. The loan taken by the defendant was assigned to the bank under the operation of the LSSD, the GSF sale notice to Custodians of 21 December 2005, the Deed of Retirement and Appointment of Trustee and the Replacement of Servicer Deed;
5. Alternatively, there has been an equitable assignment of the loan to Nominees and the court orders equitable rectification of the notice of sale to substitute the name of Nominees for the name of Custodians and that under the Replacement of Servicer Deed, the right to collect the loan was transferred to the bank;
6. The defendant is indebted to the bank for the amount of its claim plus interest according to the terms of the loan agreement;
7. The assignment of the loan to the bank is not subject to any equities existing by virtue of any connection between GSF and GSMAL and on the evidence before the court, no such equities exist;
8. The District Court has jurisdiction to determine any cause or lis based on the operation of s1022C Corporations Act but not under s12GM(7) ASIC Act; in any event, on the facts of this matter, no remedy is available to the defendant arising from the operation of those provisions and any such claim is time barred under that statute;
9. The District Court does not have jurisdiction to make orders under s1317HA CA in respect of any cause or lis based on the operation of s911A Corporations Act; in any event, based on the facts of this matter, s911A has no operation because GSF was not providing a financial service and any such claim is time barred under that statute;
10. The District Court does not have jurisdiction to make orders under s925A Corporations Act but it retains jurisdiction in law and in equity to make order for rescission; in any event, the defendant was not entitled to an order under s925A Corporations Act or at law or in equity for rescission and any such claim is time barred under that statute;
11. The conduct of GSF and GSMAL considered separately or together was not misleading conduct;
12. The bank is not burdened with any deleterious effect of any of the conduct of GSF or GSMAL separately or together and in any event the bank was an innocent bystander and did not conduct itself in any way that constituted a breach of s52 Trade Practices Act (1975) that gave rise to a right of relief under s87 Trade Practices Act aforesaid; and any such claim is time barred under that statute;
13. The interest rates charged under the loan contract are not a penalty.
14. There has been no unconscionable conduct for s12CC ASIC Act.
PW Young, C Croft and ML Smith, On Equity (2009) [10.160]; District Court Civil Rules Rule 100, Rule 158; Trade Practices Act s51A, s52, s87; Victorian Supreme Court Act s 33V; Law of Property Act 1969 (WA) s 20; Judicature Act 1873 (UK) s 25(6) ; Meagher, Gummow and Lehane: Equity: Doctrines and Remedies, 4th edition p. 892 para 26-050; Law of Property Act 1936 s 15(1); Australian Consumer Law generally; The Corporations Act s50, s50AAA, s50AA, s761G, s763A, s763B, s911A, s1013D(1)(c), s1022B(2), s1022B(6), s1022(3), s1022C, s1101B, s1101H(1), s1101H(2), s1325(5), Division 2 of Part 7.12 of Chapter 7, Division 7 of Part 7.9 of Chapter 7 ; ASIC Act s12CC(1) and (6), s12DA(1), s12EA, s12GF, s12GM(7), Part 2 of Division 2 ; Financial Services Reform Bill 2001 (Cth) paragraph 20.7, referred to.
Aon Risk Services Australia Ltd v Australia National University (2009) 239 CLR 175; Manock v Channel 7 Adelaide Pty Ltd [2010] SASC 198; Channel 7 Adelaide Pty Ltd v Manock [2010] 273 LSJS 70; Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; Nitschke & Ors v Foraco Australia P/L & Anor [2014] SASC 88; Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443; Alghussein Establishment v Eaton College [1988] 1 WLR 587; Hope Island Resort Holdings Pty Ltd v Jefferson Properties (Qld) Pty Ltd [2005] QCA 315; MacKenzie v Coulson (1869) LR 8 Eq 368; Elders Lensworth Finance Ltd. v. Australian Central Pacific Ltd. [1986] 2 Qd.R. 364; Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR; Bishopgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429; Australia Hotel Co Ltd v Moore (1899) 20 NSWLR (Eq) 155; 16 WN (NSW) 132; Fowler v Fowler (1859) 4 De G & J 250; Holroyd v Marshall (1862) 10 HLC 191; 11 ER 999 [1861-72] All ER Rep 414; Tailby v Official Receiver (1888) 13 App Cas 523; [1886-90] All ER Rep 486; FCT v Betro Harrison Constructions Pty Ltd (1978) 20 ALR 647 ; Re Androma Pty Ltd [1987] 2 Qd R 134; Craddock Bros. v Hunt [1923] 2 Ch. 136; Malmesbury v Malmesbury (1862) 31 Beav 407; Van Lynn Developments Ltd v Pelias Construction Co Ltd [1969] 1 QB 607; Cator v Croydon Canal Co (1843) 4 Y & C Ex 593; Fulham v M’Carthy (1848) 1 HLC 703; Smith v New South Wales Bar Association (no.2) (1992) 176 CLR 256; AMEV-UDC Finance Limited v Austin (1986) 162 CLR 170; Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656, applied.
Peter Clarke as Trustee of the Clarke Family Trust & Ors v Great Southern Finance Pty Ltd (Receivers and Managers appointed)(in liquidation) and others [2014] VSC 334; [2014] VSC 516; Hines Exports Pty Ltd v Mediterranean Shipping Company SA. (2001) 80 SASR 268; Equus Corp Pty Ltd v Haxton; Equus Corp Pty Ltd v Bassat; Equus Corp Pty Ltd v Cunningham’s Warehouse Sales Pty Ltd (2012) 246 CLR 498, discussed.
Jeans v Commonwealth Bank of Australia Ltd (2003) 204 ALR 327; ACN 007 528 207 Pty Ltd (in liquidation) v The Bird Cameron (2003) 231 LSJS 454; Sands v Channel 7 Adelaide Pty Ltd (2009) 104 SASR 452; Permanent Trustees Australia v FAI General Insurance Co Ltd (in liq) (2003) 197 ALR 364; Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 301; Heinrich v Commonwealth Bank [1999] SASC 210; Wonda Joinery Pty Ltd (in liq) v Wonda Projects Australia Pty Ltd [2007] SASC 301; Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98; [1998] 1 WLR 896; Battye v Shammell (2008) 91 SASR 315; Butler v Mountview Estates Ltd. [1951] 2 K.B. 563; Frederick E Rose v William H Pin Junior & Co Ltd [1953] 2 QB 450; Klusman v ASIC [2011] AATA 150; Winge Carribee Shire Council v Lehmann Brothers Australia Limited (in liq.) [2012] FCA 1028; Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (no. 2) (1994) 122 ALR 717 ; Duke Group (in liq.) v Pilmer (1997) 193 LSJS 204; Murray v Figge (1974) 4 ALR 612; Footersville Pty Ltd v Miles (1986) 41 SASR 211; Ljoljic v Sherlock (no. 2) (1990) 157 LSJS 463 ; Trendtex Trading Corporation v Credit Suisse [1982] AC 679; Londish v Gulf Pacific Pty Ltd (1993) 45 FCR 128 ; Cornwall v Rowan (2004) 90 SASR 269; Ample Source International Limited v Bonython Metals Group Pty Ltd; in the matter of Bonython Metals Group Pty Ltd (No 6) [2011] FCA 1484; Esanda Finance Corporation v Plessnig (1989) 166 CLR 131, considered.

BENDIGO AND ADELAIDE BANK LIMITED & ANOR. v LING
[2016] SADC 34
JUDGE SLATTERY
Overview and conclusion

One of the plaintiffs in the action is Bendigo and Adelaide Bank Limited. For a number of instances the Bank named in a series of relevant documents in this action is Adelaide Bank Limited, that Bank was the owner of a number of choses of action and other assets as at 30 November 2008. On 1 December 2008, Adelaide Bank transferred its assets, liabilities, business and undertaking to Bendigo and Adelaide Bank. For the sake of convenience, in this judgment any reference to “Bank” will in the chronology of events mean Adelaide Bank prior to 30 November 2008 and Bendigo and Adelaide Bank after 1 December 2008, inclusive of both those dates.
In this action the Bank or alternatively ABL Custodian Services Pty Ltd Pty Ltd claims from the defendant Mr Ling for the recovery of a loan made to him in 2004 by Great Southern Finance Pty Ltd (in liquidation) when that company was a member of the Great Southern Plantations Group of companies. The loan made to Mr Ling was associated with the purchase of wood lots under a managed investment scheme promoted by Great Southern Managers Australia Limited (in liquidation). That company had caused a Product Disclosure Statement (PDS) to be prepared promoting the purchase of wood lots (each comprising some 0.33 hectares of trees to be grown or already grown). The managed investment scheme was associated with a ruling from the Commissioner of Taxation under which investors were assured of a full tax deduction for each dollar of investment in the scheme.
There was no imperative or compunction for an investor in the scheme to use loan funds provided by Great Southern Finance Pty Ltd. An investor could use the investor’s own available capital or use loan funds procured by the investor from another source. It was entirely the decision for the investor how the funds were to be procured; the choice of the use of loan funds provided by Great Southern Finance Pty Ltd was a matter entirely for Mr Ling.
Mr Ling made a decision to invest in the purchase of 67 wood lots on or about 29 June 2004. For that purpose, Mr Ling borrowed $203,260 ($201,000 plus costs of $2,260) from Great Southern Finance Pty Ltd. He executed a proposal for a loan agreement, a loan agreement and an agreement to purchase wood lots and he then made repayments on his loan from 2004 until December 2009.
Mr Ling unilaterally ceased making repayments on his loan in December 2009. Before that time, and under an agreed variation of his initial loan agreement, Mr Ling was due to make a full repayment of the loan by June 2014 and not June 2011 as initially agreed in 2004. At that time he also agreed to an increase in the interest rate applicable to the repayments on the loan and the default interest rate applicable in the event of a breach by him of the terms of the loan.
In the 2003/2004 financial year, Mr Ling obtained a tax deduction to the value of between $80,000 and $90,000, his marginal tax rate was reduced to 30 cents in the dollar (as required by him) and he fully deducted the cost of interest on his loan repayments made up to December 2009.
