Haxton v Equuscorp Pty Ltd

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.