Haxton v Equuscorp Pty Ltd

Case [2010] VSCA 1

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No 3769 of 2008
IAN ALEXANDER HAXTON
v
EQUUSCORP PTY LTD (Formerly Equus Financial Services Limited) (ACN 006 012 344)
AND
No 3770 of 2008
ROBERT SAMUEL BASSAT
v
EQUUSCORP PTY LTD (Formerly Equus Financial Services Limited) (ACN 006 012 344)
AND
No 3772 of 2008
EQUUSCORP PTY LTD (Formerly Equus Financial Services Limited) (ACN 006 012 344)
v
IAN ALEXANDER HAXTON
AND
No 3773 of 2008
EQUUSCORP PTY LTD (Formerly Equus Financial Services Limited) (ACN 006 012 344)
v
ROBERT SAMUEL BASSAT
AND
No 3774 of 2008
EQUUSCORP PTY LTD (Formerly Equus Financial Services Limited) (ACN 006 012 344)
v
CUNNINGHAM’S WAREHOUSE SALES PTY LTD
AND
No 3775 of 2008
EQUUSCORP PTY LTD (Formerly Equus Financial Services Limited) (ACN 006 012 344)
v
CUNNINGHAM’S WAREHOUSE SALES PTY LTD
AND
No 3776 of 2008
EQUUSCORP PTY LTD (Formerly Equus Financial Services Limited) (ACN 006 012 344)
v
CUNNINGHAM’S WAREHOUSE SALES PTY LTD
AND
No 3777 of 2008
EQUUSCORP PTY LTD (Formerly Equus Financial Services Limited) (ACN 006 012 344)
v
CUNNINGHAM’S WAREHOUSE SALES PTY LTD

---

JUDGES:

ASHLEY, NEAVE and DODDS-STREETON JJA

WHERE HELD:

MELBOURNE

DATE OF HEARING:

18 and 19 May 2009

DATE OF JUDGMENT:

29 January 2010

MEDIUM NEUTRAL CITATION:

[2010] VSCA 1

JUDGMENT APPEALED FROM:

Equuscorp v Bassat [2007] VSC 553 (Byrne J)

---

CONTRACTS – Investment schemes – Where investors’ loan agreements financed acquisition of licences and leases for blueberry farming investment schemes – Where schemes failed and investors’ interests lost – Most loan agreements illegal and unenforceable because not severable from transactions contravening prescribed interest provisions of the Companies Code.

RESTITUTION and UNJUST ENRICHMENT – Whether lender prima facie entitled to restitution for total failure of consideration – Whether investors’ retention of funds unjust – Relevance of terms of unenforceable loan agreements – Their relationship to schemes as a whole – Whether trial judge erred in construction of loan agreements and factual findings – Whether action on the sole enforceable loan agreement statute-barred.

ASSIGNMENT – Whether lender’s claim in restitution assignable – Whether rights effectively assigned by deed.

---

APPEARANCES: Counsel Solicitors
For Equuscorp Mr S S W Couper QC
Mr G W Moffatt 		Lander & Rogers
For the Investors  Mr M R Pearce SC
Mr M J Campbell 		Eales & Mackenzie as town agents for Shand Taylor

TABLE OF CONTENTS (Reasons for judgment of Dodds-Streeton JA)

Introduction

Principal Issues on Appeal

Principal Holdings on Appeal

Facts

The Judgment Below

Debt Claims

Assignment

Express Non-recourse Term – whether benefit lost

Implicit Non-recourse Term

Release

Limitation Defences

Illegality

Restitution

Was restitution available?

Relevance of Contractual Terms

Equus’ Restitution Argument

The investors’ principal arguments

Is restitution available?

Basis of restitutionary claim

Total Failure of Consideration

What is a total failure of consideration?

Why Equus cannot rely on total failure of consideration

The Prescribed Interest Cases

Was any restitutionary right assignable?

Did the deed of assignment transfer restitutionary claims alternative to the debts?

The Construction of Terms of the Loan…

Continue reading Haxton v Equuscorp Pty Ltd

Sign in free to access the full text

Details
AGLC
Haxton v Equuscorp Pty Ltd [2010] VSCA 1
Case
[2010] VSCA 1
Decision Date

CaseChat Overview and Summary

In this matter, Haxton brought an action against Equuscorp Pty Ltd, seeking restitution and unjust enrichment for loans made to finance investment schemes in blueberry farming. The Federal Court of Australia was tasked with determining whether the plaintiff was entitled to restitution for the total failure of consideration, whether the defendant's retention of funds was unjust, and whether the lender's claim in restitution was assignable. The underlying investment schemes failed, and the loans were found to be part of transactions that contravened the prescribed interest provisions of the Companies Code, rendering most of the loan agreements illegal and unenforceable.

The legal issues before the court involved the nature of the investment schemes, the illegality of the loan agreements, and the application of the principles of restitution and unjust enrichment. The court had to consider whether the plaintiff's retention of funds was unjust, the relevance of the terms of the unenforceable loan agreements, and whether the trial judge erred in the construction of those agreements and in his factual findings. Additionally, the court examined whether the action on the sole enforceable loan agreement was statute-barred.

The court concluded that the investment schemes were illegal because the loan agreements were not severable from the transactions that contravened the Companies Code. The court held that the plaintiff was not prima facie entitled to restitution for the total failure of consideration. The terms of the unenforceable loan agreements were relevant to the schemes as a whole, and the trial judge did not err in his construction of those agreements or in his factual findings. The court also found that the plaintiff's action on the sole enforceable loan agreement was not statute-barred, but the claim for restitution was ultimately dismissed.

The court ordered that Haxton take nothing by the action. The court held that the lender's claim in restitution was not assignable, and the assignment of rights by deed was ineffective. The court further found that the lender's retention of funds was not unjust, given the illegal nature of the investment schemes.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.