Burkett v Bendigo and Adelaide Bank Ltd (No 2)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2018 00837

PAUL BURKETT	Plaintiff
v
BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178)	Defendant

S CI 2018 00839

BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178)	First Plaintiff
and
ABL NOMINEES PTY LIMITED (ACN 106 756 521) AS TRUSTEE FOR THE LIGHTHOUSE TRUST NO 12 v	Second Plaintiff
PAUL BURKETT	Defendant

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JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	19 June, 26 June, 19 October, 24 October (Written submissions) 2018
DATE OF JUDGMENT:	7 December 2018
CASE MAY BE CITED AS:	Burkett v Bendigo and Adelaide Bank Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2018] VSC 723

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COURTS AND JUDICIAL SYSTEM – Consequences of being a group member – Clarke (as Trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) [2014] VSC 516 – Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214 – Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592; [2017] VSCA 51 – Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212.

BANKING AND FINANCE – Evidence required to establish the advance of moneys under an alleged loan agreement – Where evidence is equivocal regarding the genesis and assignment of the loan – Where inconsistencies abound amongst evidence and pleadings – Advance not proven.

DEEDS AND OTHER INSTRUMENTS – AGENCY – Whether application form for managed investment scheme purporting to confer a power of attorney was executed as a deed – Requirement that deed be delivered persists – Whether deed delivered – Application form a deed but not delivered – Relevant power of attorney not granted – Dean v Lloyd (1990) 3 WAR 235 – 400 George Street (Qld) Pty Ltd v BG International Ltd [2012] NSWCA 253 – Netglory Pty Ltd v Caratti [2013] WASC 364 – Powers of Attorney Act 2003 (NSW) ss 7, 8 – Conveyancing Act 1919 (NSW) s 38.

AGENCY – Whether power of attorney validly exercised – Where donor of power of attorney was not ascertainable at the time of alleged grant of power – Where a third party purported to exercise the power of attorney – Purported exercise of the power of attorney by third party ineffective.

RESTITUTION – Unjust enrichment – Moneys had and received – Liability of managed investment scheme participant to account to financier for moneys allegedly borrowed for investment scheme – Where loss by a financier not established – Where gain by investor not established – Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff in S CI 2018 00837 and the Defendant in S CI 2018 00839	Mr A Harding with Mr B Petrie	StevensVuaran Lawyers
For the Defendant in S CI 2018 00837 and the Plaintiffs in S CI 2018 00839	Mr J Hynes	Turks Legal

HIS HONOUR:

Introduction

This matter comprises two proceedings with respect to the same subject matter:

(a) a proceeding commenced by Mr Paul Malcolm Burkett (“Burkett”) against Bendigo and Adelaide Bank Limited (“BEN”) — S CI 2018 00837 — (“the Burkett Proceedings”); and

(b) a proceeding commenced by BEN and ABL Nominees Pty Limited (“ABLN”) against Burkett — S CI 2018 00839 — (“the Bank Proceedings”).

Both of these proceedings were commenced in the Supreme Court of New South Wales and subsequently transferred to this Court pursuant to s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) by order of Rein J on 19 February 2018.

The claims in the Bank Proceedings by the Plaintiffs (“the Bank Parties”) concern claims against Burkett in respect of liability under a guarantee instrument which guaranteed the obligations of DSP Group Pty Ltd (“DSP Group”) under a loan agreement pursuant to which ABLN advanced the sum of $401,600 (“DSP Loan”).

The second claim in the Bank Proceedings against Burkett relates to a claim in respect of liability outstanding under a loan agreement in which Burkett is borrower pursuant to which it is claimed that ABLN advanced the sum of $251,250 (“Burkett Loan”). The amount claimed to be owing under this loan as at 19 June 2018 is $704,608.67. At the hearing of closing submissions on 19 October 2018, the Court was informed that there had been a resolution of the claims against Burkett as they concern his guaranteed liability to the Bank.[1] Consequently, the only aspect of the Bank Proceedings raising live issues is the second claim, with respect to the Burkett Loan.
[1]Transcript (19 October 2018), 1.

In the Burkett Proceedings, Burkett seeks declarations that he is not liable under the agreements that are sought to be enforced in the Bank Proceedings. Burkett has abandoned a number of other prayers for relief initially raised by him in the Burkett Proceedings, including allegations of misleading and deceptive conduct under the Trade Practices Act 1974 (Cth). As a result, Burkett’s remaining arguments which are directed at impugning his liability to the Bank Parties are, in summary, that ABLN did not make the advances, that no valid power of attorney was granted for the purpose of executing the Loan Deed, and the argument that Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) (ACN 009 235 143) (“GSF” or “GSFPL”) was the lender rather than ABLN and the associated argument that the Loan Deed, even if validly executed, was executed in circumstances where the parties were not ascertained, with the result that it was ineffective. The nature and extent of live issues flowing from those arguments is both enunciated and discussed in detail in the reasons which follow.

The Bank Parties in both the Bank Proceedings and the Burkett Proceedings seek to raise as a complete answer to both the Burkett Proceedings and his defence of the Bank Proceedings the Deed of Settlement which was approved by this Court on 11 December 2014 under s 33V of the Supreme Court Act 1986 (“the Deed of Settlement”) in Clarke (as Trustee of the Clarke Family Trust) v Great Southern Finance (receivers and managers appointed) (in liquidation) (“Clarke”).[2]
[2][2014] VSC 516.

The Plaintiff relies upon affidavits of Mr Stephen Flamer-Smith[3] and also the affidavit of Mr Jack Thomas Frantz,[4] which were admitted as evidence at trial on the basis that, where the deponents have no personal knowledge of the matters and documents to which reference is made and exhibited, they are to be treated as explanatory material only for the purpose of putting the documents into evidence.[5] Exhibited to those affidavits are certain critical documents upon which the Plaintiff relies, including:

(a)the Application for Term Finance made by Burkett with respect to the 2007 High Value Timber Scheme (“the 2007 HVT Scheme” or “the Scheme”) made on 18 June 2007 (“the Application for Term Finance”);[6] and
(b)the Loan Deed purportedly executed on behalf of Burkett with respect to the 2007 High Value Timber Scheme on 1 July 2007 (“the Loan Deed”).[7]
[3]Affidavits of Stephen Flamer-Smith of 29 March 2017; 20 July 2017; 13 September 2017; 15 June 2018 and 20 June 2018.
[4]Affidavit of Jack Thomas Frantz (25 June 2018).
[5]Transcript (19 June 2018), 29, referring to Defendant’s Objections to Evidence.
[6]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 619–40.
[7]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 643–54.

The reference to documents in these reasons in an unqualified way—such as, for example, “the Loan Deed” or “the power of attorney”—does not connote any view or position as to their validity. The substance of these reasons indicates my opinion or opinions in this respect.
Key issues

The parties addressed a number of agreed key issues in these proceedings. Though slightly differently formulated, it is convenient to set them out as stated by Burkett:[8]
[8]Burkett’s Outline of Closing Submissions (31 July 2018), [11] (omitting paragraph (5) as it related to the guaranteed obligations of DSP Group).

(1)Does the evidence establish that, as claimed by the Bank Parties, ABLN made the … [a]dvance?
(2)Did Burkett … ever give to GSF a power of attorney by which it was lawfully authorised to enter into [a] loan … [deed] on … [his] behalf?
(3)If yes, and the loan … [deed was] validly executed, who were the counterparties to the … [deed]?
(4)If no, and the loan … [deed was] not validly executed, did there nevertheless arise [a] loan … [agreement] between … Burkett and ABLN on the terms claimed by the Bank Parties, namely the … [Burkett] Loan Agreement …?
…
(6)In respect of the … [a]dvance, has Burkett been unjustly enriched at the expense of ABLN or BEN?
(7)Is Burkett estopped or otherwise prevented from advancing any claims or defences by reason of a deed of settlement approved by Croft J in related group proceedings (No. S CI 2011 04071) on 11 December 2014?

It should, however, be emphasised that, as indicated in paragraph (7), these “Key issues” are to be viewed in the context of the overarching argument put by the Bank Parties that the provisions of the Deed of Settlement prevent a person in Burkett’s position, as a group member in the Great Southern group proceedings, from now raising any of these matters. Thus, these “Key issues” are addressed in the reasons which follow and then the effect of the Deed of Settlement is considered as the final issue.
Factual and documentary background

Before turning to address the key issues, it is important to have regard to the factual and documentary background with respect to the 2007 HVT Scheme.

A product disclosure statement was issued on 16 February 2007 for the 2007 HVT Scheme (“the PDS”).[9] By the PDS, Great Southern Managers Australia Limited (“GSMAL”) invited interested persons to invest in the 2007 HVT Scheme. The process of investment in this Scheme required the subscribers or “growers” to enter into a Land and Management Agreement (“LMA”) under which GSMAL would establish and maintain African mahogany and teak plantations on the growers’ behalf. Depending upon the level of investment, a grower would be allocated one or more areas of land, or “woodlots”. As part of the 2007 HVT Scheme, GSF offered finance, either on its own behalf or through its “preferred financier”. The identity of the “preferred financier” was not disclosed in the PDS. Thus, ABLN is not mentioned in the PDS, whether as a potential financier or otherwise.
[9]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017) at 1–108.

Section 8 of the PDS, entitled “Application Details”, explains how an application should be made to participate in the 2007 HVT Scheme. This section of the PDS is prefaced by the following material under the heading, “Introduction”:[10]

Applications to participate in the Projects [referring to the Great Southern 2007 High Value Timber Project and also the Great Southern 2008 High Value Timber Project] may only be made by completing the relevant Application Form attached to this PDS and forwarding it to the Responsible Entity with a cheque for the deposit or full Application Price. Growers should read ‘How to subscribe checklist’ on page 97 or 101 prior to completing an Application Form.

[10]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 90. Page number references are to the page number of the exhibit, rather than to the page numbers used internally in the document which has been exhibited (the page numbers of the PDS are 2 less than the page numbers of the exhibit).

The PDS addresses payment arrangements[11] and, more particularly, contains the following material:[12]

Borrowing the Application Price (excluding GST) from GSFPL or the preferred financier, GSFPL and the preferred financier makes available long term finance to suitably qualified Applicants subject to certain lending criteria. GSMAL does not guarantee that long term finance will be made available by GSFPL or the preferred financier and such finance is subject to application arrangements, lending criteria, security arrangements, interest rates and repayment terms as agreed between the Applicant for finance and the lender. A Tax Invoice for $13,750 (inclusive of GST) per Woodlot will be issued on execution of your Land & Management Agreement. The balance not subject to financing by GSFPL or paid on application, will be due in accordance with the terms of that invoice.
Growers should obtain appropriate professional advice that borrowing funds from either GSFPL, the preferred financier or other lenders is appropriate to their particular circumstances and may also wish to ensure they have appropriate income protection and other insurance arrangements in place to cover the borrowings.
Additional information on financing facilities can be obtained from your financial adviser.

As can be seen from this material, consistently with the other material contained in Section 8 of the PDS, there is no reference to the “preferred financier” by name or any other identifying feature.

[11]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 91–2.

[12]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 92.

