Food and Beverage Australia Limited v Nash - [2020] SASC 92

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
FOOD AND BEVERAGE AUSTRALIA LIMITED v NASH
[2020] SASC 92
Judgment of The Honourable Justice Blue
29 May 2020
CORPORATIONS - MANAGED INVESTMENTS
CORPORATIONS - MANAGED INVESTMENTS - TRUST DEED OR CONSTITUTION
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT
The plaintiff sues the defendants for fees allegedly payable in respect of an avocado managed investment scheme and the second defendant for fees allegedly payable in respect of a cherries managed investment scheme.
The second defendant counterclaims seeking remedies for misleading conduct and breach of contract in respect of the cherries scheme restoring the parties to the position before his investment in the scheme or damages to the same effect.
The issues in relation to the avocado claim are:
1. Did the parties enter into contracts for the payment of the fees the subject of the invoices?
2. Did the parties enter into an agreement that no amount would be payable until the scheme was cashflow positive or is the plaintiff precluded by estopped by representation from claiming payment?
3. Has the plaintiff proved the quantum of fees the subject of the May 2010 invoices?
The issues in relation to the cherries claim are:
1. Did the parties enter into contracts for the payment of the fees the subject of the invoices?
2. Are the licence and rental fee components of the invoices recoverable by the plaintiff or are they only recoverable by Aussie Cherries Limited?
3. Did the parties enter into an agreement that $435,000 that the plaintiff acknowledged was to be paid to a company owned by the first defendant was to be offset against the fee invoices?
The issues in relation to the cherries counterclaim are:
1. Did the plaintiff engage in misleading conduct by representing to the second defendant that he could obtain loans from an associated company to cover the first four years’ grower fees; did he rely on those representations in deciding to apply to become a grower; and if so what relief should be granted?
2. Did the plaintiff engage in misleading conduct by representing to the second defendant that rain covers and bird netting would be installed over the cherry orchards; did he rely on those representations in deciding to apply to become a grower; and if so what relief should be granted?
3. Did the plaintiff breach the Constitution by failing to make reasonable endeavours to sell the second defendant’s interest in the cherries scheme; if so, did it cause loss or damage; and if so what relief should be granted?
Held:
1. Although the documents were not tendered, it should be inferred based on the presumption of regularity that Timbercorp Securities Limited executed the requisite agreements in relation to the avocado scheme (at [163]). Alternatively, the parties by their conduct entered in contracts in terms of the agreements attached to the Constitution (at [171]).
2. The parties did not enter into an agreement, and the plaintiff did not represent, that no amount would be payable until the avocado scheme was cashflow positive (at [184]).
3. The plaintiff has proved the quantum of fees the subject of the May 2010 avocado scheme invoices [191]).
4. The plaintiff is entitled to judgment for the amount claimed against each defendant in the avocado scheme invoices together with interest [194]).
5. The plaintiff properly executed the requisite agreements in respect of the cherries scheme (at [212]).
6. The licence and rental fee components of the invoices issued by the plaintiff in respect of the cherries scheme are recoverable by the plaintiff (at [238]).
7. The second defendant has failed to prove that the parties entered into an agreement that the sum of $435,000 was to be offset against the cherries scheme fee invoices (at [294]).
8. The plaintiff did not represent to the second defendant that he could obtain loans from an associated company to cover the first four years’ grower fees (at [363]).
9. The plaintiff did not represent to the second defendant that rain covers and bird netting would be installed over the cherry orchards (at [391]).
10. The second defendant has failed to prove that the plaintiff breached the Constitution by failing to make any reasonable endeavour to sell the second defendant interest in the cherries scheme (at [414]).
11. The plaintiff is entitled to judgment for the amount claimed against the second defendant in respect of the cherries scheme invoices together with interest [416]).
Corporations Act 2001 (Cth) ss 601GB, 1022B, 1022C; Australian Securities and Investments Commission Act 2001 (Cth) ss 12DA, 12GM, 12GF, referred to.
Carpenter v Carpenter Grazing Co Pty Ltd (1987) 5 ACLC 506; McLean Bros & Rigg Ltd v Grice (1906) 4 CLR 835; Morris v Kanssen [1946] AC 459, considered.

FOOD AND BEVERAGE AUSTRALIA LIMITED v NASH
[2020] SASC 92
Civil
BLUE J:

The plaintiff Food and Beverage Australia Ltd (FBA) sues the first defendant Philip Nash, the second defendant Philip Nash as trustee of the Nash Family Trust and the third defendant Sarah Nash for fees allegedly payable in respect of a managed investment scheme entitled “2007 Queensland Avocado & Fruit Project” (the Avocado Project).
FBA sues Mr Nash as trustee of the Nash Family Trust for fees allegedly payable in respect of a managed investment scheme entitled “The Tasmanian Premium Cherries Project” (the Cherries Project).
Mr Nash as trustee of the Nash Family Trust[1] counterclaims against FBA seeking remedies for misleading conduct and breach of contract in respect of the Cherries Project restoring the parties to the position before his investment in the scheme or damages to the same effect.
Background
[1] The claim is expressed to be by both Mr Nash as the first defendant in his personal capacity and by Mr Nash as the second defendant as trustee for the Nash Family Trust. However, Mr Nash’s investment in the Cherries Project was exclusively as trustee for the Nash Family Trust. I therefore refer to the claim as being by Mr Nash as trustee of the Nash Family Trust. Mrs Nash is also named as a claimant on the counterclaim. This is because the counterclaim originally included a claim by all three defendants in respect of the Avocado Project. However, that claim was abandoned at trial.
FABAL group
FBA has carried on business as the operator, as responsible entity, of managed investment schemes under Chapter 5C of the Corporations Act 2001 (Cth) (the Corporations Act) (and its predecessor) since 1995. It is based in Adelaide. It holds an Australian Financial Services Licence authorising it to operate managed investment schemes. Until it became involved in the Cherries Project in 2007, its managed investment schemes were associated with vineyards. Investors in managed investment schemes operated by FBA are called growers.
FBA is a wholly owned subsidiary of The FABAL Group Pty Ltd (FBG). FBG owns several other subsidiaries involved in, or providing services to, agricultural businesses and projects in Australia, including Total Beverage Australia Pty Ltd (TBA) and FABAL Operations Pty Ltd (FABAL Operations).
TBA has carried on business as a small-scale lender to investors in agricultural projects conducted by the group comprising FBG and its subsidiaries (collectively FABAL) since about 2005. Apart from lending in relation to the Cherries Project, its total lending in relation to other schemes was limited to approximately $300,000 to $400,000, with maximum lending to any one grower limited to $50,000 or $100,000.
FABAL Operations held a separate bank account for each managed investment scheme of which FBA was the responsible entity. Payments of grower fees were banked into a bank account of FBA and then transferred to a bank account of FABAL Operations. Expenses of a scheme were paid out of the relevant bank account of FABAL Operations.
Christopher Day has been a director of the FABAL companies since at least 1995. He was the chief executive officer of the FABAL companies (apart from a brief interlude) at all material times. He has a Bachelor of Laws, Bachelor of Economics, Master of International Business, Graduate Diploma of Applied Finance and Diploma in Financial Services.
John Lambert has been the chief financial officer of the FABAL companies since at least 1995. He is an accountant.
Christopher Dundon was the chief operations officer of FBA since 2002. He is now, and has since some point after the events the subject of this action been, the chief horticultural officer. He has also been the chief governance officer since about 2010 or 2011. His background is in agriculture. Before joining FBA, he worked as a technical viticulturist and as a technical officer for an irrigation business.
Ian Gray commenced working for FBA in September 2009 as an accounts manager, responsible primarily for collecting debts.
Holt Norman group
Peter Holt and William Norman were financial planners based in Melbourne. They were proprietors of a financial planning company or companies called Holt Norman & Co Pty Ltd and later HNC Financial Planning Pty Ltd (Holt Norman & Co).[2] Holt Norman & Co was founded in 2003.
[2] It appears that this was the same company with a change of name but for the purposes of this action it does not matter if it was two separate successive companies.
Mr Holt and Mr Norman were also accountants and proprietors of an accountancy company or companies called Holt Norman Ashman Pty Ltd, later Holt Norman Ashman Baker Pty Ltd and later Holt Baker Pty Ltd (Holt Norman Ashman).[3] Holt Norman Ashman was founded in 1981.
[3] It appears that this was the same company with a change of name but for the purposes of this action it does not matter if it was two or three separate successive companies.
I refer to Mr Holt, Mr Norman and their accountancy and financial planning companies collectively as Holt Norman.
Nash group
Mr Nash started working for a fruit wholesaler in Melbourne trading as Westmores and FW Westmore & Sons at the age of 15 in about 1985. At some point he married Mrs Nash and they have four children. Mrs Nash was not working between 2005 and 2015.
By 2004 Peter Holt was the Nashes’ accountant and financial advisor.
In 2004 Mr Holt advised Mr Nash to invest in a managed investment scheme. Mr Holt advised Mr Nash that such investments were effective in obtaining tax deductions to offset against their income. In 2004 the Nashes invested in a sandalwood managed investment scheme in which the responsible entity was the Rewards group. In 2005 they invested in a citrus managed investment scheme in which the responsible entity was the Rewards group.
In July 2005 Mr Nash incorporated P J Nash Pty Ltd (Nash Co). Mr Nash has always been its sole director. Nash Co was incorporated, on the advice of Mr Holt, to acquire the Westmores’ fruit wholesaling businesses, which it did in 2005. Robin Westmore was the general manager of the business.
In August 2005 Mr Nash established the Nash Family Trust as a discretionary family trust. The specified beneficiaries were Mr and Mrs Nash’s children, with Mr and Mrs Nash as additional general beneficiaries. The initial trustee was Nash Co. By May 2007 Mr Nash had replaced Nash Co as the trustee of the Nash Family Trust.
In 2006 Mr Nash as trustee of the Nash Family Trust, Mr Nash in his own right and Mrs Nash invested in the 2006 Timbercorp Avocado Project. The investment was divided between the Nash Family Trust, Mr Nash and Mrs Nash in proportions advised by Mr Holt to maximise taxation benefits.
James Nash is an older brother of Mr Nash. He also became a participant grower in the Avocado Project and a grower in the Cherries Project.
I refer to Mr Nash, Mrs Nash, James Nash and their entities (including Nash Co and the Nash Family Trust) collectively as the Nashes.
The Avocado Project
Timbercorp Securities Limited (Timbercorp) formerly carried on business as an operator of managed investment schemes.
In 2006 Timbercorp established a managed investment scheme called the 2006 Timbercorp Avocado Project (the 2006 avocado project).
In 2007, Timbercorp established a managed investment scheme called the 2007 Timbercorp Avocado & Fruit Project (the Avocado Project). Investors in the scheme were called Participant Growers (participant growers). The Avocado Project involved two orchards. The Promised Land Orchard comprised 357 hectares of land near Bundaberg owned by OIM #6 Pty Ltd, of which 301 hectares had been planted with avocados, lemons and mandarins, and the balance was to be planted with avocados and lemons in 2007. The Ten Mile Orchard comprised 125 hectares of land near Bundaberg owned by Mango Land Pty Ltd, all of which had been planted with avocados and mangoes. Timbercorp entered into leases with OIM #6 Pty Ltd and Mango Land Pty Ltd to lease the land for the Avocado Project.
On 13 April 2007 Timbercorp executed the 2007 Timbercorp Avocado & Fruit Project Constitution (the Avocado Constitution). The parties to the Constitution were Timbercorp as Responsible Entity and each participant grower.
The Avocado Constitution contained:
·a Lot Management Agreement between Timbercorp and each participant grower as Schedule 2;
·a Grower PBR Sub-Licence & Marketing Deed between Timbercorp, Mangocorp Management Pty Ltd (Mangocorp) and each participant grower (avocado marketing deed) as Schedule 2A; and
·Ten Mile Lot Licence Agreements between Timbercorp, Mango Land Pty Ltd and each participant grower and Promised Land Lot Licence Agreements between Timbercorp, Timbercorp Limited, OIM #6 Pty Ltd and each participant grower (avocado licence agreements) as Schedule 3.
On 27 April 2007 the Australian Securities and Investments Commission (ASIC) registered the Avocado Project as managed investment scheme ARSN 124 932 510.
On 5 June 2007 Timbercorp executed a First Supplemental Deed that amended the Avocado Constitution by substituting a new Schedule 2 Lot Management Agreement between Timbercorp and each participant grower (avocado management agreement). I refer to the Constitution as amended by the First Supplemental Deed as the Avocado Constitution or, in the context of the Avocado Project, the Constitution.
On 7 June 2007 Timbercorp issued a product disclosure statement relating to the Avocado Project (the Avocado PDS). The Avocado PDS offered Participating Interests comprising the entitlement of a participant grower to the Project assets, the Crop and the Proceeds calculated in accordance with a formula being the ratio of the area of Lots licensed to the participant grower to the total area of Lots licensed to all participant growers.
For the purpose of the Avocado Project, a Lot comprised approximately 0.25 hectares: approximately 0.18 hectares of the Promised Land Orchard and approximately 0.07 hectares of the Ten Mile Orchard. A participant grower would receive a share, depending on the number of Lots held, of the net proceeds of the sale of the crop produced on the entire land the subject of the Project over the project term of 20 years.
The Avocado PDS distinguished between Early Growers and Post 30 June Growers. An Early Grower was defined as a person who lodged an application for Lots by 15 June 2007. A participant grower who was an Early Grower was required to pay $7,000 (inclusive of GST) per lot. The Grower could elect to pay a deposit of ten per cent and the balance by instalments. The Grower was required to pay annual licence fees; management fees; farm operating costs; royalty fees and marketing costs; and an incentive fee. For an Early Grower, the fees payable for the financial years ended 30 June 2008 to 30 June 2013 (all figures inclusive of GST) were as follows:

Fee/cost 2008 2009 2010 2011 2012 2013

Licence fee $700 $700 $900 $900 $1,500 $1,564

Management fee $3,000 plus 2% of Net Sale Proceeds $3,250 plus 2% of Net Sale Proceeds 2% of Net Sale Proceeds 2% of Net Sale Proceeds 2% of Net Sale Proceeds 2% of Net Sale Proceeds plus deferred fees of 1% to 15% of Net Sale Proceeds

Farm operating costs Nil or picking costs attributed to yields in excess of specified thresholds Nil or picking costs attributed to yields in excess of specified thresholds Estimated farm operating costs with adjustment for actual costs for this year (including admin overheads of $55 indexed from 30 June 2007) Estimated farm operating costs with adjustment for actual costs for this year (including admin overheads of $55 indexed from 30 June 2007) Estimated farm operating costs with adjustment for actual costs for this year (including admin overheads of $55 indexed from 30 June 2007) Estimated farm operating costs with adjustment for actual costs for this year (including admin overheads of $55 indexed from 30 June 2007)

Royalty fees and other marketing & sales costs Royalty fees of 3.3% and other marketing & sales costs Royalty fees of 3.3% and other marketing & sales costs Royalty fees of 3.3% and other marketing & sales costs Royalty fees of 3.3% and other marketing & sales costs Royalty fees of 3.3% and other marketing & sales costs Royalty fees of 3.3% and other marketing & sales costs

Incentive (performance) fee 27.5% of Net Proceeds that exceed threshold on 2 year rolling basis 27.5% of Net Proceeds that exceed threshold on 2 year rolling basis 27.5% of Net Proceeds that exceed threshold on 2 year rolling basis

The Avocado PDS included an Application Form and Power of Attorney Booklet (Application Form) which prospective participant growers were required to complete to apply for Lots in the Project. An applicant could complete the physical application form or an electronic application form. Part 1 comprised instructions for completion. Part 2 comprised a power of attorney, terms and conditions of the power of attorney and declarations. Part 3 required the applicant to provide the investment name, number of lots applied for and amount enclosed together with details of payment. Part 4 was to be completed by individual applicants and Part 6 was to be completed by trusts or superannuation funds. Those parts required details of the applicant, a witness to their signature and the date of signing.
On 12 June 2007 Mr and Mrs Nash signed and caused to be lodged with Timbercorp three application forms as follows:
·Mr Nash as trustee for the Nash Family Trust applied for 20 lots at a cost of $140,000 and paid a deposit of $14,000;
·Mr Nash in his own right applied for 6 lots at a cost of $42,000 and paid a deposit of $4,200;
·Mrs Nash applied for 6 lots at a cost of $42,000 and paid a deposit of $4,200.
I infer that James Nash applied for, and was granted, 15 lots.
In December 2007 Holt Norman Ashman lodged a trust tax return on behalf of Mr Nash as trustee for the Nash Family Trust. The main business activity was described as avocado growing. Primary production expenses of $127,273 were deducted. I infer that these related to fees paid in respect of the 2006 and 2007 Timbercorp avocado projects. This net loss from primary production largely offset income received by the Trust from dividends.
In April 2009 Timbercorp was placed into administration and in June 2009 it was placed into liquidation.
In September 2009 Huntley Management Limited (Huntley) was appointed responsible entity of the Avocado Project in lieu of Timbercorp. Norman Holt’s clients comprised a significant proportion of the participant growers in the Avocado Project. Mr Nash and Mr Holt suggested to Mr Day that FBA take over from Timbercorp as responsible entity for the 2006 avocado project and FBA take over from Huntley as responsible entity for the Avocado Project.

In about November 2009 FBA took over as responsible entity for the 2006 avocado project.
On 14 October 2009 Huntley issued tax invoices to Mr and Mrs Nash for 50 per cent of the annual fees for the financial year ended 30 June 2010 as follows:

Description Family Trust Mr Nash Mrs Nash

Licence fee $6,534 $1,960 $1,960

Farm operating costs $17,347 $5,204 $5,204

Responsible entity fee $682 $205 $205

Total $24,563 $7,369 $7,369

On the invoice Huntley said that, if the invoices were paid by 31 October, it would defer the requirement to pay the second half until after an offset of harvest proceeds due in April 2010.
On 2 March 2010 the participant growers voted to replace Huntley with FBA as the responsible entity of the Avocado Project. FBA became the responsible entity on that date.
On 3 March 2010 the name of the Avocado Project was changed to “2007 Queensland Avocado & Fruit Project”.
On 9 April 2010 FBA sent a letter in standard form to each participant grower in the Avocado Project. FBA said that there was approximately $500 per lot available to growers from 2009 harvest proceeds, which had been applied as a credit to the enclosed invoice for the balance of 50 per cent of the annual fees for the financial year ended 30 June 2010.
FBA sent with the letters to Mr and Mrs Nash tax invoices dated 9 April 2010 (the April invoices) for the balance of 50 per cent of the annual fees for the financial year ended 30 June 2010, less harvest proceeds, as follows:

Description Family Trust Mr Nash Mrs Nash

Licence fee $6,534 $1,960 $1,960

Farm operating costs $17,347 $5,204 $5,204

Responsible entity fee $682 $205 $205

Less harvest proceeds -$10,000 -$3,000 -$3,000

Total $14,563 $4,369 $4,369

On 12 May 2010 FBA sent letters to Mr and Mrs Nash saying that it was required by accounting standards and legislation to provide a credit note in respect of the October 2009 Huntley invoice and a replacement tax invoice from FBA. It enclosed credit notes issued by Huntley dated 31 March 2010 for the amounts of the 14 October 2009 invoices and tax invoices from FBA dated 7 May 2010 for the same amounts (the May invoices) as follows:

Description Family Trust Mr Nash Mrs Nash

Licence fee $6,534 $1,960 $1,960

Farm operating costs $17,347 $5,204 $5,204

Responsible entity fee $682 $205 $205

Total $24,563 $7,369 $7,369

The letters also demanded payment of the April invoices.
On 4 and 7 June 2010 Mr and Mrs Nash paid to FBA $14,563, $4,369 and $4,369 in payment of the April invoices.
On 15 June 2010 Mr Gray spoke to Mr Nash. He confirmed the conversation in an email sent on 10 August.
On 10 August 2010 Mr Gray sent an email to Mr Nash with the subject “2007 Qld Avocado & Fruit Project – Payment of Outstanding Amounts”. He said that $57,723 remained outstanding for the Project, comprising $24,563 for the Nash Family Trust, $7,369 for each of Mr and Mrs Nash and $18,422 for James Nash. I interpolate that these were the fees the subject of the May invoices.
Mr Gray said in the email that he and Mr Nash had spoken on 15 June about the management fee amounts that the Nashes were to pay and Mr Nash said that he would ascertain how he would pay these amounts and come back to him. Mr Gray asked Mr Nash to let him know when the project would receive the amounts owing.
On 28 October 2010 FBA sent letters to Mr and Mrs Nash. Amongst other things, the letters enclosed invoices dated 29 October 2010 for 50 per cent of the annual fees for the financial year ended 30 June 2011 as follows:

Description Family Trust Mr Nash Mrs Nash

Licence fee $6,534 $1,960 $1,960

Farm operating costs $27,929 $8,379 $8,379

Responsible entity fee $994 $298 $298

Total $35,458 $10,637 $10,637

On 21 March 2011 FBA sent letters to Mr and Mrs Nash. Amongst other things, the letters enclosed invoices dated 23 March 2011 (the March invoices) for the balance of 50 per cent of the annual fees for the financial year ended 30 June 2011, less harvest proceeds, as follows:

Description Family Trust Mr Nash Mrs Nash

Licence fee $6,534 $1,960 $1,960

Farm operating costs $27,929 $8,379 $8,379

Responsible entity fee $994 $298 $298

Less harvest proceeds -$29,018 -$8,705 -$8,705

Total $6,440 $1,932 $1,932

On 16 May 2011 Mr Gray sent an email to Mr Nash in relation to arrears of payments for the 2006 and 2007 avocado projects. He said that $6,440, $1,932 and $1,932 was outstanding in respect of the 2007 avocado project. Although he did not say so, these were the amounts the subject of the March invoices. Mr Gray also said that $7,020 was outstanding in respect of the 2006 avocado project. The total of the amounts was $17,324.
On 16 June 2011 Mr Nash responded to Mr Gray’s email, saying that he would transfer $17,324 into the Nashes’ Macquarie account over the next few days to cover the management expenses referred to in Mr Gray’s email. He said that Robert Clarke of Mr Holt’s office would contact Mr Gray when it was appropriate to draw the funds.
On 21 June 2011 Mr Clarke sent an email to Mr Gray asking him to draw $17,324 from Mr Nash’s account as per his email of 16 June. On that day, $17,324 was transferred to FBA in payment of the March invoices and the invoice for $7,020 relating to the 2006 avocado project.
On 31 October 2011 FBA sent letters to Mr and Mrs Nash. Amongst other things, the letters enclosed invoices dated 31 October 2011 for 50 per cent of the annual fees for the financial year ended 30 June 2012, less a rebate of operating costs for the previous year ended 30 June 2011 and less harvest proceeds, as follows:

Description Family Trust Mr Nash Mrs Nash

Licence fee $10,632 $3,190 $3,190

Farm operating costs $30,653 $9,196 $9,196

Less rebate prior year -$6,463 -$1,939 -$1,939

Responsible entity fee $1,023 $307 $307

Less harvest proceeds -$35,845 -$10,754 -$10,754

Total Nil Nil Nil

On 14 February 2012 FBA sent letters to Mr and Mrs Nash. Amongst other things, the letters enclosed invoices dated 14 February 2012 (the February invoices) for the balance of 50 per cent of the annual fees for the financial year ended 30 June 2012, less harvest proceeds, as follows:

Description Family Trust Mr Nash Mrs Nash

Licence fee $10,632 $3,190 $3,190

Farm operating costs $30,653 $9,196 $9,196

Responsible entity fee $1,023 $307 $307

Less harvest proceeds -$24,488 -$7,346 -$7,346

Total $17,820 $5,346 $5,346

On 5 April 2012 FBA sent letters to Mr and Mrs Nash demanding payment of arrears (including late fees) of $42,718 from Mr Nash as trustee for the Nash Family Trust, $13,050 from Mr Nash and $13,050 from Mrs Nash.
On 18 May 2012 FBA sent letters to Mr and Mrs Nash terminating their former rights and entitlements pursuant to their former lots or interests in the Avocado Project.
The Cherries Project
In 2006 members of the Driessen family and/or their entities (the Driessens) owned in excess of 100 hectares of land at Castle Forbes Bay and Lucaston in the Huon Valley in Tasmania. The vast majority of that land was planted as apple orchards. Commencing in 1999, the Driessens started establishing cherries on some of the land. By 2008, 6.5 hectares had been planted with cherries. The land at Castle Forbes Bay comprised predominantly apple orchard with a small proportion of cherry orchard. The land at Lucaston comprised predominantly vacant land (formerly apple orchard) with a small proportion of cherry orchard.
As at 2006 Westmores had been wholesaling Driessen apples for about 20 years. When the Driessens commenced producing cherries, Westmores started wholesaling their cherries.
In 2006, inspired by his experience investing in managed investment schemes, Mr Nash conceived the idea of purchasing land from the Driessens for the purpose of establishing a managed investment scheme to grow cherries. He approached Mr Holt with a view to Holt Norman participating in the project and promoting investment in it to clients of Holt Norman. Mr Holt expressed interest. They identified the need for the involvement of a company that acted as a responsible entity for managed investment schemes. They approached several responsible entities but there was a lot of pressure on them for finance and they were not taking new schemes.
Mr Holt and Mr Norman were directors of a company called Janara Investments Pty Ltd. On 23 May 2006 that company changed its name to Aussie Cherries Pty Ltd (Aussie Cherries). I infer that Mr Holt and Mr Nash intended to use that company for involvement in a cherries project if it proceeded.
In September 2006 Mr Westmore and Mr Nash approached Mr Day and asked if FBA would be interested in acting as the responsible entity for a cherries managed investment scheme conducted on land then owned by the Driessens. They had several discussions over the next 12 months.
On 30 August 2007 there was a meeting between Mr Nash, Mr Holt and Mr Day. It was agreed in principle that the project would be developed on the basis that Aussie Cherries, as the land owning company, and the proposed cherries project would be developed jointly and investors would have the opportunity to invest in both entities. This in principle agreement was confirmed in the Development Agreement dated 9 October 2017 referred to below.
On 6 September 2007 Mr Nash was appointed a director of Aussie Cherries, joining Mr Holt and Mr Norman on the board of directors. At that stage, Nash Co held six shares and Mr Holt held the other six shares in Aussie Cherries.
On 9 October 2007 Nash Co, Holt Norman & Co and FBA entered into an agreement entitled “Managed Investment Scheme Development Agreement” (the Development Agreement). In the recitals, it was recited that the parties had agreed to work together in developing, marketing and administering a commercial cherry orchard development to be known as the Tasmanian Premium Cherries Project in the Huon Valley region of Tasmania on land currently owned by the Driessens (defined as “the Project”), which land was to be acquired by Aussie Cherries.
By clause 2 of the Development Agreement, it was agreed that, in order for the project to proceed in 2008, the parties needed to attend to a multitude of issues simultaneously, including:
·an agreement between Aussie Cherries and the Driessens to acquire the land, business and existing orchard upon which the project was to be conducted;
·a financial commitment by Nash Co and Holt Norman & Co in respect of all requisite cherry trees required by the project for delivery in 2008;
·lodgement by FBA of an application to the Australian Taxation Office for a product ruling to ensure that the project proceeded tax effectively;
·an agreement by Holt Norman & Co to underwrite the project’s fundraising to an agreed level; and
·an agreement by Nash Co to market and sell cherries produced by the project.
Clause 7 provided:
At a meeting between representatives of the parties to this Agreement held at the offices of FABAL on Friday the 30^th August, 2007 it was agreed in principle, amongst other things, that the model pursuant to which the Project will be developed is one in the course of which the Land Owning Company and the Project will be developed jointly and investors will have the opportunity to invest in both entities.
The Land Owning Company will:
7.1 Acquire the land and infrastructure;
7.2Operate the business of providing infrastructure to the Project for a commercial rent;
7.3Manage the fruit intake and packing, ready for selling marketing and distribution for a fee per kilogram (estimate of $2.15/kg in year 1);
7.4Provide sufficient water for the Project either acquired from Driessen’s or acquired from Aussie Cherries, including any need to build additional storage;
7.5Provide up to 15 % of total planting from the existing orchard acquired on the land from Driessens;
7.6Allow the development of the Project in a ‘Spanish Bush’ style so that no trellis for cherry trees needs to be provided by Aussie cherries;
7.7Install rain/bird/weather covers at a cost of in the order of approximately A$100,000 by the first commercial crop for the Project; and
The Project will:
7.8Be developed at a total cost estimated to be in the order of A$245,000 per hectare by FABAL, including the appointment of the Driessen family as horticultural manager, over a five year period;
7.9Include the installation of irrigation and the trees by the Project Grower.[4]
[4] Emphasis in original.
Clause 8 provided that the Driessens’ experience put them in the preferred position to attend to the technical development of the project, subject to input from FBA’s Chief Operations Officer and Group Horticulturalist.
The Development Agreement contained an appendix (the Appendix) containing three columns. The first column was entitled “Term or Condition” and set out either steps that needed to be taken or the identity or position of a person or entity. The second column was entitled “Issues” and set out either who was the person or entity responsible for the step referred to in the first column or other relevant information.
The third column contained three sub-columns designating FBA, Nash Co and Holt Norman & Co and in some cases showing an estimated cost and/or percentage allocation as between two or three of the parties. For example, it was estimated that the parties would incur a total of $50,000 in operating costs for out-of-pocket expenditure by way of initial costs, of which costs of $15,000 would be incurred by each of FBA and Nash Co, and $20,000 would be incurred by Holt Norman & Co. It was anticipated that the long-term ownership of Aussie Cherries would be held as to 20 percent by each of Nash Co and Holt Norman & Co and 10 percent by FBA, with the balance implicitly being held by investors in the project.
On 23 January 2008 FBA executed the Constitution of the Tasmanian Premium Cherries Project. Investors in the Project are called Growers (growers). The parties to the Constitution are FBA as the Responsible Entity, Aussie Cherries as the Land Owning Company and growers. The Constitution establishes the Cherries Project under the longhand name “The Tasmanian Premium Cherries Project” and the shorthand name “Tassie Cherries Project”.
Recital “b” of the Constitution recites that investors will become growers upon acquiring interests in the Cherries Project through the PDS and will be bound by the terms of the Constitution. Clause 2 provides that the Constitution is binding on all growers and the Responsible Entity. Clause 33 provides that the Responsible Entity must arrange the harvest, marketing and sale of all cherries; collect all income due to the Cherries Project; and pay all sale proceeds into the Proceeds Fund.
Clause 34.1 provides for the pooling of all income from the sale of all cherries from all allotments and then a division between all growers pro rata to their proportion of allotments held. It provides:
A Grower is entitled to that percentage of the money in the Proceeds Fund which reflects that proportion which the Allotment bears to the total number of Grower Allotments for the Production Period less:
34.1.1 all fees payable pursuant to the Management Agreement;
34.1.2 all fees payable pursuant to the Licence Agreement;
34.1.3any other amounts which the Responsible Entity reasonably considers will be required to meet anticipated Horticultural Costs, subject at all times to clause 27.1.3 of this Constitution; and
34.1.4any other amounts payable by the Grower pursuant to this Constitution or any other liabilities that attach to the Grower’s Interest.
The Constitution contains as Schedule 3 a placeholder for the Management Agreement between FBA and each grower and as Schedule 4 a placeholder for the Licence Agreement between FBA, Aussie Cherries and each grower.
The Constitution was subsequently amended by Supplemental Deeds dated 29 February, 29 May and 30 May 2008. I refer to the Constitution as amended as the Cherries Constitution or, in the context of the Cherries Project, the Constitution.
The Constitution refers, for persons who become growers by 31 May 2008, to the year ended 30 June 2008 as year 1, the year ended 30 June 2009 as year 2 and so on. I adopt that terminology.
On 24 January 2008 FBA lodged an Application for Registration of a Managed Investment Scheme in respect of the Project together with the original Constitution, a Compliance Plan and Directors Statement.
On 7 February 2008 ASIC registered the Cherries Project as managed investment scheme ARSN 129 398 876.
On 21 February 2008 Mr Day (along with others) attended by invitation at a board meeting of Aussie Cherries in Melbourne. It was:
·resolved that the company adopt a new constitution and convert to a public company, known as Aussie Cherries Limited, effective on the following day;
·resolved to approve the allotment of 9,994 shares at $10 each to each of Nash Co and HNABUT Pty Ltd, a company associated with Holt Norman Ashman Baker (maintaining equality of ownership of the shares between the Nashes and Holt Norman);
·resolved to issue a prospectus offering a further 46,500 shares (or up to 70,000 shares with oversubscriptions) at $100 each to raise up to $4.65 million (or up to $7 million with oversubscriptions);
·noted that it was intended that a prospectus be brought to the board in the next five weeks;
·noted that up to 4,000 shares might be transferred to FBA in the next few months by the existing shareholders (ie those holding the 20,000 shares that would be on issue after the allotment of the 19,988 shares) on a pro rata basis;
·noted that the company was negotiating with Westpac and National Australia Bank to obtain sufficient funds to purchase the Driessens’ business and would consider an alternative to bank funding; and the funding would be repaid from the prospectus issue, depending upon the level of subscriptions; and
·resolved to appoint Mr Day as a fourth director of the company effective from the end of the meeting.
On 27 February 2008 the Australian Taxation Office issued Product Ruling 2008/18 entitled “Income Tax: Tasmanian Premium Cherries Project” (the Product Ruling). Clause 24 provided that a grower who entered into the scheme up to 31 May 2008 may claim tax deductions for fees and expenses on a per-Allotment basis set out in a table for the years ended 30 June 2008, 2009 and 2010 and additional deductions set out in the tables at either clause 25 or clause 28 as applicable.
I infer from the Cherries PDS and the Aussie Cherries prospectus that, by the end of February 2008, Aussie Cherries had entered into an agreement with the Driessens to purchase 56 hectares of their land, sufficient to plant 46.5 hectares, together with infrastructure, plant and equipment and the business conducted thereon, and an option to purchase an additional 33 hectares, sufficient to plant 23.5 hectares.
On 29 February 2008 FBA issued a product disclosure statement relating to the Cherries Scheme (the Cherries PDS). The Cherries PDS stated that the Land Owning Company (Aussie Cherries) had acquired from the Driessens 46.5 hectares of land in the Huon Valley and there was an option to purchase up to an additional 23.5 hectares if the offer was oversubscribed. Cherry trees had been planted on 6.5 hectares and mature or semi-mature cherry trees thereon were intended to be harvested in January and February 2009. It was intended to plant the balance of the land with new cherry trees. In respect of the new plantings, the first harvest was expected in 2012 (year 5), first commercial harvest was expected in 2014 (year 7) and first mature commercial harvest was expected in 2016 (year 9).

The Cherries PDS offered 465 interests, or upon oversubscription up to 700 interests, in the scheme, each described as comprising 0.1 hectare. The scheme would operate for 16 years. Growers would receive a share of the proceeds of the sales of cherries calculated in accordance with the Constitution (pro rata to number of allotments held as described above). Applications were required to be made by 31 May 2008 in terms of the Application Form in section 13 at the end of the product disclosure statement. The project would only proceed if at least 150 interests were subscribed for by 31 May 2008.
The minimum amount payable for an interest was $26,504. The grower was required to pay Grower Fees comprising Management Services Fees; Irrigation, Licence Fees and Planting Fee; and Rent (Grower Fees) in respect of the financial years ending 30 June 2008 to 30 June 2011 for each Interest as follows:

Fee/cost 2008 2009 2010 2011 Total

Initial Management Service Fees $6,964 $6,964

Ongoing Management Services Fees $2,707 $2,971 $2,780 $8,458

Irrigation, Licence Fees and Planting Fee $2,228 $1,356 $3,584

Rent $312 $2,019 $2,216 $2,951 $7,498

Total $9,504 $6,082 $5,187 $5,731 $26,504

The Cherries PDS identified the Land Owning Company as Aussie Cherries. It stated that Castle Forbes Bay Orchards Pty Ltd (Driessen Management) would be the on-site Horticultural Manager of the project and referred to the experience of the Driessen family. It stated that Westmores (Nash Co) had been engaged to market and sell the cherries and provided details of their experience. It stated that Aussie Cherries had been engaged to grade, pack and store the cherries.
Section 13 of the Cherries PDS was entitled Application Details. It stated that an Application Form for Interests in the Project must be completed in accordance with the instructions contained in that section. It provided that, by signing the Application Form, the grower gave the Responsible Entity his or her Power of Attorney authorising the Responsible Entity to sign the Management Agreement and the Licence Agreement on his or her behalf and agreed that he or she would be responsible for Grower Fees. It contained an acknowledgement and agreement on page 51 that, amongst other things, upon signing the application, the applicant agreed to become a party to and be bound by the terms of the Constitution, the Management Agreement and the Licence Agreement as if the applicant had signed those documents personally and not pursuant to the Power of Attorney.
On 11 April 2008 Aussie Cherries issued a prospectus offering 46,500 shares at $100 each (with oversubscriptions of up to an additional 23,500 shares available) (the Aussie Cherries prospectus). It stated that the offer opened on 11 April 2008 and would close on 10 May 2009. It stated that the minimum subscription was 15,000 shares ($1.5 million). It stated that Aussie Cherries would own the land, water rights and plant and equipment on which the Cherries Project would be established and these assets had an estimated cost of $3.2 million with a further investment of approximately $1.3 million required at full subscription.
It transpired that only about $1.5 million was raised through the issue of the prospectus.
On 7 May 2008 Mr Nash as trustee for the Nash Family Trust signed at the offices of Holt Norman a BankSA Investor Loan application seeking finance of $623,190 to cover the purchase price of 30 units in the Cherry Project.[5]
[5] This amount would in fact have covered only the first three years' Grower Fees.
In May 2008 Mr Nash as trustee for the Nash Family Trust signed at the offices of Holt Norman an Application Form to FBA applying for 30 allotments in the Cherries Project. The Application Form is not dated but it was received by FBA on 19 May 2008. It may have been signed by Mr Nash at the same time as the Bank SA loan application. Part 1 of the printed application form included the following:

Part 1. All Applicants to Complete

Your Allotments

Number of Allotments applied for:

The Amount Payable Per Allotment is as follows:

On Application  $9,504

31 August 2008  $6,082

31 July 2009  $5,187

31 July 2010  $5,731

Growers Fees  $26,504

Amount enclosed with this Application:     $

Amount subject to finance:  $

NB: further payments of rent and management fees will be due each year, (Refer to section 4)

If subject to finance from Total Beverage Australia Pty Ltd a completed, signed and witnessed Terms Loan Agreement and Direct Debit Agreement and application fee of $50 must also be enclosed.

