Jasper Nominees Limited v Kairouz and Murdaca
[2023] VSC 718
•4 December 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2022 05179
BETWEEN:
| JASPER NOMINEES LIMITED (SEYCHELLES COMPANY NUMBER 224224) | Plaintiff |
| and | |
| PIERRE KAIROUZ | First Defendant |
| and | |
| ANTONIO MURDACA | Second Defendant |
(by original proceeding)
AND BETWEEN
| PIERRE KAIROUZ | Plaintiff by counterclaim |
| and | |
| JASPER NOMINEES LIMITED (SEYCHELLES COMPANY NUMBER 224224) & ORS (according to the schedule) | First Defendant by counterclaim |
(by counterclaim)
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JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 9, 10, 11, 12, 16, 17 October 2023, 8 November 2023 |
DATE OF JUDGMENT: | 4 December 2023 |
CASE MAY BE CITED AS: | Jasper Nominees Limited v Kairouz and Murdaca |
MEDIUM NEUTRAL CITATION: | [2023] VSC 718 |
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MISLEADING OR DECEPTIVE CONDUCT – Whether representations made by the lender or lender’s representatives were misleading – Whether borrowers relied on misleading representations when entering into loan – Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 97 ALJR 388 – Viterra Malt Pty Ltd v Cargill Australia Ltd [2023] VSCA 157 – Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592.
GUARANTEE – Whether signing execution pages without balance of guarantee constitutes effective act of acceptance – Whether handwritten amendments had effect following removal from contract – Whether variation after execution made without notice discharged liability of guarantor.
PENALTIES – Whether interest payable upon default constitutes a penalty – Where interest rate during term of loan is nil – Compound interest - Arab Bank Australia Ltd v Sayde Developments Pty Ltd [2016] NSWLR 231 – Bay Bon Investments Pty Ltd v Selvarajah [2008] NSWSC 1251 – Aquamore Credit Equity Pty Ltd v Hung [2021] NSWSC 1681 – Bellas v Powers [2023] NSWSC 1198.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff/First to Third Defendants by Counterclaim | P Bick KC and J P Tomlinson | SBA Law |
| For the First Defendant/Plaintiff by Counterclaim | J Levine | Frank Sanna |
| For the Second Defendant/Plaintiff by Counterclaim | J Ribbands and H McAvaney | Melbourne Legal Chambers |
| For the Fourth and Fifth Defendants by Counterclaim (9 and 10 October 2023 only) | S Pitt and M Roberts | Danaher Moulton |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Jasper’s claim – the LNSA and the AAD....................................................................................... 4
The Misrepresentation Issue........................................................................................................... 8
The relevant events in more detail............................................................................................. 8
Oral evidence.................................................................................................................................... 34
Mr Kairouz................................................................................................................................... 36
The April 2021 Meeting.................................................................................................... 36
The Atlantic Restaurant Meeting.................................................................................... 37
The First IVIC meeting...................................................................................................... 37
The Second IVIC Meeting................................................................................................. 38
Mr Murdaca................................................................................................................................. 39
The April 2021 Meeting.................................................................................................... 39
The First IVIC Meeting..................................................................................................... 39
The Second IVIC Meeting................................................................................................. 40
Mr Schmidt................................................................................................................................... 41
The April 2021 Meeting(s)................................................................................................ 41
The IVIC Meeting(s).......................................................................................................... 42
Mr Dahan..................................................................................................................................... 43
The April 2021 Meeting.................................................................................................... 43
The IVIC Meetings............................................................................................................. 43
Mr Hopp....................................................................................................................................... 46
April 2021 Meeting............................................................................................................ 46
The Atlantic Restaurant Meeting.................................................................................... 46
The IVIC Meetings............................................................................................................. 47
Evaluation of the evidence as a whole and conclusion in relation to the Misrepresentation Issue.............................................................................................................................................. 49
Miscellaneous ancillary matters in relation to the Misrepresentation Issue...................... 66
Did Mr Hopp engage in condcut on behalf of Jasper?................................................. 66
The LNSA Execution Issue............................................................................................................. 73
Penalty Issue..................................................................................................................................... 89
Conclusion....................................................................................................................................... 109
HIS HONOUR:
Introduction
The plaintiff, Jasper Nominees Limited (‘Jasper’), seeks to recover amounts alleged to be owing under guarantees given by the first defendant, Pierre Kairouz (‘Mr Kairouz’) and the second defendant, Antonio Murdaca (‘Mr Murdaca’), in relation to obligations of the principal debtor, Global Meat Exports Pty Ltd (‘GME’) under two short term loan agreements entered into on 5 October 2021. The first agreement took the form of a loan note subscription agreement (‘LNSA’) and provided in substance for an advance of $36.5 million with $41.25 million required to be paid on the termination date which was 7 December 2021 (the ‘Termination Date’), nine weeks after the date of entry of the LNSA. The second agreement was titled ‘Additional Advance Deed’ (‘AAD’) and provided for an advance of $2 million with $2.4 million required to be repaid by 5 November 2021 (the ‘Repayment Date’).
The LNSA provided for interest to be charged and capitalised monthly after the Termination Date at an annual rate of 60% per annum whilst the AAD provided for interest to be charged and capitalised monthly after the Repayment Date of 120% per annum.
GME did not repay the $2.4 million due under the AAD on 5 November 2021. Nor did it pay the amount of $41.25 million due under the LNSA on 7 December 2021. No payments have been made under the LNSA. 14 payments have been made in reduction of the amount owing under the AAD, 12 of which took place after GME and Jasper had entered into a moratorium deed on 24 March 2023. As at 9 October 2023 the amount owing by GME pursuant to the AAD was $7,424,116.30 and the amount owing by GME pursuant to the LNSA is $121,765,757.69. Thus, the amounts said to be owing by Mr Kairouz and Mr Murdaca as at 9 October 2023 totalled $129,189,873.99.[1]
[1]Certificate signed by Rebecca Loh as authorised officer of Jasper dated 9 October 2023 given pursuant to clause 17.8 of the LNSA.
Mr Kairouz and Mr Murdaca defend the claims against them on three broad grounds. First, both Mr Kairouz and Mr Murdaca submit that they entered into the LNSA in reliance upon two categories of misrepresentation made by Jasper’s alleged agents, Jason Hopp (‘Mr Hopp’) and Jack Dahan (‘Mr Dahan’), and each have brought counterclaims in which they seek orders setting aside the guarantees given by them contained within the LNSA. Mr Murdaca’s counterclaim is brought only against Jasper. Mr Kairouz’s counterclaim is also brought against Jasper but is also brought against Mr Hopp personally and his company Santini Group Pty Ltd (‘Santini’) and Mr Dahan and his company Hennessey Capital Partners Pty Ltd (‘Hennessey’). The counterclaim against Mr Dahan and Hennessey was dismissed by consent of Mr Kairouz, Mr Dahan and Hennessey with no order as to costs on day two of the trial although the counterclaim against Jasper, based in part on Mr Dahan’s conduct, remains.
The two categories of misrepresentation comprise alleged ‘Exit Strategy Representations’ to the effect that Jasper would be able to procure the refinance of GME’s loan at the end of the term, and the alleged ‘Working Capital Representations’ to the effect that Jasper would not impede GME’s ability to obtain another loan for the purposes of working capital. Those representations are said to be misleading as Jasper had no reasonable basis for making the representations (the ‘Misrepresentation Issue’) and contrary to s 18 of the Australian Consumer Law (the ‘ACL’) as contained in schedule 2 to the Competition and Consumer Act 2010 (Cth) (the ‘CCA’). Mr Kairouz, but not Mr Murdaca, also alleges that the same conduct amounts to unconscionable conduct in contravention of s 21 of the ACL.
Secondly, each raise matters particular to the circumstances of their execution of the LNSA (the ‘LNSA Execution Issue’). Mr Murdaca submits that these matters have the effect that he is not bound by his signing of the execution pages of the guarantee contained within the LNSA including because its terms were changed after he executed the relevant pages. Similarly, Mr Kairouz submits that the circumstances of his execution of the guarantee are such that he too is not bound or if he is, that the guarantee is limited to the value of the assets owned by Mr Kairouz or by a company of which he was a director at the time of enforcement or recovery.
Thirdly, both argue that the LNSA and the AAD provide for high default rates of interest; 60% per annum compounding monthly in the case of the LNSA and 120% per annum compounding monthly in the case of the AAD. Each contends that such high rates of interest constitute unenforceable penalties (the ‘Penalty Issue’).
The Penalty Issue is primarily a question of law. The LNSA Execution Issue requires consideration of a relatively confined number of matters largely evidenced by contemporaneous documents. In contrast, the Misrepresentation Issue compels a fact-laden enquiry to be carried out against the backdrop of contested oral evidence given by each of the main protagonists: Mr Kairouz, Mr Murdaca, Mr Hopp, Mr Dahan, and to some extent Alan Schmidt, a former director of GME who also gave evidence. The reliability of that contested oral evidence must be considered against the background of the accompanying contemporaneous documentary record which illuminates the likelihood or otherwise of the protagonists’ contested oral evidence.
Jasper’s claim is straightforward assuming that the LNSA Execution Issue is resolved in its favour, although the amount of the guarantors’ liability may be reduced if the guarantors’ arguments on the Penalty Issue succeeds, and of course Jasper’s claim is subject to the counterclaims.
These reasons are structured by first setting out the salient provisions in the LNSA and the AAD relied upon by Jasper in establishing its claims. Secondly, the Misrepresentation Issue is considered with reference in the first instance to the objective documentary record or facts which are not disputed. The section also sets out in the relevant chronological sequence the pleaded allegations raised by both Mr Kairouz and Mr Murdaca. In the next section, the oral evidence is summarised before analysis of this issue is concluded with the necessary findings. Thirdly, the LNSA Execution Issue is considered followed lastly by the Penalty Issue.
Jasper’s claim – the LNSA and the AAD
Under the LNSA, various ‘Financiers’[2] (not Jasper) agreed to provide GME with financing up to a ‘Total Commitment’ sum of $36,500,000.[3]
[2]‘Financiers’ are defined as Baltic River Ltd and Taurus Advisors Ltd in the LNSA.
[3]Pursuant to clause 4.8 of the LNSA: ‘[GME] acknowledges and agrees that the Commitment [ie $36,500,000] will be drawn down in full on first Utilisation…’.
Under clause 3.1 of the LNSA,[4] those funds were to be obtained by GME issuing a ‘Loan Note’, pursuant to a Loan Note Deed Poll at Schedule 7 of the LNSA. The ‘Total Face Value Amount’ in the Loan Note was $41,250,000, which was the amount to be repaid to the Financiers under clause 3.1(b).
[4]Clause 4 of the LNSA additionally described how GME was to make ‘utilisations’ of the facility. Clause 4.5 stated, ‘[o]n each Utilisation Date, the Borrower shall issue Loan Notes to each Financier with an aggregate Face Value Amount equal to that Financier’s Pro Rata Share of the Face Value Amount of the Loan Notes specified in the applicable Utilisation Notice’.
The purposes of the financing were set out expressly in clause 3.3. The funds were ‘only’ to be used for:
(a) refinancing then extant Bank of Sydney and Bridge Street Capital No 2 Pty Ltd (‘Bridge Street Capital’) debts;
(b) purchasing the Cedar Meats business;
(c) the payment (to the Financiers) of fees and costs due under the LNSA; and
(d) any other purpose ‘approved by the Financier’.
That is, the permitted purposes of the LNSA did not include any allowance of funding for working capital or for any purpose that was not otherwise ‘approved by the Financier’ (and Jasper was not a Financier, so could not have approved using funds for any other purpose in any event).
By clause 6.1, GME was required to repay each Loan Note (at its Face Value) and all other Secured Moneys in full on the Termination Date, where:
(a) ‘Secured Money’ meant all debts and monetary liabilities of (inter alios) GME to ‘the Finance Parties’, on any account and in any capacity, including irrespective of whether the debts or liabilities were present or future liabilities; and
(b) the ‘Termination Date’, was 7 December 2021, being nine weeks after the LNSA was entered into, on 5 October 2021.
Clause 5.3 set out interest rates to apply: ‘[f]rom the first day following the Termination Date and on each day thereafter…interest will accrue and be calculated in the manner set out in this clause 5.3 on the Principal Outstanding and any money that is due and payable by [GME], but unpaid and on any interest payable but unpaid, at the Overdue Rate’.
Sub-clause 5.3(c) provided that the ‘Overdue Rate payable under this clause 5.3 shall be capitalised at monthly intervals such that the amount of that interest payable will form part of the Principal Outstanding and interest shall accrue on that amount’.
