Data Transfer Services Pty Ltd v White

Data Transfer Services Pty Ltd (the borrower) appealed a decision of the primary judge concerning a Deed of Loan and Guarantee. The lender, White, sought to rely on the deed to recover a sum of $2,000,000, which the deed acknowledged had been advanced to the borrower. The borrower contended that no funds were actually paid, and therefore the lender was precluded from relying on the deed. The appeal was heard by Ward P, Leeming JA, and Griffiths AJA in the Court of Appeal of New South Wales.

The central legal issue before the Court of Appeal was whether the lender was entitled to rely on the principle of estoppel by deed, notwithstanding that the acknowledged receipt of $2,000,000 in the deed was factually incorrect, as no funds had been advanced. The court also considered whether the borrower could resist the lender's claim on the basis of the non-payment, and whether the circumstances warranted rectification or rescission of the deed.

The Court of Appeal held that the lender was entitled to rely on estoppel by deed. The court reasoned that the deed contained a clear and unambiguous acknowledgement of receipt of the loan funds. While the borrower argued that the non-payment meant the lender could not rely on the deed, the court found that the evidence established a prior transaction involving vendor finance for the sale of a business, which was subsequently replaced by the separate loan agreement. Crucially, no case for rectification or rescission of the deed had been made out by the borrower. Therefore, the borrower was estopped from denying the truth of the recitals in the deed, including the acknowledgement of the loan.

The appeal was dismissed, and the borrower was ordered to pay the lender's costs.