HP Mercantile Pty Ltd v Dierickx

In *HP Mercantile Pty Ltd v Dierickx*, the New South Wales Court of Appeal considered an appeal by HP Mercantile Pty Ltd (the appellant) against a decision of the primary judge. The dispute concerned the appellant's claim for the recovery of a debt owed by the respondents, Mr and Mrs Dierickx. The respondents had borrowed money from Tumut River Orchard Management Limited (TROM) to invest in a managed investment scheme involving orchards. The appellant claimed to be the assignee of this debt through a series of assignments and sought to recover the outstanding amount from the respondents.

The Court of Appeal was required to determine several key legal issues. These included whether the debt had been validly assigned to the appellant, specifically focusing on the validity of the first assignment and whether the directors of the assignor and assignee companies had the authority to bind their respective companies to this assignment, particularly in the absence of board approval. The Court also considered whether any absence of authority could be cured by ratification and whether such ratification had been adequately pleaded. Further issues involved claims of misleading and deceptive conduct under the Trade Practices Act (now the Competition and Consumer Act), including whether a representation was made about the use of investor funds and if such a representation was misleading, as well as the applicability of limitation periods. Additionally, the Court examined questions of equitable estoppel, breach of fiduciary duty by the scheme manager, and the availability of equitable set-off as a defence to the debt recovery action.

The Court of Appeal allowed the appeal, setting aside the primary judge's orders. The reasoning involved a detailed analysis of the assignment chain and the corporate authorisations for the initial assignment. The Court found that the debt was validly assigned to the appellant. The Court also addressed the respondents' counterclaims and defences, including those based on misleading and deceptive conduct and breach of fiduciary duty, concluding that these did not defeat the appellant's claim for the debt. Consequently, the Court entered judgment for the appellant against the respondents for the outstanding principal of the loan, together with interest, and ordered the respondents to pay the appellant's costs of the appeal and the proceedings at first instance.