The handwritten figure 0 appeared next to the “Amount enclosed with this Application”. The handwritten figure “623190” appeared next to the “Amount subject to finance”. I find, and it is not controversial, that these figures were inserted by a Holt Norman employee before Mr Nash signed the form.
Part 4 of the printed application form was entitled “Trusts or Superannuation Funds”. It contained a declaration including that, by signing the application form, the applicant acknowledged and agreed to be bound by the statements on page 51 of the PDS. It was signed by Mr Nash as trustee for the Nash Family Trust.
On 23 May 2008 Aussie Cherries settled on the purchase of land from the Driessens. The land purchased was situated at Castle Forbes Bay together with the Lucaston land on which cherry trees had already been planted. The land at Lucaston was the subject of the option. It appears that the purchase price of the land together with water rights, infrastructure, plant and equipment acquired on 23 May 2008 was $3.15 million. Westpac Bank lent $2.05 million for the acquisition and the balance was contributed by the shareholders.
By 26 May 2008 FBA had received applications from 39 applicants to acquire 406 allotments in the Cherries Project. Applications from 31 clients of Holt Norman comprised 391 of those allotments.
On 26 May 2008 Mr Day and Mr Dundon executed a series of documents that FBA contends comprise management agreements between FBA and the growers and licence agreements between FBA, Aussie Cherries and the growers in respect of 406 allotments. One of the issues in this case is whether a management agreement and a licence agreement to which Mr Nash is a party came into existence.
Mr Nash and TBA entered into a “1^st Tranche Only Terms Loan Agreement” dated 30 May 2008 (loan agreement 1) for Mr Nash to borrow $200,000 repayable at 11.8 percent per annum interest over 10 years by monthly repayments of $2,874 (loan 1).
On 2 June 2008 FBA issued a tax invoice to Mr Nash as trustee for the Nash Family Trust for fees for the year ending 30 June 2008 totalling $285,120 (invoice 1). The invoice contained the following components:
·Management Fee of $208,920;
·Irrigation & Planting Fees of $66,840;
·Land & Water Licence Fee of $6,960;
·Plant & Equipment Rental costs of $2,400.
On 18 June 2008 Robert Cope on behalf of Bank SA issued a letter of offer to TBA offering to increase the facility limit on TBA’s multi-option facility from $2.12 million to $2.7 million for the purpose of lending to investors in the Cherry Project, the increase to be effective until 31 December 2008.
On 26 June 2008 TBA drew down a Bank SA commercial bill with a face value of $2.18 million pursuant to the multi-option facility. Discounted proceeds of $2,162,093 were credited to TBA’s bank account.
On 26 June 2008 TBA paid $2,158,240 to FBA. This payment was purportedly made on behalf of growers in payment of the first year’s Grower Fees due under the Cherries Project. Although Mr Nash does not necessarily accept that this payment should be so characterised, there is no reason to find otherwise and I am satisfied that it should be so characterised. This issue is arguably relevant to Mr Day’s credit but is not directly relevant to the issues to be decided in this proceeding.
By this stage Mr Day had agreed with Mr Holt that Holt Norman & Co was entitled to fees of $865,000 from FBA as responsible entity of the Cherries Project. Mr Day had agreed with Mr Nash that Nash Co was entitled to fees of $435,000 from FBA as responsible entity of the Cherries Project.
On 27 June 2008 FBA paid $865,000 into TBA’s bank account. Mr Day gave evidence that this payment was pursuant to an agreement with Mr Holt that FBA would pay this amount (notionally) to Holt Norman & Co in discharge of FBA’s indebtedness for the fees referred to in the previous paragraph and Holt Norman & Co would lend the money back to TBA for the purpose of financing the first tranche of grower payments due under the Cherries Project. Although Mr Nash challenges Mr Day’s evidence in this respect, Mr Holt did not give evidence and I have no reason to reject Mr Day’s evidence as to this agreement. This issue is only relevant to credit.
On 27 June 2008 FBA paid $435,000 into TBA’s bank account. Mr Day gave evidence that this payment was pursuant to an agreement with Mr Nash that FBA would pay this amount (notionally) to Nash Co in discharge of FBA’s indebtedness for the fees referred to in [104] above and Nash Co would lend the money back to TBA for the purpose of financing the first tranche of grower payments due under the Cherries Project. Mr Nash gave evidence denying that he agreed to this transaction. It is not necessary for the purpose of this action to make a finding whether objectively Mr Day and Mr Nash entered into the agreement asserted by Mr Day. I refer to the agreement asserted by Mr Day as the June 2008 $435,000 agreement without connoting that the parties in fact entered into such an agreement. I address this question in relation to the credit of Mr Day and Mr Nash under the heading of “The trial” below.
On 27 June 2008 TBA paid $1,397,920 to FBA. This payment was purportedly made on behalf of growers in payment of the first tranche of Grower Fees due under the Cherries Project. Mr Nash does not accept that this payment should be so characterised because the principal source of the funds was the payments of $865,000 and $435,000. However, I am satisfied that it should be so characterised. This issue is arguably relevant to Mr Day’s credit but is not directly relevant to the issues to be decided in this proceeding.
In July 2008 the first monthly payment of $2,874 was made by Mr Nash to TBA pursuant to loan agreement 1. More or less regular monthly payments were made on that loan up to March 2009, after which no payments were made until August 2009. More or less regular monthly payments then resumed.
James Nash was one of the applicants for allotments. He applied for and was issued with 12 allotments. I infer that FBA issued to him a tax invoice for the first year’s Grower Fees of $114,048, being the amount required to pay for 12 allotments. I infer that he entered into a loan agreement with TBA in about June 2008 to borrow $114,048. Monthly payments were made on that loan from July until December 2008. No payments were made during 2009 until December. More or less regular payments then resumed from December 2009.
On 11 August 2008 FBA issued a tax invoice to Mr Nash as trustee for the Nash Family Trust for Grower Fees for the year ending 30 June 2009 totalling $182,460 (invoice 2). The invoice contained the following components:
·Management Fee of $81,210;
·Irrigation & Planting Fees of $40,680;
·Land & Water Licence Fee of $37,470;
·Plant & Equipment Rental costs of $23,100.
On 7 November 2008 FBA sent to Mr Nash a letter stating that he had failed to pay invoice 2 due on 31 August 2008 and had failed to remedy that default within 28 days thereafter. An attachment to the letter showed the amount due under invoice 2 of $182,460 together with a late payment charge of $3,787 and a balance of $85,120 in respect of invoice 1 described as “own funds contribution”.
On 21 April 2009 FBA sent a letter to Mr Nash stating that he owed $182,460 under invoice 2.
In April 2009 Mr Nash and TBA entered into a “2^nd Tranche Terms Loan Agreement” (loan agreement 2) for Mr Nash to borrow $182,460 repayable interest free over 12 months by monthly repayments of $3,041 (loan 2).
The first monthly payment of loan 2 was due in May 2009. No payments were made until September 2009, when an instalment of $5,205 was paid. In December 2009, $84,067 was credited against the loan being moneys owing by Aussie Cherries to the Nashes and some other monies.
I infer that FBA had issued a tax invoice in August 2008 to James Nash for the second year’s Grower Fees of $72,984. I infer that he entered into a loan agreement with TBA in about April 2009 to borrow $72,984. Instalment payments were made on that loan in June and December 2009 and in March and April 2010. No further payments were made until March 2011 and then only two further payments after that.
On 15 June 2009 FBA issued a distribution statement for the year ending 30 June 2009 to the Nash Family Trust showing gross harvest proceeds of $39,699 together with other income and expenses, resulting in a net amount payable to the Nash Family Trust of $33,198.
On 3 July 2009 FBA issued a tax invoice to Mr Nash as trustee for the Nash Family Trust for fees for the year ending 30 June 2010 totalling $155,610 (invoice 3). The invoice contained the following components:
·Management Fee of $89,130;[6]
·Land & Water Licence Fee of $38,400;
·Plant & Equipment Rental costs of $28,080.
[6] The invoice divided this fee into two components, described as orchard expenses of $80,250 and management fee of $8,880. However, it is common ground that this was in substance a single “ongoing management fee” as referred to in the Cherries PDS and is in the same amount as set out in the Cherries PDS.
On 4 June 2010 FBA issued a distribution statement for the year ending 30 June 2010 to the Nash Family Trust showing gross harvest proceeds of $59,738 together with other income and expenses, resulting in a net amount payable to the Nash Family Trust of $44,517.
On 31 July 2010 FBA issued a tax invoice to Mr Nash as trustee for the Nash Family Trust for fees for the year ending 30 June 2011 totalling $171,930 (invoice 4). The invoice contained the following components:
·Management fee of $83,400;[7]
·Land & Water Licence Fee of $39,390;
·Plant & Equipment Rental costs of $49,140.
[7] The invoice divided this fee into two components, described as orchard expenses of $74,280 and management fee of $9,120. However, it is common ground that this was in substance a single “ongoing management fee” as referred to in the Cherries PDS and is in the same amount as set out in the Cherries PDS.
On 16 November 2010 FBA sent a letter to Mr Nash demanding payment of invoices 3 and 4 totalling $327,540 and giving notice of intention to terminate if payment was not made by 23 November 2010.
On 26 November 2010 FBA sent a letter to Mr Nash terminating his interests in the Cherries Project.
The trial
Evidence
FBA called Mr Day, Mr Lambert, Mr Dundon and Mr Gray to give evidence.
The Nash parties called Mr Nash to give evidence. They also tendered an expert report by Dr Sally Bound and called her to give evidence. Dr Bound gave evidence primarily about the advantages of rain covers and bird netting in cherry orchards.
Both parties tendered various documents.
There is no challenge by the Nash parties to the honesty of the evidence given by Mr Lambert, Mr Dundon and Mr Gray and no comprehensive challenge to the reliability of their evidence (apart from on one or two isolated topics that do not ultimately need to be resolved). I generally accept their evidence.
There is no real challenge by FBA to the expert opinion evidence given by Dr Bound. However, as a result of my conclusions, her evidence does not impact on the issues to be determined in this case.
Pleadings
During the course of the trial, the Nash parties abandoned their pleaded case in the defence that in 2009 Mr Nash and Mr Day entered into an agreement whereby the Nash parties were discharged from any liability to pay monies to FBA in respect of the Avocado Project or were entitled to set off against amounts payable for remuneration for work undertaken by Mr Nash and Nash Co in relation to FBA becoming the responsible entity for the Avocado Project. They abandoned their pleaded case in the counterclaim that FBA mismanaged the Avocado Project, including in breach of section 601FC of the Corporations Act. They also abandoned their pleaded case in the counterclaim that FBA mixed Cherries Project monies with monies of other schemes and FBA’s own monies in breach of section 601FC of the Corporations Act.
Before and after closing addresses, both parties applied for permission to amend their pleadings (FBA’s Statement of Claim and Reply and Defence to Counterclaim and the Nash Parties’ Defence and Counterclaim). Ultimately there was no objection to these amendments and I granted permission to amend.
Credit and reliability of Mr Day’s evidence
The Nash parties challenge the credibility and reliability of Mr Day’s evidence. I reject their invitation to find that Mr Day was a dishonest witness.
I have found below that Mr Day does not, in fact, have as clear a recollection of his discussions with Mr Nash in relation to a cherries set-off as his evidence would suggest and his evidence is to a significant extent the result of reconstruction rather than recollection. However, I find that this did not involve dishonesty on his part but rather he has come to believe that he recollects what, in reality, is reconstruction in this respect.
Overall, I regard Mr Day as an honest witness and in relation to the issues in the case (leaving aside the cherries set-off issue) I consider that his evidence was reliable.
The Nash parties contend that I should find that, contrary to Mr Day’s evidence summarised at [106] above, Mr Nash did not agree to the June 2008 $435,000 agreement and in particular did not agree to lend the amount of $435,000 back to TBA. The Nash parties contend that a rejection of Mr Day’s evidence on this question would reflect adversely on his credit. This issue is ultimately only relevant to credit because TBA is not a party to this action and I conclude below that the existence or non-existence of this agreement does not impact on the cherries set-off issue addressed at [239] and following below.
I am satisfied that Mr Day believed in June 2008 (and still believes) that he entered into the June 2008 $435,000 agreement with Mr Nash. First, although not conclusive in itself, in the absence of such an agreement, the transfer of $435,000 by FPA to TBA on 27 June 2008 is inexplicable. Secondly, Mr Day’s explanation of the rationale for the agreement makes commercial sense. Thirdly, although Mr Nash denied that he specifically agreed to lend the monies to TBA, he did give evidence that more generally he agreed to leave the amount of $435,000 with FABAL for the purpose of enhancing financing Grower Fees. Fourthly, TBA maintained records showing a borrowing of $435,000 from Nash Co (and $865,000 from Holt Norman & Co) together with interest accruing on the borrowings. Fifthly, it would have been a brazen exercise for Mr Day to have invented the transaction. Sixthly, I have no reason to reject Mr Day’s evidence and no reason to prefer Mr Nash’s evidence over that of Mr Day.
This does not entail that Mr Nash was dishonest in denying that he agreed to the transaction. It may well be that the parties were not ad idem in their discussion about Mr Nash leaving in the amount of $435,000. Mr Day may have believed that he adequately explained, and Mr Nash understood, not only that the monies would be left in with FABAL but also more specifically that they would now be owed by TBA rather than FBA but in fact Mr Nash only understood the former and not the latter. I do not treat Mr Nash’s denial that he agreed to the June 2008 $435,000 agreement as reflecting adversely on his credit.

