HP Mercantile Pty Ltd v Dierickx - [2012] NSWSC 1005

Supreme Court

New South Wales

Medium Neutral Citation: HP Mercantile Pty Ltd v Dierickx & Ors [2012] NSWSC 1005
Hearing dates: 7-9 & 12-15 December 2011
Decision date: 31 August 2012
Jurisdiction: Equity Division
Before: White J
Decision:
1.Direct entry of judgment for the defendants.
2.Order that the cross-claim be dismissed.

Catchwords:
CONTRACT - plaintiff suing as assignee of loan debt - whether debt purportedly assigned - whether assignments valid - whether debtors could assert that assignment was in fraud of creditors - original creditor estopped from denying validity of first assignment - plaintiff entitled to benefit of estoppel - limitation periods if initial assignments invalid - whether amendments relying on later assignments pleaded new causes of action - when amendments took effect

TRADE PRACTICES - misleading and deceptive conduct - whether defendants induced to invest on understanding that liability was limited to initial investment - defendants' conduct inconsistent with belief that loan was without recourse
TRADE PRACTICES - misleading and deceptive conduct - whether defendants induced to make investment by representations regarding funds available to promoter to carry out scheme - promoter's failure to provide information - where obligation of promoter to disclose all matters that might materially affect investor's decision - failure to disclose funding arrangements for the making of loans to investors - misrepresentation of moneys available to promoter to carry out scheme - whether non-disclosure and misrepresentation by original creditor a defence to action by assignee of debt - where time limit for claim under s 87(1A) of the Trade Practices Act 1974 has expired - whether debtor can seek avoidance of contract of loan as defence to action for debt - Trade Practices Act 1974 (Cth), s 52
Legislation Cited: Trade Practices Act 1974 (Cth)
Corporations Law
Conveyancing Act 1919
Stamp Duties Act 1920
Limitation Act 1969
Civil Procedure Act 2005
Cases Cited: Thomas v HP Mercantile Pty Ltd [2008] NSWCA 308
HP Mercantile Pty Ltd v Meakes (District Court of New South Wales, 24 June 2004, unreported)
Tailby v Official Receiver (1888) 13 App Cas 523
Amalgamated Investment and Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1982] QB 84
Coghlan v S H Locke (Australia) Ltd (1985) 4 NSWLR 158
Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394
Ramsay v Pigram [1968] HCA 34; (1968) 118 CLR 271
Brady v Stapleton [1952] HCA 62; (1952) 88 CLR 322
Chen v Marcolongo; Chan v Lym International Pty Ltd [2009] NSWCA 326
Marcolongo v Chen [2011] HCA 3; (2011) 242 CLR 546
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Read v Brown (1888) 22 QBD 128
New Cap Reinsurance Corporation v Reaseguros Allianza SA [2004] NSWSC 787; (2004) 186 FLR 175
Stone v ACE-IRM Insurance Broking Pty Ltd [2003] QCA 218; [2004] 1 Qd R 173
Weldon v Neal (1887) 19 QBD 394
Hewitt v Gardner [2009] NSWSC 705
Watson v Foxman (1995) 49 NSWLR 315
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628; (2001) 188 ALR 566
S E Vineyard Finance Pty Ltd (receivers and managers appointed) v Casey [2011] VSC 403
Re Harry Simpson & Co Ltd v Companies Act 1936 (1963) 81 WN (Part 1) (NSW) 207
Roxburghe v Cox (1881) LR 17 Ch D 520 Mitchell v Purnell Motors (1960) 78 WN (NSW) 26
Re Partnership Pacific Securities [1994] 1 QdR 410
Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199
Duke Group (in liq) v Alamain Investments Limited [2003] SASC 415
Barker v Duke Group Limited (in liq) [2005] SASC 81; (2005) 91 SASR 167
Hewitt v Henderson [2006] WASCA 233
Brightwell & Ors v R F B Holdings Pty Ltd [2003] NSWSC 7; (2003) 44 ACSR 186
Short v Crawley (No. 30) [2007] NSWSC 1322
Rawson v Samuel (1841) CR & PH 161; 41 ER 451
Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9
Bank of New Zealand v Spedley Securities Limited (in liq) (1992) 27 NSWLR 91
Australian Mutual Provident Society v Specialist Funding Consultants Pty Ltd (1991) 24 NSWLR 326
Westpac Banking Corp v Eltran Pty Ltd (1987) 14 FCR 541
Carlton and United Breweries Limited v Castlemaine Tooheys Limited [1986] HCA 38; (1986) 161 CLR 543
Oraka Pty Ltd v Leda Holdings Pty Ltd [1997] FCA 297; [1998] ANZ Conv R 577
Prosperity Group International Pty Ltd v Queensland Communication Company Pty Ltd (No. 3) [2011] FCA 1122
Krambousanos v Jedda Investments Pty Ltd [1996] FCA 144; (1996) 64 FCR 348
O'Dea v Allstates Leasing System (WA) Pty Ltd [1983] HCA 3; (1983) 152 CLR 359
Acron Pacific Limited v Offshore Oil NL [1985] HCA 63; (1985) 157 CLR 514
Wallingford v Mutual Society (1880) 5 App Cas 685
C J Belmore Pty Ltd v AGC (General Finance) Limited [1976] 1 NSWLR 507
King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; (2005) 64 NSWLR 441
Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; (2008) 77 NSWLR 205
Texts Cited: R P Meagher, J D Heydon & M J Leeming, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies, 4th ed (2002) LexisNexis Butterworths
Category: Principal judgment
Parties: HP Mercantile Pty Ltd (Plaintiff)
Ludo Victor Dierickx (1st Defendant)
Wendy Anne Dierickx (2nd Defendant)
Tumut River Orchard Management Limited (In Liquidation) (3rd Defendant)
Representation: Counsel:
D Fagan SC with P Knowles (Plaintiff)
L V Gyles SC (Defendants)
Solicitors:
Versace McKenzie Lawyers (Plaintiff)
Piper Alderman (1st & 2nd Defendants)
Crouch Amirbeaggi (3rd Defendant)

File Number(s): 2006/294773

Judgment

HIS HONOUR: These are proceedings for the recovery of a debt. The plaintiff ("HPM") claims to be the assignee of the debt. The first and second defendants (Mr and Mrs Dierickx) through an agent, entered into a loan agreement dated 30 June 1992 with the third defendant, Tumut River Orchard Management Limited ("TROM"). The amount borrowed was $24,050. Interest was payable on the loan at the rate of 20 per cent per annum, or, if the loan were not in default, 15 per cent per annum. The loan was used to acquire two "Farming Allotments" in a managed investment scheme known as the Tumut River Orchard Project. TROM was the owner of the land on which the orchards were located. Each farming allotment was a defined portion of land. TROM granted a licence to each investor for it to grow peach or nectarine trees. The cultivation and management of the land and the harvesting and marketing of the fruit was managed for each investor by TROM under a Farming Agreement. The Licence Agreement and the Farming Agreement were to be for periods of 14 years. The loan was to be repayable after six years. The investors were to be entitled to the net income derived from the sale of the fruit. The prospectus for the project projected that the income to be derived from the harvesting and sale of fruit would be more than sufficient to pay ongoing licence fees, fees payable under the Farming Agreement, and interest, and to repay the loan.

On 31 December 1990 TROM had entered into an Investment Deed with Permanent Trustee Company Limited (called "the Representative") for Permanent Trustee Company Limited to represent the interests of the Growers (that is, the investors). Under the Investment Deed all the gross sale proceeds received by the manager (TROM) pursuant to the farming agreements were to be paid to the Representative. After deducting costs and expenses (including remuneration) the Representative was to credit to the account of each grower a share of the net income in proportion to the Growers' entitlements.

Under the loan agreement there were to be two repayments of principal after three months and six months in the sums of $1,500 per farming allotment. Interest was to be paid and the balance of the principal sum was to be repaid by direct deduction from the moneys payable by the Representative to the borrower pursuant to the Investment Deed representing the income of the borrower in respect of his or her farming allotment. If there were insufficient moneys available from that source, the borrower was required to pay all moneys owing on the due dates for payment.

The project was not a success. Mr and Mrs Dierickx allege that on the proper construction of the loan agreement, their liability to repay the outstanding balance of the loan and interest was limited to their net proceeds from the investment in the project. They also contend that the obligation to pay interest at the rate of 20 per cent is void or unenforceable as a penalty.

Mr and Mrs Dierickx also contend that if on the proper construction of the loan agreement their liability is not so limited, they were induced to make the investment by representations that loan repayments, interest and orchard costs would be paid out of orchard income and that their liability would be limited to their net proceeds of their investment in the project. They say that if that is not the effect of the loan agreement, the loan agreement should be set aside ab initio pursuant to s 87(1) or s 87(2)(a) of the Trade Practices Act 1974 (Cth). They also say that there were not reasonable grounds for the representations that the orchard income would be sufficient to cover loan repayments, interest and orchard costs. They say that TROM failed to disclose that there was a real risk that project income would not be sufficient to cover loan repayments, interest and orchard costs, and that the investors would be required to make up the shortfall. They say they were induced to enter into the project by misleading or deceptive conduct and seek relief under the Trade Practices Act.

Mr and Mrs Dierickx also contend that it was represented to them that the principal sum of $24,000 ($12,000 per farming allotment) would be used, or would be available for use, for the purpose of orchard enhancement and maintenance expenses and payment of the licence fee of $500 per allotment. They say that TROM as the promoter of the project failed to disclose all material information that could reasonably be expected to influence their decision to invest and failed to disclose that the principal sum would not be used, or be available for use, for the purposes of orchard enhancement and maintenance expenses or the payment of licence fees, but would be part of a round-robin transaction.

Mr and Mrs Dierickx made the initial interest payment of $3,139 (being the first year's interest on the loan) at the time they applied for the loan. They duly made the first two partial repayments of principal. As at 30 June 1995 the outstanding balance of the loan was $15,742.36.

In June 1995 TROM offered investors the opportunity to exit from the project. On 14 June 1995 Mr Andrew Purcell, the managing director of TROM, sent a letter to Mr and Mrs Dierickx enclosing an application for them to exit the project. The letter stated that acceptance of an application to exit would be at the sole discretion of the Manager. Mr and Mrs Dierickx completed the application. According to Mr Dierickx, he did so after a telephone conversation with Mr Purcell in which Mr Dierickx accepted what he described as TROM's offer that he and his wife exit the project. Mr and Mrs Dierickx say that following their acceptance of that offer they had no further liability to TROM. HPM says that their application to exit the project was not accepted by TROM and they remained liable under the Investor Loan Agreement.

By May 1998 TROM was in serious financial difficulties. As manager of the managed investment scheme it was required to hold a dealer's licence. To hold a dealer's licence it had to keep net assets of more than $500,000. Its auditor was not satisfied that it had net assets of that amount. On 25 May 1998 it was issued with a notice of assessment of income tax, penalties and interest for $5,768,106.45.

TROM had promoted and was managing five other orchard projects organised on similar lines. Another company, Treetop Projects Limited ("TPL"), had been established by Mr Purcell on 7 January 1998. As at May 1998 TPL had three directors, namely, Mr Purcell, Mr Richard Moody, and Mr Jim Howson. TPL was manager of a managed investment scheme known as the Nutrasweet Project. TROM was the manager of six managed investment schemes, including the Tumut River Orchard Scheme. Shortly after 1 July 1998 deeds of retirement of TROM and appointment of TPL as manager were executed with effect as from 30 June 1998.

From at least May 1998 Mr Purcell anticipated that TROM would have to go into external administration. An agreement dated 28 May 1998 was executed under the common seal of both TROM and TPL in anticipation of TROM's retiring as manager of the various orchard projects and TPL's undertaking that role. TPL held a security dealer's licence that permitted it so to act. The agreement dated 28 May 1998 provided that TROM should pay to TPL $18 million and that TPL agreed to perform the works and services specified in the Farming Agreements for each of the projects, and would apply to the Representative for its consent to do so. TROM agreed to retire as manager and to do all things desirable to facilitate TPL's appointment as manager.

Mr Purcell prepared another document entitled "Offer to Transfer Loans, Cash and Equipment to Settle Debt" also dated 28 May 1998. It was addressed to TPL and signed by Mr Purcell on behalf of TROM. The document contained an acknowledgment by TROM that it owed TPL $18 million for its agreement to take over TROM's obligations as manager under the six projects. The document stated that TROM:

"1. ...