At a time shortly prior to the making of the loan to Mr Ling by Great Southern Finance Pty Ltd, the Bank, ABL Custodian Services Pty Ltd as trustee of the Lighthouse Warehouse Trust No. 7 and Great Southern Finance entered into a Loan Sale and Servicing Deed (LSSD) under which contractual terms were established between the parties in the event that there was a decision or agreement to assign for value to the Bank directly, or in relation to Queensland assets to ABL Custodian Services Pty Ltd the value of the loans generated by Great Southern Finance Pty Ltd in its loan books. There was no discounting of the loan book under this scheme. The arrangements were for the full receivables of the loan to be assigned. The loan to Mr Ling was one of the bundle of loans that was assigned to the Bank or alternatively to ABL Custodian Services Pty Ltd in its capacity as trustee. The question of the correct assignee of this loan, amongst others, is necessary of determination in this action but in the view that I have formed, that question was secondary to the more primary question whether the loan agreement was made between Great Southern Finance Pty Ltd and Mr Ling and the outstanding balance (if any) of that loan which was due to be repaid by Mr Ling. Mr Ling has denied that he ever received the loan. He is mistaken in that denial.
For the reasons which are set out in my decision, I have formed the view that the documentation executed between the Bank, Great Southern Finance Pty Ltd, ABL Custodian Services Pty Ltd and ABL Nominees Pty Ltd, the Bank is properly to be seen as the assignee of the bundle of loans from Great Southern Finance Pty Ltd, which bundle included the loan to Mr Ling. In the alternative, I am of the view that there has been an equitable assignment of that loan. If I am wrong in either of those views, I have formed the alternative view that the assignee of the loan was ABL Custodian Services Pty Ltd, a company owned and controlled by the Bank and that company is properly the recipient of the benefit of any judgment in this matter.
In this trial, it has been necessary to hear and determine a number of interlocutory applications brought by Mr Ling during the course of trial. These were: an application to amend the Defence and Counterclaim; an application for dismissal of the plaintiffs’ claim on the basis of there being no case to answer with an associated application for a stay of the proceedings; and an application to reopen the case with an associated application to further amend the pleadings of the defendant. This proposed amendment was an attempt to plead the inability of any plaintiff to bring an action on a loan given to Mr Ling when the lender did not hold a Financial Services Licence under the Corporations Act (CA). This proposed Defence and counterclaim were also associated with an attempt to plead a breach of the ASIC Act as well as misleading conduct under the Trade Practices Act and the Fair Trading legislation.
It is necessary to briefly explain why I have rejected these interlocutory applications but it is first necessary to explain an important event that stands in the background of this action. On 25 July 2014, Croft J in the Victorian Supreme Court was due to deliver his judgment in the action of Clarke and Ors v Great Southern Finance Pty Ltd (in liq), Great Southern Assets Management (in liq) and the Bank. Shortly prior to that date, (on 23 July 2014 being the date on which he announced that he would hand down his judgment on 25 July 2014) Croft J was informed of the settlement of the proceedings. It became necessary for Croft J to approve the settlement and his Honour did so on 11 December 2014. In that process, Croft J released the judgment he had intended to release on 25 July 2014. That judgment disclosed that the claims of the plaintiff investors were hopeless and were bound to fail. The settlement was approved by Croft J because in his view, the borrowers could not have achieved a better result. They had failed in the action that they had brought.

Mr Ling was an investor who lent his name to those proceedings in the Supreme Court of Victoria. He said initially that he had withdrawn as a member of the plaintiff group in 2014 but he later informed me that this had happened in 2012. In light of the material before me, I have found that Mr Ling opted out of the proceedings as a plaintiff in 2014 at or about the time that this action commenced.
Many of the arguments that Mr Ling wished to press in this action either in his initial pleadings or in his proposed amended pleadings were matters that were argued and lost before Croft J in the Victorian Supreme Court. There was also a further complication. I have jurisdiction to hear and determine matters under the Trade Practices Act and the Fair Trading legislation. I do not have jurisdiction to hear and determine all of the matters proposed to be pleaded by Mr Ling in his counterclaim under the CA or the ASIC Act. Mr Ling proposed to amend his pleadings to seek relief under those Acts.
I have refused the application of Mr Ling. I formed the view that on the relevant authorities, the first application to amend was brought too late in the proceedings, the later proposed amendments sought to plead some remedies outside of the jurisdiction of this Court and in respect of matters where the proposed pleadings had no prospects on any view of the law and facts. On that latter aspect, Mr Ling wished to allege misleading conduct of the Bank, but there was no pleading that the Bank had engaged in any conduct or made any form of representation to Mr Ling on his own case. It was an innocent bystander in all of the transactions that occurred between Great Southern Finance Pty Ltd and Mr Ling. The Bank did not have any liability by association and Mr Ling did not propose to call evidence of the common directors of Great Southern Managers Australia Limited, Great Southern Finance Pty Ltd or the senior management of Great Southern Finance Pty Ltd. Mr Ling therefore proposed claims that had no prospects of success on any view of the law or facts.
I also formed the view that this action should proceed on the basis that Mr Ling could put his case on any basis that he himself chose under any of his proposed amendments as if they had been allowed and he could seek whatever remedy that might be available to him on the facts as they were proven before me. The plaintiffs were content to proceed on this basis. That is the way this matter has proceeded in this Court. It has therefore become necessary to express a view on each of the matters put before me by Mr Ling in the course of each of the applications that he brings. This includes a review of the matters raised by him on the application to reopen the action.
I have reached the conclusion that the Bank succeeds on its claim against Mr Ling in full. The Bank is entitled to judgment in its favour for the full amount of its claim and for interest. In the event that I am incorrect about the assessment of the claim of the Bank, the result is no different because the plaintiff ABL Custodian Services Pty Ltd is entitled to judgment in its favour on the same basis. The counterclaim of the defendant is dismissed.
Some preliminary matters
On Thursday 15 January 2015, I gave leave to the plaintiffs to join as a plaintiff in the proceeding the company the company ABL Custodian Services Pty Ltd. That matter had been raised with me on Wednesday 14 January 2015 as a result of a query that I raised between the parties. That query derived from the content of documents which had been tendered before me following a discussion before the Court. Leave was then given to the plaintiffs to join as a plaintiff the company ABL Custodian Services Pty Ltd. There was no objection to the joinder of that company as a party to the proceedings. It will be necessary later in this judgment to explain the reasons why there was a joinder of a further party in the proceedings.
Two applications by Mr Ling occupied that initial period of the hearing of this action. The first was an application by Mr Ling to amend his pleadings. The second related to an application by Mr Ling to dismiss the plaintiffs’ claim for failing to disclose a cause of action. I made orders dismissing both applications. It is necessary to canvass the issues in both applications before embarking upon my decision in this action.
The history of this action
The Summons was issued on 6 March 2012. The Statement of Claim (second Statement of Claim) was lodged on 31 October 2014. The Defence and Cross Action (Counterclaim) are dated 15 November 2012. The defendant did not further plead to the amendments set out in the second Statement of Claim. Under Rule 100 of the District Court Civil Rules, the amendments are taken to be denied.
The hearing of this action commenced on 12 January 2015. The last hearing date was in June 2015. Up until about 6 January 2015 the defendant was represented by a firm of solicitors, more latterly Johnston Withers (Mr Edward Guthrie). Between 6 and 12 January 2015, the defendant made an election to appear on his own behalf at the proceedings. This occurred after the trial book was lodged at the Court (on 5 January 2015).
The Great Southern Scheme
The company Great Southern Managers Australia Limited (GSMAL) was the responsible entity for Great Southern Plantations. The Great Southern Plantations’ 2004 project was established to provide applicant growers with the opportunity to carry on the business of commercially growing eucalyptus trees. These were to be grown in various regions in Australia. The disclosure statement produced by GSMAL suggests that timber from the plantations would produce wood fibre and hardwood woodchips for use in various industries.
Under the Product Disclosure Statement (PDS) produced in 2004, individual investors would become growers of eucalyptus trees. Individual growers would all be given a PDS and they would enter into a land management agreement under which they would contract with GSMAL to establish the eucalyptus plantation and to carry on the future management and maintenance of their plantation until the harvesting of the trees. In relation to Tasmanian Blue Gum trees, the expectation was that there would be at least two harvests of timber from the trees that were grown. Each grower would enter into a lease or forest right agreement for one or more areas of land called “wood lots”. The wood lots comprised an area of land measuring about 0.33 hectares. The rental agreement would last for 11 years. This would allow time for growth of the forest and for harvesting.
GSMAL, as a responsible entity, was a wholly owned subsidiary of Great Southern Plantations Limited (GSPL). GSPL was a public listed company on the Australian Stock Exchange. In the PDS, it was alleged that at 30 June 2003 the Great Southern Group had net assets in excess of $226 million. The evidence before me does not provide any opportunity to challenge or to verify this entry in the PDS. As a public listed company the accounts of Great Southern Plantations were required to be audited. Consolidated accounts would also be audited.
In order to buy a wood lot, each grower was required to pay $3,000 plus GST of $300. This fee was paid for a number of things which included establishment services and there were no ongoing payments apart from insurance payments. It was the responsibility of the grower to insure the wood lot under prearranged insurance contracts. It was necessary for growers to pay 5.5% of the net harvest proceeds for management and rental expenses. There would be no separate ongoing management and rental expenses over the 10 year period and management and rental expenses would be taken at the end of the 10 year period. Growers who were called “electing growers” were required to pay their proportionate share of the costs and expenses associated with harvest and delivery of their timber upon collection whereas non-electing growers could opt for the cost of harvesting, chipping and sale of timber to be deducted from harvest proceeds.
