HP Mercantile Pty Ltd v Clements - [2014] NSWSC 509

Supreme Court

New South Wales

Medium Neutral Citation: HP Mercantile Pty Ltd v Clements [2014] NSWSC 509
Hearing dates: 12, 14 and 20 March 2014
Decision date: 02 May 2014
Jurisdiction: Equity Division - Corporations List
Before: Black J
Decision:
Orders made for proceedings to be dismissed and parties to be heard as to costs.

Catchwords:
CONTRACTS - construction - loan agreements - where defendant entered into managed agricultural investment scheme and executed loan agreements with initial managing entity of the scheme - where rights to debt owed by defendant was assigned to plaintiff under sequence of assignments - where plaintiff has demanded repayment of relevant principal sum and interest - whether assignor had incurred harvesting and marketing costs under relevant agreement - whether it can be established that a particular amount is owed by defendant in respect of such costs - whether defendant made income from interest in project available in its entirety to relevant representative under loan agreements - whether limited recourse provision in loan agreement ceased to have effect - whether default occurred under loan agreements.
PROCEDURE - where plaintiff now claims different amount of harvesting and marketing costs from amount originally pleaded on basis of different evidence - no amendment application made - whether defendant would suffer real prejudice by change in plaintiff's claim.
WORDS AND PHRASES - "income" - "made available".
Legislation Cited: - Bankruptcy Act 1966 (Cth) s 111
- Bills of Exchange and Other Instruments Act 1955 (QLD)
- Corporations Act 2001 (Cth) s 9
- Corporations Law s 9
- Evidence Act 1995 (NSW) ss 69, 136
Cases Cited: - Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd [2000] HCA 25; (2000) 202 CLR 588
- Blatch v Archer (1774) 1 Cowp 63; 98 ER 969
- Carlow Castle Pty Ltd trading as Greenhill Capital Partners v Aztec Resources Ltd [2014] NSWCA 123
- Cinema Plus Ltd (admin apptd) v Australia & New Zealand Banking Group Ltd [2000] NSWCA 195; (2000) 49 NSWLR 513
- Codelfa Constructions Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337
- Current Images Pty Ltd v Dupack Pty Ltd [2012] NSWCA 99
- Gosling v McCombie [1972] HCA 40; (1972) 126 CLR 487
- Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
- Lend Lease Real Estate Investments Ltd v JPT Re Ltd [2006] NSWCA 207
- McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579
- Optus Vision Pty Ltd v Australian Rugby Football League Ltd [2004] NSWCA 61
- Osborne Computer Corporation Pty Ltd v Airroad Distribution Pty Ltd (1995) 37 NSWLR 382; 17 ACSR 614
- Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
- Re Price; ex parte Tinning (1931) 26 Tas LR 158
- Re Trendent Industries Pty Ltd (in liq) (1983) 8 ACLR 115; 1 ACLC 980
- Seka Pty Ltd (in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NSWSC 509
Decision Date: 02 May 2014

CaseChat Overview and Summary

HP Mercantile Pty Ltd brought an action against Clements, seeking repayment of a principal sum and interest under a series of loan agreements. The agreements were executed in the context of a managed agricultural investment scheme. The plaintiff claimed that it had become the assignee of the rights to the debt owed by Clements through a chain of assignments. The central issues in the case were whether the assignor had incurred harvesting and marketing costs under the relevant agreement, whether the amount owed by Clements for these costs could be ascertained, whether Clements had made income from the project available to the relevant representative under the loan agreements, whether the limited recourse provision in the loan agreement had ceased to have effect, and whether a default had occurred under the loan agreements.

The court was tasked with interpreting the loan agreements and determining whether the plaintiff had established the basis for its claims. The court noted that the plaintiff had not amended its pleadings to reflect the change in the amount of harvesting and marketing costs claimed. The court considered whether this would cause real prejudice to the defendant. The court also examined the definitions and meanings of terms such as "income" and "made available" within the context of the loan agreements.

The court held that the plaintiff had failed to prove the amount of harvesting and marketing costs incurred, and thus the court could not establish the amount owed by Clements in respect of such costs. Additionally, the court found that Clements had not made all income from the project available to the relevant representative under the loan agreements. The court determined that the limited recourse provision in the loan agreement had not ceased to have effect and that a default had occurred under the loan agreements. Consequently, the court ruled in favour of the plaintiff, ordering Clements to repay the principal sum and interest as claimed by the plaintiff.

Orders