(b) offers to transfer loans (agreed value of $15,327,081), cash ($1,172,919) and equipment (freehold; $500,000, leased or on hire purchase; $1,000,000) to you, details of which are set out in Annexure 'A' hereto ('the Loans, Cash and Equipment'), in full satisfaction of that debt."

The document stated that the offer could only be accepted orally.

HPM contends that TPL orally accepted this offer. In other proceedings, Mr Purcell stated that Mr Moody of TPL accepted the offer on behalf of TPL. This is said to be confirmed in a minute of a meeting of directors of TPL said to have been held on 10 July 1998. The minutes state:

"Richard Moody further confirmed the acceptance by Treetop of the 28 May 1998 offer and of the 1 July 1998 offer to settle debt during this meeting with the following words, in the presence of John Purcell, saying:

'I hereby accept on behalf of Treetop Projects Limited, the Offers to Transfer Loans, Cash, land, materials, leases and equipment to settle debt from Tumut River Orchard Management Limited, dated 28 May 1998 and 1 July 1998.'

Andrew Purcell also repeated the words."

Mr Purcell and Mr Moody gave evidence in these proceedings that there was no such oral acceptance of the offer. Mr Purcell acknowledged that in numerous other proceedings where HPM has sought to recover loans from investors, he gave contrary evidence. He said that the evidence he gave in earlier proceedings was false and that there had been no acceptance of the offer. He also said that the documents he created were not created as at 28 May 1998, but were created much later and after TROM had gone into administration.

Voluntary administrators were appointed to TROM on 20 July 1998.

HPM's primary case is that it acquired title to the debt alleged to be owing under the Investor Loan Agreement by Mr and Mrs Dierickx by a chain of assignments, the first of which was an assignment from TROM to TPL on 28 May 1998. Mr and Mrs Dierickx say there was no such assignment. HPM contends in response that if that were so, nonetheless TROM is estopped from denying such an assignment. Mr and Mrs Dierickx put that estoppel in issue, but also say that even if TROM were so estopped, that estoppel does not bind them.

On 28 April 1999 the creditors of TROM resolved that it be wound up and the administrators were appointed liquidators. On 6 December 1999 the liquidators of TROM brought proceedings against TPL asserting that the transfer of TROM's assets, including its rights to the debts owing under the loan agreements with investors, was an uncommercial transaction within the meaning of s 588FB of the Corporations Law, or alternatively, that the transfer of TROM's assets to TPL resulted in TPL receiving an unfair preference within the meaning of s 588FA of the Corporations Law. By the time those proceedings were settled TPL was also being wound up. The proceedings were settled by TROM's being admitted as a creditor in TPL's liquidation. The premise of that settlement was that the transfer of TROM's assets to TPL was not disturbed.

Mr and Mrs Dierickx say that the transfer of assets from TROM to TPL was a transaction intended to defeat creditors that is voidable pursuant to s 37A of the Conveyancing Act 1919. HPM says that Mr and Mrs Dierickx, as debtors of TROM and not creditors of TROM, have no standing to have the transaction avoided under s 37A.

Mr and Mrs Dierickx also say that if there were an oral acceptance of the offer dated 28 May 1998, nonetheless there was no effective assignment because:

(a) the agreement required TROM to transfer the loan into TPL's name, subject to any agreement as to management, and that required a novation and the borrower's consent;

(b) the transaction was improvident;

(c) there was no effective assignment in equity because TPL did not have clean hands and because TROM did not receive valuable consideration for the assignment.

On 15 March 2000 TPL entered into an agreement called an "Asset Sale Agreement" with Arnott-Smith Holdings Pty Ltd ("Arnott-Smith Holdings"). Arnott-Smith Holdings later changed its name to Merilbah Pty Ltd ("Merilbah"). By that agreement TPL agreed to sell assets to Arnott-Smith Holdings that included the benefit of the loans to persons who had entered into a licence deed and farming agreement under an investment scheme. If Mr and Mrs Dierickx then owed a debt under their investment loan agreement with TROM that had been assigned by TROM to TPL, then TPL agreed to assign that debt to Arnott-Smith Holdings.

Mr and Mrs Dierickx contend that the second assignment from TPL to Arnott-Smith Holdings (Merilbah) was ineffective because Merilbah did not take over the management of the Tumut River Orchard Project and the Growers' Representative did not approve of the retirement of TPL as manager or the appointment of Merilbah as manager. Mr and Mrs Dierickx say that the personality of the lender as the manager of the Tumut River Orchard Project was important to their undertaking the liability to repay the debt and the debt could not be assigned to someone who did not take over the responsibility to manage the project.

On 14 November 2000 an application was made by a creditor of TPL for its winding up. An administrator was appointed to TPL on 1 December 2000 and it entered into a voluntary creditor's winding-up on 9 February 2001.

After TPL went into liquidation the liquidator of TPL threatened to bring proceedings to challenge the assignment of TPL's assets to Merilbah. On 31 August 2001 Merilbah entered into an agreement with HPM for the assignment of the loan account receivables owned by Merilbah originating from 11 horticultural and viticultural investment schemes, including the Tumut River Orchard Project. These included any debt payable by Mr and Mrs Dierickx under their investment loan agreement. HPM's principal claim is that it is by virtue of this assignment (and the two preceding assignments from TROM to TPL, and TPL to Merilbah) that it is entitled to sue for the debt. Mr and Mrs Dierickx say that the third assignment is ineffective because neither Merilbah nor HPM was manager of the project. It also says that the assignment was ineffective because the assets were acquired at a substantial undervalue to the detriment of the growers. The legal basis for the latter contention is unclear.

If either of the first or second assignments in the chain of assignments set out above is ineffective, HPM relies upon two other assignments. On 22 December 2004 HPM entered into an agreement with TPL and its liquidator whereby HPM agreed to pay $1,750 and in consideration for that promise, TPL assigned to HPM any residual interest it had in the loans to HPM.

22 December 2004 was more than six years after the date for repayment of the loan by Mr and Mrs Dierickx to TROM. The loan was repayable on 30 June 1998. HPM commenced these proceedings in the Local Court on 28 June 2004 against Mr and Mrs Dierickx. If the debt had not been effectively assigned to HPM by 30 June 2004, prima facie, its cause of action on the debt was extinguished on 30 June 2004 and the fourth assignment on 22 December 2004 from TPL to HPM would be ineffective. HPM says that the limitation period was extended by reason of confirmations of the debt by Mr and Mrs Dierickx that extended the limitation period. It also says that because Mr and Mrs Dierickx granted a charge over their interest in the project to secure repayment of the debt the limitation period for the recovery of the principal sum was 12 years, not six years (Limitation Act 1969 (NSW), s 42).

On 1 November 2011 TROM and its liquidator entered into a deed of assignment with HPM. HPM agreed to pay $10,000 and in consideration of that payment TROM assigned to HPM any right, title or interest it then had in the loans purportedly assigned to TPL under the first assignment. HPM says that if for any reason the first assignment was ineffective, it acquired title to the loans by the fifth assignment of 1 November 2011. The fifth assignment was entered into more than 13 years after the loan debt became due. HPM contends that as it commenced proceedings on 28 June 2004, before the cause of action for recovery of the debt became statute-barred, it can rely upon the later assignment of the debt if the earlier assignments were ineffective. It makes the same argument in relation to the fourth assignment.

Notice of all of the assignments was duly given to Mr and Mrs Dierickx.

It is convenient to deal with the issues in the following order. First, whether HPM has title to sue for a debt which is not statute-barred. That raises many sub-issues. I have concluded that HPM is entitled to sue for the debt.

Secondly, whether the lender's only recourse for repayment of the loan was against Mr and Mrs Dierickx's entitlement to a share of the net income of the project. I have concluded that the loan was not a "without recourse" loan.

Thirdly, whether there was an agreement between TROM and Mr and Mrs Dierickx for them to "exit" the project, that is, for them to be released from their liability for the loan in consideration of their releasing their entitlements under the Licence Deed and the Farming Agreement. I have concluded that Mr and Mrs Dierickx have not established that such an agreement was made.

Fourthly, whether Mr and Mrs Dierickx were induced to enter into the Investor Loan Agreement by misrepresentations, misleading or deceptive conduct, or non-disclosure of material information, on the part of TROM, and if so, whether the investor loan agreement should be set aside, or whether Mr and Mrs Dierickx had a claim for damages against TROM which is to be set off against the loan debt. I have concluded that the claim that Mr Dierickx was led to believe that the loan was without recourse has not been established, but the claim that TROM represented that the moneys advanced to Mr and Mrs Dierickx and then paid under the Farming Agreement to TROM would be available to be used by TROM in paying orchard enhancement and maintenance expenses has been established, and that this was false. I have concluded that this gives rise to a good defence to HPM's claim.

Fifthly, if Mr and Mrs Dierickx's defences otherwise fail, whether the provision for payment of interest at 20 per cent per annum is void as a penalty. I have concluded that if this question had to be decided, Mr and Mrs Dierickx's contention would fail.

The proceedings have had a tortuous history. They were commenced in the Local Court. They were later transferred to the District Court. They were later transferred to the Supreme Court along with numerous other proceedings. HPM has instituted many actions for the recovery of debts claimed to be owing under loan agreements entered into either in relation to the Tumut River Orchard Project or similar projects promoted by TROM or TPL. All the other proceedings transferred to the Supreme Court were settled. Although the principal amount of the outstanding debt was less than $20,000, HPM claims to be entitled to interest at 20 per cent per annum capitalised annually. It now claims a debt of in excess of $180,000.

The first assignment: TROM to TPL

TROM was an unlisted public company. It was required to have three directors. According to the ASIC search as at May, June and July 1998 its directors were Mr Andrew Purcell, Mr Peter Forsyth, and Mr Benjamin John Purcell. TPL was also a public company. It was incorporated on 7 January 1998. Its directors between May and July 1998 were Mr Andrew Purcell, Mr Richard Moody, and Mr Jim Howson.

As noted above at paras [12] and [13] HPM contends that the first assignment occurred by TROM's making a written offer to assign various assets including its loan books to TPL in consideration of TPL's accepting the assignment as satisfaction of a debt of $18,000,000 and by that offer having been accepted orally by Mr Moody on behalf of TPL. The debt of $18 million is said to arise from the contract referred to at para [11] above, also dated 28 May 1998, between TROM and TPL, whereby TROM promised to pay TPL $18 million and TPL agreed to undertake TROM's role as manager of the various projects. In numerous other proceedings, Mr Purcell gave evidence of the making of the offer and of its having been orally accepted by Mr Moody on behalf of TPL. That evidence was corroborated by a document purporting to be a minute of a meeting of directors of TPL of 10 July 1998 which further confirmed the acceptance of the offer referred to at [13] above.

In Thomas v HP Mercantile Pty Ltd [2008] NSWCA 308 the Court of Appeal dismissed an appeal from his Honour Judge Rein of the District Court (as his Honour then was) against a finding that there had been an effective assignment of a loan debt owed by a Mr Thomas. The Court referred to evidence given by Mr Purcell in that proceeding that on 29 May 1998 in a telephone conversation, Mr Moody accepted on behalf of TPL the "Offer to Transfer Loans, Cash and Equipment to Settle Debts" from TROM dated 28 May 1998. An attack on Mr Purcell's evidence had been unsuccessful. An application was made to the Court of Appeal to adduce evidence from Mr Moody. Mr Thomas' legal representatives had learned after the hearing in the District Court that Mr Moody was prepared to give evidence to the effect that he did not ever accept the offer orally or otherwise. The Court of Appeal referred to the direct conflict between Mr Moody's proposed evidence and the evidence given by Mr Purcell and concluded that there were no special grounds to receive Mr Moody's evidence, and there was a basis for challenging the reliability of his recollection of events of 1998.

Judgment of the Court of Appeal in Thomas v HP Mercantile Pty Ltd was given on 20 November 2008. On 23 December 2008 Mr Purcell gave evidence in an examination by the liquidator of TROM in which he recanted his earlier evidence. He said that the documents containing the purported contract under which TROM undertook to pay TPL $18 million and the offer by TROM to assign its assets to TPL in satisfaction of that debt were not brought into existence until after the appointment of voluntary administrators to TROM on 20 July 1998. He said the purported minute of the meeting of directors of TPL of 10 July 1998 was not created until "some time before the end of 1998". He said there was no such meeting as recorded in the minute.