Section 8 of the PDS also contains provisions with respect to the grant of a power of attorney, under the heading “Power of attorney”.[13] Extensive powers with respect to the process of investment by the applicant in the 2007 HVT Scheme are set out in paragraphs 1 to 6 under this heading, introduced by the following:[14]

By Signing the Application Form on page 98 or 102 of this PDS, Applicants are agreeing to appoint Great Southern Managers Australia Limited and each Director and Company Secretary of Great Southern Managers Australia Limited jointly and severally to be attorney for the Applicant, in the Applicant’s name, on the Applicant’s behalf and as the Applicant’s act and deed on the terms specified below and to exercise the powers set out hereunder, and only those powers.

The material with respect to the grant of a power of attorney is followed by material in the PDS which addresses the terms of the loan to finance the investment, under the heading “Loan Conditions”.[15]

[13]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 92–3.

[14]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 92.

[15]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 94.

The PDS contains template application forms, as indicated in the material to which reference has been made.[16] Paragraph 5 of the template application form is headed, “FINANCE (IF APPLICABLE) Please complete” and states:

I/We hereby apply to Great Southern Finance Pty Ltd, or to a preferred financier of GSMAL, to borrow the amount of… (insert amount which may not exceed the number of Woodlots applied for x $12,500 per Woodlot, under the terms of the finance option selected below…
[Emphasis added by Burkett]

[16]See Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 100, 104.

The template application form also attached a direct debit form for applicants seeking finance from GSF. The direct debit form is headed:[17]
[17]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 101.

PLEASE ONLY COMPLETE THIS FORM IF USING GREAT SOUTHERN FINANCE (SECTION 5 OF THE APPLICATION FORM)

This heading is capitalised and in bold as printed in the PDS.

The authority section of this direct debit form, under the heading “REQUEST AND AUTHORITY TO DEBIT THE ACCOUNT NAMED BELOW TO PAY GREAT SOUTHERN FINANCE PTY LTD“ (also capitalised and bold as printed in the PDS), contained space for insertion of the borrower’s name, and beneath that the following:

request and authorise Great Southern Finance Pty Ltd… to arrange for any amount Great Southern Finance Pty Ltd may debit or charge you to be debited… at the financial institution debited below.
[Emphasis added by Burkett]

The direct debit form also contained an acknowledgment, as follows:
ACKNOWLEDGEMENT
By signing this Direct Debit Request (DDR) you acknowledge having read and understood the terms and conditions governing the debit agreements between you and Great Southern Finance Pty Ltd as set out in this Request and in your Direct Debit Request Service Agreement.
[Emphasis added by Burkett]

On 18 June 2007, Burkett signed an application form to participate in the 2007 HVT Scheme on his own behalf.[18] On the same date, Burkett also completed an application for term finance in the same terms as the form of that name provided for in the PDS for a loan amount of $251,000 (“Burkett Application”).[19] When Burkett signed these forms, the relevant details (including loan amounts) had not been filled out; the forms were unpopulated with any information pertaining to Burkett, with the relevant details later inserted by Burkett’s accountant, Mr Bakous Makari.[20]
[18]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 641–2.
[19]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017), 619–40.
[20]Transcript (26 June 2018), 83–4, 107–8.

In the application form, when completed by Mr Makari, Burkett:

(a)applied to invest in a specified number of woodlots (paragraph 4);
(b)applied for finance on a principal and interest basis (paragraph 5); and
(c)completed a direct debit request, in the same terms as the template form in the PDS authorising payments to be made to GSF from a Commonwealth Bank account. ABLN was not mentioned on that form.

The Application for Term Finance, which, as indicated, was in template form, included as standard terms a power of attorney in favour of the lender (being GSF or ABLN as applicable), authorising the lender to enter into and execute a loan deed on behalf of Burkett (Part 7) and a draft loan deed, entitled “”Term of Loan Deed - Term Finance, which contained the terms on which finance would be provided. The draft “”Term of Loan Deed - Term Finance identified the relevant “lender” as follows:

If the proposed loan has been approved by GSF, the Lender under this loan deed is GSF. If the proposed loan deed has been approved by [ABLN], the Lender under this loan deed is [ABLN].

As observed by Burkett, what would constitute an “approval” of the proposed loan was not stipulated. Without detracting from this position, it would appear that the process of approval would be informed by the provisions of cl 3 of the draft loan deed (Conditions Precedent to Facility).

Clause 2 of the draft loan deed, titled “Provision of Facility”, relevantly stated:

(a)The parties agree that the Lender will lend the Funds to the Borrower at the date on which the Fees are payable as specified in item 5 of the Schedule …
(b)The Borrower irrevocably directs the Lender to advance the Funds by satisfying on the due date: …

Clause 5 of the draft loan deed imposed on the borrower an obligation to pay interest, in the following terms:

5.1 Interest
(a)The Borrower must pay to the Lender Interest on the Principal Sum from the date being the later of either:
(1)the date the Lender advances the Funds under clause 2(a); or
(2)the Interest start date specified in item 6 of the Schedule, calculated at the rate set out in item 9(a) of the Schedule. Such interest is payable on each Repayment Date.

The Application for Term Finance contains the following provisions, on which the Plaintiffs rely:[21]
[21]Plaintiff’s Closing Outline (15 August 2018), [8]–[11].

(a)the first page of content in the document being that part of the document headed CHECKLIST FOR APPLICANTS containing the following statement:

SECTION 7 POWER OF ATTORNEY AND SIGNATURE
The applicants and guarantors are not required to sign the loan deed attached to this application (and other documents connected with, or related to, the loan deed) as the loan deed will be completed and signed by the lender (or the lender’s attorney) as attorney for the applicants and guarantors pursuant to Section 7 of this application.
(b)the final page of that part of the document headed APPLICATION FOR TERM FINANCE containing:
(i)above the execution boxes, 12 declarations;
(ii)provisions referring to the terms on which finance was to be provided and attaching a form of “Loan Deed” that was to be executed on the applicant’s behalf in due course; and
(iii)below the declarations and immediately above the execution boxes appeared the following capitalized statement:

BY SIGNING HERE YOU MAKE EACH OF THE TWELVE DECLARATIONS, STATEMENTS AND ACKNOWLEDGMENTS SET OUT ABOVE. THIS INCLUDES AUTHORISING GSF AND/OR ABL TO COMPLETE AND SIGN THE LOAN DEED ON YOUR BEHALF.

The Application for Term Finance was signed by Burkett and witnessed.

The Plaintiffs contend that the loan monies were advanced to facilitate the acquisition of Burkett’s investment in the 2007 HVT Scheme and that the loan amount of $251,250 was advanced and that loan statements record Burkett’s “investor number” (being G40021) and the unique loan repayment schedule number (being H00476). The Plaintiffs also contend that the loan origination and advances were made in accordance with a securitised lending arrangement under a Loan Sale and Servicing Deed dated 9 June 2006 (“the LSSD”).[22]
[22]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017) at 177–424.

The loan deed referable to the Application for Term Finance was executed using the power of attorney that had purportedly been granted in the Application. The following provisions of the Loan Deed are, the Plaintiffs contend, relevant:

(a) item 7 in Schedule 1 providing for the due dates for payment to be the last business day of each month and Item 8 specifying the amounts payable on each specified payment date;

(b) clause 4 providing that the borrower must pay those amounts on those dates;

(c) clause 5 providing for the payment of interest at the rates specified in Item 9 of Schedule 1 with the “overdue rate” being applicable in respect of amounts due and payable but unpaid;

(d) clause 15 providing that an “acceleration event” occurs if the borrower fails to pay any money owing on the due date for payment;

(e) clause 16.1 providing that upon the happening of an “acceleration event”, the lender is entitled to demand payment of the “moneys payable”; and

(f) clauses 20 and 21 containing guarantee and indemnity provisions.

A copy of the executed Loan Deed was sent to Burkett on 4 September 2008.[23]

[23]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017) at 158; cf. Affidavit of Stephen Flamer-Smith (29 March 2017), [14], [61].

On 1 December 2008, BEN acquired the assets and liabilities of Adelaide Bank Limited (“ABL”) including its rights under the loan. All of ABL’s rights under the loan were transferred by operation of the Financial Services (Transfer of Business and Group Restructure) Act 1999 (Cth).

Burkett’s loan application was approved on 19 June 2007, as is evidenced by a Loan Approval Form dated 19 June 2007. As observed by Burkett in his submissions, this Loan Approval Form does not indicate whether the loan was approved by GSF or ABLN which would, accordingly, determine who was the Lender; as provided for in the “Term of Loan Deed – Term Finance”.[24]
[24]See above, [19].

The Loan Deed, styled “Terms of Loan Deed”, dated 1 July 2007 was executed on behalf of Burkett. The provisions of this document with respect to parties are as follows:

… between the following parties:
[If the proposed loan has been approved by GSF, the Lender under this loan deed is GSF. If the proposed loan deed has been approved by [ABLN], the Lender under this loan deed is [ABLN]]
1. Great Southern Finance Pty Ltd
ACN 009 235 143
of 16 Parliament Place, West Perth, Western Australia
(Lender)

OR
1. ABL Nominees Pty Ltd
ACN 106 756 521
of Level 5, 169 Pirie Street, Adelaide, South Australia
(Lender)
[Delete as applicable]

and
2. The Borrower
described in Item 1 of the Schedule
(Borrower)

and
3. The parties (if any)
described in Item 11 of the Schedule
(Guarantor)

Schedule 1 states the borrower to be Paul Burkett and that the project is the “Great Southern 2007 High Value Timber project ARSN 123 528 950” with a reference to the number of woodlots in his favour being 20 and the woodlot numbers being 1405-1424. This Schedule also contains (or is intended to be followed by) the execution clauses, as follows:
EXECUTED AS A DEED:
Signed sealed and delivered by the Borrower
Paul Burkett by his/hers/its duly appointed attorney
Great Southern Finance Pty Ltd ABN 47 009 235 143
in accordance with Section 127 of the Corporations Act 2001
Signature Director Signature Secretary
John Carlton Young Cameron Arthur Rhodes
Signed sealed and delivered by the Lender:
ABL Nominees Pty Ltd ACN 106 756 521
by its duly appointed attorneys:
...

It is conceded by Burkett that the provisions of the Terms of Loan Deed are in the same terms as the draft deed attached to the Application Form, save that certain details relevant to this loan were inserted. In this respect, reference is made to the Schedule which identifies, in Items 6 and 7, that the interest start date was 1 July 2007 and that the first repayment date was 31 July 2007.

There was also an issue raised during the course of oral addresses on 19 October 2018 as to whether the signatures appearing in respect of the attestation by GSF (purportedly on behalf of Burkett) were inserted by facsimile or were original signatures. Subsequently, by email dated 24 October 2018, the parties advised by way of an agreed fact that these signatures were inserted by facsimile and were not original signatures.

Determination of key issues
Which entity was the lender and was any advance made?

