Mark Simon Laszczuk v Bendigo & Adelaide Bank Ltd (ACN 068 049 178)

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0108

MARK SIMON LASZCZUK	Applicant
v
BENDIGO & ADELAIDE BANK LTD (ACN 068 049 178)	Respondent

S APCI 2018 0109

TIFFANY MICHELLE CAIRNCROSS	Applicant
v
BENDIGO & ADELAIDE BANK LTD (ACN 068 049 178)	Respondent

S APCI 2018 0115

MD MONIRUL HAQUE	Applicant
v
BENDIGO & ADELAIDE BANK LTD (ACN 068 049 178)	First Respondent
And
ABL NOMINEES PTY LTD IN ITS CAPACITY AS TRUSTEE FOR THE LIGHTHOUSE TRUST NO 12 (ACN 106 756 521)	Second Respondent

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JUDGES:	WHELAN, HARGRAVE and EMERTON JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	12, 13 February, 7 May (Directions), 26 August (Directions) and 27 November 2019
DATE OF JUDGMENT:	14 February 2020
MEDIUM NEUTRAL CITATION:	[2020] VSCA 17 First Revision: 20 February 2020
JUDGMENT APPEALED FROM:	[2018] VSC 388 (Croft J), [2018] VSC 406 (Croft J)

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APPEAL – PROCEDURE – Group proceeding – Approved deed of settlement – Group members acknowledge validity and enforceability of loan deeds – Debt recovery action by respondent bank – Applicant Haque does not admit group membership – Summary enforcement of deed of settlement – ‘Trial’ of group membership and summary enforcement of deed of settlement – Whether procedure consistent with authority – Whether summary procedure appropriate – Application for leave to appeal granted – Appeal allowed – Remitted for trial – Bendigo & Adelaide Bank Ltd v DY Logistics Pty Ltd [2018] VSC 558, Burkett v Bendigo & Adelaide Bank Ltd [No 2] [2018] VSC 723 referred to – Barratt v Rees [2014] VSCA 327 applied.

APPEAL – Group proceeding – Approved deed of settlement – Group members acknowledge validity and enforceability of loan deeds – Debt recovery action by respondent bank – Applicants Laszczuk and Cairncross admit group membership – Deed of settlement precludes defences sought to be relied upon – Leave to appeal granted – Appeal dismissed – Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214, Bendigo & Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd [2017] VSCA 51 applied.

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APPEARANCES:	Counsel	Solicitors
For the Applicants in S APCI 2018 0108 and S APCI 2018 0109	Mr Q A Rares with Mr S Ivantsoff (solicitor)	Lewis & Weir
For the Applicant in S APCI 2018 0115	Mr B Petrie	Rigby Cooke
For the Respondents	Ms P Neskovcin SC with Ms F Gordon and Mr D C Gration	Allens in S APCI 2018 0108 and S APCI 2018 0109 Turks Legal in S APCI 2018 0115

WHELAN JA
HARGRAVE JA
EMERTON JA:

On 16 May 2009 voluntary administrators were appointed to a publicly listed company named Great Southern Limited (‘GSL’), and to its subsidiaries which included Great Southern Managers Australia Limited (‘GSMAL’) and Great Southern Finance Pty Ltd (‘GSF’). A few days later, on 19 May 2009, receivers and managers were appointed by a syndicate of secured lenders. The companies were placed into liquidation in November 2009.

GSL and its subsidiaries (‘the Great Southern group’) had conducted a business of establishing, marketing, and managing forestry and agricultural managed investment schemes. GSMAL was the responsible entity for a number of these schemes. Finance was provided to investors in the schemes by, or through, GSF, and the group undertook securitisation of those finance arrangements which involved Bendigo and Adelaide Bank Limited (‘BABL’) and its related entities, ABL Custodian Services Pty Ltd (‘ABLC’), ABL Nominees Pty Ltd (‘ABLN’) and Adelaide Bank Limited (‘ABL’) (now named Pirie Street Holdings Pty Ltd).

Each managed investment scheme was the subject of a product disclosure statement (‘PDS’). An investor could apply to invest in a managed investment scheme by completing an application form in the PDS. There was a limited ‘interest free’ finance option (which is not presently relevant), but if the investor sought long term finance, the investor would also complete an application for term finance form. The relevant arrangements were structured in such a way that the investor’s signature to the application form, and, where applicable, the application for term finance form, would authorise the creation of contractual agreements regulating the investment and the finance provided in relation to it, and in particular would authorise entry into a loan deed on the investor’s behalf. The efficacy of those arrangements is a central issue in these applications.

Each PDS contained information relevant to a commercial assessment of the proposed investment. One aspect of that assessment was the viability of the particular forestry or agricultural undertaking. Another relevant aspect was the tax consequences for the investor of the proposed investment. The investments were designed to be ‘tax effective’. Typically, a substantial number of applications were made shortly prior to 30 June.