‘Overdue Rate’ meant 60% per annum and ‘Principal Outstanding’ meant the aggregate Face Value Amount of all outstanding Loan Notes at that time.
By clause 14.1 (Guarantee) the defendants (among others) irrevocably and unconditionally, jointly and severally:
(a) guaranteed ‘to each Financier [the] punctual performance by [inter alia GME] all of [GME’s] obligations under the Finance Documents’; and
(b) undertook that whenever GME did not pay any Secured Money when due, then the defendants would immediately on demand pay the Secured Money as if they were the principal obligors.
Mr Kairouz and Mr Murdaca (and others) also irrevocably and unconditionally indemnified ‘each Finance Party’ against loss incurred as a result of various things, including failure by an obligor (such as GME) to pay the Secured Money, or if ‘a liability to pay the Secured Money or perform any of the obligations under a Finance Document, is unenforceable, invalid or illegal against an Obliger for any reason, whether or not the Financier knew or ought to have known anything about it’.
Clause 14.3(c)[5] is relevant as it provided that whilst the guarantee was given ‘to the Financiers’ (ie not Jasper), the guarantors were nevertheless required to make payments, due to the Financiers under the guarantee, to the ‘Security Trustee’ (Jasper).[6] A mirrored, although different, requirement, to pay the Security Trustee in respect of losses suffered by ‘Finance Parties’, was set out in cl 14.2(b).
[5]Clause 14.3(c) of the LNSA provides, ‘if an Event of Default occurs, the Guarantors must immediately on receipt of a written demand by or on behalf of the Financiers pay the Secured Money to the Security Trustee’. An ‘Event of Default’ included where, ‘an Obligor [including GME] fails to pay or repay any part of the Secured Moneys when due and payable by it,…’ where the ‘[Guarantee] is enforced or becomes enforceable’.
[6]Security Trustee is defined in the LNSA and LNSA Schedule 2 to mean Jasper.
As Security Trustee, and under a related ‘Security Trust Deed’, made at the same time as the LNSA, Jasper was and is entitled to, ‘exercise all Powers under the Finance Documents … as if the Security Trustee were the beneficial owner of the Finance Documents and the Powers’.[7] ‘Powers’ is not defined by the Security Trust Deed, but must take its meaning from the ‘Principal Agreement’, ie the LNSA, and accordingly meant ‘any right, power, authority, discretion, or remedy conferred on [the Financiers] … by any Finance Document or any applicable law’.
[7]‘Finance Document’ has the same meaning as in the LNSA, and relevantly included the LNSA and the AAD.
The Financiers therefore authorised Jasper (as Security Trustee) to take action on their behalf in respect of their rights under the LNSA and AAD. Jasper was and is obliged to hold sums received by it (including under LNSA clauses 14.3(c) or 14.2(b)), on trust for, inter alia, the Financiers.[8] However:
(a) Jasper did not, as Security Trustee, or otherwise, lend or advance moneys to GME (or anyone else); and
(b) Jasper’s entitlements to act on behalf of the Financiers (under the Security Trust Deed, or as a consequence of LNSA clauses 14.3(c) and 14.2(b)) did not eradicate the Financiers’ own rights to enforce the LNSA, including as the beneficiary of the Guarantee given by the defendants under clause 14 of the LNSA. The Financiers have therefore retained their rights to the benefit of the Guarantee.
[8]See clause 1.1 of the Security Trust Deed, which defines ‘Trust Fund’ at (c) as ‘all money paid to the Security Trustee under any Finance Document for the account or benefit of a Beneficiary or for application in accordance with this deed’.
The LNSA also referred to the AAD as a ‘Finance Document’. Relevantly, the AAD provided that:
(a) the Finance Parties under the LNSA agreed to provide an ‘Advance Amount’ of $2 million to GME, in addition to the sums to be provided under the LNSA;
(b) GME agreed to repay the sum of $2,400,000 (‘Repayment Amount’) by 9am on 5 November 2021 (the ‘Expiry Time’), being one month after monies under the AAD were advanced, also on 5 October 2021;
(c) failure to pay the Repayment Amount would constitute a default under the LNSA and result in all sums (including under the LNSA) becoming payable; and
(d) default interest would be payable on the Repayment Amount from the Expiry Time at a rate of 120% per annum and otherwise to accrue in accordance with clause 5.3 of the LNSA, until the Repayment Amount is paid.
There is no dispute that on or about 5 October 2021:
(a) GME issued a Loan Note with a Total Face Value Amount in the sum of $41,250,000; and
(b) $36,500,000 was advanced to GME in accordance with the LNSA and, separately, a sum of $2,000,000 was advanced to GME in accordance with the AAD.
It is also not in dispute that:
(a) GME did not repay the AAD Repayment Amount sum of $2,400,000 on 5 November 2021;
(b) GME did not repay the LNSA Total Face Value Amount sum of $41,250,000 on 7 December 2021; and
(c) approximately one year later, on 6 December 2022, Jasper (as Security Trustee) made demands to each of the defendants in respect of their liability under the Guarantee (and the defendants have not paid the Secured Money to Jasper).
The Misrepresentation Issue
The relevant events in more detail
For about 35 years, Cedar Meats (Aust) Pty Ltd (‘Cedar Meats’) operated an abattoir business trading under the name Cedar Meats from premises located at 5–9 Mitford Parade, Footscray, Victoria (the ‘Footscray Property’) and 690 Brooklyn Road, Brooklyn (the ‘Brooklyn Property’).
Cedar Meats was a family-owned business run by the Kairouz family which comprised six brothers and their family. Mr Kairouz was the youngest of the six brothers. His nephew, Tony Kairouz (‘Tony Kairouz’) was also heavily involved in the business and a participant in the relevant events. Tony Kairouz did not give evidence in the proceeding.
The Footscray Property was owned by Birrawae Pty Ltd (‘Birrawae’) and the Brooklyn Property was owned by Jeskan Nominees Pty Ltd (‘Jeskan’). Birrawae and Jeskan are companies associated with the Kairouz family.
In around 2018, Mr Murdaca became aware that the Kairouz family was interested in selling the Cedar Meats business. The proposed sale involved the sale of both properties and the business including the sale of relevant licences. Mr Murdaca understood that the motivation for the sale was that it was becoming difficult to manage the business within the large Kairouz family.
In late 2018, Mr Murdaca, along with various others, procured the incorporation of GME which was incorporated for the purpose of acquiring the Cedar Meat business, including its licences and the Cedar Meats properties. Mr Murdaca became a significant shareholder in GME
On 24 December 2018, Jeskan and Birrawae entered into contracts of sale for the Brooklyn and Footscray Properties for $45 million and $11 million respectively. The contracts of sale were signed by Mr Kairouz on behalf of Jeskan and Birrawae, and by Mr Murdaca and his business associate Manny Stamatopoulos on behalf of an unidentified purchaser entity. The Brooklyn contract of sale specified that the contract was subject to the payment of $2 million on 24 December 2018 but was otherwise silent as to the payment of any other amount by way of deposit. Settlement was scheduled for 22 February 2019. The Footscray contract of sale likewise provided that it was subject to payment of $2 million on 24 December 2018 and otherwise that settlement was due to take place on 22 February 2019.
Although the name of the purchaser is not identified on the contracts, according to Mr Murdaca the purchaser of the Footscray Property and the Brooklyn Property was another company of which he, along with Mr Stamatopoulos, were directors; Asia Australia Group Pty Ltd (‘Asia Australia Group’). Mr Murdaca, via a company which he controlled, also held a substantial shareholding in Asia Australia Group. Mr Murdaca says that the intention was for Asia Australia Group to nominate GME to take the transfer of the Footscray Property and the Brooklyn Property at settlement contemporaneously with the purchase of the business by Asia Australia Group. Asia Australia Group had entered into a business sale agreement with Cedar Meats. Mr Murdaca was a guarantor of the obligations of Asia Australia Group under each of the business purchase contract, the Footscray Property contract of sale and the Brooklyn Property contract of sale.
Notwithstanding the contingencies expressed in the Brooklyn Property contract of sale and the Footscray Property contract of sale, only a single payment of $500,000 was paid (by GME) on 2 November 2018. In total, GME made payments of $6,220,028 in connection with the Cedar Meats purchase by way of the payment of $500,000 on 2 November 2018, together with further payments of $2 million on 16 December 2019, $2,250,000 on 21 February 2020, $500,000 on 5 February 2021 and $970,028 on 9 February 2021.
On or around 15 August 2020, an unlisted public company called AustAgri Group Ltd (‘AustAgri’) acquired all the shares in GME from its existing shareholders. The share purchase agreement, among other things, contemplates that the shareholders in GME would receive a shareholding in AustAgri and that AustAgri would procure the settlement of the Brooklyn Property contract of sale, the Footscray Property contract of sale and the Cedar Meats business purchase contract. The directors of Aust Agri included Mr Schmidt, who gave evidence in this proceeding.
AustAgri had ambitions to acquire a series of livestock assets including the Cedar Meats assets and an abattoir in Mildura owned by interests controlled by Tony Kairouz as well as acquisitions of other livestock businesses known as Top Cut Foods and Napparoy Agriculture, and to aggregate those assets into a sub-fund controlled by the ASX listed DomaCom Limited. Those who had interests in AustAgri would receive interests in the fund.
As part of the proposed AustAgri acquisition, Mr Kairouz and Tony Kairouz were to be retained in executive roles at Cedar Meats and entities controlled by them were to receive shareholdings in AustAgri and interests in the fund. So too were Mr Murdaca and Mr Schmidt among others including interests associated with Paul Fielding. Relevantly, Mr Fielding had mutual business interests with Mr Dahan who also had an interest in AustAgri and was to receive an interest in the fund.
In March 2021, Mr Schmidt approached Mr Hopp, the sole director of Santini. Mr Hopp and the Santini carried on a private debt business involving the sourcing of capital from prospective lenders and the advancing of funds to private borrowers. Mr Hopp was approached by way of an email from Mr Schmidt with a view to providing funding to AustAgri and its wholly owned subsidiaries (which included GME) by way of a redeemable convertible note for $7 million to be repaid by no later than 30 June 2021 so as to facilitate the completion of the Cedar Meats acquisition, the Top Cut Foods acquisition and various other purposes.
Mr Schmidt’s email was also copied to Paul Fielding who in turn forwarded the email on to Mr Dahan. Mr Dahan was a former banker whose work experience included stints at Macquarie Bank, Credit Suisse and Morgan Stanley. In more recent times, Mr Dahan has carried on business, among other things, under the umbrella of Hennessey providing corporate advisory services including the sourcing of debt and equity. Mr Dahan’s shared business interests with Mr Fielding included an earlier transaction which also involved Mr Hopp in connection with the Sands Resort in Torquay.
On 15 April 2021, Mr Dahan sent a WhatsApp message to Mr Hopp which stated:
$59m is the senior
$1.5m is for working cap
This is where you are with Belgravia (and others) doing the $10.7m
Assuming I have this right I will call at 5pm with Alan [Schmidt] in the call
This was a reference to a request for capital for the funding of the Cedar Meats business by AustAgri and GME. The ‘$59m’ referred to the proposed first ranking or senior debt and the request contemplated that another source of finance, Belgravia, would also contribute $10.7 million which would be used to pay out the existing second mortgagee, Bridge Street Capital. Bridge Street Capital was an entity associated with David Cacciola who also gave evidence in the proceeding. Bridge Street Capital held a second mortgage over the Footscray and Brooklyn Properties. The existing first mortgage was held by the Bank of Sydney. Although this was denied by Mr Kairouz and Mr Murdaca, Mr Dahan gave evidence that his understanding was that Bridge Street Capital was threatening to appoint a receiver.
It is common ground that a meeting occurred between around 25–27 April 2021 between Mr Kairouz, Mr Dahan, Mr Hopp, Tony Kairouz, Mr Schmidt, Mr Murdaca and Philippe Barros (the ‘April 2021 Meeting’). This was the first time that Mr Kairouz and Mr Murdaca had met Mr Hopp. At this meeting, Mr Hopp is alleged to have made a number of the misrepresentations now relied upon by Mr Kairouz and Mr Murdaca.