On 1 July 2007, the Bank Parties plead that ABLN made the relevant advance to Burkett.[25] Burkett does not admit these allegations and submits that the evidence does not establish that ABLN advanced any monies at all pursuant to any loan agreement or deed with Burkett, whether on 1 July 2007 or on any other date. Moreover, Burkett contends that the Bank Parties have failed to establish on the balance of probabilities that ABLN made the relevant advance.
[25]See Further Amended Statement of Claim (13 April 2017), [30(a)], [34]; Affidavit of Stephen Flamer-Smith (29 March 2017), [58].

The genesis of Burkett’s contention is, the Bank Parties contend, evident in Burkett’s opening outline[26] where considerable weight was placed on the decision of Bendigo and Adelaide Bank Ltd v Howard (“Howard”).[27] The Bank Parties submit that this decision is plainly distinguishable from the present case; principally because of the position here with respect to the parties to the Loan Deed and the documents now before the Court.[28] Thus it is said that the contentions raised in Burkett’s closing outline ignore the entirety of the documentary evidence which must be considered as a whole. A number of the transactional documents, the Bank Parties contend, show the loans being an incident of what is known as “program” or “portfolio lending”. It is said that for the purpose of the loans the subject of this proceeding, ABLN was the relevant “Lender” and the vehicle by which program lending was undertaken. For the reasons which follow, I think the position in the present proceeding is the same, at least broadly speaking, as that reached in Howard. This is on the basis of the documentary and other evidence now before this Court; not because Howard is in any relevant sense an authority on this issue as it is primarily a question of fact in the present evidentiary context.
[26]Burkett’s Outline of Opening Submissions (16 June 2018), [37]–[44], especially [44].
[27][2018] NSWSC 383; particularly with reference to [86], [89], [92] and [101]–[106].
[28]Plaintiff’s Closing Outline (15 August 2018), [58]–[60].

In summary, the Bank Parties submit that:

(a)GSF undertook the dealings with the borrowers in respect of organising the loans;
(b)loans that met particular criteria would be funded (these were called “Originated Loans”) by either ABLN or ABL;
(c)GSF and GSMAL (being the “Originator”) would offer these Originated Loans to ABLN or ABL in tranches through an offer document called an “Origination Notice”;
(d)each Origination Notice referred to a list of loans called a “Settlement Report”;
(e)the loans could be funded by either ABLN or ABL;
(f)GSF would act as the “Servicer” and see to the administrative collections and enforcement matters; and
(g)there was also an assignment of these loans under a “Sale Notice” by ABLN to ABL.

The PDS referred to the finance options available for investors in the following terms:

Finance is available to Growers from Great Southern Finance Pty Ltd (and/or its preferred financier or related parties), a wholly owned subsidiary of Great Southern Limited.
[Emphasis added by the Bank Parties]

Reference has already been made to the contents of Part 8 of the PDS—“Application Details”—which makes a variety of references to alternative financing or financial options.

In support of their position in relation to this issue, the Bank Parties placed reliance on the transactional documents that regulated the origination of the loan contemplated by the Terms of Loan Deed. These comprised the LSSD which, it is said, also provides additional explanation as to why ABLN was the lender.

The LSSD contains the following provisions which the Bank Parties contend are relevant:[29]
[29]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017) at 177–424.

(a)clause 2 — Assignment and Origination of Loan Rights— provides in cl 2.1(b):
(Delivery of Origination Notice): the Originator [being GSMAL] and GSF may deliver to the Lender at any time during the Availability Period an Origination Notice complying with this Deed.

(b) clause 2.6A — Funding Originated Loans — provides:
(a)(Decision to Fund): If the Lender [ABLN] agrees to fund a proposed Loan set out in the Settlement Report accompanying an Origination Notice delivered to it (and which has not been revoked in accordance with clause 2.1(f)), it may do so by payment on the Closing Date of the Origination Amount in relation to that Origination Notice to, or at the direction of, the Originator.

(c)clause 2.19 — Undertaking to Fund — provides:
(a)(Obligation to Fund): Subject to clause 2.19(b), Adelaide Bank undertakes to fund, or to arrange for ABL Nominees to fund, Loans offered to it or ABL Nominees for purchase or origination in accordance with this clause 2 where the proposed Closing Date with respect to the Loans occurs during the Availability Period.

(d)clause 7 — Appointment and Replacement of Servicer — provides for the appointment of the “Servicer” (which, under these provisions, is GSF or ABL);
(e)the obligations of the “Servicer” under the LSSD are set out in cl 8 and include undertaking collections and enforcement action.

Moreover, the Bank Parties submit that as contemplated by cl 2 of the LSSD, on 4 July 2007 an Origination Notice was issued by GSF and GSMAL to ABLN (as lender).[30] The document provides:[31]

We refer to [the LSSD] between ourselves, Adelaide Bank Limited and the Lender [ABLN], as amended from time to time. …
This is an Origination Notice given pursuant to clause 2.1 of [the LSSD]. The Originator intends to originate in the name of the Lender as agent for the Lender in accordance with the [LSSD] on 5 July 2007… each Loan identified in the Settlement Report accompanying this Origination Notice.
If the Lender agrees to make such Loans it may do so by paying the Origination Amount in relation to this Origination Notice of $66,286,070.72 to the Originator on the Closing Date, as set out in clause 2.6A.

Attached to the Origination Notice was the document “Settlement Report as at 03/07/07”.[32] That document, the Bank Parties say, included the two loans the subject of this proceeding. A redacted copy of the Settlement Report which also included reference to the $66,286,070.72 amount referred to in the Origination Notice is exhibited to Mr Flamer-Smith’s affidavit of 15 June 2018.[33] ABLN and ABL accepted the offer in the Origination Notice by letter dated 5 July 2007,[34] which confirmed ABLN having made three payments totalling $66,286,070.72.

[30]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017) at 172–3.

[31]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017) at 172–3.

[32]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017) at 176A–C.

[33]Exhibits SFS-2 and SFS-3 to the Affidavit of Stephen Flamer-Smith (15 June 2018).

[34]Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017) at 175–6.

The Bank Parties add that further evidence demonstrating the payment of the $66,286,070.72 is provided in:

(a)Mr Flamer-Smith’s affidavit of 15 June 2018. That evidence records ABL funding the $66,286,070.72 payments to the relevant GSF and GSMAL accounts on behalf of ABLN, this being contemplated by cl 2.19 of the LSSD;
(b)Mr Flamer-Smith’s affidavit of 20 June 2018. That evidence demonstrates:
(i)the existence of a Supplementary Terms Notice Deed between ABLN (as trustee) and ABL (“STND”) pursuant to which ABLN (as trustee) would fund loan rights and originate loan rights by issuing notes and subscribing to increases in the invested amount of the notes from time to time;
(ii)the issue of a note by ABLN to ABL (as noteholder) under the STND pursuant to which ABL obtained units to the value of $66,286,070.72;
(iii)the recording of loan assets in the general ledger of ABL which record the transactions in respect of the payments to the value of $66,286,070.72; and
(iv)the recording of the notes in the relevant notes register to the value of the payments of $66,286,070.72.

The Bank Parties also add that, contemporaneously with the loans’ origination on 5 July 2007, a transaction occurred between ABL and ABLN pursuant to an agreement documented in a letter dated 14 June 2006. The agreement provided for an arrangement whereby ABL would take an assignment in equity of the loans (see cl 7) and the provision of Sale Notices by ABLN to ABL. A Sale Notice was also issued on 5 July 2007 in connection with the loans, the subject of this proceeding.

As has been observed, Burkett’s submission, in general terms, is that the Bank Parties have failed to establish that, on the balance of probabilities, ABLN made the advance. As discussed in the reasons which follow, there are, in my view, some fundamental problems for the Bank Parties in the picture they present on the basis of the documents and other evidence on which they rely.

At the outset it is contended by Burkett that the case of the Bank Parties involves two inconsistent propositions. The first is that ABL paid approximately $66 million to take an assignment of ABLN’s loan rights by making payment to the agent which had originated the loans on ABLN’s behalf, namely GSF[35] or GSMAL; as asserted by Mr Flamer-Smith in oral evidence.[36] This is the Bank Parties’ pleaded case.[37] The second is that ABL paid approximately $66 million to originate the loans by making payment to GSMAL on behalf of ABLN. This was the position asserted by Mr Flamer-Smith in his affidavit evidence[38] and in his oral evidence.[39]
[35]As pleaded in Further Amended Statement of Claim (13 April 2017), [46].
[36]Transcript (26 June 2018), 75.
[37]See Further Amended Statement of Claim (13 April 2017), [43]–[46].
[38]Affidavit of Stephen Flamer-Smith (15 June 2018), [11], [13].
[39]Transcript (26 June 2018), 76–7.

There was, however, only one payment of $66 million made by ABL.[40] Burkett contends that the one payment of $66 million cannot serve both purposes; it cannot both originate the loans and simultaneously effect a transfer of the loan rights to ABL. I accept that this is the position for the reasons which follow.
[40]Affidavit of Stephen Flamer-Smith (15 June 2018), [11] and in oral evidence, Transcript (26 June 2018), 65, 72.

First, on the Bank Parties’ case, the loans as at 5 July 2007 had already been originated, by payments made by ABLN on 1 July 2007.[41]
[41]Further Amended Statement of Claim (13 April 2017), [7(a)], [16], [30(a)], [34]; Affidavit of Stephen Flamer-Smith (29 March 2017), [13], [58]; Bank Parties’ Chronology.

Secondly, the contemporaneous documents point to the loans having been supposedly “originated” prior to the payments by ABL on 5 July 2007. For example:

(a)The Loan Deed relied on by the Bank Parties has an interest start date of 1 July 2007, and interest was calculated and paid by Burkett from that date.
(b)Clause 5.1 of the Loan Deed provided as follows:
5.1 Interest
(a)The Borrower must pay to the Lender Interest on the Principal Sum from the date being the later of either:
(1)the date the Lender advances the Funds under clause 2(a); or
(2)the Interest start date specified in item 6 of the Schedule, calculated at the rate set out in item 9(a). …

[Emphasis added by Burkett]

The Interest start date specified in item 6 of the Schedule was 1 July 2007 and interest was levied and paid from that date. Consequently, it follows from the terms of cl 5.1, and in particular the words “the later of”, that the date the “Lender” advanced the funds was a date on or before 1 July 2007. It would also follow, in my view, that if the Loan Deed were to be held enforceable—and as a deed—the Bank Parties would be estopped by the terms of cl 5.1 of the deed (and the fact that Bank Parties have received interest calculated from 1 July 2007) from contending for a loan advance date after 1 July 2007.
(c)The loan repayment schedules tendered by the Bank Parties (and relied on by them for interest calculation purposes) refer to the loans having been originated on 1 July 2007.
(d)The settlement reports are all dated 3 July 2007 and record the loans being purportedly in existence as at that date.

Thirdly, the Bank Parties’ pleaded case is that the payment of $66 million made by ABL on 5 July 2007 was to take an assignment of ABLN’s loan rights existing at that date.[42]
[42]Further Amended Statement of Claim (13 April 2017), [46]; a case which was verified by Mr Flamer-Smith, see Affidavit of Stephen Flamer-Smith (29 March 2017), [63]–[64]; Transcript (26 June 2018), 71.