There was an immediate financial benefit for any person to invest in the wood lots. In the year in which the wood lot was purchased, the application price of each wood lot ($3,000 per wood lot (excluding GST)) was fully tax deductable. The tax deductibility of the investment was confirmed under Australian Taxation Office Product Ruling PR2004/5. This means that for each dollar of investment, there was a dollar of deductibility.
It was expected that the trees within the wood lots would be harvested after 10 years and payment would follow. There was no guaranteed return and the PDS recorded that: “…the ability to accurately forecast returns is extremely limited…” and “… there are a number of variables involved in the calculation of return to growers…”
The PDS also provided for a finance option. Finance was available to growers from Great Southern Finance Pty Ltd which was a wholly owned subsidiary of Great Southern Plantations Limited (the public listed company). There was both short term interest free finance and long term principal and interest finance offered to the growers through Great Southern Finance (GSF).
The PDS said that the 2004 project was intended to provide a commercial investment with a potential for sound returns and a high level of investor’s security. The key features were described as: tax deductibility; no ongoing costs until harvest; the strength of the responsible entity GSMAL as a wholly owned subsidiary of GSPL; the ownership of the land by Great Southern Group and other matters.
The PDS also gave directions to potential investors on how to subscribe. The first direction given to the investors was that they were required to read the PDS. Potential investors were told that:-
If you were not paying for your application in full immediately, you must insert the amount you wish to borrow at section 5 of the application form and select either the 12 month interest free or principal and interest loan option. For principal and interest loans, please insert the term sought and any interest only period (if applicable).
An investor was able to make a direct debit request. It read as follows:-
…If you have completed section 5 please also complete and sign the direct debit request form on page 75 of this PDS and send it with your application. (This will enable direct deduction of the monthly instalments from your nominated bank account). You should also read the terms of the direct debit service agreement of page 69 to 71 of this PDS.
In the direct debit request service agreement, the arrangements are set out for the servicing of the borrowing made by an investor in connection with the purchase of a wood lot with Great Southern Plantations Projects through the nominated financier, GSF. The document discloses that by signing the direct debit request, an investor has authorised GSF to arrange for funds to be debited from the investor’s bank account, in accordance with the terms of a direct debit request. This authority and request may be amended from time to time. It was the responsibility of the investor to ensure that there are sufficient cleared funds available in the account to allow a direct debit payment to be made in accordance with a direct debit request.
Within the same form is a blank application form. It sets out information to be given by the applicant including the number of wood lots required for investment. It then sets out in paragraphs 5 and 6, the finance options. It allows a borrower to nominate how much money the investor would intend to borrow from Great Southern Finance. It then allows the investor to choose whether the finance option should be a 12 month interest free loan finance or a principal and interest loan. Any principal and interest loan had to be for a minimum of $15,000. The investor was required to insert the terms of the loan and the terms of any interest only period. Paragraph 6 sets out the insurance options. There was either a compulsory option or a full (compulsory and optional) option and if no selection was made then the investor would be invoiced for compulsory insurance only. The investor was then asked to make a declaration in the following terms:-
By signing this application form, I/we acknowledge and agree to be bound by the statements on the reverse side of this application.
The applicant’s knowledge and acceptance meant that the investors agree that they had read the PDS of 8 March 2014; that they were bound by the provisions of the constitution regarding the scheme Great Southern Plantations 2004; they agreed to appoint GSMAL; the project was intended to be of a medium to long term nature and there are risks of any such project as disclosed in the PDS; the investor authorises GSMAL as the responsible entity to register the investor as a grower in respect of the number of wood lots indicated on the application form; and that the investor is of age and is capable of understanding the agreement.
Immediately following that document and still within the PDS, is a direct debit request. That document requests and authorises Great Southern Finance to arrange for any amount that GSF may debit or charge the investor through the bulk electronic clearing system from an account held at the financial institution of the investor set out in the direct debit request. Any direct debit made would be in accordance with the direct debit request service agreement.
The investor is then required to insert the name and address of the financial institution, the details of the account and then execution. By executing, the investor acknowledges that he has read and has understood the terms and conditions governing the direct debit agreements between the investor and Great Southern Finance and that direct debits would be made on the 15^th of the month following receipt of the application for wood lots in the Great Southern Plantations Project. Those direct debits would be made at monthly intervals thereafter.
The defendant Mr Ling completed an application form with GSMAL under the PDS of 8 March 2004 by executing an application form on 29 June 2004. Under that application, Mr Ling applied to purchase 67 wood lots (at $3,000 each). Mr Ling also applied for finance in the amount of $201,000 over a period of 7 years with an interest only period of 3 years. He opted to pay the full compulsory and optional insurance. He executed the application form on 29 June 2004 and on or about that day, he was given the allotment number A36685 and grower number G20387. His advisor’s name was identified as Christopher Grindal with an advisor code PC23. That information could only have come from Mr Ling. Mr Ling confirmed in evidence that he had never met Mr Grindal, that the person who suggested the investment was his accountant Phillip Lynch of Cairns and that the investment was for the purposes of obtaining a tax deduction because in the relevant year (2004)[1] the business conducted by Mr Ling enjoyed significant profits upon which large amounts of taxation were required to be paid.
[1] 2003/2004 financial year and following.
After 2004, Mr Ling serviced the debt until about 2009. He unilaterally chose to terminate the servicing of the debt at that time. The failure by Mr Ling to repay the debt owing under the loan financing arrangement is the subject of this claim.
Also on or about 29 June 2004, Great Southern Finance Pty Ltd assigned the benefit of the loan contract between itself and Mr Ling to ABL Custodian Services Pty Ltd in its capacity as the trustee of Lighthouse Warehouse Trust No.7 which in turn (in its capacity as trustee) assigned the benefit of the loan to the Bank. It will be necessary later in this judgment to explain the arrangements in relation to the assignment but for current purposes it is only necessary to identify that fact.[2]
[2] A complication which does not have any long term consequence is that the trustee of the trust was changed to ABL Nominees Pty Ltd. Both of these trustee companies were controlled by the Bank and the trust held the beneficial interest in the fund only as a conduit to the asset being assigned to the Bank. The complicating feature is that as at the date of assignment, the identity of the trustee had changed to ABL Nominees Pty Ltd, whereas the assignment of the asset was made to ABL Custodian Pty Ltd.
The recitation of this material is necessarily preliminary to the fact that on 8 January 2015 the defendant brought an interlocutory application (FDN 24) for a series of orders as follows: -
“Application
The defendant/plaintiff by counter-claim, Malcolm Ling, seeks the following orders or directions:
1.   That this application be heard specially returnable given the listed trial date of 12 January 2015.
2.   That the defendant be granted permission to amend his defence and counter claim.
3.   That the plaintiff’s make disclosure of all documents relating to the assignment of alleged loans to them the subject of this action by Great Southern Finance Pty Ltd, including, but not limited to, all documents recording the amounts paid by the plaintiff for those alleged loans.
4.   That the plaintiffs provide full particulars of the amounts that they alleged the defendant is indebted to them, including, but not limited to, particulars of how the amounts are calculated.
5.   That the trial of this action scheduled to commence on 12 January 2015 be adjourned.
6.   That the defendant be entitled on the hearing of this application by telephone.
7.   Costs of the adjournment of the trial be reserved.
8.   Such further or other orders as this Honourable Court deems fit.”
In order to properly comprehend the importance and the gravamen of the application taken by the defendant, it is necessary to identify the state of the pleadings as at 8 January 2015, some 4 days prior to the date for the commencement of the trial. It is worth noting again, that, by that time, Mr Ling had been represented by solicitors for a period of some 3 years and he had filed a Defence and a significant cross-action (counter claim) against the plaintiffs.
The pleadings: amendment application
In the second statement of claim, the following matters are pleaded, and, appear not to be in contest; they are repeated below in the same numbered order as the paragraphs of the statement of claim as follows:
1.   On or about 1 July 2004, Great Southern Finance Pty Ltd (lender), agreed to lend, and, did lend to, Malcolm Ling the sum of $203,260, which loan was recorded in loan documents.
2.   The loan was recorded in a form of a loan agreement.
3.   The rights of Great Southern Finance Pty Ltd as lender against Ling in respect of the loan agreement were assigned as follows:
3.1.Great Southern Finance assigned all of its rights under the loan agreement to ABL Custodian Services Pty Ltd under a sale notice issued on 21 December 2005;
3.2.Pursuant to a deed of retirement and appointment of Trustee dated 19 July 2005 with effect from that date, ABL Nominees Pty Ltd succeeded to the rights of ABL Custodian Services Pty Ltd as Trustee of the Light House Warehouse Trust No 7, the assets of which included the rights under the loan agreement;
3.3.Pursuant to a replacement servicer deed, dated 5 February 2009, the right to collect all monies due under the loan agreement was transferred to Bendigo and Adelaide Bank Ltd.
4.   Ling made payments under the loan agreement in the period from 1 July 2004 until 15 December 2009.
5.   On 25 January 2010 Bendigo and Adelaide Bank Ltd by written notice demanded that Ling pay the balance owing under the loan agreement in the amount of $134,270.69.
The interlocutory application (FDN24) was supported by the first affidavit of Malcolm Ling sworn on 6 January 2015. In the affidavit, Mr Ling informs the Court that he seeks permission to amend his defence and his counter claim to defend on the Action, on the additional basis that:
(a) No monies were ever advanced to him by the original lender, Great Southern Finance Pty Ltd, and, therefore no loans existed which could have been assigned to the plaintiff; and
(b) If the plaintiffs are entitled to recover the alleged loans against him, which he would deny, than they should not be able to recover the full amount of the loans as they only paid to Great Southern Finance Pty Ltd a portion of the value when assigned in 2009.

Mr Ling then avers that he did not raise those defences earlier as he was involved in defending an action on the same grounds as those raised by claimants in a class action in the Supreme Court of Victoria, which involves substantially similar matters to those in this action. He avers that he was waiting for judgment to be delivered in that class action, which he thought would be a judgment in his favour (i.e. a judgment for the claimants) and that would in turn support his action here. As will become apparent, this assertion is inconsistent with a later assertion of Mr Ling that he opted out of the plaintiff group in the Victorian proceedings in 2012.