In Mr Kairouz’s defence, he alleges that the following took place at the meeting:
(a) Mr Hopp or Mr Dahan said words to the effect that ‘we will have an exit strategy in place to take out the first mortgagee at the end of the Jasper loan’ (the ‘First Exit Strategy Statement’);
(b) Mr Kairouz told Mr Hopp and Mr Dahan that GME would require $20 million to $25 million of working capital as part of the Jasper loan;
(c) Mr Hopp said words to the effect that ‘I will allow a carveout of debtors and stock from the loan to facilitate the provision of working capital’ (the ‘First Working Capital Statement’);
(d) Mr Hopp said words to the effect ‘Jack will organise the working capital and Jack will take care of it’ (the ‘First Dahan Statement’); and in response, Mr Dahan said words to the effect that ‘he understood working capital was required by GME and there would be access to working capital from day 1’ (the ‘Second Working Capital Statement’).
According to Mr Murdaca’s defence, at this meeting Mr Hopp said words to the effect that:
(a) Jasper would provide a short term loan to GME for a term of eight weeks in the range of $25 million to $35 million (the ‘Short Term Loan’);
(b) Dahan had arranged longer term finance for GME as an ‘exit strategy’ from the short term loan;
(c) Jasper would allow GME to obtain up to $20 million in working capital from another lender that could take security carved out of Jasper’s security.
It is also common ground that on 30 April 2021, Mr Hopp, Mr Kairouz and Tony Kairouz met at the Atlantic Restaurant in Southbank (the ‘Atlantic Restaurant Meeting’). In his defence, Mr Kairouz alleges that the following occurred::
(a) Mr Kairouz said words to the effect that GME needed working capital of $20-25 million;
(b) Mr Hopp said words to the effect of ‘not a problem’ and ‘we will use the debtors and stock to give you the working capital that you require’ (the ‘Third Working Capital Statement’);
(c) Mr Hopp said words to the effect that ‘Jack will take care of the working capital’ (the ‘Second Dahan Statement’);
(d) Tony Kairouz said words to the effect of ‘we need to ensure that GME has an exit strategy’; and
(e) in response, Mr Hopp said words to the effect of ‘I’m only here for a short term’ and ‘we’ve got to get it all done’ (the ‘Second Exit Strategy Statement’).
On 3 May 2021, Mr Hopp emailed Tony Kairouz and after referring to the enjoyable lunch asked whether it would be possible to come down and meet with him the next day, along with his lawyer, so that they could better understand the Cedar Meats assets.
Mr Hopp and his solicitor attended at the Cedar Meats premises as proposed and later on 4 May 2021, Mr Hopp sent what he described as a very high-level term sheet to Mr Schmidt. In his covering email, Mr Hopp noted that he did not have all the facts surrounding the transactions, had not reviewed the relevant documents, had not reviewed any financials and that the figures and conditions on the term sheet may change as due diligence progressed.
The attached term sheet was headed ‘Term Sheet Cedar Meats Loan Notes’ and provided that the note issuer would be GME, the registered landowner was Jeskan and Birrawae and that guarantees would be provided by AustAgri, Mr Schmidt, Jeskan and Birrawae, amongst others, and that the face value of the note would be $67 million. The term of the loan was to be three months and the issue price or principal advance would be $57 million which would be dispersed as to various fees and then $17 million as to discharge the first mortgagee, with the balance of $39,100,000 to be paid into a controlled account which would provide for agreed releases from that account including: $5 million on the exchange of a contract of sale for the two security properties for an aggregate of not less than $72.5 million; $11 million in repayment of the existing second mortgage to be released upon the two sales contracts going unconditional; around $23,100,000 for a business restructure which would take place after the disbursement of a subordinated loan of $14 million which would be secured on second ranking securities with any balance used to repay the facility (without provision for a redraw). The term sheet specified a raft of securities including first mortgages over the Brooklyn Property and the Footscray Property, as well as guarantees from AustAgri, Mr Schmidt, Jeskan and Birrawae, among others, and a general security agreement (‘GSA’) for all present and after-acquired property over Jeskan, Birrawae and the seller and buyer of the Cedar Meats business.
On 5 May 2021, Mr Dahan sent an email to Mr Hopp with the subject line ‘Cedar Meats Term Sheet V4 (002)’ and attached a copy of what was a markup of the earlier term sheet referred to above. The marked up term sheet included an increase in the face value of the note to $68,000,000 with the issue price/principal advance of $58 million to be disbursed after various fees, as to $17 million in repayment of the outgoing first mortgagee, $39,100,000 into a control account and a new proposed agreed release from the control account of $1,340,000 by way of working capital. The securities had not been changed. Mr Dahan requested that Mr Hopp approve the ‘mark ups’ (ie the changes).
On 5 May 2021 at 5:56pm, Mr Hopp emailed Mr Dahan and Mr Schmidt attaching a further amended term sheet for signing. This version of the term sheet was recorded as V5 (version 5). His email addressed to Mr Schmidt and Mr Dahan commenced with ‘you drive a hard bargain (marketing applied for Jacks benefit)’. A copy of that annexure does not appear in the documents tendered although Mr Hopp’s email states that for consistency the facility would add up to $58 million and he had corrected the working capital figure to be $1,330,000. He requested that all relevant parties sign the term sheet and once this occurred he would commence commercial and legal due diligence in order to make this high-level term sheet become a reality.
At 7:16am on 6 May 2021, Mr Schmidt responded by an email sent to Mr Hopp and Mr Dahan, copied to Mr Murdaca, among others. In his email, Mr Schmidt sought working capital of $6 million and various other amendments. Mr Hopp replied by marking up Mr Schmidt’s email with comments in red and updating the term sheet to V7. In respect of the working capital component, Mr Hopp’s response split the working capital of $6 million into two parts; $4 million which would be made available on financial close which would be incorporated into the disbursement to the Bank of Sydney and $2 million which would be released on the contracts becoming unconditional. The latter would appear to be a reference to the proposed contracts of sale for the Footscray and Brooklyn Properties for a combined price of not less than $72.5 million. Mr Hopp otherwise requested that funds be forwarded to the solicitors’ trust account so that due diligence could commence.
On 18 May 2021, Mr Dahan sent a further WhatsApp message to Mr Hopp. In reference to the proposed deal contemplated by Mr Hopp, Mr Dahan noted that Mr Hopp would not be deploying more than $32 million and as such asked whether Mr Hopp would consider advancing an additional $3 million with ‘penalties kicking in after first mth [sic]’. Mr Dahan’s message continued, ‘This would ensure family and working capital outcomes. Puts pressure on the boys to bring in the equity.’
On 20 May 2021, Mr Schmidt emailed Mr Dahan and Mr Hopp forwarding on an email that had been sent to him by ScotPac Business Finance (‘ScotPac’) proposing a working capital solution for GME/AustAgri and attaching an indicative term sheet. The indicative term sheet, among other things, proposed a debtor finance facility of $50 million and an export finance facility of $8 million. The security referred to in the indicative term sheet included, amongst other things, finance facility agreements as well as a GSA over GME and the AustAgri Group and second registered mortgage security over all freehold properties which would include the Brooklyn and Footscray Properties for such time as they remained in the ownership of GME and AustAgri. In ScotPac’s covering email to Mr Schmidt, among others, ScotPac asked for copies of the contracts of sale for the Brooklyn and Footscray Properties, as well as a full breakdown of the planned acquisitions of Cedar Meats, Top Cut Foods, Napparoy and the Mildura abattoir, and a full update on the DomaCom pathway.
On 27 May 2021, Grant Guenther emailed Peter Guy, solicitor, from Kennedy Guy. The email was copied to Mr Murdaca. Mr Guenther was a solicitor at Macpherson Kelley and was acting on behalf of GME. Mr Guy was the solicitor for the Kairouz family. In Mr Guenther’s email, he set out what he understood was to be the proposed structure of a new transaction between GME and the Kairouz family. Mr Guenther’s email set out the following matters:
1. The current contracts are cancelled.
2.The Vendors have agreed to sell GME (or nominee) the properties (both of them) and the business. New contracts will be prepared in this regard for all of:
(a) The cedar meats busines [sic] ($15M);
(b) Mitford Pde [the Footscray Property] ($11M);
I 690 Geelong Road [the Brooklyn Property] ($45M).
3.The Vendors will recognise the $8.22M paid as deposit on these contracts.
4.[Agriculture Australia Group] will be the purchaser under the land contracts.
5.GME/AAG will borrow $41M net from Manda Capital. Jeskan (owner of 690 Geelong Road) will guarantee that loan and offer up the property as security for it.
6.The $41M net plus the $8.22M will result in $49.22M having been paid against the contracts as follows:
(a) Business sale ($15M in full). Some adjustments still to be made
(b) Mitford Parade ($11M in full).
(c)The balance (circa $23.22) will be treated as deposit/part payment towards 690 Geelong Road.
7. Business and Mitford will settle quickly (say 14 days).
8.690 Geelong Road will get 6 months to settle (to line up with Manda Capital repayment date).
9.GME will lease Brooklyn from Jeskan on the following key commercial terms:
(a) Term: 20 years with a 10 year option.
(b)Rent $2.5M per annum payable monthly in advance
Fixed 2.5% rent increases annually. Market review on commencement of further term.
(d) No security deposit.
The LIV lease format is proposed.
I’ve sent you some amendments to the Terms Sheet separately.
Kindly confirm the above is also your understanding and acceptable to your client.
Agriculture Australia Group (‘AAG’) is a wholly owned subsidiary of AustAgri.
The proposed lender, Manda Capital, was a different lender to the lender the subject of the term sheets sent by Mr Hopp.
Mr Guy forwarded Mr Guenther’s email to Mr Kairouz and Tony Kairouz who confirmed that it was acceptable, with the only concern raised being the lack of a deposit under the proposed lease between GME and Jeskan being perceived to make it difficult to sell the Brooklyn freehold post-settlement of the transaction.
As contemplated by Mr Guenther’s email, on 4 June 2021 three new contracts were entered into to give effect to the sale of the Cedar Meats business: a business sale agreement between Cedar Meats and GME (the ‘Business Sale Contract’) which provided for the purchase of the Cedar Meats business for the price of $13 million plus the value of stock calculated in accordance with a mechanism set out in Schedule 6 to the business sale contract, a contract of sale for the Footscray Property between AAG as purchaser and Birrawae as vendor which provided for the sale of the Footscray Property for $11 million, and a contract of sale for the Brooklyn Property between AAG as purchaser and Jeskan as vendor for $45 million.
Settlement of the Business Sale Contract and the Footscray Property was to occur on 11 June 2021; settlement of the Footscray contract of sale was to occur on 11 June 2021, whilst settlement of the Brooklyn Property was to occur on 28 November 2021.
Relevantly, in the case of the Business Sale Contract, debtors and the stock on hand was to remain with the vendor unless, in the case of the stock, a separate payment was made after the carrying out of a valuation in accordance with schedule 6. This had the effect that on the first day of operation post-settlement, the new Cedar Meats business owned by GME would not own any stock, unless it bought that stock from the vendor, or have any debtors. This created a need for working capital.
On 4 June 2021, Mr Dahan emailed Mr Fielding, Mr Schmidt and Mr Murdaca with the subject line ‘Cedar working capital’. Mr Dahan’s email stated that ‘I have the trade facility for $5m. Now working on the domestic debtor and equipment finance piece’.
On 30 June 2021, Mr Dahan emailed Mr Kairouz and Mr Schmidt with the subject line ‘Debtors Ledger’ in which he requested that Mr Kairouz ‘please provide a copy of current debtors…we will make sure that there is enough working capital for Cedar to function correctly at handover’ (the ‘Fourth Working Capital Statement’).
Mr Dahan later sent further emails in connection with his attempts to secure working capital to Mr Kairouz and copied to Mr Schmidt, Mr Fielding, Tony Kairouz and Mr Murdaca on 1 July 2021 with subject line ‘Debtors ledger’ stating ‘we will discuss with the financiers about which debtors will be suitable to fund. We are moving nicely on the working capital requirements to support the transaction’ (the ‘Fifth Working Capital Statement’).
Later, on 6 July 2021, Mr Dahan emailed Mr Kairouz, asking for copies of a creditors list having acknowledged receipt of the latest aged debtors list. The email was copied to Mr Schmidt and Mr Fielding, along with Brad Coppens, who worked for the working capital lender Earlypay. Mr Dahan’s email stated that ‘we are at between $11m and $17m for working capital’ and advised that the financier wanted to obtain information about those suppliers on the creditors list for whom the business required trade finance, noting that the financier would require copies of supplier invoices or details of the value of purchases each month which required funding, and that ‘we will aim to conduct a review of major debtors/creditors and advise terms and confirm currency along with country as necessary’(the ‘Sixth Working Capital Statement’) .