It is unnecessary to make a finding whether, objectively, the parties entered into the June 2008 $435,000 agreement. Assuming that Mr Nash did not agree to the transaction, for the reasons given below, this makes no difference to a consideration of what the parties discussed or agreed in early 2010. On any view, the set-off that they discussed was not between identical parties because the $435,000 was payable to Nash Co and not to Mr Nash or James Nash. Whether it was payable by FBA or TBA is of no consequence. It is undesirable to make such a finding because, although Mr Day and Mr Nash gave some evidence about it, there was only limited cross-examination of them on the topic. In addition, it is theoretically possible that the issue might arise in other proceedings and Nash Co is not a party to this proceeding.
The Nash parties contend that I should find that the transactions that occurred on 27 June 2008 whereby FBA transferred $865,000 and $435,000 to TBA and TBA transferred $1,397,920 to FBA constitute a “round robin” and the fact that Mr Day engineered them, and his evidence about them, reflect adversely on his credit. Whether the transaction is characterised as a “round robin” depends on one’s definition of the term “round robin”. If it merely means that the payment of $1,397,920 was sourced out of the transfers of $865,000 and $435,000, I accept that that is the case. However, on that definition of a “round robin”, there is nothing pejorative about the transaction in itself.
The Nash parties (perhaps unsurprisingly) do not contend that the amount of $435,000 was not payable by FBA as responsible entity of the Cherries Project out of Project monies. On that assumption, there would have been no impropriety in FBA paying out of Grower Fees received on 26 June 2008 the amount of $435,000 to Nash Co in payment of fees due to it. If Nash Co had then lent $435,000 back to TBA, there would have been no impropriety in TBA advancing those funds to growers and paying them, on behalf of growers, to FBA in payment of Grower Fees due. Assuming that Mr Day believed that Mr Nash had entered into such an agreement, there was no impropriety in the “round robin” nature of the transactions.
The Nash parties contend in closing address that FBA mixed Cherries Project monies with FBA’s own monies in breach of section 601FC of the Corporations Act and this reflects adversely on Mr Day’s credit. However, this allegation in the counterclaim was abandoned at trial and it was not in issue at the trial.
Mr Day and Mr Lambert were cross-examined on the practice of FABAL to bank grower fees into FBA’s bank account and then pay them into a dedicated bank account of FABAL Operations. However, it was not suggested or demonstrated that this was unlawful or improper. Mr Nash does not submit this practice reflects adversely on Mr Day’s credit and in any event in the circumstances it does not do so.
The Nash parties refer to observations made by the trial Judge concerning Mr Day’s reliability as a witness in a proceeding in the Supreme Court of Victoria in which FBA and TBA were parties and in which Mr Nash was not a party but was a witness. Mr Nash acknowledges that the trial Judge did not find that Mr Day was a dishonest witness.
Self-evidently, I did not see or hear Mr Day give evidence in the Victorian proceeding. I do not have the transcript of the proceeding or the exhibits tendered in it (apart from Mr Day’s witness statement). A reliability finding made in a different proceeding is of no assistance to me in assessing the reliability of a witness in a proceeding before me. The same applies to any findings of fact made by the trial Judge in that proceeding on the basis of the evidence adduced before, and submissions made to, the trial Judge in that proceeding.
Credit and reliability of Mr Nash’s evidence
I formed an unfavourable impression of the credibility and reliability of the evidence given by Mr Nash.
Mr Nash’s answers to questions in cross-examination were often evasive. It was often necessary for the cross-examiner to ask him a question two or three times. He had a distinct tendency to argue his case instead of answering a question. I formed the impression that he gave his answers by reference to his perception of what would advance his case.
For the reasons given below, I reject Mr Nash’s evidence that he entered into an agreement with Mr Day that the Nash parties were not required to make any payment of fees in respect of the Avocado Project until it became cashflow positive. I consider that his evidence in this respect was dishonest.
The avocado claim
The avocado claim is for payment of six invoices as follows:

Invoice Family Trust Mr Nash Mrs Nash Total

7 May 2010 $24,563 $7,369 $7,369 $39,301

14 February 2012 $17,820 $5,346 $5,346 $28,512

Total $42,383 $12,715 $12,715 $67,813

There are three issues in relation to the avocado claim:
1Did Timbercorp and each of the Nash parties enter into contracts for the payment of the fees the subject of the invoices?
2Did FBA and the Nash parties enter into an agreement that no amount would be payable by them or James Nash for fees in respect of the Avocado Project or the 2006 avocado project until the project was cashflow positive or is FBA estopped by making a representation to that effect from claiming payment of the invoices?
3Has FBA proved the quantum of fees the subject of the 7 May 2010 invoices?
Existence of contracts
Clause 9.1 of the Avocado Constitution provides that, following acceptance of an application, the Responsible Entity will prepare the Management Agreement, Marketing Deed and Licence Agreements (collectively the grower agreements). Clause 3 provides that each participant grower irrevocably appoints the Responsible Entity as its attorney in relation to the project with the powers set out in the Constitution. Clause 6.3 provides that an Applicant must deliver to the Responsible Entity an Application including a Power of Attorney in the form attached to the Avocado PDS signed or executed by the Applicant appointing the Responsible Entity to be the Applicant’s attorney to execute the grower agreements. The grower agreements are contained as schedules to the Constitution.
FBA does not have possession of, and did not tender, grower agreements between Timbercorp and the Nash parties. The Nash parties contend that FBA has failed to prove execution of grower agreements with them and its avocado claim therefore fails.
FBA relies on the presumption of regularity and contends that it should be inferred that grower agreements between Timbercorp and the Nash parties were executed by Timbercorp, including on behalf of the Nash parties, pursuant to the powers of attorney contained in the Nash parties’ application forms.
In the alternative, FBA contends that the parties entered into contracts in terms of the grower agreements by their conduct independently of execution of the grower agreements.
Execution of grower agreements
Timbercorp went into administration and then liquidation in April and June 2009. Huntley took over as responsible entity from Timbercorp in September 2009. FBA then took over as responsible entity from Huntley in March 2010. Mr Day gave evidence that FBA experienced great difficulties in obtaining relevant documents from Timbercorp’s liquidators. In the circumstances, the fact that FBA does not have possession of executed grower agreements does not suggest that they did not exist. However, the onus of proof lies on FBA to prove their existence.
The presumption of regularity is a presumption that has general application. In McLean Bros & Rigg Ltd v Grice[8] the High Court applied the presumption to the existence of a quorum at a meeting of the board of directors when there was no evidence about the number of directors present. Griffith CJ (with whom Barton and O’Connor JJ agreed) said:
Another statement of some authority on the same point is found in the judgment of Mr Justice Brewer in Knox County v Ninth National Bank:— "It is a rule of very general application, that where an act is done which can be done legally only after the performance of some prior act, proof of the later carries with it a presumption of the due performance of the prior act." A very well-known illustration of that rule is that acting as owner of property is primâ facie evidence of ownership.[9]
[8] (1906) 4 CLR 835.
[9] At 850-851.
In Carpenter v Carpenter Grazing Co Pty Ltd,[10] the New South Wales Court of Appeal applied the presumption to the existence of a share register and the entry in it of a share transfer. Hope JA (with whom Samuels and Priestley JJA agreed) said:
As I understand it, the true rule is that the presumption may reasonably be drawn where an intention to do some formal act is established, when the evidence is consistent with that intention having been carried into effect in a proper way, the observance of the formality has not been proved or disproved and its actual observance can only be inferred as a matter of probability.[11]
[10] (1987) 5 ACLC 506.
[11] At 514.
In Morris v Kanssen,[12] Lord Simonds (with whom Viscount Simon, Lord Thankerton, Lord Porter and Lord Uthwatt agreed) said:
One of the fundamental maxims of the law is the maxim “omnia praesumuntur rite esse acta”. It has many applications. In the law of agency it is illustrated by the doctrine of ostensible authority. In the law relating to corporations its application is very similar. The wheels of business will not go smoothly round unless it may be assumed that that is in order which appears to be in order.[13]
[12] [1946] AC 459.
[13] At 475.
In the present case, clause 7.1 of the Avocado Constitution entitled the Responsible Entity to give notice in writing to any applicant that its application had been refused. It is clear that no such notice was given to the Nash parties and on the contrary Timbercorp and the Nash parties acted on the basis that their applications had been accepted.
Part 2 of the Application Form provided:
POWER OF ATTORNEY
I/we, the person named in the “Your Details” section in the Application Form appoint TIMBERCORP SECURITIES LIMITED … (“Attorney”) to be my/our attorney and in my/our name and on my/our behalf and as my/our act and deed to:
· enter into and execute on my/our behalf whether as a deed or agreement, Licence Agreements, Grower PBR Sub-licence and Marketing Deed and a Lot Management Agreement in respect of the Lots for which I/we have applied in which Timbercorp Securities Limited accepts pursuant to the Constitution …
Clause 8.7(a) of the Avocado Constitution provides:
At the time or times specified in the PDS, the Responsible Entity, following the acceptance of an application:
(i)must immediately allocate and allot a Lot or Lots to the Participant Grower from the Land (of such location or locations within the Land as the Responsible Entity in its absolute discretion thinks fit) and the Responsible Entity must within 21 days thereafter register the name, number or other description of the Lot or Lots in the appropriate place in the Register in relation to the entry of that Participant Grower; and
(ii)will as attorney for and on behalf of the Participant Grower, enter into the Grower Agreements in relation to the Lots allocated to the Participant Grower, and any other documents which are ancillary or related to the Grower Agreements, contemplated by the Grower Agreements.
Timbercorp was required by clause 8.7(a) to execute the Grower Agreements. Both Timbercorp and the Nash parties acted thereafter on the basis that the grower agreements had been duly executed. The presumption of regularity applies. There is a presumption that Timbercorp in its own right and as attorney for the Nash parties executed grower agreements in respect of the Nash parties’ Lots and that, where applicable, the other parties also executed them.
In addition, clause 9.3 requires the Responsible Entity, upon becoming satisfied of the matters specified in clause 9.2, to release the application moneys and apply them in payment of the fees payable under the grower agreements. Clause 9.2(a) provides:
Before the release of moneys referred to in clause 9.3, the Responsible Entity must be reasonably satisfied that:
(a)the Licence Agreements, Grower PBR Sub-licence and Marketing Deed and Lot Management Agreement are in the form required by this Deed and have been duly entered into by all parties; ...
It is evident that Timbercorp released the application moneys paid by the Nash parties. It was only entitled to do so if the grower agreements had first been executed. The presumption of regularity applies.
The application of the presumption of regularity is fortified by the following circumstances. First, by the avocado licence agreements, to which both the landowner and Timbercorp were parties, the Nash parties were granted licences to use the land for the cultivation of trees and harvesting and processing of the fruit of the trees. By the lot management agreement, the Nash parties engaged Timbercorp to cultivate and maintain the trees and manage the lots. By the marketing deed, the Nash parties obtained licensing rights from Mangocorp in respect of Calypso mangoes. Both parties acted on the basis that the Nash parties obtained these benefits and Timbercorp had held out to the Nash parties that they would obtain these benefits.
Secondly, Timbercorp had held out to the Nash parties that they would obtain substantial taxation benefits, including in respect of the year ending 30 June 2007. Unless the parties entered into grower agreements, the Nash parties would not obtain those taxation benefits.
There is good reason to infer that Timbercorp and its related entities duly executed grower agreements in respect of the Nash parties’ Lots. There is no evidence to suggest that they did not do so. I find on the balance of probabilities that they did do so.
Entry otherwise into grower agreements
It is not strictly necessary to consider FBA’s alternative contention but I do so for completeness on the assumption that FBA had not proved execution of grower agreements in respect of the Nash parties’ Lots.
Section 601GB of the Corporations Act provides that the “constitution of a registered scheme must be contained in a document that is legally enforceable as between the members and the responsible entity”.
Recital B in the Background to the Avocado Constitution provides that, by participating through the PDS or otherwise, a person will become a participant grower and be bound by the Constitution. Clause 8.1 provides:
Upon an Application being accepted by the Responsible Entity in whole or part, and the Minimum Subscription, if any, being reached or waived by the Responsible Entity, the Applicant will become a Participant Grower.
The Avocado PDS provides that there is no minimum subscription. A participant grower is defined by clause 1.1 of the Avocado Constitution to include:
each several person … who becomes a party to this Deed (as a Participant Grower in the Project) as a result of … the allotment of Lots pursuant to an Application in the PDS; …
Clause 8.3 of the Avocado Constitution provides that it is not necessary to communicate the acceptance of an application to an applicant and clause 8.4 provides for deemed acceptance of an application if it is not refused under clause 7.1.
Accordingly, under the Avocado Constitution, an applicant becomes a participant grower, and becomes bound by the Constitution, upon acceptance or deemed acceptance of the application, without the necessity for the grower agreements to have been executed at that point. Upon a person becoming a participant grower, the Constitution provides that the Responsible Entity has various rights, powers and duties and participant growers have various rights and obligations.
The terms of the grower agreements between Timbercorp and each participant grower are prescribed in their entirety by the Avocado Constitution. It is the evident intention of Timbercorp and a participant grower, objectively assessed in accordance with the law of contract, that, upon a person becoming a participant grower, the participant grower will have rights and obligations in terms of the grower agreements contained in the Schedules to the Constitution. Of course, there is an anticipation, objectively assessed, that Timbercorp will execute a set of grower agreements in respect of each Grower Participant. However, this does not entail that the parties intended that, in the absence of such execution, neither party will have any rights or duties in terms of the grower agreements. On the contrary, by the Constitution considered as a whole, there is manifested an objective intention by the parties that, if for some reason execution of the grower agreements is overlooked or otherwise not undertaken, if the parties act on the basis that a Lot has been allocated to an applicant, there will come into existence agreements in terms of the grower agreements contained in the Schedules to the Constitution.
In the present case, after the Nash parties lodged their applications on 12 June 2007, both Timbercorp and the Nash parties acted on the basis that they had entered into agreements in terms of the grower agreements contained in the Schedules to the Constitution. It is well established that parties can enter into a contract by conduct. Timbercorp and the Nash parties by their conduct, in the context of the provisions of the Avocado Constitution, entered into contracts in terms of the grower agreements contained in the Schedules to the Constitution.
Conclusion
FBA has proved the existence of contracts under which the fees the subject of the invoices were charged. FBA succeeds on this issue.
Existence of cash flow positive agreement
The Nash parties contend that they entered into an agreement with FBA in 2010 that no amount would be payable by them or James Nash for fees payable in respect of the Avocado Project or the 2006 avocado project until the project was cashflow positive. I refer to the agreement asserted by Mr Nash as the cashflow positive agreement without connoting that the parties in fact entered into such an agreement.
Mr Nash gave evidence that he and Mr Holt suggested to Mr Day that FBA take over as responsible entity of the Avocado Project and the 2006 avocado project. Mr Nash said that he spent substantial time, which he described as hundreds of hours, in relation to bringing about the change in the responsible entity. He said that this comprised talking to investors and providing information to Mr Day about the marketing of avocados.
The Avocado PDS records that Simpson Farms and TradingExchange had been engaged to market the avocados; TradingExchange had been engaged to market the citrus fruit; and Harvest Markets had an exclusive licence to market the Calypso Mango. Mr Nash gave evidence that he was hoping that Nash Co would be engaged by FBA, if it became the responsible entity, to market the avocados, which would be quite lucrative. However, he recognised that there was an existing marketing agreement with Simpson Farms and Costa, so this was only a prospect.
Mr Nash gave evidence in chief that he had a conversation with Mr Day towards the beginning of the evolution of FBA taking over as responsible entity. Mr Nash asked Mr Day about remuneration for the work that he would be doing. He said that, during that conversation, Mr Day rejected paying him but said that the other way for him to be remunerated was not to pay fees for his avocado lots until the project became cashflow positive. That evidence was as follows:
Q.    Did you seek any remuneration for that.
A.I had a discussion with Chris Day when it all started evolving to take over, the takeover of the avocados, and I put it to him about the work that I'd be doing and about the remuneration. He said to me it's not a start-up project, it's a takeover so he can't pay PJ Nash a development fee like he did in the cherries because it was already up and running. And I said well okay, how else can we do this, how do I still be remunerated? He didn't say I could do the marketing, but he said he would try and get me in there as a marketer.
Q.    Was there a marketer at the time already.
A.Simpsons and Costa's. So that was an offer that was going to be quite lucrative for me, if I could do marketing, it would be - I'd get remunerated that way. That was one way of sort of getting remunerated. The other way was for me not to pay fees for my avo lots.
Q.    Well could you just say what Mr Day said to you about that.
A.He said to me I wouldn't have to pay - there would be no need for me to pay for my fees until it became cash flow positive.
Q.    And that was in in [sic] relation to which avocado lots.
A.    Both. '06 and '07.
…
Q.    Who made that suggestion.
A.    Chris.
Q.    When was that.
A.When I was discussing with him about how I'd be remunerated. Can I use the word 'pay'? How I would be paid for the work I put in.
Q.    When do you say this conversation took place.
A.The takeover of the avocados, the discussion about taking it over probably started in 2009.