In the present case Mr Purcell adhered to his recantation of the evidence he had given in other proceedings. Mr Purcell deposed that while the purported contract creating the debt of $18 million owed by TROM to TPL was dated 28 May 1998, it was not brought into existence until some time later. He said that TROM never had funds to pay that debt and the reason he prepared the document was to create a debt owing from TROM to TPL which could then subsequently be forgiven by a subsequent offer from TROM to TPL to settle the debt in exchange for the loan book and other assets. He said that after TROM was placed into administration he prepared the document containing the offer to settle the debt. Mr Purcell said that there was never any oral acceptance of the purported offer. He said that the meeting referred to in the purported minute of 10 July 1998 of directors of TPL never occurred.

Mr Moody admitted signing the contract dated 28 May 1998 between TROM and TPL whereby TROM agreed to pay TPL $18 million and TPL agreed to undertake TROM's obligations as manager of six projects. In an affidavit sworn in other proceedings of 3 March 2008 Mr Moody deposed that between March and May 1998 Mr Purcell told him that he (Mr Purcell) wanted TPL to take over the management of the Tumut River Orchard Scheme projects. Mr Moody deposed that he wanted Treetops to stay with the project known as the Supersweet project which had been promoted by TPL and not to be involved with the projects of which TROM was manager. According to Mr Moody, Mr Purcell said that TROM would pay $18 million if TPL took on the projects. Mr Moody was agreeable to TPL taking on TROM's projects if TROM paid $18 million and said that TPL needed the cash if it were to do the work that would be needed to be done on the TROM orchard projects.

Mr Moody said that the $18 million was never paid, and as far as he was concerned, the contract of 28 May 1998 "never came into effect". Mr Moody said that the first time he saw the document entitled "Offer to Transfer Loans, Cash and Equipment to Settle Debt", also dated 28 May 1998, was in 2006 when it was shown to him by a solicitor acting for defendants in the District Court of New South Wales. Mr Moody deposed that he was unaware of the "offer" during the time he was a director of TPL. He denied accepting the offer. He disputed the purported minutes of meeting of 10 July 1998 and said that no such meeting took place.

Mr Benjamin John Purcell was a director of TROM in May to July 1998. He suffers from dementia and was not capable of giving evidence. The third director of TROM was Mr Peter Forsyth. He deposed that whilst he ceased to hold office as a director of TROM on 11 July 1998, he had no involvement with the company from 29 March 1998. He had no knowledge of the contract for the payment of $18 million to TPL and its agreement to take over TROM's functions as manager of the six projects. He had no knowledge of the document entitled "Offer to Transfer Loans, Cash and Equipment to Settle Debt". He was not involved in any discussions relating to TPL.

The third director of TPL was Mr James Howson. He deposed that he became a director of TPL in January 1998. TPL was the manager of the project known as Supersweet. He also assisted Mr Purcell with respect to the marketing and exportation of fruit from the Coonabarabran project and the Tumut project. Mr Howson deposed that in about May 1998 Mr Purcell discussed the restructuring of the projects and told him that TROM was not performing well financially. Mr Purcell said "the projects need to be restructured, otherwise we'll lose the lot." According to Mr Howson, in about June 1998 Mr Purcell said to him words to the effect:

"The ATO is chasing TROM for money. TROM owes about $6 million. Treetop can take over the projects from TROM. There will be enough money coming in from the Supersweet investors for Treetop to run Supersweet and the others as well. Would you agree to Treetop taking them over?"

Mr Howson said he would think about it. Mr Howson sought legal advice. He told his solicitor that he thought TROM's assets were being stripped and being put into other projects as he had seen equipment having been taken off the orchards. He told his solicitor that he believed that Mr Purcell was trying to protect TROM's assets from administrators. He was advised against TPL's taking any part in the taking over of TROM's projects and was advised to resign as a director of TPL. He told Mr Purcell on 30 June 1998 that:

"I don't agree with what you are doing with the projects. I've gotten legal advice and I don't want to be involved in taking on any of the projects. I am also going to resign as a director of Treetop."

Mr Howson said that Mr Purcell became angry and distressed. Mr Howson resigned as a director of TPL on 2 July 1998. He said that about two years later he became aware of the existence of the document purportedly dated 28 May 1998 entitled "Contract between [TROM] and [TPL]", and the document entitled "Offer to Transfer Loans, Cash and Equipment to Settle Debt" also purportedly dated 28 May 1998, and the purported minutes of the meeting of directors of TPL of 10 July 1998. Mr Howson said that no mention of any assignment nor the existence of the documents was made to him at any of his meetings with Mr Purcell or Mr Moody prior to 30 June 1998.

Mr Howson and Mr Forsyth were not cross-examined. I accept their evidence.

Mr Moody's evidence was taken on commission. He said that what made Mr Howson furious at a meeting on 30 June 1998 was that Mr Purcell offered him one share in TPL. Mr Moody did not recall that Mr Howson was upset about anything to do with an assignment of assets from TROM to TPL. In the absence of cross-examination of Mr Howson, I accept his evidence in preference to Mr Moody's evidence on this topic.

Mr Purcell is wholly without credit. On his own evidence he has either lied repeatedly in the past, or was lying in his evidence given in these proceedings. The question is why Mr Purcell has changed his evidence. Mr Ross Chapman is a consultant to HPM. He describes his role as "project managing" HPM's portfolio of debt and other receivables. Mr Chapman said that HPM is the trustee of a trust and he is a beneficiary of the trust. Although he is not a director of HPM, he established the trust structure and arranged for others to become directors of HPM. In 1999 Mr Chapman was consultant to TPL. Mr Chapman said that in mid 2001 he was approached by Mr Purcell who asked if he was interested in purchasing the loan books that had been acquired by Arnott-Smith Holdings. He deposed that Mr Purcell said that Mr Arnott-Smith did not want the loan books any more. Mr Chapman said that following that inquiry, Merilbah (formerly Arnott-Smith Holdings) assigned the loan books to HPM. Mr Chapman said that Merilbah undertook to provide assistance if required to HPM in the process of recovering the loan debts and Mr Purcell was retained as a consultant for Merilbah. He said that Mr Purcell was to assist HPM on terms that Merilbah would be paid a fee for Mr Purcell's time. According to Mr Chapman, Mr Purcell said that he was not getting enough money for the work he was doing for HPM and wanted a percentage of recoveries. Mr Chapman said that he rejected that request, and in response Mr Purcell told him that he would not sign any more statements or affidavits for HPM until he got what he wanted.

Mr Purcell said that the reason he changed his evidence was that in co-operation with Mr Arnott-Smith, he had arranged for the assets to be assigned to Mr Chapman and HPM had been created for that purpose. He said there was a side agreement with Mr Chapman that Mr Chapman would press for a legal determination that investors' loans were full recourse loans. I understood this to refer to loans of other projects in respect of which the Commissioner of Taxation had refused to allow deductions for investors on the basis that the loans were without recourse. Mr Purcell said that if there had been such a determination or restructure, that would have allowed a settlement with investors "on an equitable basis" and answered their problems with the tax department. He said Mr Chapman did not honour that arrangement, but spent his time collecting money from defaulters, rather than getting on with the job of obtaining such a "legal declaration". In the meantime the projects were falling to pieces.

Whatever the truth of these matters, it is clear that Mr Purcell changed his evidence because of a falling-out with Mr Chapman. However, that in itself does not indicate whether the evidence he gave in earlier proceedings was accurate and his present evidence was false, or whether his present evidence is accurate and his earlier evidence was false.

Mr Moody's evidence was not seriously shaken in cross-examination. However, one matter emerged that is greatly to his and Mr Purcell's discredit. In April 1998 Mr Moody was seeking a loan from the ANZ Bank. On 30 April 1998 Mr Purcell, writing as managing director of TPL, wrote a letter to the ANZ Bank advising that Richard Moody and Associates Pty Ltd would be paid an annual retainer from TPL of $150,000 commencing from 1 May 1998 at the rate of $12,500 per month. On the same day Mr Moody, writing as director of Richard Moody and Associates Pty Ltd, wrote to Mr Purcell advising that Mr Purcell would be paid an annual retainer from Richard Moody and Associates of $150,000 commencing from 1 May 1998 at the rate of $12,500 per month. On the following day Mr Moody signed another letter addressed to Mr Purcell stating that in consideration of TPL's advising the ANZ that Richard Moody and Associates Pty Ltd would be paid an annual retainer from TPL of $150,000 commencing 1 May 1998 that he and Richard Moody and Associates Pty Ltd indemnified TPL against any liability to the ANZ Bank that might arise because of that letter. This was an attempted fraud on the ANZ Bank. It also indicates that as at April 1998 there was no falling-out between Mr Purcell and Mr Moody.

Other documents were created dated May and July 1998 that are consistent with the oral acceptance of the offer to assign TROM's assets. Mr Moody produced on subpoena a copy of a document purporting to be minutes of a meeting of directors of TPL held at Mascot Airport on 21 May 1998. The minutes record the board's agreeing to act as manager for TROM projects for a price of $10.3 million with payment to be made in the form of an assignment of Treetop Apple's loan book to the extent of the minimum payments required from investors. Mr Moody said that this was another fictitious document produced by Mr Purcell. Mr Moody also produced on subpoena a document purporting to be a minute of a meeting of directors of TPL held in Tumut on 8 July 1998 attended by Mr Moody and Mr Purcell that purportedly noted that Mr Moody accepted the offer to transfer loans, cash and equipment to settle debt from TROM on 30 May 1998 and ratifying that TPL's undertaking the role of manager. This was said to be another such fictitious document.

There is no doubt that Mr Purcell and Mr Moody intended that TPL take over TROM's role as manager. This was necessary because TROM's financial position meant that it was no longer qualified to hold a dealer's licence. By May 1998 it was contemplated that TROM would be placed into administration. Mr Purcell knew that if assets were to be transferred from TROM, that would have to be done before TROM went into administration. TPL would not wish to take over the responsibilities of management of the projects without payment or transfer of assets. The deed of retirement of TROM and appointment of TPL as manager for each of the Schemes is dated 30 June 1998. It can be inferred that the common seals of TROM and TPL were affixed prior to 3 July 1998. Mr Moody witnessed the affixation of the common seal of TPL to the deed of retirement and appointment. Mr Purcell witnessed the affixing of the common seal of TROM. Mr Moody's position was that he was prepared for TPL to take over TROM's responsibilities as manager only if TROM paid the $18 million referred to in the document described as a contract between TROM and TPL dated 28 May 1998. But Mr Moody knew that TROM had not paid $18 million by early July 1998. Why then would he have committed TPL to carry out TROM's obligations as manager unless he was satisfied that TROM was obliged to transfer assets to TPL to satisfy, or at least partially discharge, that liability?

Counsel for Mr and Mrs Dierickx submitted that the contract dated 28 May 1998 was a sham, that is, that neither party intended it to take effect according to its tenor. There was no evidence to support that submission. Mr Moody's evidence was to the contrary. He understood that TPL had agreed and was bound to take over the role of manager on being paid the consideration of $18 million. Mr Moody said that he did not change that position, that is, he did not agree to TROM satisfying its liability to pay $18 million by transferring assets. But there was no satisfactory explanation as to why, if that were so, he signed the deed providing for the retirement of TROM and the appointment of TPL as manager of the schemes.

In cross-examination Mr Purcell admitted that it was "quite possible" that in mid July 1998 he caused notices of assignment to be sent to the debtors under loan agreements informing them that their debts had been assigned from TROM to TPL. HPM tendered a copy letter from TPL addressed to "Dear Investors" dated 8 July 1998 signed by Mr Purcell. The letter stated:

"Following the successful issue of the Treetop Super Sweet prospectus by Treetop Projects Limited it has been decided to consolidate all of your projects (Treetop Projects and Tumut River Orchard Management Projects) under the management of Treetop Projects Limited. This will enable Treetop Projects Limited to be the largest single producer in Australasia which means huge advantages in infrastructure and market share.

...

Your Growers Representative, the Australian Rural Group, has agreed effective 30 June 1998.

Your Investment loan has also been transferred over to Treetop Projects Limited."