Mr Ling than avers that despite his best expectations the class action has been finalised by settlement. He then avers that given that the class action did not result in a judgment, he wants to continue to defend the action, including, on the additional grounds set out above.
He then seeks further orders as described in paragraph [38] above including the trial scheduled for 12 January 2015 be adjourned to enable the orders sought to be dealt with and also to enable him time to prepare the matter as he is now self-represented.
In support of his application, Mr Ling then presented to the court a draft of a second defence and a second cross-action (counter claim). In paragraph one of this amended pleading, Mr Ling (in the proposed second defence), seeks to withdraw his admission that on or about 1 July 2004, Great Southern Finance Pty Ltd lent any monies to him at all. In paragraph 3 of the proposed second defence, Mr Ling purports to withdraw the admission that there was an assignment of those loans.
He then seeks to plead fresh paragraph 7, 8, 9 and 10. In the new paragraph 7 he wishes to plead that he had claimed a tax deduction in respect of the loan, but, in doing so he does not acknowledge the existence of the loan. He also wishes to plead that having regard to the total amount of the monies repaid on account of those loans (which loans he denies he received despite having admitted that he has made interest payments and then interest and principal repayments on these loans from July 2004 to December 2009), he wishes to deny receiving any benefit based upon (what he describes as a) net benefit basis. In paragraph 8 he wishes to plead a denial that the plaintiffs are entitled to any of the relief claimed. In proposed paragraph 9 Mr Ling wishes to plead in the alternative that the alleged loan contract, namely the offer, the consideration and the legality are all infected by fraud and as a result by default the assignment is not valid. He then proposed to deny (in paragraph 10) any right of the plaintiff to recover any amounts pursuant to any alleged loans by the reason of the matters set out in the proposed second cross-action counter claim.
The amendments to the cross action counter claim seek to plead a further misrepresentation based upon the content of the product disclosure statement. The proposed pleading then set out allegations about why those further misrepresentations were misleading and deceptive under s51A, 52 of the Trade Practices Act, under the ASIC Act and under the Corporations Act (CA).
The Victorian proceedings
It was common ground that the proposed further pleadings of Mr Ling derived from the plaintiff’s pleadings in the action heard in the Supreme Court of Victoria in the Commercial and Equity Division No. sC1 2010 022882 between Peter Clarke as Trustee of the Clarke Family Trust & Ors (and other plaintiffs names in the schedule attached) and Great Southern Finance Pty Ltd (Receivers and Managers appointed)(in liquidation) and others. In that case the judgment of Croft J was delivered on 11 December 2014.[3] The judgment itself comprises some 1700 pages and 2006 paragraphs.
[3] [2014] VSC 516.
This was a class action brought against 12 defendants and two third parties were joined to the Action. The first defendant was Great Southern Finance Pty Ltd (in liquidation), the second defendant was Bendigo and Adelaide Bank Ltd, the third defendant was ABL Custodian Services Pty Ltd in its capacity as Trustee of the ABL Portfolio Funding Trust. The fourth defendant was ABL Nominees Pty Ltd, in its capacity as Trustee of the Light House Trust No. 12, and, the fifth defendant was Pirie St Holdings Pty Ltd (formerly Adelaide Bank Ltd). Great Southern Managers Ltd (Receivers and Managers appointed)(in liquidation) was named as the seventh defendant.
The Action came before Croft J on an application for approval of a settlement under s 33V[4] of the Victorian Supreme Court Act. Croft J was required to consider whether or not to approve a settlement reached between the plaintiffs and the defendants. In order to do so, his Honour was required to give consideration to the merits of the plaintiffs’ claims against the defendants and so to assess the likelihood of success, or, otherwise of the plaintiffs’ claims. In the result, his Honour came to the conclusion that the plaintiffs’ claims had no prospect of success and that therefore the settlement should be approved because the plaintiffs could not have done better in a proceeding than in the settlement for which approval was sought.
[4] 33V Settlement and discontinuance
(1)A group proceeding may not be settled or discontinued without the approval of the Court.
(2)If the Court gives such approval, it may make such orders as it thinks fit with respect to the distribution of any money, including interest, paid under a settlement or paid into court.
The claims made in the proceedings had been the subject of a trial before Croft J commencing on 29 October 2012, which extended over 90 sitting days and concluded on 24 October 2013. Judgment was reserved and was listed for delivery on 25 July 2014. The parties were informed of the date of the delivery of judgment on 23 July 2014, and, within hours, the parties informed the Court that the matter had settled. It follows that in giving consideration to the approval of the settlement, Croft J was fully familiar with the merits of the action having heard evidence over 90 sitting days and then having prepared a judgment on the merits.
Following the settlement, the certified and sealed judgment which was to be delivered on 25 July 2014 was locked away pending resolution of the application for approval of the settlement under s 33V of the Supreme Court Act of Victoria. Eventually Croft J decided that it was necessary to publish that judgment. Preparatory to that event the judgment bore a media neutral citation [2014] VSC 334. Those reasons were then annexed to the reasons published by Croft J on 11 December 2014 and they are consequently not reasons for judgment about the approval of the compromise.[5] For assistance his Honour published a synopsis of the proceedings the subject of the judgment [2014] VSC 334. That synopsis read, in part, as follows: -
[5] Absent the publication of these reasons a reader of the approved decision may not have had a sufficient grasp of the background in which that decision was made.
“The Great Southern Proceedings comprised a series of group and individual proceedings in which claims are advanced by, and on behalf of, persons who are invested in the management investment schemes promoted and operated by GSMAL.
The purpose of this synopsis is to provide an overview and to aid the understanding of the detailed reasons which follow; reasons which are directed to a variety of claims, defences and counter claims in the range of proceedings which comprise the Great Southern Proceeding. This synopsis is not, however, intended to stand in place of the detailed reasons …
Overall result
For the detailed reasons which follow, the plaintiffs’ various cases, whether they be by primary claim or counter claim, must fail …
The plaintiffs’ cases
[6] The principal claim made by the plaintiffs (and the plaintiffs by counter claim …) is that GSMAL issued product disclosure statements relating to the offer of interest in the management investment schemes which were ‘defective’ by reason of the provision containing in part 7.9 of the Corporations Act and that the plaintiffs have, as a result, suffered loss and damage.
[7] In order for the plaintiffs to succeed in their principal claim, they must establish the following elements:
(1) The relevant product disclosure statement contained representations which were misleading or deceptive;
(2) The relevant product disclosure statement omitted to include information that was required to be included in them pursuant to division 2 part 7.9 of the Corporations Act;
(3) The matters omitted from the product disclosure statements were actually known to the relevant persons under s 1013C(2) of the Corporations Act;
(4) The plaintiffs relied on the alleged misleading product disclosure statements in applying for interests in the relevant management investment schemes and would not have invested in the relevant management investment schemes had the relevant matters been disclosed;
(5) The plaintiffs have suffered loss and damage as a result of being given a defective product disclosure statement;
(6) The defendants are liable for that loss and damage
The first three elements might be described generally as going to liability whereas the latter three go towards causation and damage. It follows that even if liability were established, the plaintiffs would not succeed if the later three elements were not established …
Findings
Overview
[8] The plaintiffs also plead a variety of alternative claims which is substantially based on the same underlying factual allegations relevant to the principal claims. It follows that if the plaintiffs’ principal claims fail, the alternative claims also fall away.
[9] For the detailed reasons which follow, the court finds that none of the product disclosure statements the subject of the proceedings were defective within the meaning of s 1022A of the Corporations Act by reason of the inclusion of the alleged misleading product disclosure statements or the omission of the alleged relevant matters.
[10] In relation to the proceedings which are set down for trial on all issues, the Court finds that the relevant plaintiffs have not established:
(a)That they relied on the relevant product disclosure statement;
(b)That they have suffered any loss or damage;
(c)Nor, if it were established that any loss or damage had been suffered;
(i)That their loss or damage arose because of being given a defective product disclosure statement; or
(ii)That the defendants (or defendants by counter claim) are liable for their loss or damage.
In summary, the position I reached as a result of the trial of the Great Southern proceedings is, as set out in the Great Southern reasons that the plaintiffs’ claims completely and comprehensively failed – in all proceedings and the respect of all management investment schemes”
Mr Ling was a member of the plaintiff group in the Victorian proceedings. He opted out of the Victorian proceedings. There was initially some doubt about when he opted out but later in evidence he suggested that he opted out in 2012. In other evidence the inference arises that he opted out in 2014. I consider it to be more likely that he opted out of the plaintiff group in 2014 and this reflects the content of his affidavit to which I have earlier made reference.
I have made a survey of the claims within the Victorian proceedings and they are summarised at pages i – xxx of the judgment of Croft J. The findings of Croft J, in overview, are contained in paragraphs 8 – 12 inclusive, and they are set out above.
One of the many issues dealt with by Croft J is what is described as yield representations in the PDS. These set out an example of a calculation of the yield of timber products from trees grown in the wood lots purchased by investors. I have deliberately used the expression: “example of calculation” because that is an apt description. It is not some form of unquantified statement given in the context that it is an estimate the accuracy of which differs according to a series of variables that cannot be controlled.
Croft J made a series of findings about yield representations. He found that the yield representations within the product disclosure statement were not false. Croft J found that the representations which appeared in the statement of claim do not appear in the Product disclosure statements, and, that such representations are to be inferred. My survey of the pleadings brought by the defendant Mr Ling in these proceedings are to the same affect.
Croft J criticised the plaintiffs’ representation case and found that the product disclosure statements did not contain any words to the effect as pleaded. He also found that the strong financial position representations were not false and set out his summary of findings at paragraph [28] and following. He also found that there were no relevant omissions and set out his findings at paragraphs [34] – [40] of the synopsis.