On 19 July 2021, Mr Kairouz emailed Mr Murdaca, Mr Schmidt, Mr Fielding and copied in Tony Kairouz and Mr Dahan as well as another representative at Cedar Meats. Mr Kairouz’s email referenced the subject line ‘Working Capital’ and referred to the fact that ‘the Loan Documents have been issued and expected Settlement is on 23rd July 2021’. Mr Kairouz’s email continued:
It is very important to ensure our working capital is in place from day one of operations. We must take advantage of the upcoming spring Lamb season.
For the short term (6 months) minimum working capital required will be $10-12m. To maximise production in Brooklyn for the long term, ideal working capital $20-25m.
Mr Schmidt responded to Mr Kairouz informing him that:
We are at $15M now, we can add another A$2.0M to that with P & E – I am thinking probably another at least A$2.0M to that with the addition of my security. Once we commence we will be able to source more before the lamb season kicks in.
The question of working capital was again referred to in emails which passed between Mr Dahan, Mr Kairouz, Mr Fielding and others between 21–23 July 2021. On 21 July 2021, Mr Dahan noted that there was $7 million in working capital arranged to support the Cedar Meats new company on day 1 with approximately $2 million being secured against equipment and as such available on day one, with an additional $5 million available to pay suppliers. Mr Dahan requested a forecast of Cedar Meat’s expected outgoings for the first nine weeks, noting that the $5 million in working capital was there to pay such costs. Mr Dahan went on to say, ‘The $10 million of debtor funding will be activated by the first (non-Chinese at this stage) invoice generated. We expect further equipment finance and funding of equipment to be approved over the rest of this week’ (the ‘Seventh Working Capital Statement’).
On 22 July 2021, Mr Dahan sent Mr Murdaca an indicative facility offer from Earlypay which contemplated a facility limit of AUD5 million and USD5 million. The proposed facility was in the form of a debtors finance facility with security to be provided in the form of a GSA over GME, AustAgri and AAG, personal guarantees and indemnity from each of those entities along with guarantees from Mr Schmidt, Mr Fielding and any other director, shareholder or related party required by Earlypay.
It is not disputed that a meeting occurred in or around late July to early August 2021, at the Essendon premises of a business owned by Mr Murdaca known as International Vehicle Integrity Centre Pty Ltd (‘IVIC’), attended by Mr Hopp, Mr Dahan, Mr Murdaca and Mr Kairouz (the ‘First IVIC Meeting’) although what took place is the subject of dispute. Mr Kairouz’s defence says that the following occurred:
(a) when discussing working capital, Mr Hopp told Mr Dahan to ‘take care of it’ (the ‘Third Dahan Statement’);
(b) Mr Kairouz said words to the effect that having an exit strategy and sufficient working capital were critical to the transaction; and
(c) in response, Mr Dahan said words to the effect of ‘we have it under control, we will have the exit strategy to take out the first mortgagee and the interest rate (on refinance) will be much cheaper than we are on now, we may be looking at an indicative rate of 10-12%’ (the ‘Third Exit Strategy Statement’) ‘and allow for working capital’ (the ‘Eighth Working Capital Statement’).
According to Mr Murdaca’s defence, at this meeting, Mr Hopp said words to the effect that:
(a) Jasper could provide a loan to GME of about $37–39 million by way of a short term loan for a term of eight weeks;
(b) Mr Dahan had an ‘exit strategy’ for GME to obtain a loan with another lender to refinance the loan from Jasper at the end of the eight week term;
(c) Jasper would allow GME to obtain up to $20 million in working capital from another lender carved out of the security for Jasper; and
(d) the provision of the further loan for the ‘exit strategy’ made the Jasper loan a workable option.
By 10 August 2021, the settlement date for the business sale and the settlement of the Footscray Property had come and gone and the prospective lender referred to in Mr Guenther’s email to Mr Guy of 27 May 2021, Manda Capital, had withdrawn from the transaction.
A series of emails involving Mr Hopp, Mr Dahan, Mr Kairouz, Mr Schmidt and Mr Murdaca on 10 and 11 August 2021 record negotiations as to the proposed loan structure involving the following:[9]
[9]The structure is set out firstly in Mr Kairouz’s email to Mr Murdaca of 10 August 2021; this in turn was forwarded on by Mr Murdaca to Mr Schmidt and copied to Mr Dahan and the latter forwarded it on to Mr Hopp, who replied to the proposed structure by adding in comments in red. That which is set out in [67] summarises the structure taking account of Mr Hopp’s comments.
(a) settlement would take place early the next week;
(b) Mr Hopp would provide an advance of $36.5 million of which approximately $36 million would be available to the borrower secured by first ranking mortgages over the Footscray and Brooklyn Properties and a first ranking GSA over the business;
(c) the properties would remain within the ownership of the Cedar Group and Cedar Meats would remain for $27 million as a second mortgagee;
(d) the advance made by Mr Hopp would be repaid in 4 months’ time with the amount due on repayment coming to $45 million;
(e) the Brooklyn property would be put on the market as soon as possible; and
(f) the transaction would be subject to due diligence by Mr Hopp which would start on payment of $30,000 into Mills Oakley’ s account and Mr Hopp would issue a term sheet.
In connection with the proposed sale of the Brooklyn property, on 16 August 2021 Mr Murdaca emailed Mr Dahan with the subject line ‘Cedar GME Portfolio Update.’ In his email Mr Murdaca forwarded on an email from Brad Esler, the director of the Industrial and Logistics Division at Savills Australia (‘Savills’), real estate agents, in which Mr Esler provided an update on the current interest for the Cedar Meats real estate portfolio. Mr Esler advised that Savills had been able to attract solid interest on the basis that the Cedar business was transferred to GME imminently. Savills had identified three qualified buyers with the key to the buyers’ interest being the completion of the sale of business transaction and hence the entering into of leases with the larger GME entity.
On 17 August 2021, Mr Dahan emailed Mr Kairouz and Mr Murdaca, and copied in Mr Schmidt attaching a term sheet that had been sent to him by Mr Hopp, but which had been the subject of some handwritten alterations made by Mr Dahan. In his covering email, Mr Dahan described the attachment as the ‘revised Hopp term sheet’ and that he and Mr Hopp had gone through it point by point. Mr Dahan noted that section 3.4 of the term sheet needed to stay in some form in order to allow security over the two specific properties. Mr Dahan’s email otherwise described the document as a ‘reasonably clean first mortgage term sheet with limited CPs now’.
The attached term sheet specified that the borrower was to be GME, noted that the land owner was Jeskan and Birrawae, stipulated guarantees from Cedar Meats, AustAgri, Jeskan, Birrawae, as well as the directors of each of those entities including Mr Schmidt, Mr Dahan, Mr Murdaca, Mr Kairouz, Tony Kairouz, ‘and others’. The face value of the loan note was to be $40,250,000 with the issue price or principal advance of $36,500,000 and the term was 8 weeks. The principal security was recorded as the Brooklyn Property and Footscray Property and the Cedar Meats business. The purpose of the loan was described as land purchase and refinance and it was provided that the principal advance of $36,500,000 would be dispersed in payment of a work fee, an establishment fee, legal fees and ancillaries, then as to ‘repayment of existing mortgagees’ and finally, as directed by the borrower. Mr Dahan had crossed out in hand the reference to a GSA over the Cedar business, the borrower, GME and the landowners, in the section headed ‘Securities’. Likewise in the section headed Cedar Meats Notes Facility’ subsection ‘Principal Security’ had crossed out the reference to the Cedar Meats business and otherwise sought to cross out various other events of default and conditions precedent. The term sheet for the first time referred to ‘Jasper Group Limited and/or Nominee’. Jasper Group Limited (‘Jasper Group’) is a different entity to Jasper.
On 19 August 2021, Mr Schmidt emailed Mr Fielding, amongst others and copied to Mr Murdaca and Mr Dahan, amongst others, forwarding on a term sheet from another financier, Merricks Capital (‘Merricks’), who proposed a bridging loan for six months of $37.6 million. Mr Schmidt expressed his view that the Merricks offer was too light and recommended that the Merricks term sheet not be signed and that in the meantime Faro Corporate Advisory Pty Ltd (‘Faro’) and other sources of finance be pursued.
On 20 August 2021, Mr Murdaca sent a text message to Mr Hopp in which he referred to a discussion he had with Mr Dahan and Mr Kariouz, amongst others, in which he asked Mr Dahan to ‘get us ten weeks in-stead [sic] of eight’. His text message continued:
the only other concern is the [sic] one of the family trust the ownes [sic] the units in one of the property’s [sic] the some trust owns other family assets I totally understand you need to protect your investors is there a way we can not [sic] register anything on it so that the family members agree Pierre is willing to settle using your term sheet…
On 20 August 2021, Mr Schmidt, Mr Dahan and Mr Murdaca signed a term sheet which had been prepared by Mr Hopp. The term sheet recorded that the guarantees would be required from the directors of AAG, GME, Jeskan, Birrawae including Mr Kairouz, Mr Murdaca, Mr Schmidt, Tony Kairouz ‘and others’. The term sheet had also been signed by Mr Kairouz on his own behalf and on behalf of Cedar Meats, Jeskan and Birrawae. The term sheet provided a space for the signature of Tony Kairouz as well, but he had not signed it and his name had been crossed out. In the section of the term sheet which set out the principal security, there was reference to the Brooklyn Property, the Footscray Property, as well as the Cedar Meats business. The loan term specified was eight weeks but this had been crossed out and replaced with a reference to nine weeks which had been initialled. The section headed ‘Securities’, listed a first ranking GSA over the Cedar Meats business and the business of GME, as well as the landowners Jeskan and Birrawae, and a first ranking registered mortgage over the Footscray Property and the Brooklyn Property.
The term sheet was also accompanied by a further handwritten note signed by Mr Dahan, Mr Schmidt, Mr Murdaca and Mr Kairouz with the words ‘as discussed with Jason Hopp and in the absence of any doubt, the security package outlined in section 3 “securities” only extends to the following properties’, with the addresses of the Brooklyn Property and Footscray Property then set out. Various witnesses gave evidence to similar effect that this was a motivated by a concern that Birrawae and Jeskan both acted as trustees of trusts which owned property separate to the Footscray and Brooklyn Properties and that it was intended (and the lender accepted) that these additional properties would not form part of the security package.
On 22 August 2021, Mr Schmidt emailed Mr Dahan and Mr Fielding amongst others with the subject line ‘Faro Term Sheet.’ Despite this description what was attached was a letter of mandate dated 9 August 2021 between AustAgri and Faro and Terbium Partners Ltd (‘Terbium’), the substance of which provided for the payment by AustAgri of a fee of $100,000 plus GST together with a further success fee in respect of a mandate provided to Faro to secure finance for AustAgri. Mr Schmidt’s email explained the rationale for the mandate in the following terms:
Faro and Terbium believe that they can start providing access to the Senior debt and equity that they are arranging within the 8 weeks window that we now have with Hopp.
Situation is, we have the following available potential funding to take out Hopp, being: -
Faro – has a credit approved facility for A$41.0M net, (same T&C’s as Manda) – term sheet available 24th August
Kairouz family – have an approved facility of A$50M at 4% for 5 years – Pierre advises this will be ready within 7 weeks.
We have another potential private equity offer of a net A$42M at 8% for 12 months. Term sheet due 24th Aug.
Any of the above, if they materialise will be ready prior to Hopp’s initial expiry. The Faro offer has been made in case we are not able (for any reason) to settle the Senior debt within 8 weeks.
It is not disputed that a second meeting took place at the IVIC premises, most likely in September 2021 (the ‘Second IVIC Meeting’) although what occurred is the subject of dispute. In his defence, Mr Kairouz says that the following occurred at the Second IVIC Meeting:
(a) Mr Dahan said that he had arranged working capital for GME of $3 million from Hennessey Capital, USD5 million and AUD5 million from Earlypay, and between AUD200,000 to AUD400,000 from Gold Leaf Capital Partners Pty Ltd (‘Gold Leaf’);
(b) Mr Kairouz said to Mr Hopp words to the effect that debtors and stock had to be used as security for amounts of that magnitude;
(c) in response, Mr Hopp said words to the effect ‘no problem’ (the ‘Ninth Working Capital Statement’);
(d) Mr Dahan said words to the effect of ‘I’ve got it under control.’ ‘It is well underway, it is under control. We are looking at very attractive interest rate and a good length of loan, the interest rate is in the low double digits. I’m putting it altogether. I have approached Merricks Capital and Chris Oliver from Faro Capital to begin arranging the refinance of the Jasper loan in relation to the exit strategy for the Jasper loan’ (the ‘Fourth Exit Strategy Statement’).