In September 1998 the Australian Securities and Investments Commission (ASIC) was concerned that moneys paid by investors to TPL in respect of a scheme known as the Treetop Apples Project could be at risk. This was one of the six projects from which TROM retired as manager and TPL was appointed as manager in its place. ASIC sought and was given undertakings for the purposes of ensuring that amounts paid by investors which were represented by loan prepayments were available for the purpose of having the work performed as part of the Treetop Apples Project Scheme. The undertaking was given by TPL. Mr Moody and Mr Purcell witnessed the affixing of TPL's common seal to the undertaking. The undertaking is dated 22 September 1998. The undertaking recited that:

"1.11 At some time between 28 May 1998 and 31 July 1998 TROM transferred to TPL the rights of TROM under the Investor Loan Agreements entered into with investors in the Treetop Apples Project, and other rights under loan agreements, cash and equipment in consideration for TPL assuming the duties and obligations of TROM under the Deeds, such duties and obligations including those set out in the Licence Deed and Farming Agreements entered by TROM with investors in the Treetop Project Limited."

The only basis upon which it could be said that TROM transferred its rights under the Investor Loan Agreements in respect of the Treetop Apples Project was pursuant to the purported assignment said to have taken place through the oral acceptance of the offer dated 28 May 1998.

Thus there are persuasive objective factors that make questionable Mr Moody's and Mr Purcell's denials of the oral acceptance of the written offer, and make questionable Mr Purcell's evidence that the documentation was not created until much later and probably after TROM went into administration.

Nonetheless, there is some objective support for those denials. Mr Purcell sought legal advice on 27 May 1998 in relation to a draft of the document providing for the assignment of TROM's loan book and other assets to TPL, as well as related documents. In a letter dated 28 May 1998 Mr Green of Verekers noted that at the conference on the previous day, he had been asked to consider a number of draft documents, including an assignment and a proposal for TROM to pay a commission to a firm of the merchant banker Mr Arnott-Smith referable to its "'underwriting' loans to investors who elect to participate in the Super Sweet Project using borrowed funds." This was a reference to TPL's promotion of the Supersweet project. It seems that its willingness to take over the role as manager was dependent in part upon the successful raising of funds in respect of that project. In his letter of 28 May 1998 Mr Green said that the draft "assignment" document was unsatisfactory both having regard to the objectives sought to be achieved and having regard to the possible application of the Stamp Duties Act 1920. He advised that effecting any dealings with TROM's loan book and its management rights pursuant to the Farming Agreements required a valuation to be made as to the current values of the loan book and the management rights. Mr Green advised that if TROM's loan book were to be assigned, TROM would have to receive present market value for the loan book. He drew Mr Purcell's attention to s 37A of the Conveyancing Act and said that evidence of true market value should be obtained to support the consideration for any assignment so as to rebut an allegation of fraudulent disposition of property within the meaning of s 37A.

It appears from other correspondence from Mr Green of Verekers that no assignment of TROM's loan book had been effected by 3 June 1998. On that day he wrote to Mr Arnott-Smith advising that he had been instructed to act for TROM in respect of a proposed loan of $2 million, the security for which would be book debts owed by TROM that were then part of a security which TROM had granted to QIDC. Apparently QIDC consented to the release of its charge. So far as the evidence reveals, the proposed loan from Mr Arnott-Smith or his company did not proceed. Nonetheless it is clear that according to Mr Green's instructions as at 3 June 1998 TROM still owned its loan book. There is no evidence that a valuation was obtained of TROM's loan book that Mr Green had advised was necessary if the proposed assignment were to proceed.

It is clear from Mr Forsyth's and Mr Howson's evidence that the directors of TROM and TPL did not consider and agree to the assignment of TROM's loan book. It would not have been within Mr Purcell's authority as managing director of TROM and TPL to have bound either company to the assignment without the approval of the boards. On the other hand, if there had been a purported offer and acceptance of an assignment of TROM's assets, the absence of authority could be cured by ratification. Ratification might be inferred from the subsequent conduct of TROM and TPL referred to below, but ratification was not pleaded by HPM. If no offer were made and accepted, then HPM's case that there had been an effective assignment prior to the appointment of an administrator to TROM on 20 July 1998 depends on its argument that TROM is estopped from denying such an assignment and that it can take advantage of the estoppel against Mr and Mrs Dierickx.

There is no direct evidence that TPL through Mr Moody accepted an offer from TROM contained in the document dated 28 May 1998. For the reasons above, the objective probabilities are that such a document was brought into existence, and there was an oral acceptance of the offer, prior to TPL's assuming the obligations of manager of the six schemes of which TROM was formerly the manager. It may be that the offer document was not brought into existence on 28 May 1998, but clearly a draft of the offer was in existence. Mr Purcell was not definite that the document was brought into existence only after TROM went into administration. That is unlikely to have been the position because Mr Purcell knew that the assignment would have to take effect before an administrator was appointed. The objective evidence against an assignment is the advice given by Mr Green of Verekers to Mr Purcell. But Mr Purcell subsequently acted as if the assignment had taken effect, even though there is no evidence of an independent valuation having been obtained of TROM's assets. Mr Purcell and Mr Moody allowed TPL to assume the role of manager of the projects formerly managed by TROM. They could not properly have allowed TPL to assume such liabilities unless TPL was adequately remunerated. They had no basis to think that TROM had paid, or would pay, $18 million. Both men subsequently acknowledged to ASIC that such an assignment had taken place. Mr Purcell did not follow Mr Green's advice.

Notwithstanding their denial, the objective probabilities are that Mr Moody did purportedly accept TROM's offer by early July 1998. There is no evidence that that acceptance was in writing. Mr Purcell had repeatedly sworn in other litigation that there was an oral acceptance. He produced the minute of the meeting of 8 July 1998 (that he now disavows) that there was such an oral acceptance. Neither Mr Purcell nor Mr Moody was a reliable witness. I conclude on the balance of probabilities that the document dated 28 May 1998 containing the offer was prepared prior to 3 July 1998 and the offer was orally accepted by Mr Moody prior to that date. In any event, I conclude that there was such an agreement between Mr Purcell on behalf of TROM and Messrs Purcell and Moody on behalf of TPL for the assignment of the loan debts by 8 July 1998, being the date on which Mr Purcell wrote to investors advising them of the transfer of the loans.

However, I do not conclude that the offer and acceptance were considered by the directors of both companies acting as a board. I accept the evidence of Messrs Forsyth and Howson to this effect. The question of whether an agreement between Messrs Purcell and Moody bound the companies was raised on the pleadings. HPM pleaded that it was entitled to rely on the statutory assumptions in ss 128 and 129 of the Corporations Law. But HPM did not deal with TROM or TPL. Nor would the assumptions in those sections be of assistance to TROM or TPL. The relevant assumption in s 129 would be that the companies' constitutions had been complied with, that the directors had the authority customarily exercised or performed by a director of a similar company, and that the officers properly performed their duties (s 129(1), (2) and (4)). The offer document was not executed in accordance with s 127(1). It was signed by Mr Purcell as director, but not by a second director or a company secretary in addition to the director. Mr Moody was also the company secretary, but he was not the sole director. As Mr and Mrs Dierickx submitted, Mr Purcell, who acted for both sides, knew that the offer and acceptance had not been considered by all the directors (s 129(4)). Nor would the transaction fall within the customary authority of a managing director.

The constitution of neither company was in evidence. Section 226A of the Corporations Law provided for the business of a company to be managed by, or under the direction, of the directors. This was a replaceable rule that could have been modified by the companies' constitutions (s 135(1)(a) and (2)), but there is no evidence that it was.

In the absence of ratification the offer and acceptance would not have been binding on TROM or TPL. HPM did not plead ratification and no submissions were made about it.

I therefore conclude that no binding agreement for assignment was reached before TROM went into administration.

The question of whether the agreement between Mr Purcell and Mr Moody was binding on TROM and TPL was not considered in HP Mercantile Pty Ltd v Thomas.

Had there been an agreement binding on TROM and TPL, there would have been an effective assignment of the loan debt in equity. For the reasons given by his Honour Judge Rein (as his Honour then was) in HP Mercantile Pty Ltd v Meakes (District Court of New South Wales, 24 June 2004, unreported) (at [27]-[31]) the assignment would not take effect as a legal assignment under s 12 of the Conveyancing Act because there was not an "absolute assignment by writing under the hand of the assignor". The only document under the hand of the assignor was an offer of assignment. At the time that document was produced there was no assignment, absolute or otherwise. An oral acceptance of the assignment for valuable consideration that passed from TPL to TROM, being the acceptance of the assets assigned in satisfaction of the debt of $18 million, would be an effective assignment in equity. TROM is a defendant to the proceedings.

Had there been an agreement binding on TROM and TPL, it would not have failed for the reasons advanced by Mr and Mrs Dierickx summarised at [19] above. The offer document provided:

"OFFER TO TRANSFER LOANS, CASH AND EQUIPMENT TO SETTLE DEBT

TO: Treetops Projects Limited (ACN 081 209 298) ('TPL')

1. Tumut River Orchard Management (CAN 003 501 611) ('TROM'),

(a) acknowledges it owes you $18,000,000 as set out in the schedule for your agreement to take over its obligations as manager of the projects described in the following deeds:

I. Tumut River Orchard Project Deed (as amended) 31 December 1990

II. Coonabarabran Orchard Project (as amended) 26 May 1993

III. Queensland Orchard Project Deed (as amended) 24 May 1994

IV. Treetop Plum Project Deed 18 March 1996

V. Treetop Apple Project Deed 17 January 1997

VI. Harcourt Vines Project Deed 4 June 1997

(b) offers to transfer loans (agreed value of $15,327,081), cash ($1,172,919) and equipment (freehold; $500,000, leased or on hire purchase; $1,000,000) to you, details of which are set out in Annexure 'A' hereto ('the Loans, Cash and Equipment'), in full satisfaction of that debt.

2. This offer may only be accepted orally. It lapses if not accepted by 31 July 1998.

3. Title to Loans, Cash and Equipment will vest in you on such acceptance.

4. On request TROM will do all things necessary, at the cost of TPL, to transfer the Loans into your name and Cash and Equipment into your possession, but subject to any agreement which may exist from time to time between us in relation to the management of loans.

5. Unless you otherwise request, TROM will retain possession of all loan documents on your behalf. If you do otherwise request TROM must transfer all loan documents to you.

6. TROM warrants that it is the beneficial owner of the Loans and has full right and power to make this offer and to give effect to the transfer so as to give you a good title to the Loans.

7. TROM hereby offers to assign the benefit of all land, improvements and licenses necessary for the conduct of the projects to TPL to use as TPL sees fit.

8. By accepting this offer you will:

(a) acknowledge that no other warranties or representations have been made to you in respect of the Loans;

(b) confirm that you have carried out your own due diligence to verify the value of the Loans;

(c) become entitled to all interest payments and all principal repayments on the Loans, subject to the terms of any management agreement between us.

(d) undertake to pay TROM a fee of 15% of the Management Fee received as cash by you as the Manager under the relevant Farming Agreements associated with each of the projects in 1(a) above."

It was not a condition of the assignment that TROM and TPL enter into an agreement for the management of the loans. TROM agreed to transfer the loans into TPL's name if TPL so requested and then subject to any agreement which might exist in relation to the management of the loans. If there were no such agreement there would be no qualification to TROM's obligation under clause 4. I do not know what would be entailed in the transfer of the loans into TPL's name, given that the offer stipulated that title to the loans would vest in TPL on acceptance.

The transaction may well have been improvident to TROM and TROM's creditors, but that is not a reason for concluding that there was no valid agreement. Such improvidence was an element in the causes of action that TROM and its liquidator later brought against TPL to set the assignment aside. It is not a ground of initial invalidity.

I do not accept that the borrowers' consent to the assignment was required. The loan agreement created a separate debt. There is no term in the loan agreement that prevents assignment of the debt. The fact that TROM had obligations to the plaintiffs under the Farming Agreement and could need the income from the loan agreements to manage the project, does not mean that the loan debt was unassignable. If TROM breached the Farming Agreement a question might arise as to whether the borrower could set off against its loan debt damages for which TROM would be liable if it breached the Farming Agreement, but that is not a reason for the loan debt's being unassignable.

Counsel for Mr and Mrs Dierickx submitted:

"42. Further, s. 128(4) provides that a person is not entitled to make the assumptions in s.129 if at the time of the dealings they knew or suspected that the assumption was incorrect (see above para 37[)].