At paragraph [46] of the synopsis Croft J turned his attention to the question of reliance and causation. Those findings are set out in paragraphs [46]-[50] as follows:
[46] “In order to establish an entitlement to recover loss and damage in respect of any of the alleged contraventions, the plaintiffs must prove that they would not have invested in the relevant MISs but for the alleged contraventions and that the alleged contraventions caused the relevant loss. The evidence given by the plaintiffs falls well short of this. Moreover, to establish that they suffered loss or damage because of a defective PDS, the plaintiffs need to establish, at the very least, that they relied on the Misleading PDS Statements. That is to say, they must establish that had those statements not been made (i.e. but for the misleading statements) they would not have applied for interests in schemes. Self-evidently, as the Court has concluded that the plaintiffs would have applied to invest in the Schemes irrespective of whether the Misleading PDS Statements were made or the relevant Matters omitted, then their claims must fail.
[47] The evidence shows that, with some possible exceptions, none of the plaintiffs relied on the alleged “Misleading PDS Statements” and that even if the alleged “Relevant Matters” and “True State of Affairs” were disclosed to them, it would not have affected their investment decision. In this context, the plaintiffs sought to retrieve the failure of their cases on the basis of, what might be described as, “direct reliance” by arguing that they h ad established “inferred reliance”. Though, as the defendants submitted, this was not part of the plaintiffs’ pleaded cases, the evidence does not, for the detailed reasons which follow, even establish “inferred reliance”.
[48] These MISs were designed to be tax effective and investments in the MISs were tax-driven. Indeed, the decisive consideration, possibly with some exceptions, for each plaintiff’s decisions to invest in the relevant Great Southern Schemes was to retain, for other purposes, money which would otherwise have been payable to the Commissioner of Taxation. The other purposes were one, or more, of either:
(a) To invest the money for higher returns;
(b) To use the money to repay non-deductible debt; and
(c) For cash flow purposes.
The plaintiffs, with one possible exception, did not enter into the Schemes for the purpose of obtaining an estimated yield from the investment or because of the “financial strength” or “financial position” of the Great Southern Group. The evidence makes clear that the matters the subject of the Misleading PDS Statements were extraneous to those considered by the plaintiffs.
[49] The failure of the plaintiffs, with some possible exceptions, to establish that they relied on the alleged “Misleading PDS Statements” or would not have invested had they known of the alleged “Relevant Matters” or “True State of Affairs” is fatal to their claims. To the extent that the plaintiffs purported to give evidence of reliance, on close scrutiny, the evidence is generally unreliable and is rejected as discussed in the detailed reasons. In light of the evidence, the defendants’ submissions as to the existence if “hindsight bias” is both apposite and accurate, in my view.
[50] Although reliance is a necessary precondition to the plaintiffs’ claim for damages, it is not sufficient – the plaintiffs must establish not only reliance, but also that there is a relevant nexus between the defective PDS and any loss or damage they have suffered. The plaintiffs did not lead any evidence at trial as to any compensable loss. The plaintiffs allege that they have suffered loss and damage comprising “all amounts paid by the plaintiffs and all liabilities incurred or to be incurred by them under the scheme documents and the loan Deeds”. The alleged loss or damage the plaintiffs seek to recover arises as a consequence of the insolvency of GSMAL and does not arise by reason of the alleged contravening conduct. The plaintiffs have not established the necessary causal connection between the alleged contravening conduct and the alleged loss and damage they seek to recover.”
Croft J than turned his attention to the question of relief against the third parties. The discussion commenced at paragraph [51] of the synopsis. There was no assertion in the claims of the plaintiffs that Bendigo Bank was a “liable person” or engaged in, or was otherwise involved in, any of the conduct complained of by any of the plaintiffs. Bendigo Bank was an innocent third party. Despite that, the plaintiffs in the Victorian action sought declarations that their loan deeds were void, or otherwise unenforceable, and, sought orders that Bendigo Bank repay all of the monies paid under any loan deeds. That relief was consequential upon any findings that one or both of GSMAL or Great Southern Finance were “liable persons”. Croft J found that any claim against innocent third parties failed. In relation to the Bendigo Bank interests, his Honour summarised the position at paragraph 53 of the synopsis as follows:
[53] “Additionally, and of critical importance to the plaintiffs’ claim against the BEN parties … the various statutory provisions under which the plaintiffs seek declarations and orders do not permit the Court to make orders against persons, such as the BEN parties … who are ‘innocent third parties’. In any event, the plaintiffs have not established any basis on which the Court should exercise its discretion under those statutory provisions in favour of the plaintiffs. There is no entitlement to such relief and in any event justice does not require the orders sought by the plaintiffs be made.”
I have earlier in these reasons surveyed the proposed further pleadings. In paragraphs 1 and 3 of the proposed second defence, the defendant seeks to withdraw the admissions that he had made in his defence. No basis was provided in support of the application to withdraw these admissions. The first is that the defendant admitted that on, or about, 1 July 2004, Great Southern Finance agreed to lend the money to the defendant, and, did in fact lend him $203,260. The defendant would now seek to put a diametrically opposed view, namely, that no such loan was ever made to him. The second admission was of the content of paragraph 3 of the statement of claim. Paragraph 3 referred to the relevant assignment of the rights of lenders, the first, to ABL Custodian Services Pty Ltd, second, pursuant to a Deed of retirement and appointment of Trustee, ABL Nominees succeeded to the rights of ABL Custodian Services Pty Ltd; and third, pursuant to a replacement of servicer Deed dated 5 February 2009, the right to collect all monies due under the loan agreement was transferred to Bendigo and Adelaide Bank Ltd. These pleadings are to an extent fundamental to the position put by the plaintiff however, properly considered they are also slightly secondary to the issue about the taking of the loan. The reason is largely self evident. The primary or fundamental issue for the defendant appears to be the fact of the loan. If the defendant fails on that issue it is of little interest to him to identify to whom that loan liability must be paid.

Paragraph 9 of the proposed further pleadings was an allegation of fraud associated with elements 3 and 4 of the alleged loan contract, namely, the offer, the consideration and the legality. Because of this fraud, it is alleged that the assignment is not valid.
Under Rule 158 of the District Court Rules, a party is not entitled to withdraw an admission without the permission of the Court. It is not a discretion which is freely granted[6]. The factors relevant to the exercise of the discretion include, the stage in which the proceedings have reached, the detriment which might be caused to the other party, the reasons why the admission was made and the reasons given as to why the admission is now sought to be withdrawn.[7]
[6] Jeans v Commonwealth Bank of Australia Ltd (2003) 204 ALR 327.
[7] ACN 007 528 207 Pty Ltd (in liquidation) v The Bird Cameron (2003) 231 LSJS 454.
There is no suggestion here that the defendant made an admission outside of his own knowledge in circumstances where it might prove to be incorrect[8]. There is also no suggestion that the fault of the defendant in seeking to withdraw the submission is only attributable to the realisation of an error made because of reliance upon a misunderstanding of a factual situation or it is based upon an understanding wrongly created by the other party to the proceeding.
[8] Sands v Channel 7 Adelaide Pty Ltd (2009) 104 SASR 452.
Then there are other more general considerations and they reflect a slightly more relaxed attitude that a Court may take. That is because the Court is involved in the administration of justice and so the ultimate question always becomes whether, in the interests of justice, permission should be given. There is a high degree of flexibility within that statement and that includes the possibility that the Court is able to do justice between the parties even absent the grant of permission. A Court in certain circumstances may receive sufficient evidence to be able to consider a defendant’s position on a number of inconsistent alternative basis. This has always been the case when there are pleadings in the alternative and there is no reason why a Court could not adopt that approach in the interests of justice: this is how I intend to proceed in this case. One difficulty here is that Mr Ling seeks to plead matters under the ASIC Act and the CA that are beyond the jurisdiction of this Court. That is one basis for the referral of this application. It affirmed the connection with the Clarke proceedings.
Conversely when a party attempts to plead fraud, that fraud must be pleaded clearly, specifically and with detailed particulars[9], and in the absence of specific particulars, a Court will not entertain the allegations of fraud at trial.[10] In order for a late pleading of fraud to be accepted, it must raise a genuinely justiciable issue.[11]
[9] Permanent Trustees Australia v FAI General Insurance Co Ltd (in liq) (2003) 197 ALR 364.
[10] Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 301.
[11] Heinrich v Commonwealth Bank [1999] SASC 210.
The proposed defence of the defendant purports to plead fraud without pleading any factual basis or any particulars. What is proposed to be pleaded by the defendant in his defence does not found a reasonable defence to the cause of action based upon the type of fraud alleged[12].There is no basis set out in the second defence which factually or in any other way informs the obligation of fraud.
[12] Wonda Joinery Pty Ltd (in liq) v Wonda Projects Australia Pty Ltd [2007] SASC 301.
A survey of the proposed second cross-action counter claim discloses that it contains further pleadings of particularity in support of the Management Investment Scheme representations being false, misleading or deceptive, because of the content of the product disclosure statement. Paragraph 17 pleads the case of Mr Ling on what he calls the Management Investment Scheme representations which are based upon the content of the product disclosure statement. There are further particulars of the effect of the representations. In effect Mr Ling pleads that the statements in the PDS may be seen as representations upon which he relied in entering into the loan arrangements and the investments. The basic thrust of that case is already pleaded and the plaintiff could not claim prejudice on that ground alone. The fate of the defendant’s case on the existing or the amended pleading turns on my findings about why Mr Ling entered into the transaction. Having made that determination, it would then be necessary to identify whether those findings in any way were to be connected to a party such as the plaintiff which was an assignee of the loans which emanated from GSF.
Paragraph 18 pleads further particularity of the falsity of the misleading and deceptive nature of the Management Investment Scheme representations. The particulars plead the negative of the representations alleged to have been made to the defendant under the PDS, (which I have called the MIS representations). In particular, proposed paragraph 18iv.ii pleads nine further sub paragraphs setting out the deficiencies of the yield in comparison to the forecast. It is alleged that the estimates of yields were less than the yields that had been forecast for a number of years. But pleadings of this nature already exist in the defendant’s filed pleadings and these further subparagraphs are little more than further particulars of the existing pleading.