In his defence, Mr Murdaca says the following occurred at the Second IVIC Meeting:
(a) Mr Dahan said that he had arranged working capital for GME of $3 million from Hennessey Capital, USD5 million and AUD5 million from Earlypay, and between AUD200,000 to AUD400,000 from Gold Leaf Capital Partners;
(b) Mr Kairouz said to Mr Hopp words to the effect that debtors and stock had to be used as security for amounts of that magnitude;
(c) in response, Mr Hopp said words to the effect ‘no problems’; and
(d) Mr Dahan stated words to the effect of ‘I’ve got it under control’ in relation to the exit strategy for the Jasper loan.
On 7 September 2021, Mr Dahan emailed Mr Kairouz in relation to the Earlypay offer of working capital. In his email, Mr Dahan confirmed with Mr Kairouz that Earlypay ‘are looking to provide equipment finance, working capital, as well as debt funding to Cedar post settlement’. Mr Dahan advised that he had shared with Earlypay a number of options ‘which we are working on to take out the incoming mortgagee in nine weeks’ and requested that Mr Kairouz ‘email your signed term sheet for Cedar funding’ directly to Earlypay. Mr Kairouz responded advising that Haroon Nathaniel would continue to proceed with his option but Mr Kairouz wished to maintain strict confidentiality with respect to the signed term sheet (clearly a reference to the one that Mr Nathaniel was working on) and encouraged Mr Dahan to continue to work on his options to take out the incoming mortgagee in nine weeks. Mr Nathaniel was an investment advisor who was working at Mr Kairouz’s request to source finance. Mr Nathaniel had a Cedar Meats email address. Mr Kairouz’s described it as great news that Mr Dahan was pursuing other options and noted that Mr Nathaniel was only one of the options and he did not want it to be the only one.
On 7 September 2021, Mr Hopp emailed Mr Kairouz, Mr Schmidt, Mr Dahan and Mr Murdaca, among others, advising that the funds required to settle the Cedar Meats transaction were now in place[10] awaiting the provision of executed documents. He advised that he had not yet received payout figures from the outgoing mortgagees and that these should be provided as soon as possible. In the last paragraph of his email, Mr Hopp stated that subject to further documentation he had made available the $2 million for GME as requested in the meeting the previous Friday.
[10]In fact in a PEXA settlement account.
On 9 September 2021, Mr Dahan emailed Mr Kairouz and Mr Schmidt, copied to Mr Murdaca and Mr Hopp, with the subject line ‘Working Capital’ and stated that the Earlypay working capital facility had been formally approved and that he would advise next steps shortly.
On 16 September 2021, Mr Schmidt emailed Mr Kairouz and Tony Kairouz, copied to Mr Dahan and Mr Murdaca, attaching an Excel spreadsheet dated 15 September 2021. The Excel spreadsheet set out Mr Schmidt’s understanding of the disbursement that would result from settlement of loan arranged by Mr Hopp (later described in similar versions as the ‘settlement waterfall’). The spreadsheet anticipated funds available for settlement of $41,750,000 comprising $35,900,000 (being the Hopp short term facility), an additional $2 million from Mr Hopp, an additional $750,000 from Mr Dahan and ‘other possible finance – Cacciola’ in the sum of $3,100,000. These funds were to be used to pay out the first mortgagee, the Bank of Sydney, in the amount of $20,300,000, and the second mortgagee in the sum of $13,100,000, with $8 million going to the Kairouz family, leaving $350,000 left over. Working capital was then to comprise $1.5 million paid by Earlypay described as a deposit, along with trade finance of $5 million with the balance of the Earlypay facility of $11,756,756. There was then a raft of other commitments next set out which were to paid in part from the working capital funding.
On 17 September 2021, Mr Kairouz emailed his solicitor, Mr Guy, copied to Tony Kairouz and Mr Dahan. In his email, he referred to an earlier email (which he also forwarded on to Mr Guy) from Mr Dahan to Mr Guy which set out the position regarding day one working capital once settlement had occurred of the sale of the business from Cedar Meats to GME. In Mr Dahan’s email, he set out that the day one working capital would comprise $2 million provided by the Jasper Group at 4% per month; $3 million from Hennessey Capital at 1% per month and $800,000 from Gold Leaf at 1.5% per month. His email continued that:
Once the business transacts, post the AustAgri EGM (23 September) we have significant equity capital had pledged (between $5 million and $7 million at this stage.).
In Mr Kairouz’s email to Mr Guy, he stated that the Jasper $2 million, the Hennessey $3 million loan and the Gold Leaf $800,000 did not form part of working capital and that those funds could be used at Cedar’s discretion.
In a follow-up email sent by Mr Dahan to Mr Kairouz, copied to Mr Schmidt and Mr Fielding, on 22 September 2021, he set out the working capital funding lines for Cedar Meats provided by Earlypay as comprising 1.5 million from the sale and the leaseback of equipment in the boning room; a $5 million working capital facility and debtor funding of AUD5 million and USD5 million. Other sources were then set out in the same terms as his earlier email of 21 September 2021 comprising the funds from Jasper Group ($2 million), Hennessey Capital ($3 million) and Gold Leaf ($800,000).
On 23 September 2021, Mr Dahan emailed Mr Kairouz, Mr Schmidt and Mr Murdaca advising that Mr Hopp was advancing ‘an additional $3 million in total ‘which was all for GME’s working capital. He attached a further version of the settlement waterfall spreadsheet earlier prepared by Mr Schmidt and which included some typewritten notes. The spreadsheet now identified available working capital of $17,600,000 which was to be largely provided by Earlypay and in respect of which $1.5 million was to be available on Tuesday (28 September 2021) together with the Earlypay $5 million working capital facility and debtor funding facilities also available from that day.
Mr Kairouz’s email of 27 September 2021 sent to Mr Guy and copied to Dalia Salloum (Cedar Meat’s financial controller), Tony Kairouz, Mr Dahan, Mr Schmidt and Mr Murdaca was largely consistent with the waterfall spreadsheet sent by Mr Dahan to Mr Kairouz on 23 September 2021, although in the comments section Mr Kairouz had written that Mr Dahan was to confirm the timing of availability in respect of the various working capital finance lines.
Between 29 September 2021 and 5 October 2021, steps were taken to procure execution of the LNSA and the AAD. On 5 October 2021, GME issued a loan note with a face value amount of $41,250,000 in respect of which GME accessed the utilisation amount provided by the financiers under the LNSA of $36,500,000 and received the additional advance of $2 million made pursuant to the AAD.
On 11 October 2021, Mr Kairouz emailed Mr Dahan, copied to Ms Salloum, Tony Kairouz, Mr Schmidt and Mr Murdaca, setting out the Cedar Meats/GME waterfall, which was described in Mr Kairouz’s email as the ‘waterfall everyone agreed with’. The table largely followed the format of the spreadsheets earlier prepared by Mr Schmidt and recorded available funds at settlement totalling $40,900,000 of which $35,900,000 was said to come from the Santini, along with an additional $2 million coming from the Santini with the notation ‘bank cheque in favour of GME. GME to pay Cedar’. $3 million was to be provided by Hennessey which made up the total of $40,900,000. Those funds in turn were then to be disbursed as to $19,863,112 in discharge of the first mortgage owing to the Bank of Sydney, $13,423,733 to the second mortgagee, Bridge Street Capital, with $2,645,241 being received by Cedar Meats which showed excess funds of $4,967,914.[11] Under the heading ‘Working Capital’, Mr Kairouz listed amounts totalling $17,200,000 which comprised $700,000 from Gold Leaf with the balance from Earlypay recorded in various financing lines: cash at bank (AUD1.5 million); livestock purchases (AUD5 million); trade finance (AUD5 million); and trade finance (USD5 million). In his email, Mr Kairouz stated that ‘it is critically important that we meet and deliver on the waterfall’.
[11]For reasons which were not explained on the evidence, the waterfall described this figure as a shortfall with a ‘minus’ placed in front of it.
On or about 12 October 2021, GME and others[12] executed five agreements with Earlypay: a partnership finance facility deed providing for facility limits of AUD5 million and USD5 million, an import finance facility deed with a facility limit of AUD5 million, and two loan agreements in respect of advances of AUD500,000 and AUD1 million and a GSA. The partnership finance facility deed was effectively a debtor finance facility; the import finance facility deed financed purchases by GME. The GSA constituted part of the security sought in relation to each of the facilities and the loan agreements.
[12]The documents were also executed by the guarantors; Austagri, AAG, Mr Schmidt (and his wife Rachael), Mr Kairouz, Birrawae and P & K Kairouz Pty Ltd.
On 15 October 2021, Mr Dahan emailed Nicholas Alexander, the head of business development at Balance Lending, enclosing a copy of an information memorandum that had been prepared by Savills in connection with the proposed sale of the Footscray Property and Brooklyn Property. The subject of the email was ‘Cedar working capital bridge’. In his covering email, Mr Dahan said that ‘our preference is not to sell the buildings’ but that Savills has interest at around $72 million for the two properties. After noting that the sale of the land, buildings and business had taken place the previous week,[13] Mr Dahan advised that Terbium had been mandated to raise debt and equity capital for the GME food processing aggregation and that they expected to bring in an equity raising at $20 million which would be used to keep the land and buildings in Melbourne as well as the facility owned by Tony Kairouz in Mildura. Mr Dahan’s email was also copied to Mr Nathaniel.
[13]This was not accurate and could only refer to the sale of the shares in Cedar Meats to GME as there had been no change in the ownership of the two properties.
On 15 October 2021, Mr Dahan emailed Mr Schmidt forwarding on an email that he had received that day from Mr Coppens at Earlypay. In his email, Mr Coppens advised that Earlypay was having their documents certified[14] and caveats were being lodged ahead of the mortgages being lodged for registration. He advised that Earlypay was ready to settle on the term loans totalling $1,500,000 and would be sending the funds overnight to GME, which funds could be used for general cashflow and purchases. He said that they should have the trade finance facility[15] ready to go the next week for direct purchases of livestock which would be paid by Earlypay when each invoice was due. His email concluded by advising that once a pre-settlement audit had been completed and other settlement conditions had been addressed, the debtor finance facility would be fully in place which could be used for advances against invoices owing to GME from domestic and export sales.
[14]It is difficult to reconcile this email with the fact that the agreements are dated 12 October 2021; see [88] This inconsistency was not addressed in the evidence.
[15]Evidently a reference to the import finance facility.
On 18 October 2021, Mr Dahan sent an email to [email protected], copied to Mr Hopp. The email address was that of Rebecca Loh who is the sole director of Jasper and Jasper Group. The email read:
Good afternoon Rebecca, we have arranged working capital for Cedar Meats through listed EPY.ASX (Earlypay). EPY have prepared an intercreditor deed to sit behind your mortgages against Mitford Parade (Footscray) and Brooklyn.
We would be pleased if you can consider this request favourably as the viability of the Cedar business depends on these funds being made available as a matter of urgency.
Mr Dahan also forwarded a copy of that email to Mr Schmidt on the same day.
On 19 October 2021, Mr Nathaniel emailed Mr Dahan, forwarding on a copy of an email sent to Mr Nathaniel by the Commonwealth Bank of Australia which requested various pieces of information in connection with the operation of the Cedar Meats business including, relevantly, a business plan, last three years of audited financial statements, financial forecasts and details of property available for security, as well as valuations of those properties. Mr Nathaniel asked for assistance in compiling the requested information.
On 20 October 2021, Mr Dahan emailed Mr Hopp, copied to Mr Schmidt, Mr Kairouz and Mr Fielding enclosing three documents asking that Mr Hopp arrange for them to be signed. He enclosed two priority deeds for the Footscray and Brooklyn Properties which effectively gave Earlypay second ranking security over the two properties, and a document headed ‘Release and Undertaking to Amend Registration’ which in effect carved out GME’s personal property, debtors and inventory from the GSA registered in favour of Jasper. Mr Schmidt’s email to Mr Kairouz of the same day, advised that the documents were with Mr Hopp who agreed with them. Mr Schmidt’s email noted that Mr Dahan was chasing Mr Hopp.
On 22 October 2021, Mr Kairouz emailed Mr Dahan, copying in, Tony Kairouz, Mr Hopp, Mr Murdaca and Mr Schmidt (among others). Mr Kairouz requested confirmation from Mr Dahan that the working capital facility was in place as business had commenced trading under GME. His email noted that GME had incurred expenses that would be due and payable the next week and as a result it was necessary that the full working capital be ready to go.