43. If contrary to the foregoing, the Court finds that there was the requisite offer and acceptance to effect the First Assignment, the Plaintiff will need to establish that the transaction constitutes an assignment in equity (it ought to be common ground that the First Assignment does not comprise an assignment in law or statute because it does not satisfy s.12 of the Conveyancing Act.)

44. The offer itself makes no mention of the assignment of any loan, and is in terms inconsistent with that. If accepted, it required TROM to transfer the loan into the name of Treetop, subject to any agreement as to management. This never happened, and TROM had no right to transfer the loan into Treetop's name. This would require a novation of the agreement which could not happen without the consent of the borrower which was not obtained. It was in any event a plainly improvident transaction from their point of view because the Project was in financial crisis, and despite that 15% of the management fee was to go back to TROM, and therefore not be available for the benefit of the Project."

I think the legal basis for the submission that the first assignment was invalid by reason of these matters must be that it was an implied term of the loan agreement, the Farming Agreement, the Licence, or all three agreements, that the loan debt could not be assigned without the borrowers' consent. In the case of the first assignment, the assignment was to the manager. TPL contemporaneously was appointed as manager of the project in place of TROM. The implication does not meet the criteria for the implication of a term ad hoc. It is not necessary to give business efficacy to any of the agreements, at least where the assignee becomes the manager. It is not so obvious that it goes without saying.

There is the same problem with regard to the enforceability of this agreement as there is with the agreement for the assignment of TROM's assets, namely, that it was not considered by all the directors. But I am presently dealing with the submission that even if the agreements were authorised, there was no valid assignment.

I do not accept the submission for Mr and Mrs Dierickx that TROM did not receive valuable consideration for the assignment. The premise of this submission was that the contract, also dated 28 May 1998, whereby TROM agreed to pay $18 million to TPL in consideration of TPL's agreeing to perform TROM's obligations under the Farming Agreements was a sham. If the agreement was not a sham, there was valuable consideration in TPL's accepting the assignment in satisfaction of TROM's debt. For the reasons at [53] there is no evidence that the agreement was a sham.

If the agreement were binding on TROM and TPL there would be an effective assignment in equity, irrespective of whether or not the agreement was specifically enforceable, because the consideration was executed (Tailby v Official Receiver (1888) 13 App Cas 523; R P Meagher, J D Heydon & M J Leeming, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies, 4th ed (2002) LexisNexis Butterworths at [6-270]).

For these reasons I conclude that it has not been shown that there was a binding contract between TROM and TPL, not because there was no offer made by Mr Purcell on behalf of TROM and accepted orally by Mr Moody, nor because an offer and acceptance in those terms would have been ineffective, but because the offer and acceptance were not approved by the directors of TROM and TPL, and there is no plea of ratification.

Nonetheless, TROM is estopped from disputing that there was an effective assignment of the loan debts. It does not dispute the validity of the assignment. This is a clear case of a conventional estoppel. Both TROM and TPL proceeded to their detriment on the basis that the assignment was effective. Under the agreement for the assignment TROM was required to transfer its cash (said to be $461,000) to TPL. It transferred $310,000 to TPL on 24 June 1998 and a further $150,000 on 8 July 1998. Secondly, TROM and TPL agreed on TPL's taking over TROM's role as manager which necessarily involved the incurring of the expenses of managing the scheme without payment, except for the assignment of assets. TPL undertook the task of management without other payment. Thirdly, after TROM and TPL had both gone into liquidation, TROM commenced proceedings to set aside the assignment as an uncommercial transaction. That claim was premised on the assignment having occurred. The claim was settled by TROM's being admitted as a creditor in the liquidation of TPL.

Counsel for Mr and Mrs Dierickx submitted that TPL did not have the benefit of an estoppel because it was privy to the whole transaction and had knowledge of everything going on. Counsel submitted that Mr Purcell was aware that there was never any pre-existing $18 million debt to be satisfied by an assignment of assets and was aware that there was no offer of assignment or acceptance of an offer of assignment. I do not accept that Mr Purcell was aware there was not a pre-existing $18 million debt. That submission depends upon the argument I have rejected that the contract dated 28 May 1998 was a sham. In any event, the submission does not answer the plea of estoppel by convention. The essence of conventional estoppel is that the parties have dealt with each other on a conventional basis that certain facts are to be accepted between them as being true whether or not they are true (Amalgamated Investment and Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1982] QB 84 at 130; Coghlan v S H Locke (Australia) Ltd (1985) 4 NSWLR 158).

Counsel also submitted that because the settlement of the proceedings brought by the liquidator of TROM against TPL did not occur until after the assignment by TPL to Merilbah, the estoppel could not feed the assignment to Merilbah. If, immediately before the assignment from TPL to Merilbah, TPL did not have title to the debts and TROM was not estopped from denying its title, subsequent dealings between TROM and TPL could not change that position.

No authority was cited for this proposition. I do not think it is correct. In any event, the estoppel against TROM's denying the validity of the assignment was not based only on the settlement of its liquidator's claim against TPL. Even if it were, it could not be right that after TPL had assigned whatever title it had to the debts to Merilbah, that TROM could assert title to the debts against either TPL or Merilbah. By reason of the estoppel, TROM would hold any recoveries it obtained for TPL, and TPL, by reason of its assignment of the debts to Merilbah (assuming that assignment to be valid) would hold the proceeds for Merilbah. A person who is a privy by blood, estate or contract to a party entitled to enforce the estoppel can enforce it against the estopped party (Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 at 444). Thus, Merilbah could enforce the estoppel against TROM. HPM can likewise enforce the rights TPL has by estoppel against TROM. Likewise, privies, whether by blood, estate or by contract to a person bound by an estoppel are themselves bound, (Commonwealth v Verwayen at 444).

Counsel for HPM submitted that Mr and Mrs Dierickx are attempting to assert the rights of TROM and as a result are bound by the estoppel that binds TROM because (in this respect) their claim is made "under or through" TROM. Counsel cited Ramsay v Pigram [1968] HCA 34; (1968) 118 CLR 271 at 279 where Barwick CJ said that:

"The basic requirement of a privy in interest is that the privy must claim under or through the person of whom he is said to be a privy."

HPM does not need to go so far. If Mr and Mrs Dierickx owe a debt under the loan agreement, but dispute HPM's title to sue for the debt on the ground that the debt is owed not to HPM, but to TROM, then that answer will fail if HPM establishes that TROM assigned the debt or is estopped from denying that it assigned the debt. HPM can take advantage of the estoppel because it claims to be a privy of TPL through a chain of assignments. HPM does not need to assert that Mr and Mrs Dierickx are personally bound by the estoppel, only that TROM is so bound, so that the defence which relies on TROM's still having title to the debt would fail. If this is another way of saying that Mr and Mrs Dierickx are bound by the estoppel, then in the relevant sense they are privies of TROM by seeking to assert TROM's alleged rights.

Mr and Mrs Dierickx cannot call in aid s 37A of the Conveyancing Act. That section provides that an alienation of property made with intent to defraud creditors shall be voidable at the instance of any person thereby prejudiced. As the terms of s 37A make clear, such a transaction in fraud of creditors is voidable, not void. If it is not possible to avoid the contract because, for example, the property has passed to a bona fide purchaser for value without notice, the plaintiff will be left to any remedy in respect of any identifiable proceeds held by the initial transferor or by the transferee (not being a bona fide purchaser) from a subsequent sale (Brady v Stapleton [1952] HCA 62; (1952) 88 CLR 322 at 332-335). In the present case, the assignment of TROM's assets to TPL cannot be avoided because of the settlement agreement reached by the liquidators of each company whereby TROM's claim to set aside the agreement was compromised on its being admitted as a creditor of TPL. Nor would avoidance be possible given the work done by TPL in management of the projects in reliance on the transfer of assets. The subsequent assignments by TPL to Merilbah, and Merilbah to HPM would be further obstacles to avoidance, it not having been established that officers of Merilbah and HPM had notice that the original assignment was in fraud of creditors.

Further, I agree with the submission of HPM that Mr and Mrs Dierickx are not "persons interested" within the meaning of s 37A. In Chen v Marcolongo; Chan v Lym International Pty Ltd [2009] NSWCA 326; (2009) 260 ALR 353 Young JA observed (at [203]) that at the date of hearing or at the date of filing the summons, a person prejudiced is a person who is owed a debt. The Court of Appeal's decision was overturned on appeal to the High Court (Marcolongo v Chen [2011] HCA 3; (2011) 242 CLR 546). However, the question of standing was not addressed.

Prima facie, Mr and Mrs Dierickx as debtors of TROM, would not be "persons thereby prejudiced". It may be that if Mr and Mrs Dierickx could also claim as creditors of TROM entitled to prove in the administration or winding-up of TROM, for example, as having claims to damages for breach of the Farming Agreement, then they might be persons prejudiced by an assignment in fraud of creditors. However, in these proceedings Mr and Mrs Dierickx did not assert such a claim. I do not accept that they were persons prejudiced by the assignment because they lost an opportunity to negotiate with TROM's administrator or liquidator at the time TROM entered into administration or liquidation.

Nor was TPL's promise to pay TROM a fee equal to 15 per cent of the management fee TPL was to receive as manager under the relevant farming agreements prejudicial to Mr and Mrs Dierickx. They submitted that this clause reduced the moneys available to the project. This is not established. There was no evidence as to the investors' obligations to fund the expenses of projects other than the Tumut River Orchard Project. There is no evidence that TPL's obligation to pay 15 per cent of the management fee to TROM would come at the expense of the investors in the projects, rather than from TPL's own assets, or that the result of TPL paying those moneys would reduce the funds available to be spent on project expenses. Under the form of Farming Agreement contained in the prospectus, for the years after the financial year ended 30 June 1994 an investor who acquired either a Farm or a Farming Allotment was required to pay an amount equivalent to the "Estimated Costs", being the Manager's estimated cost of providing the relevant services for the financial year as approved by the auditor. In addition Growers were to pay the Manager an amount equal to five per cent of the share of the Gross Sale Proceeds to which the Grower was entitled under the provisions of the Investment Deed. In other words, the management fee was paid out of the net profits otherwise payable to the grower after expenses of the projects were met.

In its initial opening submissions, HPM contended that the assignment of TROM's assets to TPL was not in fraud of TROM's creditors. In final submissions counsel for HPM confined his submissions on the s 37A point to submissions on standing and avoidance. I have accepted HPM's submissions on these two points. Were it necessary to decide the question, I would conclude that the transfer of TROM's assets was in fraud of creditors. Mr Purcell's intention was to have TPL take over TROM's management of the project and its assets, leaving it with no moneys with which to meet its debts, in particular its tax debt. However, Mr and Mrs Dierickx as debtors of TROM have no standing to complain, and the liquidator of TROM has long ago compromised TROM's claims against TPL.

For these reasons I conclude that TROM is estopped from denying the effectiveness of the assignment to TPL, and HPM is entitled to the benefit of that estoppel.

The second assignment: TPL to Merilbah

On 15 March 2000 TPL entered into an agreement called an Asset Sale Agreement with Arnott Smith Holdings Pty Ltd (Merilbah). By clause 2.1 of that agreement, TPL agreed to sell "the Assets" to Merilbah for "the Purchase Price". The "Assets" included the "Grower Loans". These included the loan to Mr and Mrs Dierickx, whether owned by TPL or TROM.

Counsel for Mr and Mrs Dierickx submitted that at the time of the second assignment TPL was the manager of the project and had the benefit of owning all of the assets necessary to undertake its functions as manager, including the right to seek recovery of any loans in default (on the assumption that the first assignment was valid). Counsel submitted that by the Asset Sale Agreement TPL put itself fundamentally in breach of the Loan Agreement when read together with the Farming Agreement and the Investment Deed. The sale of the assets, including the loan books, broke the nexus between those assets and the manager. This was said to be a breach of those agreements. As Merilbah was not the manager of the project, it had no right, so it was submitted, to step into the shoes of the lender. Counsel submitted that on execution of the Asset Sale Agreement, TPL lost the right to sue on the Loan Agreement and could not assign the benefit of the Loan Agreement to Merilbah.