Fundamental to the further remedies sought in the proposed amended cross-action (counterclaim), was a declaration sought that no loan was ever advanced to Mr Ling by GSF, and, therefore, no loan was ever assigned to the defendants. It may be assumed that this is a reaction to the judgment of Croft J in the matter of Clarke, wherein his Honour made criticisms of the pleaded cases of the investors and the consequences of their failure to prove a connection between, for example, harvest predictions and any misleading nature of a product disclosure statement released in 2004.
The refusal of the application to amend
In reasons delivered by me on 14 January 2015, I refuse the application for Mr Ling to amend based upon the principles enunciated by the High Court in Aon Risk Services Australia Ltd v Australia National University (2009) 239 CLR 175, and as discussed in the Supreme Court of South Australia decision of Manock v Channel 7 Adelaide Pty Ltd [2010] SASC 198; and Channel 7 Adelaide Pty Ltd v Manock [2010] 273 LSJS 70. As became clear in the course of argument, Mr Ling’s proposed further pleadings were little more than a reaction to the criticisms of Croft J in his Honours decision in Clarke. In the absence of any appropriate explanation as to the reasons for the delay in applying for the amendments to the pleadings, and subject to the matters that I set out hereunder, I exercised my discretion to refuse the application.
The rejection of the fraud pleadings was more fundamental. No basis was made but on any factual basis to make this plea and the application was rejected for that reason. I was satisfied that there was no basis to attempt to make this plea.
For the reasons which I expressed in my ex tempore judgment, I also made a decision that, notwithstanding the exercise of my discretion, the matters raised within the pleadings, apart from the issue of fraud, would be matters that would be ventilated in the trial in any event. This approach cause no embarrassment to the plaintiffs who were able to address these further issues in their evidence in chief of their witnesses. The plaintiff was content to put the case on the basis as if the amendments had been allowed and that there was no need to amend the Reply or Defence to cross action (counterclaim). The plaintiffs were content to proceed on the basis that all issues had been sufficiently joined as if to answer the proposed pleadings of the defendant. I took this approach so that the defendants would not suffer any prejudice as a self represented litigant. The further issue raised in the proposed pleadings were largely a more fulsome pleading of the existing defences. I formed the view that having regard to the interests of justice which includes the due and timely administration of justice the more appropriate choice was to require the action to proceed on the existing pleaded case and with great liberty being given to Mr Ling to lead evidence on any matter as he saw fit.
The practical result
As a result, the plaintiff then put its case against the defendant based upon the content of the whole of the further amended pleading of the defendant, except on the question of fraud, and, ultimately, on the question of penalties having regards to the decision of the High Court of Australia in Andrews v Australia and New Zealand Banking Group Ltd.[13] As a result, the plaintiff put its case based, in part, upon the proposed pleadings of the defendant in its amended defence as referred to above. I was satisfied that in the whole of my circumstances the defendant would suffer no prejudice as a result. This is the way that the matter has proceeded.
[13] (2012) 247 CLR 205.
I made that decision in part because having regard to the decision of Croft J in Clarke, it was apparent that on the proposed further pleadings and on all other bases the defendant was still not able to point to any knowledge or fault, on the part of the plaintiffs who were, as described by Croft J in Clarke: … “innocent third parties …”. Another reason of lesser importance was that at paragraph [34] and following of Croft J’s decision in Clarke,[14] his Honour found that the allegations that the product disclosure statements were defective could not be made out. His Honour rejected the assertion that the product disclosure statements failed to disclose information about expected yields for previous Great Southern Plantation schemes. His Honour found that the mechanism for delivering the product, namely, interest in a scheme assessed as being capable of delivering a target yield of 250m3/ha of woodlots to each investor had changed in very material ways between 1994 and 2004. Therefore, even if it be said throughout the years 1994 through to 2000 there was sufficient information to indicate that the 250m3 prediction had not been met, that was not a basis that could make that prediction for future periods misleading. At paragraph [36] of the synopsis, Croft J said, inter alia: -
[36] “… in the ten years or so since the establishment of the 1994 plantations there had been a pronounced evolution in knowledge and experience in the forestry industry generally (and in particular within Great Southern, which led to the introduction of the PPR methodology). Much more was known empirically about the synergies and effects of soil depth, soil quality and annual rainfall on plantation growth. Consequently, in 2005 when Great Southern came to assess the productive capabilities of the land used in the 1994 plantations, those lands scored roughly half … that they had originally been assessed at in 1994. I accept that the disparity between these ‘scores’ is a ready reflection of the significant evolution in the sophistication of plantation establishment and maintenance that had occurred during the decade or so since the 1994 plantations were established.
[37] These three differences meant that yields in respect of the early plantation schemes were not relevant to expected yields in the 2003 and subsequent schemes. I entirely agree with the submissions by the defendants that it would have been more apt to confuse than inform retail clients had that comparative information been disclosed in the product disclosure statements. It follows that the PDS was not defective by reason of the omission of that information.”
[14] [2014] VSC 334.
Those and similar matters were the basis of the proposed further cross-action (counterclaim) of the defendant. I have described these matters as being of lesser importance because they are findings of fact in the Clarke litigation and they do not bind me here. However I think that they are useful observations as they give an indication of the issues of proof for the defendant here and the task confronting the plaintiff if those issues do arise on the defendant’s case. And it is the case here that GSF, GSMAL and GFSPL are not parties to these proceedings as occurred in Clarke.
The claimant plaintiff is a Bank which alleges that it is the beneficiary of an assignment for consideration. The defendant has ventilated specific points of defence against the plaintiff Bank but each of them are connected to the transaction entered into between the defendant and GSMAL. The cross action (counterclaim) of the defendant is premised upon the transactions entered into by the defendant with GSMAL and the loan with GSF. None of the allegations involve any allegation of wrong doing against the Bank. Nor could that occur, as the Bank was not a party to any of these transactions. It follows that the findings of Croft J are informative even though they are not in any sense binding. At one level, the only truly informative finding of Croft J concerns the position of an “innocent” party such as the Bank. These are all matters that require careful consideration by me.
The application for adjournment which was refused
Following my decision on the question of the amendment of the pleadings, Mr Ling then applied for an adjournment of the trial. The principal reason proffered by him was that he had only recently commenced to act for himself and that he needed more time. Mr Ling was not specific about what particular issues he was dealing with that required more time. He could not elucidate the position nor could he inform what different position he was in now than he had been in only a week earlier when he had been represented by solicitors and presumably was preparing for trial. The amended pleadings proffered by him disclosed the hallmarks of a trained solicitor. Eventually Mr Ling told me that the solicitor Mr Guthrie continued to advise him and had drawn the amended pleadings. It also became clear that Mr Ling had received advice from the solicitors about the conduct of the trial and that they had been involved in the process of the preparation for trial. The solicitor had only formally ceased to act some seven days earlier and in light of their involvement in the amended pleadings it beggars belief that they would not have had the same input to trial preparation. Those proposed amendments are demonstrably a reaction to some of the criticisms of the plaintiff’s case in Clarke made by Croft J. The solicitors appear to have made themselves familiar with that decision in order to draft the amendments.
The important point here is that despite Mr Ling admitting this ongoing assistance from the firm of solicitors, he could only inform me that he was now acting for himself and needed more time. The period of time was not specified and Mr Ling could not tell me the issues or things that he thought required further attention. He had the tender book and was aware of the transactional history that the plaintiff intended to rely upon in its case. He had formulated an amended pleading and was permitted to press that Defence and to also press the content of the cross action (counterclaim) as amended.
Nothing that Mr Ling put to me satisfied me that in weighing all relevant considerations the balance fell in his favour in the exercise of my discretion. By the time this application was made I had adopted the view that I needed to give every assistance that I could (within reason) to Mr Ling both in the defence of the plaintiff’s claim and in the pursuit of his cross action (counterclaim). I also formed the view that I should adjourn this action for a day or more as and when required to give Mr Ling time to “catch up” as it were to the case in the event that he falls behind. This is what I have done.
I formed the view that the interests of all parties were best served by me managing the pace of the litigation to best protect Mr Ling’s interests. It had also become clear to me that Mr Ling was a man of real intelligence with a sufficient intellect to be able to comprehend the Court process as it developed and that the better choice for someone in his position was to embark upon the action. That way, he could get through the difficult early days of an action suffered by any litigant and he could familiarise himself early with a process that was foreign to him regardless of when the trial commenced.
For all of those reasons I decided that it is the exercise of my discretion to dismiss Mr Ling’s application for adjournment of the trial.
The questions that arise in this proceeding
The issues that arise for resolution in this proceeding are as follow:-
1.   Whether on or about 1 July 2004 Great Southern Finance agreed to lend to the defendant and did lend to the defendant the sum of $203,260;
2.   If yes to 1, the terms of the loan;
3.   Whether and if so what variations occurred to the terms of the loan made between Great Southern Finance Pty Ltd (GSF) and the defendant;
4.   If yes to 3, whether GSF has assigned its right under the loan agreement to ABL Custodian Services Pty Ltd under a sale notice issued 21 December 2005;
5.   If yes to 4, whether pursuant to a deed of retirement and appointment of trustee dated 19 July 2005, ABL Nominees Pty Ltd succeeded to the rights of ABL Custodian Services Pty Ltd as trustee of the Lighthouse Warehouse Trust No.7 one of the assets of which included the rights under the loan agreement;
6.   If yes to 5, whether pursuant to a replacement of servicer deed dated 5 February 2009, the right to collect all monies due and owing under the loan agreement became the right belonging to Bendigo and Adelaide Bank Limited;
7.   If yes to 6, whether the plaintiff has made a written notice of demand upon the defendant for repayment of the debt outstanding;
8.   If yes to 7, the correct calculation of the amount of the debt owing by the defendant and the applicable rate of interest.