Mr Kairouz’s email then set out that the total funds that had been available to GME at settlement totalled $37,494,824 leading to a shortfall of $3,505,176. Mr Kairouz said that he was not chasing the shortfall but wanted Mr Dahan to deliver the working capital into the GME bank account. His email noted that Mr Dahan had pledged that the funding from Earlypay and Hennessey would be immediately available after settlement and they were still waiting for it. Mr Kairouz then set out the anticipated funding from Earlypay for each of the facilities which totalled AUD11.5 million[16] and USD5 million along with the $3 million expected from Hennessey. Mr Kairouz’s email concluded with a statement that ‘we all must deliver on what we promise, as we have accepted your pledges on face value’.
[16]In his email, Mr Kairouz broke up the various amounts attributing USD5 million to a trade finance facility; AUD5 million to a trade finance facility; $5,000,000 to livestock (evidently a reference to the import finance facility and $1,500,000 to cash at bank (evidently a reference to the two loans totalling $1.5 million).
In response, Mr Dahan emailed Mr Kairouz, copying in Mr Schmidt and Mr Hopp, advising that he and Mr Schmidt were with Mr Hopp looking to resolve the working capital impasse. Mr Dahan requested that Mr Kairouz instruct Mr Guy as a matter of urgency to prepare a contract of sale and a section 32 statement for the Footscray Property and the Brooklyn Property as well as an ATO withholding clearance certificate.
On 23 October 2021, Mr Hopp emailed Mr Dahan and Mr Schmidt advising that he was instructing Mills Oakley to ‘down tools to save costs’ as Mr Kairouz is intending to pay us out next Friday. The reference to downing tools evidently related to the documentation needed to address Earlypay’s security requirements which would be rendered moot if Jasper’s debt was paid out. In his response, Mr Dahan wrote that GME was intending to pay you out and that Mills Oakley was not doing anything as Mr Hopp had not given approval for the working capital facility.
Despite this, on 27 October 2021, Mr Dahan emailed Mr Coppens, copied to Mr Kairouz, Mr Schmidt and Mr Nathaniel, requesting that Earlypay’s lawyers liaise with Mills Oakley in relation to the drafting of a deed of priority in relation to the ‘accounts’. He confirmed that Mr Hopp was agreeable to a second mortgage being lodged by Earlypay on the two properties and advised that Haroon Nathaniel from Nathaniel Capital was comfortably placed with his arrangements to take Jasper out of their first mortgage in a timely fashion.
On 28 October 2021, Mr Dahan emailed Mr Kairouz, Mr Schmidt and Mr Nathaniel advising that he had held a very good meeting with Invigo and Fresh Supply Company who were willing to replace and increase the working capital to purchase the livestock which Mr Hopp had restricted from Earlypay by not allowing a carveout of stock from the GSA. Mr Dahan’s email noted that ‘we had created a structure that will circumvent Hopp while staying compliant with the loan note’.
On 1 November 2021, Mr Hopp sent an iMessage to Mr Dahan advising that the documentation was with Mills Oakley after having been reviewed by the financiers. His message advised that he assumed that the amendments would be sent over to Earlypay for consideration that day and that once the amendments had been agreed he would have it executed by the security trustee. Mr Dahan’s message in response was to the effect that they were keen to see the signed document down at Cedar Meats as ‘the boys’ were keen to know everything was in order so they could buy livestock.
On 4 November 2021, Mr Kairouz and Mr Nathaniel participated in an email exchange relating to the provision of valuations for the properties being provided to prospective lenders.
On 5 November 2021, GME became liable to repay $2.4 million under the AAD. The payment was not made.
On 5 November 2021, Mr Coppens from Earlypay emailed Mr Dahan. The subject line in the email read ‘Signed GME Earlypay Agreement’ and the email attached the copy of the partnership finance facility deed with the facility limits of AUD5 million and USD5 million which had been earlier executed by GME among others on 12 October 2021. Despite the subject line in the email, the documents had not been signed by Earlypay. There was nothing else written in the body of the email.
On 9 and 10 November 2021, Mr Hopp and Mr Coppens exchanged a series of emails relating to the terms of a deed of priority between Jasper and Earlypay.
On 7 December 2021, GME became liable to make payment of the face value amount of the loan note in the sum of $41,250,000. That sum was not paid.
On 3 February 2022, Mr Dahan emailed Mr Kairouz and Mr Murdaca seeking a mandate from GME to engage Hennessey on an exclusive basis to facilitate the appropriate refinance of debt[17] which would incorporate the sale of the Brooklyn and Footscray Properties. GME later executed the mandate in favour of Hennessey and on 3 March 2022, a company by the name of IP Generation made an offer subject to due diligence to purchase the Footscray and Brooklyn Properties for a price of $65 million on the basis, inter alia, that the properties would be sold subject to 20 year leases with 12 month bank guarantee. The proposed sale to IP Generation did not proceed.
[17]Clearly a reference to the Jasper debt.
On 15 May 2022, a term sheet was entered into by GME, among others, and Bridge Street Capital, for a loan of the lesser of 85% of the independent valuation of the security properties and $87,422,500 for a term of six months. Notwithstanding the term sheet, the finance arrangement did not proceed.
No refinance of the amounts owing under the LNSA occurred.
On 6 December 2022, demands were made by Jasper upon Mr Murdaca and Mr Kairouz of all amounts due and owing under the LNSA.
On 16 March 2023, Jasper appointed receivers and managers over the shares held by GME in Cedar Meats and over GME’s bank accounts.
On 24 March 2023, Jasper and GME, among others including Mr Kairouz, entered into a moratorium deed, the terms of which, among other things, provided that Jasper would not make any further appointments of receivers or receivers and managers to any of the assets of the GME parties before 17 April 2023.
Oral evidence
Each of the witnesses in the proceeding, with the exception of Mr Dahan, gave evidence-in-chief by way of the tender of an affidavit and was then cross-examined. However, insofar as the evidence-in-chief related to what was said at the meetings where the representations were alleged to have been made, namely the April 2021 Meeting, the Atlantic Restaurant Meeting, the First IVIC Meeting, and the Second IVIC Meeting, each was required to give evidence-in-chief orally and not by way of affidavit.
The parties had agreed that the order of evidence would be Jasper first but only in relation to its claim which in effect went only to the LNSA Execution Issue, Mr Kairouz and Mr Murdaca in relation to the counterclaim (effectively the Misrepresentation Issue) followed by Jasper/ Santini and Mr Dahan/ Hennessey in defence of the counterclaim. Jasper tendered a short affidavit from Mr Dahan (the ‘Jasper/Dahan Affidavit’) in its case without the necessity of Mr Dahan being called or cross examined. That was understandable. At the time of the tender of the Jasper/Dahan Affidavit, Mr Dahan and Hennessey were defendants to Mr Kairouz’s counterclaim and an affidavit had been prepared for Mr Dahan by the solicitors for Mr Dahan and Hennessey which dealt with the Misrepresentation Issue (the ‘Dahan affidavit’). A day or so after the tender of the Jasper/Dahan Affidavit, counsel for Mr Kairouz and Mr Dahan advised that the counterclaim against Mr Dahan and Hennessey had been resolved, orders were made dismissing the counterclaim against them with no order as to costs and Mr Dahan’s counsel were excused.
In due course, counsel for Mr Kairouz then called Mr Dahan as a witness and adduced oral evidence in chief from him in relation to the Misrepresentation Issue. After the evidence-in-chief had concluded, on application being made by counsel for Mr Kairouz to cross examine, I accepted that Mr Dahan’s evidence as to the exit representations and his authority to act on behalf of Mr Hopp and Jasper was unfavourable within the meaning of s 38 of the Evidence Act 2008 (Vic) and accordingly, I gave leave to Mr Kairouz’s counsel to cross-examine him as to those matters, followed by cross-examination from counsel for Mr Murdaca and then counsel for Jasper. During the course of cross examination of Mr Dahan, counsel for Jasper tendered the Dahan Affidavit, excluding those parts that set out what had occurred at the various meetings, without objection.
Next, the defendants submit that a basal comparison of the interest rate payable prior to default (ie 0.0%) with that payable in the event of breach (60% per annum and 120% per annum under the LNSA and the AAD respectively) speaks to the proposition that the (or a) predominant purpose of clauses 5.3 and 12 is to punish the borrow upon default and as such compel performance of the primary stipulation. Both rely upon the presumption which arises from the fact that the Overdue Rate payable under clause 5.3 of the LNSA is applicable in the wide array of circumstances set out in clause 13.1 of the LNSA encompassing no less than 40 separate events, ranging from the obvious, a failure to pay (clause 13.1(a)) to more atypical events of default, including 13.1(f), which enlivens the payment of interest of the Overdue Rate in the event of a breach by GME of clause 12.19 of the LNSA, which clause provides:
Global Meat Exports Pty Ltd must:
(a)provide any information, including but not limited to passwords, in order to allow the Security Trustee to effectively exercise its powers as set out in the GME POA;
(b)open, use or allow for funds to be deposited in any account other than a GME account;
(c)not remove, or cause to be removed, Jason Hopp as an authorised signatory of any GME account.
The defendants argue that the breadth of events which engage the Overdue Rate is illustrative of its hair trigger operation, arguing that on no view could a breach of the less serous events of default be causative of any loss to Jasper and/or the Financiers of a kind which required the imposition of a 60% per annum interest rate compounded monthly.
Whilst the defendants accept that they bear the onus of establishing that the relevant provisions are penalties, they argue that in the circumstances of this case, where Jasper has not sought to adduce any evidence justifying the default rate, the onus is not a heavy one and is discharged by pointing to the relevant provisions in the LNSA and AAD themselves.
In support of such submission, they point to a series of decisions in the Supreme Court of New South Wales. Thus in Bay Bon Investments Pty Ltd v Selvarajah (‘Bay Bon Investments’),[76] where the Court upheld as a penalty a default rate of 240% per annum compared with a standard rate of 60% per annum, White J observed:
Whilst I accept that the onus is on the defendant [the borrower] to show that the provision is a penalty, it appears to me that once some evidence is adduced which may be sufficient to satisfy that onus, there is an evidentiary onus on the plaintiff [the lender] to explain the nature of its business, the rates at which it is able to lend, and how, when the contracts were entered into, it would have been anticipated that the moneys would be re-deployed on repayment of the loans. This information was entirely in the plaintiff’s camp. Evidence is to be weighed according to the power of a party to produce it. Where facts are peculiarly within the knowledge of one party, comparatively slight evidence may be sufficient to discharge the onus of proof lying on the opposite party.
[76][2008] NSWSC 1251, [51] (‘Bay Bon Investments’).
In First Cash Flow Solutions Pty Ltd v Saad,[77] Robb J held that a payment default fee was penal and stated:
There may be cases, of which I think the present is one, where the plaintiff must tender the contract upon which it sues in order to make out its case, and the contract itself is then evidence that is capable of establishing a sufficient basis for the Court to find that a particular term is a penalty so as to cast an evidentiary burden on the plaintiff to call evidence to explain why it is not.
[77][2023] NSWSC 686, [56].
Robb J made substantially the same point in concluding that a default rate of 9.75% per 30 days in light of a standard rate of 1.75% per 30 days was a penalty in Bellas v Powers (‘Bellas’):[78]
Consequently, although the burden of proving that a contractual provision is a penalty always remains on the party who makes that claim, which in the context of a loan agreement will generally be the borrower, the lender will need to tender the contract to prove the debt claimed, and the terms of the contract will constitute evidence that may cause an evidentiary onus to shift to the creditor. As the interests that the challenged provision is intended to protect will be the interests of the creditor, and as the information relevant to the need for the creditor to be able to rely upon the provision to protect those interests may be solely within the creditor’s province, the failure of the creditor to lead evidence beyond the contract may have the effect that the presumption operates, notwithstanding its weakness.
[78][2023] NSWSC 1198, [67] (‘Bellas’).
In Bellas, Robb J followed the same approach as followed by Meagher JA in Aquamore Credit Equity Pty Ltd v Hung (‘Aquamore Credit’),[79] where his Honour held that a higher rate of 5% per month payable on default was a penalty and hence unenforceable in circumstances which included a lower rate of 2% per month payable absent default.
[79][2021] NSWSC 1681 (‘Aquamore Credit’).
In the present case, Jasper did not lead any evidence that sought to justify the rates at which the Financiers would have been able to lend or how the moneys could have been redeployed on repayment of the loans.