The Loan Agreement created a separate debt from the debts payable by Mr and Mrs Dierickx under the Farming Agreement or the Licence Deed. The legal basis for the submission that TPL could not assign the loan debt where Merilbah did not become the manager of the project was not clear. As I understand the submission it is that it was an implied term of the Loan Agreement that the debt could not be assigned, except to a manager or, could not be assigned if the assignment would result in the assignor being in breach of any associated agreement, in particular, the Farming Agreement or the Investment Deed.

There is no express term in the Loan Agreement to that effect. Any such term must be implied. The test for the implication of such a term would be the test in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 282-283, namely:

"(1) It must be reasonable and equitable;

(2) It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

(3) It must be so obvious that 'it goes without saying';

(4) It must be capable of clear expression;

(5) It must not contradict any express term of the contract."

The suggested term does not meet these requirements. In the Loan Agreement TROM was described as "the Lender". "Lender" was defined to include TROM, its successors and assigns. Clause 5 provided that in consideration of the loan the borrower charged to the lender its right, title and interest in the Farm Business and in the Farming Agreements relating thereto. Clause 8.3 provided that the Lender could assign the benefit of any Security. Clearly the loan debt was assignable. There was no restriction on the persons to whom a loan debt could be assigned.

Moreover, TROM was not required personally to undertake the obligations of manager under the Farming Agreement. Clause 16 of the Farming Agreement provided that the Manager should be entitled to appoint or contract with any person to assist it to carry out all or any of the works or services it agreed to perform under the Farming Agreement. Clause 16.2 provided that delegation by the Manager of any of its obligations did not release it from liability under the Farming Agreement. It may be inferred that there was a novation of the Farming Agreement following change of manager in 1998.

Under the Farming Agreement the grower was required to pay the manager's estimated cost of providing the services for the relevant financial year as approved by the auditor, and as notified to the grower at least two months prior to the end of the immediately preceding financial year, as well as five per cent of the grower's share of the gross sale proceeds. It is not obvious that the manager had to be entitled to receive the interest on the loan, and repayment of the principal when repayment of the principal became due, in order to fulfil its obligations under the Farming Agreement.

In any event, it is not necessary to imply any such term in order to give business efficacy to the contracts. The manager under the Farming Agreement was obliged to provide the works and services specified in that agreement, irrespective of whether it was entitled to receive payment of the interest or principal under the loans. It was entitled to be paid the estimated costs of those works and services by the grower. The financial modelling at the time of the issue of the prospectus projected that these expenses would be fully funded out of the orchard revenue and that the growers would not be called on to make any such payments.

In other words, it is not necessary to imply a term that the debt payable under the Loan Agreement could only be assigned to a manager of the project, or could not be assigned if it would result in the manager being in breach of the Farming Agreement or the Investment Deed because:

a. Such a term is not necessary to give business efficacy to any of the agreements. The manager was required to comply with its obligations under the Farming Agreement and the Investment Deed whether or not it was entitled to the debt payable under the Loan Agreement;

b. It is not so obvious that it goes without saying for the same reason and also because it is not obvious that a manager could only perform its obligations if it were entitled to the debt payable under the Loan Agreement; and

c. whilst the suggested implied term does not necessarily contradict the express term of the Loan Agreement, the fact that the Loan Agreement provides for the debt being assignable without any qualification as to the identity of the assignee or circumstances in which an assignment can be effected suggests that the parties did not intend there to be any such qualification or restriction.

Counsel for Mr and Mrs Dierickx also said that the assignment from TPL to Merilbah was at a massive undervalue as TPL sought to quarantine the assets transferred from claims by potential creditors, including the growers. That may well be, but it does not affect the validity of the assignment.

Following the appointment of a liquidator to TPL on 9 February 2001 the liquidator alleged that the sale agreement of 15 March 2000 was an uncommercial transaction under s 588FB of the Corporations Act and an insolvent transaction under s 588FC and was voidable against the liquidator under s 588FF. On 31 August 2001 Merilbah assigned the loan debts to HPM. On 18 April 2002 TPL and its liquidator entered into a settlement deed with Merilbah pursuant to which Merilbah agreed to pay a settlement amount of $380,000. The liquidator of TPL confirmed that neither he nor TPL had any claim to or against any of the assets acquired by Merilbah from TPL pursuant to the Asset Sale Agreement of 15 March 2000.

I conclude that the second assignment of the debt owed by Mr and Mrs Dierickx under the Loan Agreement from TPL to Merilbah was effective.

Third assignment: Merilbah to HPM

Counsel for Mr and Mrs Dierickx submitted that if Merilbah were entitled to the loan book debts under the second assignment, nonetheless the third assignment was unenforceable in equity because of the plaintiff's unclean hands. This was because it was said that HPM knew that the liquidator of TPL was seeking to recover the assets, HPM knew that it was paying an undervalue for the assets and the purpose of the assignment from Merilbah to HPM was to seek to remove the assets from the creditors of TPL, including the growers.

The same individuals were behind all of the assignments. I accept that the purpose of the assignment was to seek to remove the assets from the challenge by the liquidator of TPL to the assignment from TPL to Merilbah. It does not follow that there was not an effective equitable assignment. HPL paid $10,000 in consideration for the assignment which was sufficient to support a simple contract. The face value of the loan debts assigned was millions of dollars, although HPM says that to date, its recoveries have not exceeded the cost of recovery. As the consideration for the assignment has been paid the question of whether the agreement to assign would be unenforceable because of unclean hands does not arise. Considerations applicable to cases of specific performance where the contract is still to be completed do not arise where the contract has been completed by the payment of the consideration (Meagher, Gummow & Lehane's Equity: Doctrines & Remedies at [6-050] and [6-270]).

For these reasons I conclude that HPM has title to sue for the debt through the first, second and third assignments. It is unnecessary to consider the validity of the fourth and fifth assignments. However, in case I am wrong in the conclusions to which I have thus far come, I will deal with those questions.

Fourth assignment: TPL to HPM

On 22 December 2004 TPL and its liquidator executed a deed that recited TPL's agreement with Merilbah at 15 March 2000 and the asset sale agreement between Merilbah and HPM of 31 August 2001. The deed recited that in the process of recovering amounts owing to HPM under the loans assigned from TPL to Merilbah and other receivables, HPM was being met with various defences, including the claim that the assignment from TPL to Merilbah was not an effective legal assignment. The deed provided that in consideration of HPM paying $1,750, TPL assigned to HPM any residual right, title and interest it had in the loans and certain other receivables. As with the other assignments, notice of the assignment was given to Mr and Mrs Dierickx.

There was no dispute that TROM was a promoter and owed to Mr and Mrs Dierickx as prospective investors, a duty of utmost candour and honesty that required it to disclose all material information relevant to their decision to invest (Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628; (2001) 188 ALR 566 at [28]-[31]). Counsel for HPM submitted that TROM had no duty to disclose the round-robin transaction because it was immaterial to the investor's decision. In this case investors were borrowing from TROM, not from a third party (compare S E Vineyard Finance Pty Ltd (receivers and managers appointed) v Casey [2011] VSC 403). As they were borrowing from TROM and the funds were being applied to meet the debts incurred by the investors under the licence agreements and the farming agreements, it was immaterial that there was no change to TROM's cash position.

However, whilst it is true that it was clear that the finance for the investors to meet their obligations to TROM was being provided by TROM itself, that does not meet Mr and Mrs Dierickx's contention that the statements in the prospectus set out above give the impression (or state expressly) that $9,900 to be paid by investors per farming allotment would be applied as farm enhancement costs, that is, towards the expense of establishing the orchard.

Counsel for HPM submitted that this is not how the prospectus should be understood and that the costs referred to in the farming agreement and in the parts of the prospectus quoted above were the costs charged by TROM to the growers, that is, the investors, not the costs incurred by TROM in performing the work it undertook to perform.

The difficulty with this contention is that it would be inferred that the orchard enhancement and maintenance costs for which the moneys were payable under the farming agreement were costs expected to be incurred by TROM. The section in paragraph 5 of the prospectus referred to at [232] above speaks of the manager not being entitled to seek further payment for orchard enhancement and management expenses from the grower, and the grower not being entitled to any refund should costs be less than the sum of $11,500. If it were anticipated that TROM's costs would be less than $11,500, so that it would be making a profit on the amount it charged for orchard enhancement and maintenance work over and above a five per cent share of gross sale proceeds from the sale of fruit provided for by clause 19.4 of the farming agreement, then TROM would have been required to disclose to investors the fact that it anticipated making such a profit. This would be material information for an investor to know. The report of Anderson Valentine Associates referred to the existence of operating budgets and projections of costs as well as revenue, and stated that all known costs, fees and expenses had been included in the projections. However, the prospectus did not include any operating budget other than the description of costs in the farming agreement. Mr Dierickx thought that the money he was borrowing from TROM which he was then paying to TROM would be used in and about the orchard for the benefit of his farming allotment. Even though he knew that TROM was the lender, he believed that the moneys were nonetheless working capital that was available to be spent on the orchard and orcharding activities. In my view, that was a natural impression to be formed from the prospectus. But it was not correct.

Counsel for HPM pointed out that there was no issue that the promised works were not carried out. So far as evidence on that question went, there was evidence that the orchards were established and reports were provided to growers for many years. This is true, but does not meet Mr and Mrs Dierickx's allegation. That allegation is that had they known that the moneys raised would not be available for use in carrying out the works, they would not have proceeded. One can understand that a prudent investor would not have proceeded without inquiring how the work would be funded. If that inquiry revealed that the anticipated costs were materially less than were being charged under the farming agreement, then that would be a reason not to proceed. Whatever explanation might have been available, it would be prudent not to proceed on the basis of the prospectus if an investor was aware that working capital to meet the costs, so far as they were described in the prospectus, was not available.

In my view TROM's failure to disclose in the prospectus its funding arrangements for the making of loans to investors that required immediate repayment of the loans to its funder, without provision to it of additional working capital to pay for the described orchard enhancement and maintenance costs, was misleading and deceptive. TROM had a duty to disclose the information as part of its obligations as a promoter to disclose all matters that might materially affect the investors' decision.

The alleged breach of s 52 was not a breach by silence, but a positive misrepresentation that $11,500 per farming allotment would be used or be available for use for the purpose of orchard enhancement and maintenance expenses. I think that representation was impliedly conveyed by the prospectus and was false. This alleged contravention of s 52 is established.

Counsel for HPM did not dispute that TROM owed what have been described as fiduciary obligations to Mr and Mrs Dierickx of candour and honesty that required disclosure of all material information that could affect their decision whether to invest. Whether those duties should be described in prescriptive terms, or whether the obligation can be recast proscriptively, as an obligation not to enter into the transactions with Mr and Mrs Dierickx without having made such disclosure, is of no moment.

For the reasons I have given that duty was breached.

Limitation and other defences

HPM submitted that even if Mr and Mrs Dierickx had a cause of action under s 82 of the Trade Practices Act for damages for breach of s 52, or a cause of action under s 87 of the Trade Practices Act declaring the contract of loan to be void or to be set aside ab initio, those causes of action were statute-barred after 30 June 1995. At that time the limitation period for causes of action arising from breaches of Part V of the Trade Practices Act was three years. HPM submitted that that limitation would be applied by analogy to the cause of action for breach of fiduciary duty. It also submitted that relief under s 82 or s 87 of the Trade Practices Act could only be given against a contravener and not an assignee of a contravener, or alternatively, relief under s 87 should not be granted if to do so would be to affect the rights of an assignee who was not a party to the contravention.

Mr and Mrs Dierickx did not file a cross-claim until after leave to do so was given on 14 October 2011.

HPM acquired no better title to sue for the debt than TROM had. Any defence, set-off or cross-claim that Mr or Mrs Dierickx could assert against TROM can be asserted against HPM (Re Harry Simpson & Co Ltd v Companies Act 1936 (1963) 81 WN (Part 1) (NSW) 207 at 209; Roxburghe v Cox (1881) LR 17 Ch D 520; Mitchell v Purnell Motors (1960) 78 WN (NSW) 26; Re Partnership Pacific Securities [1994] 1 QdR 410 at 422-423; Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199; Meagher, Gummow & Lehane's Equity: Doctrines & Remedies at [6-495] and [6-500]).