Fourthly, consistently with the Bank Parties’ pleading, Mr Flamer-Smith, in his first affidavit, deposed that the payment of $66 million was made by ABL to obtain an assignment of ABLN’s right, title and interest in the loan deeds.[43] Moreover, Mr Flamer-Smith, in oral testimony,[44] expressly confirmed in his first affidavit[45] under the heading “Assignment and Transfer of the First Loan”, that the payment by ABL of $49 million (being a subset of the $66 million, for the non-Queensland loans) as having been made by ABL to take an assignment of ABLN’s loan rights.[46]
[43]Affidavit of Stephen Flamer-Smith (29 March 2017), [18]–[21], [63]–[65].
[44]Transcript (26 June 2018), 75.
[45]Affidavit of Stephen Flamer-Smith (29 March 2017), [21], see also, [65].
[46]Transcript (26 June 2018), 67.

Additionally, Mr Flamer-Smith deposed that ABL received an assignment of ABLN’s rights, title and interest in respect of the First Advance and referred to:[47]

(a)a letter sent by GSF to ABLN dated 4 July 2007, being an Origination Notice (“Origination Notice”);
(b)a “form of sale notice” (“Sale Notice”); and
(c)a letter from ABL and ABLN to GSF dated 5 July 2007 (“Acceptance Notice”).

[47]Affidavit of Stephen Flamer-Smith (29 March 2017), [18].

Fifthly, the terms of the Acceptance Notice are consistent with the payment being made to achieve an assignment of the loan rights to ABL. It expressly refers, twice, to payments of $66 million being made by ABL “pursuant to clause 2.5 of the LSSD” and “Pursuant to clause 2.5(a)(ii)” of that Deed. Clause 2.5(a)(ii) of the LSSD refers to acceptance by a “Purchaser” (defined, relevantly, as being ABL or ABLN[48]) of an offer to purchase loan rights contained in a “Sale Notice”. The Sale Notice was purportedly issued pursuant to a letter dated 14 June 2006, which was referred to in evidence as the “Side Letter”.[49] Pursuant to the Sale Notice, ABLN offered to assign to ABL the “entire right, title and interest in, to and under” the loans. It was expressed to be capable of acceptance by ABL only by paying the purchase price in relation to the Sale Notice of $49 million to ABLN on 5 July 2007. Thus it appears that, as stated in the Acceptance Notice, that is precisely what ABL did. It accepted the offer contained in the Sale Notice by making the payments referred to in the letter.
[48]Definition of “Purchaser” in Clause 1.2 of the LSSD: see Exhibit SFS-1 to the Affidavit of Stephen Flamer-Smith (29 March 2017) at 210.
[49]See Transcript (26 June 2018), 71.

As observed by Burkett, Mr Flamer-Smith attempted to downplay the significance of the Acceptance Letter by describing it as a “template”.[50] However, I do accept Burkett’s submissions that this should be rejected. Nowhere in the LSSD, or elsewhere in the evidence, does the Acceptance Letter appear as a prescribed “template” or to be described as such. The document should, in my view, be taken to have been deliberately and carefully prepared and to mean what it says. Moreover, it must be kept in mind that Mr Flamer-Smith had no role in the preparation of the Acceptance Letter and was not employed by the Plaintiffs at the time it was prepared. Thus, each of the Bank Parties’ pleaded case, the evidence of Mr Flamer-Smith in his original affidavit and the contemporaneous documents all point to the payment by ABL as having been made to take from ABLN an assignment of ABLN’s alleged loan rights existing as at 5 July 2007. It was not, as belatedly suggested by Mr Flamer-Smith in his affidavit of 15 June 2018[51] and in oral testimony,[52] a payment made “to originate the loans”. This evidence is inconsistent with the Bank Parties’ pleading,[53] Mr Flamer-Smith’s evidence in his earlier affidavit and with the contemporaneous documents to which reference has been made.
[50]See Transcript (26 June 2018), 75–6.
[51]Affidavit of Stephen Flamer-Smith (15 June 2018), [5], [11], [14].
[52]Transcript (26 June 2018), 69–71.
[53]Further and Amended Statement of Claim (13 April 2017), [43]–[46] (verified by Mr Flamer-Smith).

Burkett also emphasises that Mr Flamer-Smith was not involved in the relevant transactions. He was not employed by the Plaintiffs at the time they occurred. He expressly conceded that he had not read the LSSD in detail and that it was not something that he had considered recently at the time of giving evidence.[54] He disavowed familiarity with the detail of the loan documents and said he was familiar with them at only “a very high level” and “in general terms”.[55] The Bank Parties relied on Mr Flamer-Smith only tangentially and properly conceded that this was a “documentary case” and that the documents speak for themselves.[56]
[54]Transcript (26 June 2018), 61.
[55]Transcript (26 June 2018), 63–4, 69.
[56]Transcript (26 June 2018), 28.

In light of the matters to which reference is made in the preceding reasons, I do not accept the evidence of Mr Flamer-Smith as set out in his affidavit of 15 June 2018 or given orally as to the purpose and effect of the payment of $66 million by ABL. Instead, and contrary to the submissions of the Bank Parties, which cannot be accepted having regard to the position advanced by Burkett on the basis of the documentary and other matters relied upon, the Court should, in my view, proceed on the basis of the Bank Parties’ pleading and the contemporaneous documents; which is that by 1 July 2007 the loans had purportedly been originated, and the payment on 5 July 2007 by ABL was made to take from ABLN an assignment of whatever loan rights were in existence as at that date. That being so, the Court is left with no—or no satisfactory—evidence of any payment having been made by ABLN—or by ABL as agent for ABLN—to originate the advance to Burkett. The Bank Parties’ case is this occurred on 1 July 2007, but there is no evidence to suggest that any such payments were made by ABLN on that date, or on any subsequent date.

The result is that the causes of action brought by ABLN, and by BEN as ABLN’s purported assignee, must fail in limine. As the Bank Parties cannot establish that ABLN advanced funds in favour of Burkett in the first place, it has no standing to sue Burkett for the recovery of those funds; and nor does its purported assignee, BEN.

Power of attorney

The Bank Parties plead,[57] and Burkett denies,[58] that Burkett granted a power of attorney in favour of GSF, authorising it to enter into the Loan Deed on behalf of Burkett.[59]
[57]Further and Amended Statement of Claim (13 April 2017), [28]–[29].
[58]Amended Defence (10 July 2017), [21].
[59]Further and Amended Statement of Claim (13 April 2017), [32].

It is clear and common ground that in order for an agent or attorney to be conferred with authority to execute a deed on behalf of a principal, the agent or attorney must themselves have been appointed by deed.[60]
[60]MYT Engineering Pty Ltd v Mulcon Pty Ltd (1999) 195 CLR 636 at 643 [9]; citing Harrison v Jackson [1797] EngR 415; (1797) 7 TR 207 [101 ER 935]; Berkeley v Hardy [1826] EngR 905; (1826) 5 B & C 355 [108 ER 132]; see also, Lift Capital Partners Pty Ltd (in liq) v Merrill Lynch International (2009) 73 NSWLR 404 at 412 [37] and the authorities there cited.

In the present case, Burkett contends that the power of attorney was not given by deed, with the consequence that the Loan Deed is not enforceable because GSF had no authority to enter into those deeds on Burkett’s behalf. Burkett particularises this position by reference to s 9 of the Property Law Act 1969 (WA) and that the power of attorney was not executed under seal. Until the delivery of judgment in Bendigo and Adelaide Bank Ltd v DY Logistics Pty Ltd (“DY Logistics”),[61] the parties had proceeded on the basis that the legislation relevant to the validity or otherwise of the power of attorney was s 9 of the Western Australian Property Law Act. The position, however, reached in DY Logistics is that the validity or otherwise of a power of attorney is to be tested by reference to the law of the jurisdiction in which the power of attorney is created, rather than the law of any jurisdiction in which the power of attorney may operate.[62] It is common ground that the power of attorney the subject of these proceedings as it relates to the Load Deed entered into by Burkett is New South Wales. It follows, therefore, that the applicable law as to the creation of the power of attorney and its validity or otherwise is the law of New South Wales and not Western Australia.
[61][2018] VSC 558.
[62]Bendigo and Adelaide Bank Ltd v DY Logistics Pty Ltd [2018] VSC 558, [25]–[27].

The parties to these proceedings originally made submissions in relation to the operation of the Western Australian legislation and, although attention must now be directed to the applicable law in New South Wales, it is, nevertheless, helpful to refer to those submissions and then to consider the particular requirements in New South Wales.

The requirements of s 9 of the Western Australian Property Law Act, like their equivalent provisions in other States, qualify the requirement at common law that, in order for an instrument to amount to a deed, it must be written on parchment, vellum or paper; sealed; and delivered.[63]
[63]Scook v Premier Building Solutions Pty Ltd (2003) 28 WAR 124 at 132 [22].

Section 9 of the Western Australian Property Law Act provides:

9.Formalities of Deed
(1)Every deed, whether or not affecting property—
(a)shall be signed by the party to be bound thereby; and
(b)shall be attested by at least one witness not being a party to the deed but no particular form of words is required for the attestation.

(2)It is not necessary to seal any deed except in the case of a deed executed by a corporation under its common or official seal.
(3)Formal delivery and indenting are not necessary in any case.
(4)Every instrument expressed or purporting to be an indenture or a deed or an agreement under seal or otherwise purporting to be a document executed under seal and which is executed as required by this section has the same effect as a deed duly executed in accordance with the law in force immediately prior to the coming into operation of this Act.

Section 10 of the Western Australian Property Law Act deals with the execution of instruments by or on behalf of corporations and provides, in s 10(7):

(7)Notwithstanding anything contained in this section, any mode of execution or attestation authorised by law or by practice or by the statute, charter, memorandum or articles, deed or settlement or other instrument constituting the corporation or regulating the affairs thereof, are (in addition to the modes authorised by this section) as effectual as if this section had not come into operation.

In Netglory Pty Ltd v Caratti (“Netglory”),[64] Edelman J observed that “the history against which Australian legislative provisions such as s 9 were enacted also emphasises the legislative intention to prescribe essential requirements for the validity of a deed”,[65] and that there was an intended simplicity in the formalities in s 9.[66] Similarly, Edelman J observed:[67]

The Property Law Act reduced those formal requirements and created a single, unitary regime containing the mandatory minimum requirements for a deed. The explanatory memorandum to the Property Law Bill 1969 described clause 9 as serving the goal of providing “a simple and uniform method for execution of a deed and dispens[ing] with the necessity for sealing, indenting and formal delivery”.
[Emphasis added by Bank Parties]

[64][2013] WASC 364.

[65]Netglory Pty Ltd v Caratti [2013] WASC 364, [101].

[66]Netglory Pty Ltd v Caratti [2013] WASC 364, [165].

[67]Netglory Pty Ltd v Caratti [2013] WASC 364, [102].

Edelman J, in Netglory, also dealt with the concept of delivery:[68]
[68]Netglory Pty Ltd v Caratti [2013] WASC 364, [171]–[172].