Whether or not the defendants have discharged the onus then of establishing whether the relevant provisions are penal depends solely on the proper analysis of the clauses in question. Jasper submits that it is artificial to compare the overdue rates of 60% and 120% per annum with the 0% payable under the LNSA and the AAD. Jasper emphasises that the law of penalties is ‘unquestionably concerned with substance, not form’.[80] In the case of the LNSA, it argues that GME received the Discounted Amount of $36,500,000 but was required to pay the Total Face Value Amount of $41,250,000 nine weeks later, arguing therefore that as a as a matter of substance, there was no ‘0.00% interest rate’ applicable for the duration of the nine week loan term and that the cost of borrowing the $36,500,000 for that period was $4,750,000, or approximately 13% of $36,500,000, which is the equivalent of an annual ‘interest rate’ of 75.11% (that is, 13 divided by 9 (weeks) and multiplied by 52 = 75.11).
[80]Fayad v B & G Properties [2022] NSWCA 129, [36] (Leeming JA, with whom Bell CJ and Basten AJA agreed).
Jasper notes that the ‘Overdue Rate’ calculable on the ‘Principal Outstanding’ under clause 5.3 of the LNSA is 60%, per annum, calculated daily and compounded monthly, which equates to an effective annualised (compounded) interest rate of 79.58%.
Accordingly, Jasper argues that the difference between the initial cost of borrowing (75.11%) and the rate following the termination date (79.58%) is only 4.47% per annum, which, expressed in percentage terms, is an increase of approximately 5.95% of the initial rate (ie 4.47 is approximately 5.95% of 75.11 or approximately one seventeenth of the initial rate).
By way of comparison, Jasper notes that an increase from an initial rate of 25% per annum to a 30% rate represents an increase of 20% or one fifth of the initial rate, which, in substance, is no different from an increase from 5% to 6%. In B & G Properties v Fayad (‘B & G Properties’),[81] Bell J described a default interest rate of 30% in light of an initial rate of 25% as ‘plainly … not’ a penalty.[82]
[81][2021] NSWSC 1382 (‘B & G Properties’).
[82]The increase of 5% represented a 20% increase on the initial rate.
Thus, Jasper points to the percentage increase in the present case under the LNSA being significantly lesser (i.e. 5.95%) which percentage increase would, in the case of a 5% per annum rate, result in an increase in rate to a default rate of 5.29%. Thus, the comparison of the overdue rate with that which substantively amounts to the rate prior to default is the mathematical equivalent to an increase from a 5% rate to a rate only of 5.29%, which Jasper submits, by parity of his Honour’s reasoning in B & G Properties, is plainly not a penalty.
Jasper makes substantially the same argument with respect to the AAD, but observes that the effective annualised rate of interest imposed by clause 12 of the AAD is less than, not more than, the initial borrowing costs, such that there is no occasion to compare increased rates at all. That is:
(a) the AAD repayment amount, $2,400,000, represents a tangible $400,000 cost of borrowing, the $2,000,00 ‘additional advance’ for a short term of one month;
(b) the $400,000 cost of borrowing (ie 20% of the advance, loaned for one month) equates to an annualised ‘initial’ rate of 240%; and
(c) in comparison, the default rate calculable on the ‘repayment amount’ under clause 12 is 120% per annum (calculated daily and compounded monthly in accordance with clause 5.3 of the LNSA), and that this equates to an effective annualised (compounded) interest rate of 213.84%, which is demonstrably less than the 240% rate of interest referable to the initial borrowing cost (ie it is a 10.9% decrease on the initial rate).
Jasper illustrates the above calculation and examples by reference to a simple reckoner:
A
(initial rate)B
(default rate)C
(difference)D%
(% increase or decrease of initial rate)eg #1 (LNSA) 75.11 79.58 4.47 5.95% eg #2 5 5.29 0.29 5.95% eg #3 25 30 5 20% eg #4 5 6 1 20% eg #5 (AAD) 240 213.84 -26.16 -10.9%
Jasper’s mode of comparison involves as the initial step in the case of the LNSA, the determination of the effective cost of borrowing $36,500,000 for 12 months based on annualising the effective rate of borrowing that amount over the initial nine weeks; this is the step which produces the equivalent annual rate of 75.11%.
The defendants challenge the appropriateness of this step; they argue that the $4,750,000 is a lump sum figure which compensates Jasper and the Financiers for the costs incurred by them in preparing to lend, such as the fees, costs and time/resource costs in processing the application, loan set up fees commission fees and document preparation fees as well as the Financiers’ desire to make a profit on the short term loan. They submit that the profit margin figure accounts for the fact that the money was only to be deployed for nine weeks and would not be ‘working’ for the rest of the year. In short, they submit that a ‘lump sum’ approach is fundamentally different to a daily interest rate approach and hence the derivation of an annualised equivalent rate.
If simple interest is calculated at the rate of 75.11% per annum for one year on the initial effective advance of $36,500,000, the interest payable is $27,415,150 which results in the amount due at the end of year 1 being $63,915.150. The Overdue Rate is in fact 60% per annum compounded monthly, not 79.58% per annum compounded annually and the period in which it continues is not limited to one year, it continues for as long as there is a default. The 79.58% per annum compounded annually is the equivalent of 60% per annum compounded monthly provided that the comparison is undertaken only for one year. A rate of 79.58% compounded annually over a term of 1 year only is no different to simple interest for one year at the rate of 79.58%. If the amount of interest is calculated at the end of year 1, the interest is $29,046,700 which is not a significant increase in the amount payable upon the application of the effective initial simple interest rate of 75.11 % which results in interest of $27,415,150.
If the analysis is undertaken at the end of year 2, a different picture emerges, because the compounding nature of the provision which arises on default begins to impact. Thus, the interest payable at the end of year 2 by applying an effective annual rate of 79.58% compounded annually on the original effective advance of $36,500,000 is $81,208,763 which equates to a balance outstanding of $117,708,763. Interest of $81,208,763 over two years on a principal of two years equates to an annual simple interest rate of 111.24 %, which is well above the rate which Jasper contends is the effective annualised pre default simple interest rate of 75.11%. If the effective annualised pre default simple interest is applied over a 2 year period, the interest payable is $54,830,300 which is less than half the effective annual rate of 79.58% compounded annually if the default continues to the end of year 2. The differential becomes even greater the longer the period of default.
If the equivalent analysis is undertaken in relation to the AAD a similar picture emerges; according to Jasper the effective annual simple interest rate for the 3 month loan is 240% per annum (by which $2,000,000 is borrowed and $2,400,000 is repayable 1 month later which equates to 240% per annum). Jasper submits that this is higher than the equivalent annual rate compounded annually of 213.84 %, which is true but as is the case with the LNSA, Jasper’s calculation is performed at the end of the first year before any compounding takes effect. Thus the interest payable at the end of year 1 (before compounding) is $5,132,160 which is less than the effective pre default simple interest rate of 240% per annum which equates to $5,760,000. However, if the calculation takes place at the end of year 2 after the compounding has taken place at the end of year 1, the interest is $21,238,930 which dwarfs the equivalent effective pre default simple interest of $11,520,000 (two years simple interest on $2,400,000 at the rate of 240% per annum).
Clause 5.3 of the LNSA and clause 12 of the AAD are susceptible to review as to whether they give rise to penalties because they clearly arise on breach. That being so, the critical question as to whether the provisions in fact amount to a penalty or not is a question of construction to be decided on the terms and inherent circumstances of each contract judged at the time of the making of the contract, not at the time of breach.[83]
[83]See [322] above.
Turning first to the LNSA, the alleged penal aspect of clause 5.3 which requires payment of interest at the Overdue Rate of 60% per annum compounded monthly, must be considered in the context of the LNSA as a whole. The relevant provisions which call for analysis include clause 5.1(a) which provides that ‘the borrower (GME) must pay interest in advance at the Interest Rate (0.00%) on the Principal Outstanding (being the Total Face Value Amount of $41,250,000) and any other amount which is owing to the Financier’; clause 6.1 which requires the borrower (GME) to repay each Loan Note (at its Face Value of $41,250,000) and all other Secured Money which fall due on the Termination Date (nine weeks after the date of the agreement) and otherwise as required under the Agreement. The latter requirement to repay the Loan Note at its Face Value and all other Secured Moneys ‘otherwise as required under the Agreement’ could arise in the event that Event of Default occurred within the meaning of clause 13.1, which included a failure to pay an amount when due (such as the Face Value of the Notes on the Termination Date) provided the Event of Default was subsisting, provided that the Agent (Jasper Group) inter alia declared that the Secured Moneys are immediately due and payable, and the Finance Documents are immediately enforceable (see clause 13.2).
Further, by clause 14.1, each guarantor guaranteed to each Financier punctual performance by each Obligor (which included GME) of all that Obligor’s obligations under the Finance Documents and under clause 14.2, each guarantor indemnified each Finance Party against any loss which arose inter alia because of an obligor (including GME) failing or being unable to pay the Secured Money on time, or observe or perform its obligation under a Finance Document to which it is party on time. The Finance Documents included first ranking mortgage securities over the Brooklyn Property and the Footscray Property and a GSA over the assets and undertaking of the Cedar Meats business.
Thus, the terms of the LNSA, aside from clause 5.3, give rise to a series of consequences or potential consequences arising from an Event of Default whilst that event subsists. The prospect of those consequences, including the taking of steps to enforce the securities which form part of the Finance Documents to call on the guarantee or the indemnity provided by the guarantors undoubtedly constituted an incentive for the borrower and guarantors to avoid, if possible, the happening of any event of default, including that which arises on the failure to pay the Face Value of the Notes on the Termination Date.
In that context, what purpose is served by clause 5.3?[84] Or to restate the question in a slightly different but relevantly analogous way, what interest is sought to be protected by clause 5.3?[85]
[84]See the judgment of Lords Neuberger and Sumption in Cavendish Square Holding BV v Makdessi [2016] AC 1172, [28].
[85]See the judgment of Ward JA in Australian Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99, [368], quoted with approval by Robb J in Bellas v Powers.
When Meagher JA asked that question in Aquamore Credit, he framed the inquiry as one which involved determining the purpose of a provision which ‘doubles an already substantial interest rate upon the happening of any event of default, whether serious or otherwise and provides that interest at that rate be paid only whilst the relevant event subsists’.
Having posed the question in that way, his Honour reasoned as follows:[86]
It may be taken as not controversial that the lower interest rate charged by the Financier at the commencement of the loan reflected what the parties regarded as a commercial acceptable interest rate having regard to the Financier’s then assessment of the borrower’s credit risk, and the nature of the finance as short term lending for the purpose of property development. The effect of clause 7.1 was to double that rate to one which could not have been proffered at the commencement of the loan as a genuine pre-estimate of the or an interest rate which would have taken account of the increased credit risk that the borrower in default would have represented on the happening of any one of the events of default. First, it was not possible, at the time the agreement was made, to make other than a very conservative estimate because of the many different events which could constitute the occurrence of the Event of Default. Secondly, the effect of clause 7.1 is not to increase the underlying interest rate for the balance of a loan period on the basis of an increase in the credit risk represented by the borrower. If clause 7.1 had been intended to have that outcome, it would have provided for the higher Rate to apply during the remaining term. Thirdly, an increase from 30% to 60% per annum imposed an interest rate which on the face of it was out of proportion to any increased credit risk that the Borrower was likely to represent on the happening of any Event of Default.
On the other hand it was plainly in the Financier’s interest to discourage any actions or inactions on the part of the Borrower and the guarantors that might result in an increased credit risk. In circumstances where the Financier had not imposed any express obligation on the Borrower to prevent the occurrence of Events of Default, the effect and purpose of cl 7.1 becomes clear. It was to discourage any action or inaction which might result in an Event of Default and did so by the imposition of a sufficiently exorbitant interest rate to have that consequence.
[86]Aquamore Credit (n 79) [142]-[143].
His Honour contrasted the circumstances before him with those addressed by Coleman J in Lordsvale Finance PLC v Bank of Zambia (‘Lordsvale Finance’),[87] in which case the bank’s funding facility provided that where there was default in payment of any sum due under the facility, interest was payable from the date of the default until the facility was repaid in full at a ‘default rate’, which was to be 1% above the applicable rate. In that case, Coleman J observed:[88]
[87][1996] QB 752 (‘Lordsvale Finance’).
[88]Ibid 763; Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525, [263] (Keane J) (‘Paciocco’).
... the borrower in default is not the same credit risk as the prospective borrower with whom the loan agreement was first negotiated. … Merely for the pre-existing rate of interest to continue to accrue on the outstanding amount of the debt would not reflect that the borrower no longer has a clean record. Given that money is more expensive for a less good credit risk than for a good credit risk, there would in principle seem to be no reason to deduce that a small rateable increase in interest charged prospectively upon default would have the dominant purpose of deterring default …
And concluded at 767:
If the increased rate of interest applies only from the date of default or thereafter, there is no justification for striking down as a penalty a term providing for a modest increase in the rate. I say nothing about exceptionally large increases. In such cases it may be possible to deduce that the dominant function is in terrorem the borrower. But nobody could seriously suggest that a 1% rate increase could be so. It is ... consistent only with an increase in the consideration for the loan by reason of the increased credit risk represented by a borrower in default.