Mr Day gave evidence that Mr Nash telephoned him and said that he had been speaking to Mr Holt. There was reference to finance from Green Seeds. Mr Day said to Mr Nash that, if FABAL could go to BankSA and get enough money for the Grower Fees for year 1, that would get the project started and then they could wait for Green Seeds to refinance. Mr Day said that he could only lend up to $200,000 to Mr Nash if he used TBA.
Mr Nash subsequently signed the “1st Tranche Only Terms Loan Agreement” between TBA and himself (loan agreement 1). The Schedule recorded at item 2 the project as the Tasmanian Premium Cherries Project. It recorded at item 3 the number of interests as being “30 @ $9504 (inclusive of $864 GST) per Interest $200,000. Total Borrowed Fees for Interests in the Tassie Cherries Project: $200,000.” It recorded at item 4 a selection of the Loan Terms Payment Option as the 10 year payment plan at an interest rate of 11.8%. It recorded at item 8 Repayment Amount total borrowings of $200,000 with 120 monthly repayments of $2,874 each. Mr Nash gave evidence that he signed the agreement at the Holt Norman office and it was witnessed by Kristy-Lee Thomas, a Holt Norman employee. I infer that the document was then sent by Holt Norman to FABAL. The agreement was executed by Mr Day and Mr Kerin on behalf of TBA.
Mr Day gave evidence that he approached BankSA and asked them to increase TBA’s existing facility. On 18 June 2008 BankSA agreed to increase TBA’s multi-option facility to $2.7 million for the purpose of lending to investors in the Cherry Project, the increase to be effective until 31 December 2008.
Pausing at this point, there is a direct conflict between the evidence of Mr Nash and Mr Day. Although Mr Nash’s evidence about his conversations with Mr Day on the topic of finance was vague, his evidence is inconsistent with the evidence of Mr Day.
Mr Nash bears the onus of proof of establishing misleading conduct. I am not satisfied that Mr Day ever represented to Mr Nash, or engaged in conduct that led Mr Nash to believe, that TBA would provide finance for the first four years’ Grower Fees or would provide any finance over and above finance for invoice 1 limited to $200,000. I find on the balance of probabilities that Mr Day did not represent to Mr Nash that TBA would provide finance other than in respect of year 1’s Grower Fees limited to $200,000.
First, I found Mr Nash’s evidence in chief in relation to his conversations with Mr Day unconvincing. I also found his evidence in cross-examination unconvincing. He tended to be evasive and argumentative in his answers. I have also made an adverse credit finding in respect of Mr Nash’s evidence generally.
Secondly, Mr Nash referred to finance being sought from BankSA and Green Seeds. To that extent, his evidence is consistent with Mr Day’s evidence and suggests that TBA was not regarded by Mr Nash or Mr Day as the primary financier at least.
Thirdly, I have no reason to disbelieve Mr Day’s evidence on this topic.
Fourthly, Mr Nash could not provide a satisfactory explanation why, if he had been assured by Mr Day that TBA would lend to him the full amount of the first four years’ Grower Fees, he signed an application to BankSA for finance. Mr Nash said during cross-examination that he thought that this was organised by FABAL but I reject that evidence. He said during cross-examination that he did not care where the money was coming from as long as FABAL procured it but this was inconsistent with evidence he had already given in chief that Mr Day told him that TBA would step into the shoes of Bank SA.
Fifthly, Mr Nash accepted in cross-examination that he knew in early June 2008 that TBA did not have an ability to provide all of the funding. Mr Nash did not seek to withdraw from the Project at that point.
Sixthly, the fact that loan agreement 1 refers to borrowings of only $200,000, which was less than the first year’s payment of $285,120, tends to corroborate Mr Day’s evidence that he told Mr Nash that there was a limit of $200,000 on the amount that TBA would lend. Mr Nash suggested at one point in his evidence that he did not notice that the amount of the loan was less than the payment due. I consider it unlikely that he did not inquire when he signed the document about the amount of the loan or that Holt Norman in any event did not explain to him the amount of the loan. In addition, regardless of Mr Nash’s state of mind in relation to the amount of the loan the subject of loan agreement 1, the fact that the amount of $200,000 appears in the document corroborates Mr Day’s evidence.
In making this finding, I take into account conduct by FABAL that Mr Nash in closing address submits supports his evidence. Mr Nash refers to the statements in the Cherries PDS referred to above. Assuming in favour of Mr Nash that those statements were capable of misleading an investor who, unlike Mr Nash, had no other source of knowledge about financing Grower Fees, they are nevertheless consistent with Mr Day believing that TBA would only be called to provide top-up finance and Mr Holt would obtain the principal finance from external sources. Reference is also made in the Product Ruling to the deductibility of borrowing costs for growers borrowing from TBA but the focus of that ruling is on deductibility rather than the circumstances in which finance might be provided by TBA as opposed to other financiers. Reference is also made in a March 2008 report by Australian Agribusiness Group (AAG) to finance from TBA but this was probably sourced from the Cherries PDS itself.
The subsequent conduct by Mr Nash and FABAL reinforces my finding.
Invoice 2 for $182,460 was due to be paid to FBA by 31 August 2008. On 7 November 2008 FABAL sent a notice of demand to Mr Nash demanding payment of that amount together with $85,120 being the balance of invoice 1. Mr Nash did not reply to the letter asserting that Mr Day had told him that 100 per cent finance would be provided by TBA.
On 21 April 2009 FABAL sent a further letter to Mr Nash demanding payment of invoice 2. Shortly thereafter, Mr Nash signed the 2nd Tranche Terms Loan Agreement that had been earlier sent to him by FABAL. That agreement provided for a short interest free loan of $182,460 repayable over 12 months. FABAL received the signed loan agreement on 28 April 2009. Mr Nash did not reply to the 21 April letter asserting that Mr Day had told him that long term finance would be provided by TBA.
On 3 July 2009 FBA issued invoice 3 for $155,610 and on 31 July 2010 it issued invoice 4 for $171,930. Mr Nash did not reply to the invoices asserting that Mr Day had told him that finance would be provided by TBA.
On 16 November 2010 FBA sent a letter to Mr Nash demanding payment of the third and fourth years’ Grower Fees totalling $327,540 and giving notice of intention to terminate if payment was not made by 23 November 2010. On 26 November 2010 FBA sent a letter to Mr Nash terminating his interests in the Cherries Project. Mr Nash did not reply asserting that Mr Day had told him that finance would be provided by TBA.
Mr Nash gave evidence that he preferred oral communications over written communications. Nevertheless, it is to be expected that, if Mr Day had made the representations now alleged, any person in his position would have provided some form of written response referring to those representations. In addition, Mr Nash gave evidence that, before the year 2 Grower Fees were due, Mr Day told him that TBA did not have any further monies to advance. Mr Nash did not give evidence that he complained to Mr Day that this was contrary to his representations. Nor did he give evidence of any complaint made to Mr Day on this topic at any point up to the termination of his interest in the Cherries Project.
Conclusion on misleading conduct
In conclusion, Mr Nash fails on the issue whether FBA made false or misleading representations or otherwise engaged in misleading conduct vis a vis him in relation to finance.
Reliance/causation
For the reasons given above, I find that Mr Nash did not read or rely on any statements contained in the Cherries PDS concerning the availability of finance from TBA. Even if the Cherries PDS was misleading, Mr Nash would fail on the issue of causation.
In Mr Nash’s closing address, he contends that misleading conduct by FBA concerning the availability of finance from TBA caused him and other applicants to become growers in the Cherries Project; the subsequent unavailability of finance caused him and other growers not to pay Grower Fees; the non-payment of Grower Fees caused FBA not to pay rental/licence fees to Aussie Cherries pursuant to the cherries licence agreements; the non-payment of rental/licence fees caused Aussie Cherries not to have sufficient funds to install rain covers and bird netting; and by reason thereof Mr Nash is entitled to be restored to the position in which he was before his application to become a grower or recover damages on that basis.
Mr Nash did not conduct a case at trial that he could succeed on the basis that other growers were misled if he himself was not misled. For example, the list of issues agreed by the parties for the purpose of closing addresses did not include issues reflecting such a case. However, out of an abundance of caution, Mr Nash failed in any event to establish such an alternative case.
Mr Nash did not adduce evidence that any other growers were misled or that they would not have become growers if they had not been misled. It is not possible to infer that other growers were misled by the Cherries PDS in relation to the availability of finance. It is simply unknown as to the extent to which other growers read the relevant passages in the Cherries PDS or what they understood from them. For example, some growers may not have read the PDS at all; others may not have read the passages referring to finance; and others may have read the principal passage at page 10, in which it was stated that FBA would monitor the level of applications for finance and was not obliged to accept any Application, and understood that there was no guarantee of obtaining finance from TBA.
It is simply unknown what information other growers received in relation to the prospective investment. For example, the overwhelming majority of Interests were acquired by clients of Holt Norman. Mr Holt was clearly involved in seeking finance on behalf of his clients. It is unknown what communications passed between Holt Norman and other growers in relation to finance.
Accordingly, Mr Nash would have failed to establish the first element of such an alternative case. In addition, there was no satisfactory evidence to establish the other steps in the chain of causation. For example, no satisfactory evidence was adduced to establish the extent to which growers failed to pay Grower Fees or, to the extent that they did, that it was due to the unavailability of finance.
Mr Nash fails on the misleading conduct causes of action in respect of the availability of finance from TBA.
Rain covers and bird netting
Mr Nash contends that FBA engaged in misleading conduct by making representations in the Cherries PDS that rain covers and bird netting would be installed, he relied on those representations in deciding to become a grower, he would not otherwise have done so and he is entitled to be restored to the position in which he was before his application to become a grower in the Cherries Scheme or recover damages on the basis that he never became a grower.
Misleading conduct
Representations
The Cherries PDS contained several references to the topic of rain covers and bird netting.
The principal reference was in the Independent Horticulturist’s Report by Ken Gaudion under the following headings, in which it was stated:
4.2     Climate
…
Data from the Grove Research Station indicates that:
·    Rainfall is 755 mm per annum, with the wetter months being from May to December. However, with the onset of the first year of production, it is planned that rain covers be installed. The harvest season is January to late February and possibly beyond, a period when less rain traditionally falls.
·    The installation of rain covers is likely to ensure that production would not be curtailed due to rain damage;
·    …
·    Wind: as strong winds are an impediment to plant growth, it is expected that the orchards will be covered, and wind damage is unlikely to be an issue …
·    Hail: covers will greatly assist in mitigating damage should hail occur when fruit is on the trees. Large hail tends to collect in the nets and slowly melt, small hail tends to be broken up and slowed down as it hits the nets.
…
5.     Horticultural Risk Assessment – Castle Forbes Bay and Lucaston
Note: This table has been produced assuming installation of bird netting and retractable rain covers prior to the first harvest, plus the extra water storage dam.