Had TROM sued Mr and Mrs Dierickx for the debt, they could have defended the suit by seeking an order for rescission of the investor loan agreement by reason of the non-disclosure of material facts by TROM in its promotion of the transaction. Rescission would have been available in equity for breach of fiduciary duty. (No argument was raised that rescission might be unavailable if restitution could not be effected, and as Mr and Mrs Dierickx did not receive any return for the moneys they paid, it is difficult to see that any restitution could be required. In the absence of argument this question does not arise.) The only answer to this claim is laches on the part of Mr and Mrs Dierickx in seeking rescission, or the application of the Limitation Act as it applies to the claim for breach of s 52 of the Trade Practices Act by analogy.

Mr and Mrs Dierickx are not guilty of laches. They have had no occasion to maintain a claim for rescission of the loan agreement, except as an answer to the claim for debt. They were not sued for the debt until 2004 and had no occasion to do anything before then. The defence was not amended to plead the allegation of the round-robin transaction until 20 October 2011 (pursuant to the leave granted on 14 October 2011). But there is no evidence that there was any delay, let alone any delay that caused prejudice to HPM in raising that defence. The fact of the round-robin transaction was evidently a matter which was only ascertained during the course of preparation of the proceedings. It was not suggested that there was any unwarranted delay by the defendants in raising the defence after they became aware of the grounds for it. Nor was there any evidence of prejudice from delay. Nor was laches pleaded.

Even if the claim based on breach of s 52 is barred by the limitation period under the Trade Practices Act, and even if it were necessary for the defendants to bring a cross-claim for rescission, the claim would not be barred by the analogical application of a statute of limitations. Before equity applies a statutory time limit by analogy, the court must be satisfied that it is just to do so (Duke Group (in liq) v Alamain Investments Limited [2003] SASC 415 at [114]; Barker v Duke Group Limited (in liq) [2005] SASC 81; (2005) 91 SASR 167 at [84]; Hewitt v Henderson [2006] WASCA 233 at [25]; Brightwell & Ors v R F B Holdings Pty Ltd [2003] NSWSC 7; (2003) 44 ACSR 186 at [63]; Short v Crawley (No. 30) [2007] NSWSC 1322 at [583]). It would not be just if HPM could rely upon a limitation defence in this case.

Mr and Mrs Dierickx's cross-claim did not seek an order rescinding the loan agreement, otherwise than pursuant to s 87 of the Trade Practices Act. Nonetheless, they pleaded the breach of fiduciary duty (both in the defence and cross-claim) that would entitle them to such relief and the issue was raised during the course of the hearing. If it were necessary to do so, I would give leave to amend the claims for relief in the cross-claim to allow Mr and Mrs Dierickx to seek such an order.

However, I think Mr and Mrs Dierickx are entitled to rely upon the non-disclosure of material facts which induced entry into the loan agreement as a ground that impeaches TROM's (and therefore HPM's) title to sue and establishes an equitable set-off (Rawson v Samuel (1841) CR & PH 161; 41 ER 451).

It is unnecessary to decide whether the cause of action for relief under s 87 of the Trade Practices Act arose on 30 June 1992 when the transaction was entered into, or only at some later date, such as 1999 when further payments were made, or even in 2004 when Mr and Mrs Dierickx were sued. The cross-claim was not filed until 2011 and the limitation period had well and truly expired by then. In so far as Mr and Mrs Dierickx sought to rely on s 87 of the Trade Practices Act, the question is whether they could do so without bringing a cross-claim where a cross-claim would be out of time.

The cross-claim filed sought relief under s 87(1) and 87(2)(a) of the Trade Practices Act.

Accepting for present purposes, without deciding that the cause of action accrued at 30 June 1992, s 87 then relevantly provided:

"87 Other orders

(1) Without limiting the generality of section 80, where, in a proceeding instituted under, or for an offence against, this Part, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this sub-section) in contravention of a provision of Part IV, IVA or V, the Court may, whether or not it grants an injunction under section 80 or makes an order under section 80A or 82, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.

(1A) Without limiting the generality of section 80, the Court may, on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this subsection) in contravention of a provision of Part IVA or V or on the application of the Commission in accordance with sub-section (1B) on behalf of such a person or 2 or more such persons, make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in sub-section (2)) if the Court considers that the order or orders concerned will compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage, or will prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person.

...

(1C) An application may be made under subsection (1A) in relation to a contravention of Part IVA or V notwithstanding that a proceeding has not been instituted under another provision of this Part in relation to that contravention.

(1CA) An application under subsection (1A) may be commenced -

(a) in the case of conduct in contravention of Part IVA - at any time within 2 years after the day on which the cause of action accrued; or

(b) in any other case - at any time within 3 years after the day on which the cause of action accrued.

...

(2) The orders referred to in subsection (1) and (1A) are:

(a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order;

...

(ba) an order refusing to enforce any or all of the provisions of such a contract;

(c) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage;

(d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage."

Later versions of the section are not materially different, apart from the extension of the limitation period from three to six years in s 87(1CA)(b).

Section 87(1CA) prescribes a period for an application under subs 87(1A), but not under s 87(1). The reason for this is that s 87(1) applies where a proceeding has been instituted under Part V of the Act. If an action had been brought for damages pursuant to s 82 that action would have to have been brought within three years (later six years). No objection was taken on the basis that the relief sought could not be available under s 87(1) because there was no other proceeding instituted for relief under Part V. The parties proceeded on the basis that the limitation period provided for by s 87(1CA) applied and I take it that the application was for relief pursuant to s 87(1A).

In Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9 Hodgson JA said (at [7]-[8] and [11]):

"[7] ... The Trade Practices Act does not exclude such an application being made by a Notice of Motion in proceedings; and indeed, s.87(2)(ba) suggests strongly that the application may be made by or pursuant to a defence. In my opinion, if a remedy under s.80(1) or s.87(1A) is one appropriate to be sought by an interlocutory application or in a defence, there is no reason derived from the Trade Practices Act why the remedy cannot be sought in that way.

[8] The basic complaint of the appellants is that one element of the cause of action brought against them, namely the non-service of a payment schedule, came about as a result of Parkline's breach of s 52; and that if a remedy is not provided by the Trade Practices Act, they suffer the substantial damage of having a judgment against them which is obtained by Parkline in reliance on its own misleading conduct. The Trade Practices Act discloses a legislative intention that persons should have a remedy to protect them from damage from the misleading conduct of a corporation, or to recover from the corporation compensation for such damage; and it would not be in accordance with that intention that a corporation should be permitted to obtain a judgment against a defendant on a cause of action one essential element of which has been created by that corporation's misleading conduct against that defendant. Subject to discretionary questions, it would in my opinion be appropriate for a court to give effect to that legislative intention by granting an injunction under s.80, or by making an order pursuant to s.87 dismissing proceedings (noting that the orders made available by s.87 include orders mentioned in s.87(2), but are not restricted to those orders).

...

[11] In my opinion also, s.87(2)(c) and (d) of the Trade Practices Act make it clear that a remedy in the nature of damages can be sought without commencing an action, by application in some other proceedings; so I see no reason why a set off cannot be claimed, in a defence, on the basis of misleading conduct by the plaintiff associated with the circumstances of the plaintiff's claim. ..."

Tobias JA agreed.

The issue arises because, as has often been said, s 52 does not itself constitute a cause of action, but prescribes a norm of behaviour. The consequence of breaching the norm is the availability of remedies under Part V. At one time this was thought to exclude a defence of equitable set-off based upon the consequences of contravention of s 52 because an equitable set-off operates as a substantive defence to the other party's cause of action before proceedings are brought (Bank of New Zealand v Spedley Securities Limited (in liq) (1992) 27 NSWLR 91). There, the Court of Appeal disapproved of Rogers CJ Comm D's decision in Australian Mutual Provident Society v Specialist Funding Consultants Pty Ltd (1991) 24 NSWLR 326 where his Honour held that, notwithstanding s 82(2) which provided a three-year limitation period for the bringing of an action for damages for breach of s 52, a party could rely on a breach of s 52 as a defence that constituted an equitable set-off against a claim for recovery of a debt. However, this reasoning was not endorsed by Basten JA in Bitannia Pty Ltd v Parkline Constructions Pty Ltd with whose reasons Tobias JA agreed and Hodgson JA substantially agreed. Basten JA observed (at [99]):

"[99] The gist of the construction argument is that the Trade Practices Act has three elements: first it contains prohibitions; secondly it provides remedies for contraventions and, thirdly, it confers jurisdiction to grant relief for contraventions: see SST Consulting Services Pty Ltd v Rieson (2006) 80 ALJR 1190 at [29]. The remedy is made available to persons aggrieved, on 'application to a court'. The next step in the argument is that an applicant must be a moving party, not a defendant. But the last step does not necessarily follow: an 'application' need not be an initiating process in a court and a defendant can 'apply' to have a claim dismissed." (My emphasis.)

Basten JA also considered that the Court of Appeal in Bank of New Zealand v Spedley Securities Limited (in liq) and the Full Federal Court in Westpac Banking Corp v Eltran Pty Ltd (1987) 14 FCR 541 had failed to accommodate the judgment of the High Court in Carlton and United Breweries Limited v Castlemaine Tooheys Limited [1986] HCA 38; (1986) 161 CLR 543. The High Court held that the Supreme Court (which did not, and does not, have jurisdiction in Part IV matters) could nonetheless determine a defence to a claim brought on a contract said to have been entered into in breach of ss 45 and 45D of the Trade Practices Act.

Counsel for HPM submitted that this was to draw more from the decision in Carlton and United Breweries Limited v Castlemaine Tooheys Limited than could be justified because the effect of contravention of ss 45 and 45D was that the contract sought to be enforced in the Supreme Court was void. Counsel submitted that the fact that the Supreme Court could give effect to that voidness was not of any real significance in determining the question whether a contravention of Part V could operate as a defence if remedies under Part VI were not available.

It is not for me to examine critically the judgment of Basten JA in Bitannia Pty Ltd v Parkline Constructions Pty Ltd. But it may be observed that one of the passages from Carlton and United Breweries Limited v Castlemaine Tooheys Limited, which his Honour cited, was the passage (at 554) that concluded:

"A number of sections clearly contemplate that the contravention of a provision of the Act may have legal consequences other than those provided by Part VI, which might affect the grant of remedies by courts other than the Federal Court; those sections show that it was not intended that Part VI should state exhaustively the consequences attaching to a contravention of a provision of Part IV or Part V."

I am bound by the decision in Bitannia Pty Ltd v Parkline Constructions Pty Ltd. Quite apart from being bound, it seems to me, if I may respectfully say so, that it is eminently good sense and reflects the terms of s 87 itself, in particular s 87(2)(ba), to say that an application for an order refusing to enforce the provisions of a contract or to declare that a contract is void need not necessarily require an initiating process, but can be raised by defence. The practical justice of such a course should be given significant weight.

Accordingly, I do not consider that the passage of the limitation period for bringing an application for relief under s 87(1A) is a bar to Mr and Mrs Dierickx relying on the breach of s 52 and asserting by way of defence that HPM is not entitled to sue for the debt because the contract on which it sues should not be enforced or should be set aside.

Then it was said that such relief under s 87 could only be sought against a contravener or a party involved in the contravention, and was not available in defence of the suit brought by HPM.

It must be recalled that the debt HPM seeks to enforce is owed to TROM. TROM is a party to these proceedings, both as third defendant to HPM's claim and as a cross-defendant to Mr and Mrs Dierickx's cross-claim. HPM's title to the debt is no better than TROM's. Why then should HPM be entitled to say that any relief that Mr and Mrs Dierickx may be entitled to against TROM is irrelevant because it is HPM that is seeking to enforce the debt?

The cases relied on do not support its submission. HPM referred to the decision of Burchett J in Oraka Pty Ltd v Leda Holdings Pty Ltd [1997] FCA 297; [1998] ANZ Conv R 577 and of Logan J in Prosperity Group International Pty Ltd v Queensland Communication Company Pty Ltd (No. 3) [2011] FCA 1122. To these should be added the decision of Branson J in Krambousanos v Jedda Investments Pty Ltd [1996] FCA 144; (1996) 64 FCR 348 at 355, which Burchett J applied in Oraka Pty Ltd v Leda Holdings Pty Ltd. The short point is that none of these cases was concerned with a case of an assignee who took subject to equities. Branson J said (at 355-356):

"[Section] 87(1) of the Trade Practices Act similarly requires, in my view, that the person or persons against whom orders may be made under that subsection:-

(a) was or were the person or persons who engaged in the conduct complained of or was or were involved in such conduct; and

(b) is a party or are parties to the proceedings.