The evidence
The plaintiff tendered exhibit P1. This exhibit was in three volumes and consisted of 38 separate documents. This exhibit was admitted into evidence and it formed the documentary trail that informs the plaintiff’s claim. As well, it contains a number of documents executed by the defendant at various times. In the end, the defendant did not challenge his signature upon some of these documents and he agreed that he had freely and voluntarily executed those documents in full knowledge of the meaning of them. The case of the defendant was in part anchored by the fact of execution by him of all of these relevant documents and he at that time was relying on the asserted misrepresentations or misleading conduct.
The Great Southern contractual documents
Earlier in these reasons I have set out the structure for the arrangements proposed for the sale and purchase of wood lots. One principal question in the proceeding is whether or not any such proposal was entered into by or on behalf of the defendant. In order to answer that question it is necessary to closely analyse the documents in exhibit P1. Document 2 of exhibit P1 is an application for “Term Finance Principal and Interest Loan”. It is dated 29 June 2004 and is executed by the defendant. It seeks to procure a loan of $201,000 on terms of three years interest only and then four years principal and interest. All of the details contained on the face of the document are provided by the defendant. The accountant of the defendant is identified as James Lynch and Associates. A financial planner named Christopher Grindal is identified. The defendant’s evidence was that the accountant Mr Lynch advised him that it was necessary to have a financial planner for the process. That is the reason why the name of Christopher Grindal is included within this document. The defendant gave evidence that he had never met Christopher Grindal. I accept the evidence of the defendant on that topic.

On the last day of hearing in June 2015, Mr Ling announced to the court that he was intending to deliver a notice of rescission of the loan agreement to the liquidator of GSF and to the assignees of any such loans.
Section 925A CA operates in conjunction with s924A CA. That provision reads as follows:-
Section 924A
Agreements with certain unlicensed persons
(1) Subdivision B applies to an agreement entered into by a person (in this section and Subdivision B called the non-licensee ) and another person (in this section and Subdivision B called the client ) (not being a financial services licensee) that constitutes, or relates to, the provision of a financial service by the non-licensee if:
(a) the agreement is entered into in the course of a financial services business carried on by the non-licensee; and
(b) the non-licensee does not hold an Australian financial services licence covering the provision of the financial service, and is not exempt from the requirement to hold such a licence.
Note: It does not matter whether the financial service is provided to the client as a wholesale client or as a retail client.
(2) Subdivision B applies to the agreement whether or not anyone else is a party to the agreement.
In order for s925A CA to operate, it is necessary to identify an agreement entered into by a non-licensee with a client that constitutes or relates to the provision of a financial service by the non-licensee if:
(a) The agreement is entered into in the course of a financial services business carried on by the non-licensee; and
(b) The non-licensee does not hold an Australian financial services licence covering the provision of the financial service and is not exempt from the requirement to hold such a licence.
I have already made findings that s924A does not apply to the case at bar and it will be seen that this Court does not have jurisdiction under s925A CA to hear and determine any cause or lis arising under that section.
In the event that I am wrong about that conclusion, it is still necessary to give consideration to s925A as contended for by Mr Ling. Mr Ling as the investor may, before or after completion of the agreement, give to the non-licensee a written notice stating that he wishes to rescind the agreement. This may occur only within a reasonable time after Mr Ling became aware of the facts entitling him to give the notice. Consistent with common law principles, Mr Ling would not be entitled to give the notice of rescission if he had affirmed the agreement.
The question of whether or not Mr Ling has affirmed the contract is a question of fact. It is known that he made monthly repayments on the loan. He has admitted those payments. The recovery of those payments forms part of his cross-action counterclaim. He made those repayments in the period between 1 July 2004 and until 15 December 2009. He agreed in evidence that he unilaterally terminated those payments because he considered that he had not got what he bargained for in his contract with GSMAL. That termination was, on the evidence, associated with the introduction of Gunns as the manager. When Gunns became the manager, it increased the fees chargeable for the wood lots and in effect the investment became an unviable financial proposition for Mr Ling. This occurred in 2009. It is no stretch of the imagination to suggest that as a result of the 2007/2008 global financial crisis, Mr Ling’s business was nowhere near as profitable in 2009 as it was in 2004.
Also in 2004 and following, Mr Ling obtained substantial tax deductions. As I have already described, Mr Ling obtained a dollar for dollar deduction for the cost of his investment in the 2003/2004 financial year. He invested $201,000 and obtained a deduction in that amount on his income for that financial year. The evidence of Mr Ling was that this left him with a taxable income which attracted a marginal tax rate of 30 cents in the dollar. I have earlier found that the investment by Mr Ling in the wood lots was governed by the amount of tax deductions required by Mr Ling to bring his taxable income below the 30 cent per dollar marginal tax rate. This was achieved by purchasing 67 wood lots. The purchase of that number meant that a deduction was obtained for the investment of $201,000 and the balance of Mr Ling’s assessable income would be at the 30 cent marginal rate. To that extent the number of wood lots purchased was slightly random and was dependent upon the best assessment of Mr Ling’s 2003/2004 assessable income made on or about 28/29 June 2004.
All of this was part of Mr Ling’s intention at the time of entering into the transaction. This was associated with the advice that he received from the accountant Lynch. It was the accountant Lynch who suggested the investment in GSMAL, procured the retainer of the financial adviser (whom Mr Ling never met), the obtaining of the financial advice and the entry into the investments. Mr Lynch was the accountant who filed the tax returns for Mr Ling both for the 2004 financial year and the 2005, 2006, 2007, 2008 and 2009 financial years in all of which Mr Ling claimed deductions for the costs of interest paid on the loan initially procured from GSF. In any event, Mr Ling has purported to terminate the loan in 2015, some 11 years after the loan was entered into. I am satisfied on all of the evidence that Mr Ling has affirmed the loan by his conduct between 2004 and 2009. I am also therefore satisfied that Mr Ling is not able to satisfy the requirements of s925A(3) CA. In my opinion, Mr Ling is not entitled to give the notice of rescission as contemplated under that provision.
If I am wrong about that view, it becomes necessary to also give consideration to the fact that an assignment of the loan occurred as described above. There is no evidence before the court and no submissions made on this topic. It is not a matter upon which the court would speculate about what Mr Ling would say about the bona fides of the plaintiff, any question of notice to the plaintiff about any entitlement to rescind or in what way the alleged notice of rescission would somehow affect the result in the way contemplated by the decision of Bleby J in Hines v Mediterranean Shipping.[196]
[196] (2001) 80 SASR 268 at 275 [38].
One of the considerations raised in Hines was whether coupled with due diligence, it could be shown that the evidence to be submitted could have been discovered prior to the time of the application. There is really no evidence on this point before me. It is known that there is an allegation within the defence that GSMAL was a licensed entity. There is no pertinent pleading in either version of the cross-action (counterclaim) apart from that which is contained within paragraph 26 of both versions of that document. The pleading in that paragraph does not then inform the subsequent paragraphs. It is impossible to say what Mr Ling may have known or learned from his legal advisers prior to that time. It is also unclear what position Mr Ling was taking in relation to the evidence in the matter and the influence upon his decision-making of the decision of Croft J which his Honour handed down on 11 December 2014. I can give little weight to this issue because Mr Ling informed me in submissions that he dropped out of the plaintiff group in that case some time in 2012. The indication given to me in submissions was that he did so because of dissatisfaction with the conduct of the matter. I doubt the veracity of that evidence. I would therefore give no weight to any suggestion that Mr Ling might have delayed the preparation of his defence in this case dependent upon the decision of Croft J in Clarke. To the contrary, my expectation is that having retained solicitors and counsel and having been in the throes of preparation of the action for trial, Mr Ling would have received advice upon and been alert to evidentiary issues concerning his case. This is particularly so when it is known that from the time of the lodgement of the first defence cross-action (counterclaim) Mr Ling raised allegations concerning the conduct of GSMAL (and GSF) allegedly contrary to the ASIC Act, the Corporations Act and the Trade Practices Act.
Another consideration is the question of prejudice to the plaintiffs. I am unable to place any weight upon that issue. It was not suggested to me that any prejudice would be suffered by the plaintiffs apart from being put out of a judgment in the matter earlier than it might otherwise expect. That is a matter of speculation and I am not prepared to consider it further.
The plaintiffs also made submissions on the basis that having regard to other authorities on the question of re-opening a case, questions of caseflow management have application.[197] Having regard to the views that I have formed, I do not consider it necessary to give this matter further consideration. One of the difficulties faced in making an assessment on that basis is that the defendant has failed to identify the evidence which he would seek to lead in the court.
[197] Londish v Gulf Pacific Pty Ltd (1993) 45 FCR 128 at 138-139; Cornwall v Rowan (2004) 90 SASR 269; AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; Ample Source International Limited v Bonython Metals Group Pty Ltd; in the matter of Bonython Metals Group Pty Ltd (No 6) [2011] FCA 1484.
Applying the tests enunciated by the Full Court in the Hines decision, I am satisfied that whatever fresh evidence may be identified by the defendant, it is not so material that the interests of justice require it to be admitted. For the reasons that I have set out above, the evidence would not affect the result. It is impossible to say whether or not the evidence could, by reasonable diligence, have been discovered earlier. The tendency of my thinking is that it could have been so discovered but it is not necessary for me to come to a final conclusion on that topic.
Finally, on the question of the obligation to do justice between the parties, in my opinion, the obligation to do justice between the parties is not offended by any refusal to allow Mr Ling to now re-open his case. I also consider that there is a further reason why no cause of action exists between Mr Ling and the Bank, where Mr Ling seeks to obtain some relief against the Bank through GSF.
It would first be necessary for Mr Ling to prove that GSF is a “liable” person or was knowingly involved in contraventions by GSMAL (which have also not been proven in evidence). I consider that Mr Ling has failed to establish any claims against GSF in the proceedings.