ELEMENT VERY LOW LOW MODERATE HIGH VERY HIGH

Frost ü

Hail ü

Wind ü

Pests (birds) ü

…

Harvest rain ü

…
7.3     Bird Netting
Almost all risk of bird damage is alleviated when bird netting is used. The side benefit is that most of the damage caused by strong winds is also minimised.
7.4     Rain covers
Rain covers minimise the risk of serious rain cracking. However water from the rain covers needs to be removed from the orchard if possible, so that uptake via the trees root systems and therefore into the fruit is limited. The slopes of both locations will assist the movement of water from the orchard, therefore eliminating the prospect of excess water uptake from the soil.
…
7.7     Market Variables
…
The primary threats to market pricing are likely to be:
a)increasing production within Tasmania putting downward pressure on pricing and therefore profitability;
b)late area high elevation production from the mainland of Australia increasing competition; and
c)the possibility of imports from high elevation production sites in a number of South American countries such as Chile.

Given the fruit fly free status Tasmania enjoys, only one of these pricing threats, namely other developments within Tasmania, is likely to impact significantly. The provision of rain covers over this project will differentiate it from other developments within Tasmania and can be expected to justify the initial capital outlay.

The Chairman’s Letter on page 1 contained the following sentences at the end of the third paragraph:
The cherries are destined for both the Australian and international markets. The added protection of rain and bird netting for the entire Orchard is expected to provide larger and more perfect cherries that are saleable at premium prices in the Asian markets of Japan, South Korea and China where premium pricing can be regularly achieved.
On page 14, under the heading “3.4 Cropping Levels”, it was stated amongst other things:
In the Huon Valley Region, it is possible to grow trees capable of comfortably producing up to 20 tonnes of cherries per hectare. The Tassie Cherries Project is expected to consistently produce yields at a level appropriate for Tasmania as a result of the added protection of rain covers and bird netting for the entire Orchard which will protect the maturing cherries.
Mr Nash did not give evidence that he read and relied on any of the above statements contained in the Cherries PDS I am not satisfied that he did so. On the contrary, I am satisfied that he did not.
First, the general effect of Mr Nash’s evidence was that he did not read the Cherries PDS but just glanced at it in a vague way because he believed that he already knew from his involvement in the Project the matters contained in it. Examples of such evidence are given at [315] above.
Secondly, Mr Nash was not asked during his examination in chief whether he read any of the above passages, nor did he give evidence during examination in chief that he did so. If he had read the above passages, it may be expected that he would have given such evidence. The onus of proof lies on him to prove that he read passages in the Cherries PDS concerning rain covers and bird netting and he failed to discharge that onus.
Thirdly, when Mr Nash was asked in cross-examination whether he read the note at the beginning of the table of risks in section 5 of Mr Gaudion’s report referring to rain covers and bird netting being installed prior to the first harvest, he was evasive. The questions and answers were as follows:
Q.First I want to know, did you read that when you read the PDS before entering into the scheme.
A.One of the most important aspects of this scheme was to have rain covers.
Q.My question was did you read that.
A.I developed this.
Q.I'll ask you a third time, did you read it.
A.I would have, I would have thought, yes.
He was asked to explain what he meant by saying “I developed this” and he said that he did not mean that he contributed to the wording of the PDS but rather that he had initiated the idea of a cherry project in Tasmania.
In Mr Nash’s third answer, he did not categorically state that he read the passage in question but merely that he would have thought that he would have. If his answer were to be understood as suggesting that he did read this passage, I reject his evidence. I am convinced that he did not read the passages relating to rain covers and bird netting. He considered that there was no need for him to read the Cherries PDS.
My finding that Mr Nash did not read these passages is fortified by my findings above about his reading of the Cherries PDS in the context of the alleged finance representations.
Even if Mr Nash had read the above passages, I find that he knew that it was not the responsibility of FBA to install rain covers and bird netting but rather it was the responsibility of Aussie Cherries, of which he was a director and a major shareholder.
Objectively, there is no doubt that the responsibility for installing rain covers and bird netting was that of Aussie Cherries rather than FBA.
First, on 9 October 2007 Mr Nash on behalf of Nash Co together with Holt Norman & Co and FBA entered into the Development Agreement. Clause 7 provided:
At a meeting between representatives of the parties to this Agreement held at the offices of FABAL on Friday the 30^th of August, 2007 it was agreed in principle, amongst other things, that the model pursuant to which the Project will be developed is one in the course of which the Land Owning Company and the Project will be developed jointly and investors will have the opportunity to invest in both entities.
The Land Owning Company will:
7.1 Acquire the land and infrastructure;
7.2 Operate the business of providing infrastructure to the Project for a commercial rent;
…
7.7Install rain/bird/weather covers at a cost of in the order of approximately A$100,000 by the first commercial crop for the Project; and
The Project will:
7.8Be developed at a total cost estimated to be in the order of A$245,000 per hectare by FABAL, including the appointment of the Driessen family as horticultural manager, over a five year period;
7.9Include the installation of irrigation and the trees by the Project Grower.[15]
[15] Emphasis in original.
Secondly, the Aussie Cherries prospectus, which was issued on 11 April 2008, included the following section:
Aussie Cherries will own the Land, water rights, plant and equipment on which the Tassie Cherries Project will be established and these constitute the primary assets of Aussie Cherries.
The Land, water rights, investment in the pipeline, plant and equipment will be owned by Aussie Cherries at an estimated cost of $3.20 million. In addition to this amount, further investment of approximately $1.30 million is required at Full Subscription. Over the next four years, up to $3.64 million may be spent in netting, rain covers and other new investment.
The infrastructure on the Land is retained by Aussie Cherries at the end of the Tassie Cherries Project…