“Delivery” of a deed, a concept deriving from the formality of livery of seisin, is now an abstract rule rather than a rule of formality. It requires merely a manifest intention to be bound by the party who it is sought to bind by the deed. As Steytler J explained in Scook v Premier Building Solutions Pty Ltd, the Property Law Act preserved the requirement of delivery; the Act merely dispensed with any form that delivery must take.
In Monarch Petroleum NL v Citco Petroleum Ltd Kennedy J said:
Delivery means some conduct indicating that the person who has executed the deed intends to be bound by it. Anything which shows that he treats the instrument as his deed will suffice ... It “depends upon intention manifested by some words or by some act, either expressly proved or inferred from circumstances”.

...
No particular form of words or act is necessary to constitute delivery—any words or acts that sufficiently show that it was intended to be finally executed will do ... it is not necessary that the deed should be delivered into the possession or custody of the person intended to take the benefit of the deed or to someone on his behalf ... it will frequently be inferred from execution.

[Emphasis added by Bank Parties; citations omitted]

This statement of Edelman J in Netglory in relation to delivery reflects the position indicated by the Western Australian Court of Appeal in Scook to the effect that although s 9 dispenses with the requirement for “formal” delivery, there must still be delivery in order for a document to take effect as a deed.[69] Whether there has been delivery is a question of fact, to be determined from all the circumstances, as is made clear in Scook, the critical inquiry is whether the party executing the document intended to be presently bound by it.[70] Clearly, the question of whether or not there has been delivery is important because a party, having delivered a deed, even conditionally, cannot withdraw or resile from it.[71]
[69]Scook v Premier Building Solutions Pty Ltd (2003) 28 WAR 124 at 132 [23].
[70]Scook v Premier Building Solutions Pty Ltd (2003) 28 WAR 124 at 133 [25].
[71]Beesly v Hallwood Estates Ltd [1961] Ch 105 at 121; Scook v Premier Building Solutions Pty Ltd (2003) 28 WAR 124 at 134 [29] citing Kingston v Ambrian Investment Co Ltd [1975] 1 All ER 120 at 125; and see Young J in Lewis v Nortex (2001) 10 BPR 19,035, [48]; and see P W Young, A F Cahill and G D Newton, Conveyancing Service New South Wales (LexisNexis Butterworths, Loose-leaf), [30700.20].

Another factor to be considered in the context of characterising an instrument as a deed or not is that a deed is the most solemn act that can be done with respect to a particular piece of property or other right, a position that is made particularly clear in cases such as Manton v Parabolic Pty Ltd[72] and Dean v Lloyd.[73] A deed is intended to manifest a solemn act by the parties, which solemnity is evidenced by the procedures to be gone through in entering into it.[74] Extrinsic evidence is admissible with respect to the existence or otherwise of such an intention.[75] Thus, apart from the requirements dispensed with by ss 9(2) and (3) of the Western Australian Property Law Act, all factors taken into account under the common law in deciding whether an instrument has been executed as a deed remain relevant.[76]
[72](1985) 2 NSWLR 361.
[73](1991) 3 WAR 235 at 254.
[74]Meredith Projects Pty Ltd v Fletcher Construction Australia Ltd [2000] NSWSC 493, [125].
[75]Dean v Lloyd (1991) 3 WAR 235 at 252.
[76]Deanv Lloyd (1991) 3 WAR 235 at 251.

Important factors taken into account at common law include whether the instrument reflects the phraseology and structure commonly found in deeds and whether it is cast in the most solemn form of documentation appropriate for that particular transaction.[77] The fact that an execution clause utilises the language traditionally employed when an instrument is executed as a deed—“SIGNED, SEALED AND DELIVERED”—is an important indicium of an intention to execute as a deed.[78] It is, however, well established that a document is not necessarily a deed merely because it is described as such.[79]
[77]Brendan Edgeworth and Peter Butt, Butt’s Land Law (Thomson Reuters, 7th ed, 2017) at [12.350]. Cited with approval in 400 George Street (Qld) Pty Ltd v BG International Ltd [2012] 2 Qd R 302 at 311–2 [10].
[78]400 George Street (Qld) Pty Ltd v BG International Ltd [2012] 2 Qd R 302 at 316 [33].
[79]Meredith Projects Pty Ltd v Fletcher Construction Australia Ltd [2000] NSWSC 493, [130].

Against this background, I turn now to consider the position under the law of New South Wales. In so doing, attention is directed to New South Wales legislation, rather than any particular aspect of the common law of New South Wales, which, for present purposes, can be taken to be as set out in the preceding discussion of the common law position. The two pieces of legislation of relevance, or possible relevance, are the Powers of Attorney Act 2003 (NSW) and the Conveyancing Act 1919 (NSW).

Burkett, in his submissions, makes reference to s 8 of the Powers of Attorney Act, which provided that:

An instrument (whether or not under seal) that is in or to the effect of the form set out in Schedule 2 (the prescribed form) and is duly executed creates a prescribed power of attorney for the purposes of this Act.

It does not appear, however, that the power of attorney relied upon by the Bank Parties in these proceedings is an instrument which would fall within the prescribed powers of attorney provisions of Part 2 of the Powers of Attorney Act (the Part which includes s 8 of that Act). Rather, in my view, the relevant provisions of the Powers of Attorney Act are contained in s 7 of that Act, which provided as follows:
7 Application of general law to powers of attorney
(1)This Act does not affect the operation of any principle or rule of the common law or equity in relation to powers of attorney except to the extent that this Act provides otherwise, whether expressly or by necessary intention.
(2)This Act does not affect the operation of Part 3 of the Conveyancing Act 1919 except to the extent that this Act provides otherwise, whether expressly or by necessary intention.

Thus, it follows, in my view, that attention is to be directed to the provisions of s 38 of the Conveyancing Act, which were as follows:
38 Signature and attestation
(1)Every deed, whether or not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed; but no particular form of words shall be requisite for the attestation.
(1A)For the purposes of subsection (1), but without prejudice to any other method of signing, a deed is sufficiently signed by a person if:
(a)by the direction and in the presence of that person the deed is signed in the name of that person by another person,
(b)the signature is attested by a person who is not a party or signatory (except by way of attestation) to the deed, and
(c)the person attesting the signature certifies in his or her attestation that he or she is a prescribed witness and that the signature was affixed by the direction and in the presence of the person whose signature it purports to be.

(1B)For the purposes of subsection (1) but without prejudice to any other method of signing, a deed is sufficiently signed by a person if:
(a)that person affixes his or her mark to the deed,
(b)the affixing of the mark is attested by a person who is not a party or signatory (except by way of attestation) to the deed, and
(c)the person attesting the affixing of the mark certifies in his or her attestation:
(i)that, before the mark was affixed, he or she explained the nature and effect of the deed to the person making the mark, and
(ii)that he or she believed, at the time the mark was affixed, that the person making the mark understood the explanation.

(2)Indenting shall not be necessary in any case.
(3)Every instrument expressed to be an indenture or a deed, or to be sealed, which is signed and attested in accordance with this section, shall be deemed to be sealed.
(4)Every deed, executed and attested in accordance with this section may be proved in the same manner as a deed not required by law to be attested might have been proved heretofore.
(5)Nothing in this section contained shall affect:
(a)the execution of deeds by corporations, or
(b)the provisions of section 184F (4), or
(c)any deed executed prior to the commencement of this Act.

The provisions of s 38 of the Conveyancing Act for New South Wales are, in my view, not relevantly different in substance from the provisions of s 9 of the Western Australian Property Law Act; particularly when attention is directed to the provisions of s 38(3) of the former and s 9(4) of the latter legislation.[80] Moreover, s 38 of the Conveyancing Act does not displace the requirement for delivery, nor does it dispense with the factors to be taken into account under the common law in deciding whether an instrument has been executed as a deed.
[80]See also Brown v Tavern Operator Pty Ltd [2018] NSWSC 1290, [479] (Ward CJ in Eq).

Having regard to the requirements of the applicable legislation, as discussed in the preceding paragraphs, I turn now to consider the provisions of the Application for Term Finance with respect to the grant of the power of attorney.

The Application for Term Finance contains the following provisions, with each page headed APPLICATION FOR TERM FINANCE. Part 7 of this document is headed “POWER OF ATTORNEY” and states, in paragraph (a):

(a)By signing this finance application, the Borrower and the Guarantor (if any) (Appointor) agree to appoint:
(i)where Great Southern Finance Pty Ltd (GSF) is the lender under the proposed loan, GSF and each director, company secretary and attorney of GSF, jointly and severally; or
(ii)where ABL Nominees Pty Ltd (ABL) is the lender under the proposed loan, each of ABL and GSF and each director, company secretary and attorney of ABL or GSF, jointly and severally, to be attorney for the Appointor (Attorney) on the terms specified herein and to exercise the powers as follows:
(iii)to enter into and execute a loan deed or loan deeds in the form attached to this finance application (Loan Deed) on behalf of the Appointor. A loan deed will be in the same form as the loan deed attached to this finance application despite any formatting changes to the document;
(iv)to date the Loan Deed and complete the blank spaces in the schedule thereto consistent with the provisions of this finance application;
(v)to make and initial any necessary alterations to the Loan Deed which are not prejudicial to the interests of the Appointor in the considered opinion of the Attorney;
…

Paragraph (h) of Part 7 states: “[t]he Power of Attorney is executed as a deed”.

The following page of the Application for Term Finance—the Execution Page—relevantly contains the following:

I/We:
•hereby apply for term finance as detailed in this finance application or agree to guarantee the loan as detailed in this finance application;
…
•grant the power of attorney as set out in part 7
….

SIGNATURE OF APPLICANT//GUARANTOR
__________________
WITNESS SIGNATURE
___________________

The Bank Parties submit that the words of paragraph 7(h) of the Application for Term Finance are a clear indication, or distinct statement, that the power of attorney is a deed and, “absent any extrinsic evidence to the contrary, it would ordinarily be inferred that the parties intended that it should have effect as a deed”.[81] Additionally, the Bank Parties refer to the statement of Blackburn J in Xenos v Wickham,[82] that “no particular technical form of words or acts is necessary to render an instrument the deed of the party sealing it”. It is also said that this statement must be characterised as an express and unequivocal election on the part of Burkett to execute the power of attorney as a deed. In this respect, reference is made to the statement by Muir JA in 400 George Street (Qld) Pty Ltd v BG International Ltd in relation to similar language that “[t]hose words are not merely general indicia of an intention that the Instrument be a deed: they unequivocally express that intention”.[83]
[81]Dean v Lloyd (1990) 3 WAR 235 at 252; referred to with apparent approval by the Full Court of the Supreme Court of South Australia in Gibbons v Pozzan (2007) 209 FLR 233 at 238–9 [31]–[33].
[82](1867) LR 2 HL 296 at 312; referred to with apparent approval in Segboer v AJ Richardson Properties [2012] NSWCA 253, [55]–[56].
[83][2012] 2 Qd R 302 at 317–8 [39].

Burkett, on the other hand, submits that, on the basis of the authorities which have already been discussed, all factors are taken into account at common law in deciding whether an instrument has been executed as a deed, including the phraseology and structure commonly found in deeds, whether that is cast in the most solemn form of documentation appropriate for that particular transaction and whether the execution clause used utilises the language traditionally employed when an instrument is executed as a deed: namely, “signed, sealed and delivered”. It is conceded that the latter is an important indicium of an intention to execute a document as a deed.