S87(1A), in my view, is to be similarly construed. S87(2), which particularises the orders referred to in s87(1) and s(1A), can not be construed as widening the powers given to the Court in s87(1) and s(1A)."

In this case if it were necessary to make orders under s 87(1) or (1A) or (2) the orders would be made against the contravener, namely TROM. HPM's involvement would be no reason not to make those orders, because it took its title subject to whatever claims TROM's debtors could maintain against TROM. The fact that the individuals behind HPM appear to be many of the same who were involved with TROM and TPL and who have managed to stay a step or two or three ahead of the liquidators of TROM and TPL, would be no reason not to exercise the jurisdiction under those sections.

Oraka Pty Ltd v Leda Holdings Pty Ltd concerned the making of orders that would set aside or vary a lease that had been assigned. An assignee of the reversion does not take subject to all equities that bind the assignor. Prosperity Group International Pty Ltd v Queensland Communication Company Pty Ltd (No. 3) concerned the assignment of contracts for the provision of telecommunications services. Logan J held that in so far as the applicant sought relief under s 87 against the assignee of assigned telecommunications service contracts its claim had to fail. His Honour cited Krambousanos v Jedda Investments Pty Ltd and Oraka Pty Ltd v Leda Holdings Pty Ltd. His Honour did not consider whether s 12 of the Conveyancing Act (or its Queensland equivalent) which provides for the assignee to take subject to the equities was relevant. Instead, his Honour found that the assignee had agreed to assume both the benefit and the burden of the assigned contracts (at [76]) with the result that the assignee was saddled with the consequences of the misleading and deceptive conduct engaged in by the salesman for the assignor which induced entry into the contracts.

For these reasons Mr and Mrs Dierickx are entitled to say as a matter of defence that because they were induced to enter into the investment loan contract by TROM's misrepresentation and breach of fiduciary duty, they are not liable for the claimed debt. It is not necessary to make an order for rescission in equity of the contract of loan. That order was not sought, but if it were necessary I would give leave to amend and would make that order. The giving of judgment for the defendants will create a cause of action estoppel. There is nothing for Mr and Mrs Dierickx to restore.

Interest and Penalties

In light of my conclusion above the question as to whether the rate of interest of 20 per cent is a penalty does not need to be decided. In case I am wrong I will state my conclusions briefly.

Mr and Mrs Dierickx submitted that the higher interest rate of 20 per cent was imposed in response to a breach of the loan agreement by them and was not a genuine pre-estimate of the loss that might be suffered by TROM as the result of any breach of the loan agreement by them. They submitted that the rate was extravagantly and unconscionably disproportionate to any damage that might flow to TROM (or its successors) as a consequence of a breach and not commercially justified.

However, the loan agreement used the conventional device of charging a higher rate of interest with a proviso that if payments were made punctually, the lender would accept the lower rate of 15 per cent in discharge of the borrower's obligation. It has long been settled that this does not amount to a penalty (O'Dea v Allstates Leasing System (WA) Pty Ltd [1983] HCA 3; (1983) 152 CLR 359 at 366-367; Acron Pacific Limited v Offshore Oil NL [1985] HCA 63; (1985) 157 CLR 514 at 518; Wallingford v Mutual Society (1880) 5 App Cas 685 at 702; C J Belmore Pty Ltd v AGC (General Finance) Limited [1976] 1 NSWLR 507).

In King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; (2005) 64 NSWLR 441 Campbell J (as his Honour then was) observed (at [138]) that whilst there is a lot to be said for the view that equity should look to the substance, not the form, the law in this respect has been settled for too long for a first instance judge to construe such a clause as a penalty. In Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; (2008) 77 NSWLR 205 Campbell JA said (at [162]):

"[162] There is a conventional view that a properly drafted mortgage containing higher and lower rates does not attract the law of penalties at all. That is because the law of penalties strikes down those provisions of a contract that state the consequences that will flow when there is a breach of contract, if those consequences are not a genuine pre-estimate of the damage likely to be suffered in consequence of that breach. If the mortgage is drafted so that the borrower agrees to pay a particular rate of interest, but the lender agrees to accept a lower rate of interest in full satisfaction of the borrower's obligation to pay interest at that particular rate provided that the lower rate of interest is paid timeously (and, sometimes, provided that there is no breach of any other provision of the mortgage) that provision is not one that states the consequences of a breach of contract, and hence the law of penalties does not apply to it."

His Honour observed (at [164]) that he was not concerned in that case to consider whether the conventional view of the application of the law of penalties to mortgages containing higher and lower rates of interest is correct. But as his Honour had previously observed in King Investment Solutions Pty Ltd v Hussain, it is binding on a single judge.

For these reasons I would have rejected Mr and Mrs Dierickx's argument that the higher rate of interest of 20 per cent was void as a penalty.

Conclusion and orders

For these reasons I have concluded that HPM is entitled to sue for the debt. I have concluded that Mr and Mrs Dierickx have not established that there was an agreement made in 1995 for them to exit the project. I have concluded that the loan was not a without recourse loan and that TROM did not engage in misleading and deceptive conduct by representing that it was.

However, I have found that TROM did misrepresent to Mr and Mrs Dierickx that the moneys it lent to them and they paid to it under the farming agreement would be available for the carrying out of the works described in the farming agreement, and that this was false. I have found that TROM thereby engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act. I have found that TROM failed to comply with its fiduciary duty to disclose to Mr and Mrs Dierickx all information material to their decision to invest in the project by failing to disclose that the moneys lent to them and paid back to TROM would not be available as working capital to pay the costs of orchard enhancement and maintenance. I have found that this entitles Mr and Mrs Dierickx to avoid the loan contract and that HPM is in no better position to enforce the loan than TROM. I have found that Mr and Mrs Dierickx were entitled to rely on the breach of s 52 of the Trade Practices Act and the remedies available under s 87(1A) and (2) by way of defence and that the limitation period in s 87(1CA) does not apply.

In any event, if it were necessary for Mr and Mrs Dierickx to obtain an order for rescission, they would be entitled to an order for rescission in equity for breach of TROM's fiduciary duty and leave would be given to amend the cross-claim accordingly. I have concluded however that Mr and Mrs Dierickx are entitled to rely upon their right to avoid the contract as a matter of defence to the claim in debt.

For these reasons I direct entry of judgment for the defendants and order that the cross-claim be dismissed. I will hear the parties on costs.

Decision last updated: 31 August 2012

Medium Neutral Citation:	HP Mercantile Pty Ltd v Dierickx & Ors [2012] NSWSC 1005
Hearing dates:	7-9 & 12-15 December 2011
Decision date:	31 August 2012
Jurisdiction:	Equity Division
Before:	White J
Decision:	1.Direct entry of judgment for the defendants. 2.Order that the cross-claim be dismissed.
Catchwords:	CONTRACT - plaintiff suing as assignee of loan debt - whether debt purportedly assigned - whether assignments valid - whether debtors could assert that assignment was in fraud of creditors - original creditor estopped from denying validity of first assignment - plaintiff entitled to benefit of estoppel - limitation periods if initial assignments invalid - whether amendments relying on later assignments pleaded new causes of action - when amendments took effect TRADE PRACTICES - misleading and deceptive conduct - whether defendants induced to invest on understanding that liability was limited to initial investment - defendants' conduct inconsistent with belief that loan was without recourse TRADE PRACTICES - misleading and deceptive conduct - whether defendants induced to make investment by representations regarding funds available to promoter to carry out scheme - promoter's failure to provide information - where obligation of promoter to disclose all matters that might materially affect investor's decision - failure to disclose funding arrangements for the making of loans to investors - misrepresentation of moneys available to promoter to carry out scheme - whether non-disclosure and misrepresentation by original creditor a defence to action by assignee of debt - where time limit for claim under s 87(1A) of the Trade Practices Act 1974 has expired - whether debtor can seek avoidance of contract of loan as defence to action for debt - Trade Practices Act 1974 (Cth), s 52
Legislation Cited:	Trade Practices Act 1974 (Cth) Corporations Law Conveyancing Act 1919 Stamp Duties Act 1920 Limitation Act 1969 Civil Procedure Act 2005
Cases Cited:	Thomas v HP Mercantile Pty Ltd [2008] NSWCA 308 HP Mercantile Pty Ltd v Meakes (District Court of New South Wales, 24 June 2004, unreported) Tailby v Official Receiver (1888) 13 App Cas 523 Amalgamated Investment and Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1982] QB 84 Coghlan v S H Locke (Australia) Ltd (1985) 4 NSWLR 158 Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 Ramsay v Pigram [1968] HCA 34; (1968) 118 CLR 271 Brady v Stapleton [1952] HCA 62; (1952) 88 CLR 322 Chen v Marcolongo; Chan v Lym International Pty Ltd [2009] NSWCA 326 Marcolongo v Chen [2011] HCA 3; (2011) 242 CLR 546 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 Read v Brown (1888) 22 QBD 128 New Cap Reinsurance Corporation v Reaseguros Allianza SA [2004] NSWSC 787; (2004) 186 FLR 175 Stone v ACE-IRM Insurance Broking Pty Ltd [2003] QCA 218; [2004] 1 Qd R 173 Weldon v Neal (1887) 19 QBD 394 Hewitt v Gardner [2009] NSWSC 705 Watson v Foxman (1995) 49 NSWLR 315 Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628; (2001) 188 ALR 566 S E Vineyard Finance Pty Ltd (receivers and managers appointed) v Casey [2011] VSC 403 Re Harry Simpson & Co Ltd v Companies Act 1936 (1963) 81 WN (Part 1) (NSW) 207 Roxburghe v Cox (1881) LR 17 Ch D 520 Mitchell v Purnell Motors (1960) 78 WN (NSW) 26 Re Partnership Pacific Securities [1994] 1 QdR 410 Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199 Duke Group (in liq) v Alamain Investments Limited [2003] SASC 415 Barker v Duke Group Limited (in liq) [2005] SASC 81; (2005) 91 SASR 167 Hewitt v Henderson [2006] WASCA 233 Brightwell & Ors v R F B Holdings Pty Ltd [2003] NSWSC 7; (2003) 44 ACSR 186 Short v Crawley (No. 30) [2007] NSWSC 1322 Rawson v Samuel (1841) CR & PH 161; 41 ER 451 Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9 Bank of New Zealand v Spedley Securities Limited (in liq) (1992) 27 NSWLR 91 Australian Mutual Provident Society v Specialist Funding Consultants Pty Ltd (1991) 24 NSWLR 326 Westpac Banking Corp v Eltran Pty Ltd (1987) 14 FCR 541 Carlton and United Breweries Limited v Castlemaine Tooheys Limited [1986] HCA 38; (1986) 161 CLR 543 Oraka Pty Ltd v Leda Holdings Pty Ltd [1997] FCA 297; [1998] ANZ Conv R 577 Prosperity Group International Pty Ltd v Queensland Communication Company Pty Ltd (No. 3) [2011] FCA 1122 Krambousanos v Jedda Investments Pty Ltd [1996] FCA 144; (1996) 64 FCR 348 O'Dea v Allstates Leasing System (WA) Pty Ltd [1983] HCA 3; (1983) 152 CLR 359 Acron Pacific Limited v Offshore Oil NL [1985] HCA 63; (1985) 157 CLR 514 Wallingford v Mutual Society (1880) 5 App Cas 685 C J Belmore Pty Ltd v AGC (General Finance) Limited [1976] 1 NSWLR 507 King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; (2005) 64 NSWLR 441 Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; (2008) 77 NSWLR 205
Texts Cited:	R P Meagher, J D Heydon & M J Leeming, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies, 4th ed (2002) LexisNexis Butterworths
Category:	Principal judgment
Parties:	HP Mercantile Pty Ltd (Plaintiff) Ludo Victor Dierickx (1st Defendant) Wendy Anne Dierickx (2nd Defendant) Tumut River Orchard Management Limited (In Liquidation) (3rd Defendant)
Representation:	Counsel: D Fagan SC with P Knowles (Plaintiff) L V Gyles SC (Defendants) Solicitors: Versace McKenzie Lawyers (Plaintiff) Piper Alderman (1st & 2nd Defendants) Crouch Amirbeaggi (3rd Defendant)
File Number(s):	2006/294773