Thirdly, the cherries licence agreement proceeds on the basis that the land and all infrastructure, plant and equipment was to be owned by Aussie Cherries and the subject of the licences granted to growers pursuant to clauses 3 and 4.
Fourthly, there is no suggestion in any of the documentation that growers would own or meet the costs of rain covers or bird netting or that FBA would do so.
Mr Nash ultimately accepted in cross-examination that as at October 2007 it was the intention that the rain covers and bird netting be installed by Aussie Cherries:
Q. ... I'm asking you as at 9 October 2007 when you entered into this agreement it was the intention of the parties to it that ACL would install the covers.
A.There was lots - yes, that's what - how it reads, yes.
Mr Nash may not have read the Aussie Cherries prospectus or the cherries licence agreement. However, he gave evidence that it was his idea in the first place to install rain covers and he said to Mr Holt at the very outset “If we can put rain covers on an orchard down there, we will absolutely kill it for Chinese new year or around that period”. I find that he was aware in October 2007 that it was the responsibility of Aussie Cherries to install rain covers and bird netting and nothing occurred subsequently to change that. Although he was evasive when questioned on the topic of his state of mind concerning whose responsibility it was to install rain covers and bird netting, he did not give any positive evidence that the responsibility was ever assumed by FBA or the growers.
During cross-examination, on occasions Mr Nash said that Aussie Cherries would only have been required to install rain covers and bird netting if it had entered into a contract to do so and implicitly said that it had not entered into such a contract. Mr Nash gave answers during the course of his evidence that I regarded as evasive. The fact that Aussie Cherries had not entered into a contract with, say, FBA is beside the point. The point is that Mr Nash knew that, if anyone was to install rain covers and bird netting, it was Aussie Cherries.
Mr Nash’s subsequent conduct also confirms that he knew that it was the responsibility of Aussie Cherries, and not FBA, to install rain covers and bird netting. For example, the minutes of the meeting of the directors of Aussie Cherries on 15 September 2008 record, amongst other things, that Aussie Cherries had the option of spending in excess of $90,000 for 2.2 hectares of netting and Mr Nash said that the decision whether it was done that year or the following year should be deferred to Driessens’ expertise. They also record that Mr Day said that the biggest item in the 2008/2009 budget was depreciation and that would particularly be the case in respect of the netting and rain covers. Minutes of numerous meetings of the board of Aussie Cherries also refer to the installation of rain covers and bird netting by Aussie Cherries.
When cross-examined in relation to these minutes, Mr Nash tended to suggest that the minutes were not accurate. However, there is no reason to doubt that they are accurate insofar as they proceed on the basis that it was the responsibility of Aussie Cherries to install rain covers and bird netting. In addition, Mr Dundon gave evidence, which I accept, that he generally took minutes and, while not verbatim, they were generally accurate. Mr Dundon also gave evidence, which I accept, that Aussie Cherries did install some, albeit limited, rain covers and netting in 2010 or early 2011.
As extracted above, the Cherries PDS contained statements that it was intended to install rain covers and bird netting by the first harvest. Other statements within the Cherries PDS identified the first harvest as being expected to be in 2012 and the first commercial harvest as being expected to be in 2014. The Cherries PDS proceeds on the basis that the land and all infrastructure, plant and equipment was to be owned by Aussie Cherries and that use of it to grow cherries would be the subject of licences granted to growers. There is no suggestion in the Cherries PDS that infrastructure or plant, including future rain covers and bird netting, would be owned or installed by growers or by FBA as the responsible entity.
To the extent, therefore, that the Cherries PDS represented that rain covers and bird netting would be installed by 2012 or 2014, the representation must have been that it was the intention of Aussie Cherries to install them. Even if, contrary to my finding above, Mr Nash had read the relevant passages from the Cherries PDS, he (along with Mr Holt and Mr Norman) was in a very different position to an ordinary grower. He was a director and major shareholder of Aussie Cherries. He knew more than FBA about the intention of Aussie Cherries and its willingness and ability to install rain covers and bird netting in the future. Even if he had read the statements in the Cherries PDS, they were incapable of misleading him.
Mr Nash fails on the issue whether, by the Cherries PDS, FBA made false or misleading representations or otherwise engaged in misleading conduct vis a vis him in relation to rain covers and bird netting.
Reliance/causation
For the reasons given above, I find that Mr Nash did not read or rely on any statements contained in the Cherries PDS concerning the installation of rain covers and bird netting. Even if the Cherries PDS was misleading, Mr Nash would fail on the issue of causation.
Mr Nash fails on the misleading conduct causes of action in respect of the rain covers and bird netting.
Breach of contract
Mr Nash pleaded that FBA breached its contractual duties to him by failing to make reasonable endeavours to ensure that cherries were of merchantable quality, fit for purpose and free of defects and in particular failing to erect rain and bird protection; failing to work with Aussie Cherries and make all reasonable endeavours in relation to the production of cherries; and failing to act reasonably to maximise returns to him as an investor in the Cherries Project.
Mr Nash did not run a case at trial based on breach of contract. For example, the list of issues agreed by the parties for the purpose of closing addresses did not include issues reflecting such a case.
In his written closing address, Mr Nash does not advance a counterclaim for damages for breach of contract. However, his closing address contains a very brief section in which he contends that under clause 28.2 of the Cherries Constitution, FBA “is only entitled to amounts due to it pursuant to this Constitution, the Licence Agreement or the Management Agreement where the Responsible Entity has properly performed its role and met its obligations pursuant to those Agreements with respect to those fees or expenses”.
Mr Nash in his closing address contends that FBA breached its contractual obligations under clause 4.1 of the Nash management agreement, which provides:
The Responsible Entity must carry out all of its duties under and pursuant to this Agreement in a manner that:
4.1.1 Is in accordance with sound and modern horticultural practices;
4.1.2 is in accordance with sound and modern environmental practices;
4.1.3 is in accordance with modern industry practices for similar cherry orchards;
4.1.4 complies with any relevant legislation or regulations; and
4.1.5in all other respects is deemed by the Responsible Entity to be in the Grower’s best interest.
Mr Nash does not identify which subclause he contends was breached by FBA or by reason of what facts and circumstances it was breached. He just makes a generalised contention that FBA was under an obligation to see that rain covers and bird netting were installed. However, if for example he were to allege a breach of clause 4.1.3, it would be necessary for him to establish that modern industry practices for similar cherry orchards required the installation of rain covers and bird netting. Mr Nash did not plead any breach of clause 4.1 of the Nash management agreement. He did not run a case at trial that FBA breached that clause. In any event, he did not prove such a breach. The whole tenor of his case was that the installation of rain covers would set the Cherries Project apart from similar cherry orchards. Nor did Mr Nash prove that conduct by FBA in breach of clause 4.1 was the cause of non-installation of rain covers and bird netting.
Mr Nash in his written closing address contends that FBA breached a promise to growers made in the Cherries PDS that rain covers and bird netting would be installed, referring to statements in the Cherries PDS. Again, Mr Nash did not run a case at trial that the statements contained in the Cherries PDS were promissory, as opposed to representations. In any event, those statements in the Cherries PDS were plainly not promissory. The Cherries PDS referred to the Constitution, cherries management agreement and cherries licence agreement as the contractual documents that would govern the contractual relationship between FBA and growers (and Aussie Cherries in the case of the licence agreement). It contained, beginning at page 36, a summary of material contracts which were there identified and did not include the PDS itself. That section contained detailed summaries of the provisions of the Constitution, cherries management agreement and cherries licence agreement. It also contained summaries of other agreements to which growers were not parties.
One such agreement was the Marketing Agreement between FBA and Nash Co. That section of the Cherries PDS contained a summary of the Marketing Agreement, including the responsibilities of Nash Co and FBA under that agreement. It included the following passage:
10.7.5 Duties of the Responsible Entity
The Responsible Entity has agreed to, amongst other things:
3.work with the Land Owning Company and make all reasonable endeavours in relation to ensuring that all and any cherries produced by the Tassie Cherries Project upon the Land are of merchantable quality, fit for the purpose of sale for human consumption and free of disease and/or defects;
…
6.work with the Land Owning Company and make all reasonable endeavours in relation to producing cherries that will meet the specifications prescribed by Westmores from time to time;
…
Mr Nash contends, based on that provision in the Cherries PDS, that FBA had a responsibility to Growers to work with Aussie Cherries and make all reasonable endeavours in relation to ensuring that cherries were of merchantable quality, fit for purpose and free of defects and would meet the specifications prescribed by Nash Co from time to time. Again, Mr Nash did not run a case at trial to this effect. In any event, he did not prove such a case. He did not establish that FBA failed to work with Aussie Cherries or that it did not make reasonable endeavours in relation to the production of cherries.
Breach of section 601FC of the Corporations Act
Mr Nash pleaded in his counterclaim that FBA failed to exercise reasonable diligence and care or to act in the best interests of Mr Nash as a member of the Cherries Project and thereby breached section 601FC of the Corporations Act and sought a declaration that FBA contravened that section. In his counterclaim at the commencement of trial, Mr Nash had pleaded at paragraph 13 that FBA breached section 601FC of the Corporations Act by failing to keep monies of the Project separate from other monies but that case was not pursued at trial and during closing address Mr Nash produced a proposed amended counterclaim in which paragraph 13 was deleted. It appears that Mr Nash omitted to delete other paragraphs in the counterclaim referring to section 601FC of the Corporations Act.
In any event, Mr Nash does not plead any sections of the Corporations Act that create a cause of action or seek any substantive relief for a breach of section 601FC (other than a declaration). Nor did he run a case at trial based on a cause of action involving a breach of section 601FC of the Corporations Act. In his written closing address, apart from a bare assertion of breach of section 601FC, he does not advance any substantive submissions in support of such a case. In any event, he failed to establish a breach by FBA of section 601FC of the Corporations Act.
Reasonable endeavours to sell Nash interest
Mr Nash pleads that FBA breached the Constitution by failing to make any reasonable endeavour to sell his interest in the Cherries Project, causing loss and damage being the loss of a chance to offset the value of that interest against any entitlement that FBA may have to Grower Fees and to receive any surplus.
Clause 23 of the Constitution includes the following provisions:
23.1If a Defaulting Grower’s Interest is terminated by the Responsible Entity, the Responsible Entity must make all reasonable endeavours to sell the Defaulting Grower’s Interest as an attorney for the Defaulting Grower on the best Terms it can obtain.
23.2The Responsible Entity is indemnified by the Defaulting Grower for or on account of any loss incurred by that Defaulting Grower in the sale of the Defaulting Grower’s Interest by the Responsible Entity, and the Responsible Entity is not liable in any way if it is not able to sell the Defaulting Grower’s Interest.
Clause 23.3 provides for disposition of the proceeds of sale of an interest. Clause 24 provides that, if the Responsible Entity is unable to sell the interest within three months, the interest is to be transferred to the Responsible Entity to be held on trust for the remaining growers and managed in accordance with the Constitution and management agreement.
Mr Day gave evidence that Mr Holt attempted to sell Mr Nash’s interests to high net worth clients but was unsuccessful in doing so because it was in the middle of the Global Financial Crisis and there was no market for the product. Mr Day said that FBA did not take any other steps to attempt to sell the interests.
Mr Nash did not put to Mr Day in cross-examination any other steps that he contended should have been taken by FBA to attempt to sell his interests. Nor does he identify such steps in his closing address.
In any event, Mr Nash did not adduce any evidence to identify that his interests were saleable in November 2010 to February 2011 or to prove that any other steps could realistically have been taken with the prospect of achieving a sale.
In his oral closing address, Mr Nash advances a different contention. He refers to clause 24.3, which applies after a defaulting grower’s interest is transferred to the Responsible Entity to be held on trust for the other growers (if the interest cannot be sold within three months). Clause 24.3 provides that income attributable to such an interest is to be applied in a defined order. The third priority is allocation towards payment of unpaid amounts due by the defaulting grower to the Responsible Entity.
Mr Nash contends in his oral closing address that FBA was obliged to apply income for the financial years ending on 30 June 2014 onwards towards his outstanding liabilities to FBA for Grower Fees. FBA contends that this claim is not pleaded and in any event Mr Nash has not proved that there was any surplus income available for such application. In relation to FBA’s last contention, Mr Nash seeks, if he is successful on this claim, an account or enquiry by a referee or other court officer.
Mr Nash was given the opportunity to seek permission to amend his pleading after closing address. He provided a proposed amended defence and counterclaim which did not include any pleading by reference to clause 24.3 or an obligation by FBA to apply harvest proceeds for the year ended 30 June 2014 onwards towards payment of his outstanding Grower Fees.
Mr Nash did not advance a case at trial that FBA breached clause 24.3 by not applying post-termination harvest proceeds towards payment of his outstanding grower fees. Such a case was not advanced in his opening address and was not put to Mr Day or other FBA witnesses. Mr Nash did not apparently request at any time an accounting from FBA of the amounts referred to in clause 24.3. Mr Nash did not adduce any evidence concerning the amount of harvest proceeds for the year ended 30 June 2014 onwards, the amount to be applied in priority to payments under clause 24.3.3 or otherwise. Such a case was not advanced in Mr Nash’s written closing address and was first mentioned in his oral closing address after FBA had completed its closing address.
If Mr Nash had pleaded or advanced a case at trial that FBA breached clause 24.3, it may be expected that FBA would have adduced evidence concerning the amounts referred to in clause 24.3.
In the circumstances, it is not open to Mr Nash to advance this contention at the eleventh hour. This does not necessarily prevent Mr Nash in future requesting an accounting from FBA of the amounts referred to in clause 24.3 or bringing an action against FBA for a failure to so account but it is not an issue in this proceeding.
Mr Nash fails on this issue.
Conclusion
FBA is entitled to judgment on the avocado claims against Mr Nash for $12,714.90 plus interest; Mr Nash as trustee of the Nash Family Trust for $42,383.00 plus interest; and Mrs Nash for $12,714.90 plus interest.
FBA is entitled to judgment on the cherries claim against Mr Nash as trustee of the Nash Family Trust for $220,954.80.
I will hear the parties concerning the calculation of interest and costs and orders to finalise this proceeding.

Fee/cost	2008	2009	2010	2011	2012	2013
Licence fee	$700	$700	$900	$900	$1,500	$1,564
Management fee	$3,000 plus 2% of Net Sale Proceeds	$3,250 plus 2% of Net Sale Proceeds	2% of Net Sale Proceeds	2% of Net Sale Proceeds	2% of Net Sale Proceeds	2% of Net Sale Proceeds plus deferred fees of 1% to 15% of Net Sale Proceeds
Farm operating costs	Nil or picking costs attributed to yields in excess of specified thresholds	Nil or picking costs attributed to yields in excess of specified thresholds	Estimated farm operating costs with adjustment for actual costs for this year (including admin overheads of $55 indexed from 30 June 2007)	Estimated farm operating costs with adjustment for actual costs for this year (including admin overheads of $55 indexed from 30 June 2007)	Estimated farm operating costs with adjustment for actual costs for this year (including admin overheads of $55 indexed from 30 June 2007)	Estimated farm operating costs with adjustment for actual costs for this year (including admin overheads of $55 indexed from 30 June 2007)
Royalty fees and other marketing & sales costs	Royalty fees of 3.3% and other marketing & sales costs	Royalty fees of 3.3% and other marketing & sales costs	Royalty fees of 3.3% and other marketing & sales costs	Royalty fees of 3.3% and other marketing & sales costs	Royalty fees of 3.3% and other marketing & sales costs	Royalty fees of 3.3% and other marketing & sales costs
Incentive (performance) fee	27.5% of Net Proceeds that exceed threshold on 2 year rolling basis	27.5% of Net Proceeds that exceed threshold on 2 year rolling basis	27.5% of Net Proceeds that exceed threshold on 2 year rolling basis

Description	Family Trust	Mr Nash	Mrs Nash
Licence fee	$6,534	$1,960	$1,960
Farm operating costs	$17,347	$5,204	$5,204
Responsible entity fee	$682	$205	$205
Total	$24,563	$7,369	$7,369

Invoice	Family Trust	Mr Nash	Mrs Nash	Total
7 May 2010	$24,563	$7,369	$7,369	$39,301
14 February 2012	$17,820	$5,346	$5,346	$28,512
Total	$42,383	$12,715	$12,715	$67,813

ELEMENT	VERY LOW	LOW	MODERATE	HIGH	VERY HIGH
Frost	ü
Hail	ü
Wind	ü
Pests (birds)	ü
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Harvest rain	ü
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