However, against this background, Burkett points to the position that, in the present case, the power of attorney was contained in Part 7 of the Application for Term Finance, a title which appears in large print in capital letters at the top of each page of this application form, a form which required the insertion of information by the applicant. It is also observed that these words, capitalised and in the same style as on other pages of the application, appear at the top of the page on which the terms of the “Power of Attorney” are set out in small print—or at least in smaller print and not highlighted as is the page heading.

Moreover, it is also observed that there are no recitals or any mutual covenants in the application and that the prospective lender (disclosed as being either GSF or ABLN “as applicable”) assumes no positive obligations and makes no promises. The document is, instead, dominated by the provision of financial information, warranties, representations, acknowledgements and undertakings by the intending borrower, and the document was not to be signed or executed by either GSF or ABLN. Additionally, it is observed that the signature clause contains none of the words usually associated with the signing of a deed (or, for that matter, an agreement). Nowhere in the application do the words “signed, sealed and delivered” appear.

Burkett does concede in his submissions that on the previous page to the execution provisions, paragraph (h) of Part 7 does state that “the power of attorney is executed as a deed”. However, it is said that these words, divorced as they are from the signature clause, on the execution page, which is the next page, are insufficient to evince an intention on the part of Burkett to be presently bound by the contents of the document. Importantly, it is also said, the signature clause itself does not contain any indication that the document is being signed as a deed. Of itself, in my view, the separation of a provision such as paragraph 7(h) from the signature clause on the following execution page is not a decisive consideration, but it is, nevertheless, a factor, and this is particularly so, in my view, because nowhere else in the application is to be discerned any intention by Burkett to be immediately bound, in the most solemn way known to law; a further indication, or otherwise, that an instrument is intended as a deed. Instead, it is submitted that the “look and feel” of the document, and its contents, read as a whole, support the conclusion that it was intended as an application for finance and not as a solemn deed, presently binding on Burkett. Burkett also relies on the evidence as to the relative informality associated with the signing of the application as being at odds with the formality and solemnity that would be expected with respect to the execution of a document intended to be a deed.[84] I accept that, together with other indicia discussed, this is a factor consistent with Burkett’s position.
[84]Burkett’s Outline of Closing Submissions (31 July 2018), [89]–[92].

Moreover, Burkett submits that two other matters reinforce this conclusion. The first is that the Application for Term Finance did not identify the lender; instead, the lender is stated to be either GSF or ABLN, “to be determined in GSF’s discretion”. Additionally, as observed previously, the pro forma loan deed attached to the application states that the lender would be GSF or ABLN, depending on which of those two entities approve the loan. Thus, it is said that the uncertainty as to the identity of the lender is inconsistent with any present intention of Burkett to be bound at the time of signing the application. Burkett, in his submissions, asks, rhetorically, “[t]o which entity was he assuming a present obligation to be bound?”.[85]
[85]Burkett’s Outline of Closing Submissions (31 July 2018), [96].

Secondly, at the time Burkett completed the Application for Term Finance, the loan had not been approved by either GSF or ABLN. The fact that the application was subject to a condition, namely, approval, also, Burkett submits, points decisively away from the existence of intention on the part of Burkett to be “presently bound” by the terms of the application. If there had been such a present intention, it would mean that Burkett would have been unable to withdraw his loan application in the period after he had signed and before it was approved. It is submitted that it is very unlikely that this was the intended result. This possibility, or otherwise, also raises issues as to whether there had been “delivery” of anything in the nature of a deed at the time the application was signed. It is to this aspect of the matter to which I will shortly turn, after considering the purported execution of the Loan Deed by GSF.

Moreover, it should be observed that it is an agreed fact that the Loan Deed was not actually, physically, signed by the director and secretary of GSF whose names are recorded in this document; that is, personally by writing their signatures.[86] Further, there is no evidence adduced as to which person or persons affixed or personally authenticated the affixing of the purported facsimile signatures of the director and secretary of GSF whose names are recorded in the Loan Deed.
[86]See above, [30].

As observed in Bendigo and Adelaide Bank Ltd v DY Logistics Pty Ltd:[87]

The ordinary meaning of the word “signed” is elucidated by the common law. At common law a person may sign a document by stamping their name,[88] by typewriting or by printing, but in all cases, the question will be whether what was done fulfilled the function of a signature.[89] What is required for signing to be effective is that there be some kind of “personal authentication of the individual ‘signing’”.[90]

[87][2018] VSC 558, [50].

[88]Goodman v J Eban Ltd [1954] 1 QB 550 at 555.

[89]See UK Law Commission, Electronic Commerce: Formal Requirements in Commercial Transactions (December 2001), [3.26].

[90]Goodman v J Eban Ltd [1954] 1 QB 550 at 557; Re a Debtor (No 2021 of 1995) [1996] 2 All ER 345 at 351.

Absent evidence in this proceeding of any such “personal authentication”, it would appear that, regardless of the matters discussed with respect to this (power of attorney) issue, the document—whether properly characterised as a deed or otherwise—is not signed in any relevant sense; whether at common law or in accordance with s 127 of the Corporations Act.[91] In any event, this is not decisive as to this issue having regard to the preceding and subsequent reasons in relation to the power of attorney.
[91]See also Bendigo and Adelaide Bank Ltd v Laszczuk [2018] VSC 388, [44]–[45]; Bendigo and Adelaide Bank Ltd v DY Logistics Pty Ltd [2018] VSC 588, [44]–[55].

As indicated previously, the authorities indicate that whether there has been delivery of a document purporting to be a deed is a question of fact, to be determined from all the circumstances.[92] Section 9(3) of the Western Australian Property Law Act dispenses with the requirement of “formal delivery”, though there is no formal dispensation of this requirement under s 38 of the New South Wales Conveyancing Act.[93] Nevertheless, having regard to the judgment of Edelman J in Netglory in which the concept of delivery is explained,[94] the difference between the Western Australian and New South Wales legislation in this respect is not significant in the present circumstances. As explained, the concept of delivery requires the manifestation of an intention to be bound by the party who it is sought to bind with a document purporting to be a deed. As the authorities indicate, the question whether or not there has been delivery of a deed is of significant importance because a deed having been delivered cannot be withdrawn or resiled from, even if delivered subject to conditions.[95]
[92]See above, [62].
[93]See above, [66]–[67].
[94]See above, [61]–[62].
[95]See above, [62].

Burkett’s position in this respect is, as indicated, that the fact that the loan application, when it was signed, was subject to a condition, namely, approval, by either GSF or ABLN, is indicative of the lack of any intention on his part to be “presently bound” by the terms of the application. This, combined with the position that, as submitted, the loan application does not identify the identity of the lender—whether GSF or ABLN—militates against any finding of “delivery” or its substantive equivalent in the present context. The response of the Bank Parties with respect to this position is to submit that the alleged absence of any intention by Burkett to be immediately bound is misconceived. It is said that the fact that the loan application was subject to an approval condition is wholly irrelevant to the characterisation of the Application for Term Finance as a deed or not. The Bank Parties submit that Burkett, by signing in the place that he did on the document, immediately agreed to grant the power of attorney then and there. This, it is said, is evident from the objective evidence before the Court, particularly paragraph (h) of Part 7 providing that “the power of attorney is executed as a deed”. Moreover, reference is made to the sixth bullet point in the declarations which followed, providing that “I/we hereby… grant the power of attorney as set out in part 7” and then the execution of the document above which is stated “by signing here you make each of the 12 declarations, statements and acknowledgements set out above…”.

For the preceding reasons, having regard to the applicable legislative requirements, and the provisions of the Application for Term Finance to which reference has been made, I am of the view that, despite the lack of the usual formalities and structure of a document of the kind typically regarded as a deed, there is the requisite intention to execute the application here as a deed and but that the resultant “deed” has not been delivered in the relevant sense, as indicated by Edelman J in Netglory. Thus, even if there were no issue as to the parties to the Loan Deed and hence the donee of any power of attorney, I would not regard the power of attorney as being a power of attorney granted by deed, according to the requirements of s 38 of the New South Wales Conveyancing Act. However, as, for the reasons which follow, I am of the opinion that the parties to the Loan Deed were not ascertained at the time the power of attorney was executed, it is, accordingly, unclear which entity was the donee of the power[96] and therefore the power of attorney is, in the present circumstances, in any event ineffective.
[96]See above, [76].

Parties to the Loan Deed

Burkett submits that even if, despite the submissions with respect to the entity which made the advance and in relation to the validity of the power of attorney, the Court concludes that the Loan Deed was validly executed pursuant to the power of attorney, on a proper construction the parties to the Loan Deed were Burkett as borrower and GSF as lender. In this respect, it is submitted that this is a question of fact to be determined objectively and, in determining this question, namely, the parties to a contract, evidence of post-contractual conduct is admissible as an exception to the usual position that the court ought to look only to contemporaneous documents as at the time of formation, or alleged formation of the contract.[97] In the present case, Burkett contends that the evidence supports the same conclusion which the New South Wales Supreme Court reached in Bendigo and Adelaide Bank Ltd v Howard in which Davies J held:[98]
[97]Referring to Webster Investments Pty Ltd v North Star Developments Pty Ltd (2016) 52 VR 610 at 633 [45] and the authority there cited.
[98][2018] NSWSC 383, [39]–[47].

39.The defendant gave evidence, apparently without objection, that he intended to choose GSF. He said so in his affidavit which was marked as an exhibit without any objections to it. He gave oral evidence to the same effect both in chief and in cross-examination without objection. Such evidence was inadmissible: Westport at [82]. The Magistrate appears to have disregarded that evidence and correctly considered the matter objectively — see at paragraphs [41], [43] and [44] of her Honour’s judgment.
40.There was evidence to suggest that the lender was GSF and was objectively intended by the defendant to be the lender. Not only did the defendant indicate on the Finance Application that he selected GSF, he also completed the Direct Debit request which was addressed to GSF and was also expressed to be used “ONLY … IF USING” GSF. The plaintiff submitted that the direct debit request was not of assistance in determining the identity of the lender because the same request was used irrespective of the lender. The plaintiff submitted that the pro-forma request application attached to the Product Disclosure Statement contemplated GSF or a “preferred financier”.
41.However, an examination of the part of the Product Disclosure Statement dealing with the direct debit request shows that under the heading, “Direct Debit request service Agreement”, the name “Great Southern Finance Pty Ltd” appears together with its ACN and address. The agreement defines “direct debit request” as meaning “the Direct Debit Request between us and you”. The definition of “us or we” is said to “mean … Great Southern Finance Pty Ltd who (sic) you have authorised by signing a direct debit request”. In the same way the pro forma request provides for the borrower to,
[r]equest and authorise Great Southern Finance Pty Ltd … to arrange for any amount Great Southern Finance Pty Ltd may debit or charge you to be debited …

There is no mention in that section of the Product Disclosure Statement nor in the pro forma request of other than GSF, and no mention of another “preferred financier”.
42.Neither the Product Disclosure Statement nor the pro-forma request assists the plaintiff. Further, there was no evidence, despite clause 8.3 of the Loan Sale and Servicing Deed (to which reference will be made) that the direct debit request form was used irrespective of the lender.
43.On the other hand, it seems clear from the investment application that the defendant was interested only in investing in grovelots because that application was only for grovelots, and the defendant further identified that he wanted grovelots on the Finance Application. Moreover, the amount of finance he sought was $24,000 made up of 3 grovelots at $8,000 per lot as he stipulated on both application forms.
44.From an objective standpoint, what the defendant sought in completing the documents was impossible to achieve. GSF did not fund for grovelots alone where the investment was to be funded by an interest-only loan for any period of time. The only funding for grovelots by GSF was by a principal and interest loan.
45.When considering whether there was a mistake or misnomer, the Magistrate identified a number of possibilities which meant that it could not be said that it was plain to all concerned that the defendant intended to nominate ABL in the third box. Those possibilities were that the defendant might have intended a principal and interest loan or, if told of the impossibility of his choice, might have decided not to go ahead with the matter.