Meagher JA, in Aquamore Credit, considered that in respect of the agreement before him, there was good reason to deduce that the only purpose of doubling a rate of interest charged whilst a default subsisted was to secure as far as possible that there would be no event of default and that if there were, it would be remedied so far as possible. The means by which the lender sought to achieve that purpose was by the imposition of such a substantial detriment on the borrower, which could not be justified in any other way such as by reference to the enhanced credit risk.
As noted by McDougall J in Arab Bank, where his Honour quoted extensively and approvingly from the majority judgements in Paciocco v Australia and New Zealand Banking Group Ltd (‘Paciocco’); the essence of a penalty is that it is a collateral stipulation, the (or a predominant) purpose of which is to punish the borrower for breach and thus to compel performance.[89] One way in which to test whether the purpose of the impugned provision is to punish is to ask whether it is extravagant or out of proportion or unconscionable in comparison with the maximum amount of damage that might be anticipated to follow from the breach. It is in the context of that exercise that courts have compared the pre default rate of interest with the default rate of interest contained in loan agreements, and after taking account of inter alia the extent of the differential and the period in which the default rate may apply, determined whether the clause imposing the higher rate is penal or not. Thus, it was so found in Bay Bon Investments, Aquamore Credit and Bellas but not in Arab Bank, B & G Properties, or Lordsvale Finance.
[89]See [322] above; Paciocco (n 88) [29] (Kiefel J); [127], [159], [166] (Gageler J); [254], [259], [273], (Keane J).
Against the background of such an approach, it is understandable that Jasper concentrated much of its submission on the comparison between what it contended was an annualised pre-default rate and its alleged equivalent default rate, whilst the defendants concentrated their submissions on the inaptness of seeking to determine an annualised pre-default rate. There are difficulties with the approaches of both Jasper and the defendants. In the case of the defendants, the assertion that the lump sum in effect represents a recoupment of the lender’s costs plus a high profit component for a short term loan fails to pay regard to the fact that the LNSA provided for the costs of Jasper and the Financiers to be paid by the borrower and the LNSA provided for the payment of an Establishment Fee of $412,500 with its payment being effected by part of the Discounted Amount being held back for that purpose. The assertion that the money would otherwise lie idle apart from during the loan period is also speculative. Moreover, the characterisation is one viewed solely from the viewpoint of the lender when in fact regardless of the use to which the lender would put the lump sum, the inescapable fact is that the price charged to the borrower for use of $36,500,000 for a nine week period, was $4,750,000. Jasper’s approach is also somewhat problematic, particularly insofar as the relevance of the comparison it seeks to rely on is largely dependent on a calculation which stops at the end of the first year, whereas the Overdue Rate continues for as long as the default is subsisting. Given the structure of the LNSA and the AAD, such an approach presents difficulties both as to the appropriateness of calculating a pre-default rate and then the validity of the comparison with the default rate, particularly in light of the complications which arise from compounding in the default rate which are not present in the pre-default rate.
The understandable but contested nature of the different approaches, should not obscure that the critical question is whether the (or a) predominant purpose of the impugned provision is to punish the borrower for breach and thereby compel performance.
In the present case, if this question is kept at the forefront of the analysis, then the answer presents itself more clearly. As was the case in Aquamore Credit, there was a range of incentives in the LNSA for the borrower to ensure that there was no Event of Default; ensuring that there was no default under the mortgages of the properties in which GME carried on its business, or the guarantees were called upon to name but a few. In that context, it is not easy to see why the obligation to pay interest at the Overdue Rate, would be so burdensome as to compel performance in light of the other factors which incentivised performance.
But there is another purpose for the imposition of the Overdue Rate which can be inferred from reading the LNSA (and AAD) as a whole. As noted above, GME received $36,500,000 and nine weeks later had to pay $41,250,000. Because this was the structure of the LNSA, the Interest Rate was specified at 0.00%. Importantly, but for the impugned clause 5.3, clause 5.1 continues to have operation which means that after the Termination Date, when $41,250,000 becomes payable, the $41,250,000 carries an interest rate of 0.00%. Clause 5.3 serves the purpose of ensuring that after the Termination Date, the $41,250,000, if unpaid, earned interest under the LNSA as opposed to earning 0.00% interest. It is no answer to say that the lender may have been able to sue for damages or be entitled to interest under the Supreme Court Act 1958 (Vic). The borrower, or here the defendants, bear the onus of establishing that the, or a, predominant purpose of clause 5.3 was to punish the defendants, and thereby secure compliance with the primary obligations to pay at the Termination Date or ensure that there was no unremedied Event of Default. This is not a case, unlike Bay Bon Investments, Aquamore Credit and Bellas, where the lender had both a suite of other remedies available in the event of default, as well as the contractual right to continue to derive interest under the loan agreement.
Whilst it is true that the Financiers did not derive interest prior to the Termination Date, hence the specification of the Interest Rate at 0.00%, the Financiers did anticipate obtain a return for providing the $36,500,000 of $4,750,000 at the end of the nine week period. From the perspective of the borrower, this represented the price or cost in obtaining access to and use of the $36,500,000 for the nine week period. As Jasper’s calculations set out above provided, this cost represented an annualised equivalent simple interest rate of 75.11%.
However, having been required to pay that price for the nine weeks between the date of the Agreement and the Termination Date, the borrower would, absent a clause such as clause 5.3, thereafter obtain free use of the money until the Secured Moneys were payable in full. Clause 5.3 prevents this; without it, paradoxically, the cost of finance to the borrower lessened after default.
The fact that the Overdue Rate also becomes payable in the event that various matters constating an Event of Default arise and only when the default subsists does not warrant any different conclusion. Whilst the defendants appropriately sought to rely on the presumption that a clause which applies in such circumstances is penal because the consequence arises on the occurrence of one or more or all of several events, some of which may occasion and others but trifling damage, the strength of the presumption, described by Keane J in Paciocco at [265] as a weak one, nevertheless pales into insignificance in the present context, where there is another purpose for the imposition of the rate after the Termination Date.
The same analysis applies with respect to clause 12 of the AAD, arguably with even stronger force, because in the case of the AAD, the only relevant event which gave rise to the imposition of default interest being charged at a rate of 120% per annum was the failure to repay the facility by the Expiry Time.
If the LNSA and the AAD are construed as a whole, the defendants are not able to establish that a, or the predominant purpose of clauses 5.3 and 12 is to punish them for a default; there are other clauses which become operative on default which have significant consequences whilst clauses 5.3 and 12 simply ensure that the Financiers derive interest under the agreements after the Repayment Date and Expiry Date in the event that the amounts due to be paid are not paid.
Whilst the rates payable are undoubtedly high, particularly having regard to the effect of the amount of interest being compounded monthly, it is tolerably clear on the evidence that the request for finance of the magnitude which subsequently were provided under the LNSA and the AAD were perceived as extremely high risk loans. The borrower, GME, as well as its parent, AustAgri, both had separate legal advice at the time the loans were entered into, as did the Kairouz family as a significant stakeholder, and the evidence pointed to a series of prior difficulties in seeking to obtain finance that would have facilitated the completion of the Cedar Meats acquisition. Those attempts among other things, included an unsuccessful attempt to procure finance from another private lender, Manda Capital. As Mr Dahan said in his evidence, lenders whose funds were made available by people such as Mr Hopp are the type of lenders that borrowers seek out when no-one else is prepared to lend them money.
Each of the parties to these arrangements were persons of considerable commercial sophistication and had no shortage of legal advice, or access to legal advice. As well advised, sophisticated and apparently rational actors, it stands to reason that the terms on offer in the LNSA and the AAD were the best terms that could be obtained by the borrower in the circumstances in which it was seeking the finance and, as such, should be regarded as representing market rates.
The observation of McDougall J in Arab Bank is salient:[90]
… One is that, within the confines of statutory encroachment, the doctrine of freedom of contract remains important. See Keane J in Paciocco at [220]. The contracts in this case were made between parties who, it may be assumed, were capable of understanding and protecting their respective interests. Those parties chose to provide for a default interest regime, and chose to make the Bank’s various rights on default discretionary. They did not stipulate for any requirement that those rights be exhausted before the default interest rate could be applied.
Of course, the penalty doctrine is an exception to freedom of contract. That was recognised in Paciocco. But its very existence as an exception was seen to underline the need for, not mere disproportion, but extravagant or unconscionable disproportion, before it could be concluded that a particular stipulation was punitive, or penal, in character.
[90]Arab Bank (n 73) [104]-[105] (McDougall J).
Further, as Ball J stated in B&G Properties,[91] which summary was approved on appeal in Fayad v B&G Properties,[92] when applying the penalty doctrine, ‘courts will not likely invalidate a contractual provision for an agreed payment on the ground that it has the character of punishment’.
[91]B & G Properties (n 81) [28]-[29].
[92][2022] NSWCA 129, [33] (Leeming JA with whom Bell CJ and Basten AJA agreed).
Translated to the instant case, the LNSA and the AAD were contracts made between parties who were capable of understanding and protecting their respective interests. They chose to provide for a regime as set out in the LNSA and the AAD which provided for a 0.00% interest rate to be applicable during the term of the loans, and for the amount required to be repaid at the end of the loan to be greater than the amount originally borrowed. The parties then chose to enter into agreements to provide for a regime where interest would be payable in the event that the loans were not repaid, or otherwise fell into default at high rates of interest, compounded monthly. At the time the parties entered into the agreements, the circumstances in which the default might arise was varied but given the short term nature of the two loans and the absence of other payment obligations during the term, was most likely to involve the failure to pay the Face Value of the Notes (in the case of the LNSA) or the Repayment Amount under the AAD on the Termination Date or by the Expiry Time respectively. In the event of a failure to do so, the period of default may have subsisted for a short or long time. The fact that the longer the period of default, the greater the compounding effect does not make the Overdue Rates penal; there is nothing per se penal about compounding interest; ‘the requirement to pay interest on interest compensates a creditor for the fact that the creditor is out of pocket for the interest and consequently is unable to invest that interest in other profit-making investments.’[93]
[93]B & G Properties (n 81) [31].
In my view, the clauses are not penal, and hence are not invalid.
Jasper also submitted (albeit faintly) that because the primary borrower, GME, asserted that the default interest provisions in the LNSA and the AAD were unenforceable penalties and then abandoned its claim when it entered into the moratorium deed on 24 March 2023, the guarantors, Mr Kairouz and Mr Murdaca, were prevented from resisting the claims made against them by the finance parties under the LNSA.
In its written submission Jasper observed that this argument presented an interesting question (but which, it is not necessary to decide) because of its anterior submission that the Overdue Rate did not impose any penalty at all.
To the extent to which the matter does have to be decided, I reject the submission. Simply because GME, for its own reasons, chose not to press the argument does not disentitle the guarantors from seeking to have the question determined in this proceeding.
Conclusion
Mr Kairouz and Mr Murdaca are liable as guarantors under the LNSA for the amount repayable by the primary borrower, GME, at the Termination Date and Expiry Date respectively under the LNSA and the AAD, together with interest payable under those agreements.
As at 9 October 2023, the amount owing was $129,075,873.99.
In an email sent to the Court on 27 November 2023, the solicitors for Jasper, with the consent of the solicitors for Mr Kairouz, advised the Court that settlement occurred on 23 November 2023 in respect of the sale of one of the security properties, resulting in a net amount recovered by Jasper of $535,997.94.
The amount owing as at 9 October 2023 will have to updated to the date of judgment and to take account of the sale of the security property.
I will hear from the parties as to the sum owing and otherwise as to costs. The counterclaims of Mr Kairouz and Mr Murdaca will be dismissed.
SCHEDULE OF PARTIES
JASPER NOMINEES LIMITED (SEYCHELLES COMPANY NUMBER 224 224)
Plaintiff/First Defendant by First Counterclaim and Second Counterclaim
PIERRE KAIROUZ
First Defendant/Plaintiff by Second Counterclaim
ANTONIO MURDACA
Second Defendant/Plaintiff by First Counterclaim
JASON HOPP
Second Defendant by Second Counterclaim
SANTINI GROUP PTY LTD (ACN 629 438 857)
Third Defendant by Second Counterclaim
JACK DAHAN
Fourth Defendant by Second Counterclaim
HENNESSEY CAPITAL PARTNERS PTY LTD (ACN 063 732 025)
Fifth Defendant by Second Counterclaim
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