If Mr Ling was to have established these claims, it would be necessary for him to establish that the directors of GSMAL had knowledge of matters constituting a breach of the relevant CA provisions or the relevant ASIC Act provision in their capacity as directors of GSMAL and that they were under a duty to disclose those matters to GSF which, in turn, had a duty to receive the information.
This circumstance may arise where there may be common directors. There is no proof that there were common directors before GSF and GSMAL. However, for the sake of argument I will assume a common directorship. In circumstances where there is a common directorship, and there is a duty amongst the common directors to disclose the information received from GSMAL to GSF, it is necessary at least for the directors to have the requisite knowledge and be aware that the information is material to GSF. This would require Mr Ling to prove at least the following matters:-
(a) The director knew that the PDSs contained misleading statement (having proved that they did in fact contain misleading statements);
(b) That the common directors had a duty to disclose that information to GSF; and
(c) The common directors, as directors of GSF had a duty to receive that information but failed to do so.
Mr Ling has failed to establish any of these matters in any affidavit material that he has tendered in support of his application or in evidence in the trial of this matter.
Even if he could prove that there were common directors, that the PDS contained misleading statements and that there was knowledge of the common directors and the duty of the common directors in relation to the PDSs, it would still be necessary for Mr Ling to prove that the person(s) in the senior management role at GSF in some way considered and then approved the PDSs for the relevant schemes on behalf of GSF. There is no evidence of this and no consideration has been given to that matter in this trial. Mr Ling has not been able to identify any document or documents that show that the senior management of GSF had any involvement whatsoever in the due diligence process associated with any of the PDSs up to and including 30 June 2004.
The Bank as an innocent third party
The position taken by the Bank in this matter is that it is an innocent third party financier and it has no connection with any primary liability which may belong to GSMAL or GSF. Secondly, none of the statutory provisions relied upon by Mr Ling empower me to make any orders against the Bank as an innocent third party. Put simply, wrongdoing of GSMAL and GSF cannot found any relief against the Bank and there is no evidence or pleadings that the Bank engaged in or was otherwise involved in any wrongful conduct.
I accept these submissions. On the facts of the matters as I have found them, they are correct contentions.
I have already dealt in detail with s1022C. I have found that none of the matters pleaded by Mr Ling nor any evidence led by him could ground any basis for making orders against the Bank. I have emphasised earlier in these reasons the tax driven nature of the arrangements which were suggested to Mr Ling by Mr Lynch the accountant, the fact that it was Mr Ling who made the decision to enter into the loan arrangements notwithstanding that he said he could have made provision for the investment out of his own funds or from borrowings from his own bank. I have significant doubt about these last two matters. First, as the arrangements were tax driven, they ordinarily occur in circumstances of cash flow difficulty. That is, the tax burden that falls upon a person such as Mr Ling who has a rapidly increasing income (in 2004) could be dealt with in a number of ways. Provision could have been made to pay the tax. There is no evidence of this before me. The second would be to create a circumstance where a deduction is obtained. That is the position that applies to Mr Ling. In order to create that position, it was necessary for him to make a borrowing to fund the fully tax deductible investment. This is what he did. The second is that in entering the loan arrangements, Mr Ling made a commercial decision which best suited his purposes. There was no compulsion upon him to enter into those loans and that was a matter for him. In the end, his commercial decision was to borrow the funds from GSF.
Even if it be thought that because of the LSSD then the Bank was not necessarily at arm’s length, that is not a matter which would give any assistance to Mr Ling. The argument about a non-arm’s length position of the Bank (which I do not accept) appears to be based upon a submission of Mr Ling that the loans assigned to the Bank were infected with the same difficulties as beset GSMAL and GSF. There are a number of responses. The first is that the relief sought is statutory and is not equitable.[198] If it be said that the Bank could not be expected to be in a better position than the assignor GSF prior to the assignment, then it is necessary to examine the applicable rule in equity. The first is that any equity must be inseparably connected with and flow out of the chose in action assigned.[199] As I have earlier demonstrated, there is no inseparable connection between GSF and the Bank. Therefore, any contention based upon equitable grounds fails at inception.
[198] Mayfair Trading Co Pty Ltd v Deyer (1958) 101 CLR 428 at 450.
[199] PW Young, C Croft and ML Smith, On Equity (2009) [10.160].
Finally, in relation to CA claims[200] I do not have any power to make any orders under those provisions against persons who did not engage in or who were not otherwise involved in any conduct in contravention of the provisions of the CA, the ASIC Act, the TPA or any Fair Trading Act equivalent. Put simply, if the Bank was not involved in the contraventions, it can have no liability. In Clarke, at paragraph [4144], Croft J, when considering the same contentions in the Clarke matter said as follows:-
[200] Section 1325(5) CA, s12GM(7) ASIC Act.
[4144] While there are no authorities which analyse the wording of ss 1325 and 12GM, there are a number of authorities on the almost identical relief provisions in s 87 of the now repealed Trade Practices Act 1974 (Cth). Those authorities establish that orders cannot be made against innocent third parties under s 87, including innocent assignees who did not engage in, or were not involved in, the contravening conduct.
[4145] By way of example, in Krambousanos v Jedda Investments Pty Ltd Branson J said:
“[A] hurdle in the way of the applicants’ claim concerning misleading and deceptive conduct is that [the mortgagee] is not a party to these proceedings. Moreover, no attempt has been made by the pleadings or otherwise to link the first respondent with the conduct of [the mortgagee] sought to be impugned, or to establish a basis upon which it should assume responsibility for such conduct.
...
Section 82 of the Trade Practices Act makes it plain that an action for damages brought against a person who suffers loss or damage by conduct of another that was done in contravention of a provision of Pt IV or V of that Act may only be brought against the person who contravened the Act or a person involved in the contravention.
Section 87(1) of the Trade Practices Act similarly requires, in my view, that the person or persons against whom orders may be made under that subsection: (a) was or were the person or persons who engaged in the conduct complained of or were involved in such conduct.”
[4146] Given the similarities in wording between s 87 of the Trade Practices Act, and ss 1325 of the Corporations Act and s 12GM of the ASIC Act, the authorities relating to s 87 should, in my view, be applied in the present circumstances.
(Citations omitted)
I consider that the Bank has not engaged in any contravening conduct or that it is otherwise involved in any conduct. It is not in any way inseparably connected to the entity which allegedly was involved in any such conduct. I consider there is no basis to make any orders under any CA provision or any ASIC Act provision.
The question of a penalty
The final consideration is the question of an allegation by Mr Ling that the claim of the Bank involves a penalty.
The question of whether or not a penalty exists is now the subject of a number of authoritative High Court statements: Ringrow Pty Ltd v BP Australia Pty Ltd (Ringrow);[201]Andrews v Australia and New Zealand Banking Group Limited (Andrews);[202] AMEV-UDC Finance Limited v Austin.[203]
[201] (2005) 224 CLR 656.
[202] (2012) 247 CLR 205.
[203] (1986) 162 CLR 170 at 181.
The penalty doctrine remains a doctrine of equity and the Court will give due consideration to matters of substance over form. In the case at bar, at the relevant time that the loan agreement was entered into, Mr Ling willingly agreed to pay the interest component of the loan agreement at the rate of 11% or a default rate of 14%. Under the deed of variation those interest rates were increased to 12% and 15% respectively. As the High Court held in Ringrow, “…the propounded penalty must be judged “extravagant and unconscionable in amount. It is not enough that it should be lacking in proportions. It must be out of all proportion.”[204] No basis has been put to me by Mr Ling and I am aware of no basis upon which it could be said that the interest rate charged or alternatively the default interest rate was extravagant and unconscionable in amount and was out of all proportion. I am unable to accept any contention by Mr Ling that that interest rate constituted a penalty. For the same reason they are not unconscionable for s12CC CA.
[204] At [32]. See also AMEV-UDC Finance Limited v Austin at 190; Esanda Finance Corporation v Plessnig (1989) 166 CLR 131, 139-140, 141 and 143.
Result

For all of these reasons, I have refused the application of Mr Ling to reopen the trial and in the premises the plaintiff is entitled to an order for payment by My Ling of the amount of its claim plus interest. The counterclaim of Mr Ling will be dismissed.
I address the questions formulated at paragraph [82] hereof:-
1.   Whether on or about 1 July 2004 Great Southern Finance agreed to lend to the defendant and did lend to the defendant the sum of $203,260;
Yes.
2.   If yes to 1, the terms of the loan;
The terms are contained in the loan agreement executed between the parties on 14 December 2009 and forming exhibit P1 volume 1 tab 3 page 139.
3.   Whether and if so what variations occurred to the terms of the loan made between Great Southern Finance Pty Ltd (GSF) and the defendant;
Yes. Under a Deed of Variation dated 10 June 2008 the loan period was extended to 15 June 2014, the loan repayment amounts were varied so that after 1 July 2008, the basic interest rate was increased to 12% per annum and the overdue rate increased to 15% per annum.
4.   If yes to 3, whether GSF has assigned its right under the loan agreement to ABL Custodian Services Pty Ltd under a sale notice issued 21 December 2005;
Yes.
5.   If yes to 4, whether pursuant to a deed of retirement and appointment of trustee dated 19 July 2005, ABL Nominees Pty Ltd succeeded to the rights of ABL Custodian Services Pty Ltd as trustee of the Lighthouse Warehouse Trust No.7 one of the assets of which included the rights under the loan agreement;
Yes.
6.   If yes to 5, whether pursuant to a replacement of servicer deed dated 5 February 2009, the right to collect all monies due and owing under the loan agreement became the right belonging to Bendigo and Adelaide Bank Limited;
Yes.
7.   If yes to 6, whether the plaintiff has made a written notice of demand upon the defendant for repayment of the debt outstanding;
Yes.
8.   If yes to 7, the correct calculation of the amount of the debt owing by the defendant and the applicable rate of interest.
The Court will hear the parties on this issue.
I will hear the parties as to interest and costs.