The 2007 HVT Scheme, along with a number of other managed investment schemes involving the Great Southern group of companies, were the subject of group proceedings commenced in the trial division of the Supreme Court between 2010 and 2011. Burkett admits he was a group member affected by those proceedings.

As indicated previously, in Clarke the Court approved the Deed of Settlement pursuant to s 33V of the Supreme Court Act 1986 on 11 December 2014. Relying upon the Deed of Settlement, the Bank Parties allege that Burkett is estopped from raising any defence to any enforcement proceeding and is estopped from denying the validity and enforceability of the Loan Deed.[115]
[115]Further Amended Statement of Claim (13 April 2017), [55].

The first point made by Burkett is that no estoppel is capable of arising here, because of the principles governing estoppel by deed. The law was, it is said, correctly stated by Parke B in Carpenter v Buller:[116]

If a distinct statement of a particular fact is made in the recital of a bond, or other instrument under seal, and a contract is made with reference to that recital, it is unquestionably true that as between the parties to that instrument and in an action upon it, it is not competent for the party bound to deny the recital … But there is no authority to shew that a party to the instrument would be estopped, in an action by the other party, not founded on the deed, and wholly collateral to it, to dispute the facts so admitted, though the recitals would certainly be evidence.
[Emphasis added by Burkett]

This passage has been reaffirmed and applied in more recent times.[117]

[116](1841) 8 M & W 209; 151 ER 1013 at 1014–5.

[117]McCathie v McCathie [1971] NZLR 58; Re Patrick Corporation Ltd and The Companies Act [1981] 2 NSWLR 328 at 332–3; Offshore Oil NL v Southern Cross Exploration NL (1985) 3 NSWLR 337 at 341–5; Shanemist Pty Ltd v Denmac Nominees Pty Ltd [2003] QSC 373, [26]–[30]; Australia and New Zealand Banking Group Ltd v Bragg (No 3) [2017] NSWSC 208, [81]–[82].

Burkett contends that in this proceeding, the action by the Bank Parties is not an action on the Deed of Settlement, but rather is an action wholly collateral to that deed. As Edelman J observed in Netglory Pty Ltd v Carrati,[118] where a party relies upon a covenant to support its claim, but does not allege that a covenant has been breached and does not found its claim upon any alleged breach of covenant, the action will not be an action on the deed. By necessary implication, the action will be collateral to the deed.
[118][2013] WASC 364, [255]–[259].

There is, Burkett contends, nothing in the Deed of Settlement that gives rise to any relevant estoppel against Burkett.

The second point made by Burkett is that the Deed of Settlement, properly construed, does not prevent him from raising the defences he now seeks to raise. There is, it is submitted, no provision in the Deed of Settlement by which Burkett, as a group member, agreed not to raise any defences in answer to a claim by the BEN parties. More particularly, it is said that there is nothing in cl 4, which is the provision on which the Bank Parties rely most heavily, which contains such a provision.

The third point raised by Burkett is that none of matters raised by him in these proceedings were in issue in the group proceedings. In the usual case, and in the absence of clear words to the contrary, general words in a release are limited to what was specifically in the contemplation of the parties at the time the release was given;[119] the point being made that the relevant indicia of such contemplation in the present proceedings are the matters which were in issue in those group proceedings.
[119]Karam v ANZ Banking Group Ltd [2001] NSWSC 709, [406] and the authorities there cited, including Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 at 125 (where Dixon CJ, Fullagar, Kitto and Taylor JJ referred with approval to the statement from Story in Equity Jurisprudence that, “the court restrains the instrument to the purposes of the bargain and confines the release to the right intended to be released or extinguished”).

The fourth point made by Burkett is that, in so far as the Bank Parties rely upon his admission in the Deed of Settlement (in cl. 4.1.4) that the loan deeds were valid and enforceable, that admission does not take the inquiry very far. The validity and enforceability of the loan deeds are legal questions, and an admission by a party of a conclusion depending upon a legal standard is “not merely of dubious value, but by definition valueless, owing to the witnesses’ unfamiliarity with the standard governing his answer”.[120] To similar effect is the statement in Abigroup Contractors Pty Ltd v ABB Service Pty Ltd[121] that “if an admission is of a matter of law or legal consequences, as to which the admitting party has no expertise or is otherwise to be seen as uninformed or unreliable, the admission will not carry much weight”. It is said that these observations apply a fortiori in this case, as Burkett was not a direct signatory to the Deed of Settlement, but rather is bound to it only by operation of law pursuant to s 33V of the Supreme Court Act. In any event the further point is made that an admission is only one piece of evidence that falls to be considered by the Court. It is not the law that an admission is, of itself, necessarily determinative of the matter to which it relates. The Court must have regard to all the evidence and form its own view.
[120]Grey v Australian Motorists & General Insurance Co Pty Ltd[1976] 1 NSWLR 669 at 676.
[121][2004] NSWCA 181, [63].

The final (fifth) point made by Burkett is that it is significant that, whilst the Deed of Settlement contains (in cl. 4.1.6) an acknowledgement by the Lead Plaintiffs of their liability to the BEN Parties to pay the loan balances under their loan deeds, there is no equivalent acknowledgement by the group members, including Burkett.

Moreover, Burkett contends that nothing said by the Court of Appeal in either Byrne v Javelin Asset Management Pty Ltd (“Byrne”)[122] or Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (“Pekell”)[123] stand in opposition to these submissions by Burkett. More particularly in this respect, Burkett contends that in both Byrne and Pekell, the Court of Appeal was not asked to consider, and did not decide, the points now raised by Burkett in these proceedings and that there is nothing to suggest from the judgments in either case that his submissions on these points are foreclosed.
[122][2016] VSCA 214.
[123][2017] VSCA 51; (2017) 118 ACSR 592.

In relation to Pekell, Burkett says that the Court of Appeal considered whether there was a genuine dispute as to whether the respondent had opted out of the group proceedings, for the purposes of an application by the respondent to set aside a statutory demand. The respondent in that case, who sought to resist the application of the Deed of Settlement, did not appear to raise any substantive defences in opposition to the claim by BEN that the respondent was indebted under the relevant loan deeds.[124] Instead, its only defence was that it was not bound by the Deed of Settlement because it had allegedly opted out of the group proceedings and was not therefore a group member. Significantly, the Court of Appeal observed[125] that the Deed of Settlement is to be interpreted according to its terms.
[124]See Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592 at 606–9 [49]–[59], 611–3 [74]–[79].
[125]Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592 at 609 [59].

In Byrne, Burkett says that the Court of Appeal considered an application by Javelin Asset Management Pty Ltd where it relied upon cl 5.18.2 of the Deed of Release to contend that it did not need to establish the making of advances to the applicant. The Court of Appeal accepted this, and held that cl 5.18.2 enabled the respondent to rely upon an affidavit from its solicitor as proof of any amount owing.[126] Significantly, it is said, cl 5.18.2 is not a provision on which the Bank Parties are able to rely.
[126]Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214, [5]–[6].

If, despite his submissions, the Court concludes that this Court is bound by Pekell to find that Burkett is foreclosed from raising any defences in these proceedings, then Burkett formally submits that Pekell was wrongly decided. To the extent that Pekell decided that a lead plaintiff in group proceedings has authority, by entering into a settlement deed approved by the Court, to bind group members with respect to matters outside the claim the subject of the group proceeding, it is inconsistent with the High Court’s decision in Timbercorp Finance Pty Ltd (in liquidation) v Collins.[127]
[127](2016) 259 CLR 212.

For these reasons, Burkett contends that the Deed of Settlement does not create any estoppel to preclude Mr Burkett from raising the defences he does.

As indicated previously, the Bank Parties contend that a complete answer to Burkett’s defences in this proceeding is provided by the provisions of the Deed of Settlement. Burkett has admitted and does not contest that he was a group member, is bound by the Deed of Settlement and that he is “personally … part of the Group and bound by the settlement deed negotiated by the Group”.

More particularly, the Bank Parties submit that when the relevant pleadings in the Group Proceedings and the Deed of Settlement are examined, it is seen that the relief claimed in the Group Proceedings and the settlement of those proceedings by the parties was directly concerned with the issue of the enforceability of the loan deeds (which Burkett seeks to put in issue in these proceedings). In particular:

(1)The allegations in the relevant pleadings in the Group Proceedings included claims for declarations that the loan deeds were void or otherwise unenforceable and orders that the plaintiffs repay all monies paid by Group Members under the loan deeds.
(2)The provisions in the Deed of Settlement included in particular:
(i)clause 4.1.4 where “[t]he Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs’ Loan Deeds and the Group Members’ Loan Deeds”;
(ii)clause 4.1.10 where “[t]he Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members release [the Plaintiffs] from all Claims”;
(iii)clause 4.1.12 where “the Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members … agree that they will not bring or pursue … a Claim against the BEN Parties…”;
(iv)clause 4.1.13, where it was agreed that the Plaintiffs (amongst others) could plead the Deed of Settlement as a bar or defence to any claim or action (including a claim for costs) brought by any of the Lead Plaintiffs, the Group Members and others;

(3)Amongst other things, the Deed of Settlement also provided that the Plaintiffs agreed to waive Interest Relating to Overdue Amounts accrued and unpaid as at the Approval Date, in respect of Loan Deeds of Group Members (cl 4.1.1).
(4)In compliance with its obligations under the Deed of Settlement, the Bank Parties waived the relevant Interest Relating to Overdue Amounts accrued and unpaid as at the Approval Date against Burkett relating to his loan. The following amounts were waived, and the waivers appear in the loan statements with the description “Deed of Sett Waiver”:
(i)in relation to the DSP Loan – a waiver of $71,489.89; and
(ii)in relation to the Burkett Loan – a waiver of $44,683.52.

Thus the Bank Parties contend that in the circumstances of the Deed of Settlement and Burkett’s participation in the settlement, Burkett cannot in these proceedings once again raise issues about the validity or enforceability of the Loan Deed, the subject of these proceedings.

The effect of the Deed of Settlement on group members and particularly prospective claims and defences was addressed in Clarke. Opponents to the settlement (the subject of the judgment) raised various contentions in relation to the ambit of the release contained in the deed. After consideration of the doctrines of issue and Anshun estoppel, the Court concluded, in relation to the contentions:[128]

132.For the preceding reasons, any group members with purported claims or defences different to those pleaded in the group proceedings, and who wished to pursue those claims or defences, could have and should have opted out. By not opting out, as submitted by the Bank Parties, group members must be taken to have accepted that the claims as pleaded in the group proceedings represent all of the claims reasonably available to them. This is the reality of the way the class action regime operates. That being so, it follows that the Bank Parties are entitled to assume that the only challenges to the enforceability of the Loan Deeds group members wished to pursue were those made in the group proceedings. It would not be reasonable for group members to raise different claims or defences in subsequent proceedings. Further, the Bank Parties should be entitled to seek and achieve a complete settlement of the matters in dispute between them and the group members regarding the Loan Deeds. It would be an abuse of the Court’s process, especially having regard to the opt-out procedure, for any group members to frustrate this entitlement by bringing subsequent claims or defences regarding the Loan Deeds.

[128]Clarke (as Trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) [2014] VSC 516, [132].

The Bank Parties further contend that the Court of Appeal has also determined this very issue in respect of precisely these Group Proceedings and the Great Southern Managed Investment Schemes, holding that the Deed of Settlement operates to preclude Group Members (such as Burkett) from raising any issue about the enforceability or validity of the Loan Deeds.[129]
[129]See Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592 at 606–9 [49]–[59].

In 2016, similar points were raised in relation to the effect of the Deed of Settlement on group members in Byrne, where the Court of Appeal said:[130]
[130]Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214, [31]–[32], [35], [37], [56].

31.… There is a single deed of settlement, binding on a large range of persons, and it must be construed by reference to ordinary principles of construction of written instruments.
32.The fact that the deed emerged from proceedings in which certain matters were, and others were not, in issue, does not dictate any special approach to its construction. That is a commonplace occurrence when litigation is settled. As the respondent submitted, it would be wrong to approach the deed on the basis that it is to be assumed that it goes no further than to resolve issues that were previously in dispute in the group proceedings. Instead, the scope of the proceedings might be relevant in the construction of aspects of the deed, as part of the context in which it was executed. The circumstance that, as the applicant submitted, the existence of the loans in question was not litigated in the group proceedings is therefore a matter to be taken into consideration in applying ordinary principles of construction of contracts.
35.… The ‘Loan Deeds’ in turn are the relevant ‘Loan Agreements’ the subject of the group proceedings entered into between the lead plaintiffs and group members and GSFL. Those ‘Loan Agreements’ were ‘the loan agreements under which monies were advanced’ to relevant scheme members. In other words, the whole premise of cl 5 is that it is dealing with persons to whom monies were advanced by GSFL, and whose loans were subsequently assigned to the respondent. It would be perverse in those circumstances if cl 5.18.2, which is a means of facilitating proof of indebtedness, did not extend to proof of the underlying premise of the clause.
…
37.In light of these considerations, the fact that the group proceedings did not present for determination the question whether loans had in fact been advanced to group members is of little assistance in construing the deed of settlement. Given that the premise of the relevant provisions is that loans had been advanced, it is apparent that the parties resolved the proceedings on terms which travelled beyond the issues formally in issue in the litigation.
…
56.In the circumstances, it is not necessary to decide whether, in the absence of an order such as those that might be made under s 33ZF, a settlement of a group proceeding is binding upon group members once approved by the Court, by operation of s 33ZB. It suffices that the present settlement was binding on group members by virtue of the orders made by the Court in this particular case.

The application of the Deed of Settlement as precluding defences and claims of the kind now before the Court has also been considered in other court decisions.[131]

[131]See Bendigo and Adelaide Bank Ltd v Gaedtke [2017] QDC 202; ABL Custodian Services Pty Ltd v Kunz [2016] SADC 145, [172].

More recently in Bendigo and Adelaide Bank Ltd v Lonergan,[132] ABL Custodian Services Pty Ltd v Freer,[133] Bendigo and Adelaide Bank Ltd v Haque[134] and Bendigo and Adelaide Bank Ltd v Laszcuk,[135] this Court considered the application of the Deed of Settlement as precluding the defences and claims of the kind advanced by Burkett in this proceeding.
[132][2018] VSC 357.
[133][2018] VSC 355.
[134][2018] VSC 406.
[135][2018] VSC 388.

Finally, the Bank Parties make reference to the five points raised by Burkett in relation to the Deed of Settlement and why it is that it has no application in these proceedings.[136] It is to the Bank Parties’ submissions on these points to which I now turn.
[136]See above, [113]–[122].

As to the first point, Burkett’s primary submission concerns the principle of estoppel by deed. Burkett seeks to rely upon the established principle referred to in Carpenter v Buller[137] that a party to an instrument cannot be estopped in an action by the other party to the instrument in an action not founded upon it, but rather wholly collateral to it. There are, the Bank Parties submit, three answers to this submission.
[137](1841) 151 ER 1013.

The first is that the contention misconstrues how the Deed of Settlement is relied upon by the Bank Parties. The principle referred to in Carpenter v Buller is directed to holding a party to an agreed state of facts so far as regards the particular transaction or events, the subject of the agreement.[138] It is for this reason that Carpenter v Buller and the majority of the authorities referred to by Burkett deal with an estoppel by deed being founded upon facts referred to in recitals to the relevant instruments. In this case, rather than being a fact stated in any recital, cl 4.1.4 of the Deed of Settlement is an express, unequivocal and operative part of the instrument and is relied upon by the Bank Parties as a reason why Burkett cannot challenge his liability.
[138]See Offshore Oil NL v Southern Cross Exploration NL (1985) 3 NSWLR 337 at 342.

The second is that the proceedings are not “collateral” to the Deed of Settlement in any relevant sense. Again, the situation is to be distinguished from the cases referred to in Burkett’s submissions. Rather, the Deed of Settlement provided what was effectively an express bar to Burkett challenging the loans and that express bar is relied upon by the Bank Parties. Given the nature of the Deed of Settlement, the Bank Parties could not have brought a proceeding “on the deed” as was available in other decisions relied upon by Burkett.[139]
[139]See e.g. Australia and New Zealand Banking Group Ltd v Bragg (No 3) [2017] NSWSC 208, [78], [80].

The third is that, aside from estoppel by deed, Burkett ignores what was said in Clarke[140] in relation to the application of an issue estoppel, Anshun estoppel and abuse of process. Having regard to the Court’s consideration (at [132]) and the Deed of Settlement which the Court approved, the defence raised by Burkett to the claim must be regarded as an abuse of the Court’s process and is subject to a relevant estoppel.
[140]Clarke (as Trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) [2014] VSC 516, [126]–[132].

As to the second point, Burkett’s contention that there is no provision in the Deed of Settlement by which he agreed not to raise the defences in answer to the Bank Parties’ claims is plainly wrong. Clause 4.1.4 is the provision which provided an acknowledgment and admission as to the validity and enforceability of the Loan Deeds. The effect and scope of this clause was addressed in Lonergan.[141]
[141]Bendigo and Adelaide Bank Ltd v Lonergan [2018] VSC 357, [31].

As to Burkett’s third point, this ignores what the Court of Appeal (and other courts) have said of this submission, including specifically in relation to the Deed of Settlement.

In Pekell,[142] it was stated by the Court of Appeal:

It would be highly surprising if pt 4A precluded parties to a group proceeding from resolving the common claims between them on terms which also bring finality to other issues outstanding between those parties or, in the case of a plaintiff, the group members that plaintiff represents. Full releases of all outstanding claims, whether at issue in the relevant proceedings or not, are not uncommon. The respondent’s submission, if correct, would impose a remarkable constraint on those negotiating settlements of group proceedings.
[Emphasis added by Bank Parties]

See also Harrison v Sandhurst Trustees Ltd;[143] Clarke[144] and Byrne.[145]

[142]Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592 at 608 [57].

[143][2011] FCA 541, [26].

[144]Clarke (as Trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) [2014] VSC 516, [101].

[145]Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214, [32], [58]–[59].

As to Burkett’s fourth point, that the admission in the Deed of Settlement in cl. 4.1.4 that the Loan Deeds were valid and enforceable, does not “take the inquiry very far”, the Bank Parties say that the basis of this submission appears to be that because the enforceability of Loan Deeds are legal questions, the admissions contained therein are of no material value. However, the Bank Parties observe that the two authorities relied upon by Burkett in support of this contention do not concern admissions contained in agreements. In Grey v Australian Motorists & General Insurance Co Pty Ltd,[146] the Court was concerned with an attempt to procure an admission from a witness (which was refused by the trial judge). In Abigroup Contracts Pty Ltd v ABB Service Pty Ltd,[147] the Court was concerned with the admissibility of admissions contained in communications between parties to a contract for the purpose of establishing whether the contract was binding. Thus it is contended that these cases have no relevance to the matter before the Court which concerns an express and operative clause contained in a deed of settlement.
[146][1976] 1 NSWLR 669 at 676.
[147][2004] NSWCA 181, [63].

Rather, the Deed of Settlement was entered into by the Plaintiffs on Burkett’s behalf as a group member. Each party to the Deed of Settlement acknowledged that it did so “fully and voluntarily on the basis of its own information and investigation” (see cl 17.1). Moreover, cl 17.1.2 provided that each party acknowledged that:

it is aware that it, its legal advisers or other agents or advisers may discover facts different from or in addition to the facts it now knows or believes to be true with respect to the subject matter of this Deed.

The suggestion that Burkett should be considered in a different light as he is not a “direct signatory” to the Deed of Settlement and is bound by it “only by operation of law pursuant to s 33V(1)” ignores the statutory force behind Part 4A of the Supreme Court Act.[148]

[148]Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592 at 606–9 [49]–[59].

Burkett’s final (fifth) point is that it is of significance that there is no acknowledgment of Burkett’s liability to pay in the Deed of Settlement, whereas there is such an acknowledgement in relation to other specific plaintiffs (i.e. the Javelin Borrowers). This submission is also untenable, it having been effectively addressed and disposed of by the Court of Appeal in Byrne.[149]
[149]Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214, [38]; see also Bendigo and Adelaide Bank Ltd v Lonergan [2018] VSC 357, [30]–[31].

In my view, the position contended for by the Bank Parties in relation to this issue is correct, for the reasons they advanced and otherwise as I have indicated; both in these reasons and in other decisions with respect to the operation and effect of the Deed of Settlement.[150] As contended by the Bank Parties, it is quite clear that the validity of the Loan Deeds was a critical and central issue in the group proceedings and that despite any infelicities in drafting in the Deed of Settlement its terms properly construed as a commercial document in the usual way prevent the raising of the defences Burkett now seeks to raise. Moreover, it might be observed that outside the context of group proceedings it is clear that a settlement inter partes might well, and effectively, resolve all issues between parties, including those going to the validity of an agreement of any kind.
[150]See above, [130].

Conclusion

For the preceding reasons, the Plaintiffs are entitled to judgment in their favour in the Bank Proceedings, and the Burkett Proceedings will be dismissed.

I reserve the question of costs and will hear the parties further on this issue.

[2018] VSC 723

7 December 2018