Consequent upon the collapse of the Great Southern group, a large number of legal proceedings were instituted. Sixteen group proceedings, and certain related non-group proceedings, concerning the Great Southern managed investments schemes were the subject of a trial before Croft J in the Trial Division of this Court over 90 sitting days from October 2012 to October 2013. In substance, that trial concerned allegations that relevant PDSs had contained misleading statements and/or omissions related to the commercial viability of the relevant investments. Amongst those sixteen group proceedings were group proceeding SCI 2011 04862, concerning what may be referred to as the 2007 Wine Grape Scheme, in relation to which the applicants Mark Laszczuk and Tiffany Cairncross are alleged to have been group members; and group proceedings SCI 2011 04476 and SCI 2011 03513 concerning what may be referred to as the 2007 Plantation Scheme and the 2008 Almond Scheme, in relation to which the applicant MD Monirul Haque is alleged to have been a group member.[1]
[1]For ease of reference we hereafter refer to the applicants solely by their surnames.

In July 2014 the Court advised the parties to the trial before Croft J that judgment was to be delivered on 25 July 2014. Shortly after being so advised, the parties informed the Court that the proceedings had been settled. Croft J heard an application for approval of a settlement on the terms contained in a deed of settlement executed on 23 July 2014 (‘the deed of settlement’) in November 2014, and delivered a judgment approving that settlement on 11 December 2014.[2] He annexed to the judgment approving the settlement, the judgment which he would have published had the proceedings not settled. Had the proceedings not settled, Croft J would have delivered a judgment dismissing all of the plaintiffs’ claims. In the course of the Approval Reasons, Croft J stated that it was ‘quite clear’ that the enforceability of loan deeds entered into by investors had been ‘at the very heart’ of the group proceedings.[3]
[2][2014] VSC 516 (‘Approval Reasons’).
[3]Ibid [91].

The orders made by Croft J on 11 December 2014 were, relevantly, as follows:

1.Settlement of the Group Proceedings in the terms contained in the deed of settlement executed by the parties on 23 July 2014 … is approved pursuant to section 33V(1) of the Supreme Court Act 1986.
2.The plaintiffs in the Group Proceedings have the authority of the ‘Group Members’ (as that term is defined in each of the Group Proceedings), nunc pro tunc, to enter into and give effect to the deed of settlement and the transactions contemplated thereby for and on behalf of the Group Members.

Consequent upon the settlement, BABL and its related entities, and another financer, Javelin Asset Management Pty Ltd (‘Javelin’), began, or resumed, proceedings to recover loans made to investors. There have been a number of relevant judgments in those proceedings in this Court, in the Trial Division, and elsewhere. It will be necessary to review some of those judgments. Relevant features of those proceedings include a reliance on the financiers’ part on the summary enforcement of the deed of settlement, invoking the procedure described by this Court in Barratt v Rees;[4] and a focus on the borrowers’ part upon attempts to avoid the effect of the deed of settlement upon their individual cases, and attacks upon the validity and efficacy of loan deeds purportedly created in reliance upon the application forms and the application for term finance forms signed by the investors.
[4][2014] VSCA 327.

Barratt v Rees applications

Amongst the loan recovery proceedings begun or resumed after the settlement approval were proceedings brought in the Trial Division of this Court by BABL against Laszczuk, Cairncross and Haque.

On 10 August 2018 Croft J gave judgment in favour of BABL against Laszczuk and Cairncross.[5] BABL obtained that judgment on the basis of an application to give effect to the deed of settlement, invoking the procedure described by this Court in Barratt v Rees.[6]
[5]Bendigo & Adelaide Bank Ltd v Laszczuk [2018] VSC 388 (‘Laszczuk and Cairncross’).
[6]Ibid [13].

On the same day, in a separate judgment, Croft J gave judgment in favour of BABL against Haque,[7] also pursuant to an application for judgment to give effect to the deed of settlement by BABL as described by this Court in Barratt v Rees.[8] BABL contends that this hearing was also a trial on certain issues.
[7]Bendigo & Adelaide Bank Ltd v Haque [2018] VSC 406 (‘Haque’).
[8]Ibid [6].

In Barratt v Rees this Court described the relevant application by adopting the analysis of Smith J in the decision of the Full Court in Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd.[9] This Court said:
[9][1956] VLR 555 (‘Roberts’).

The summary procedure to enforce terms of settlement was described in detail by Smith J in Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd. His Honour identified ‘certain rather vaguely defined rules of practice’, including:
(a)The Court would ordinarily leave a party to proceed by separate bill if the agreement involved matters extraneous to the suit compromised. And it regarded an agreement as falling within this general category, (i) if it dealt with property as to which no question was raised in the suit, or (ii) if it provided for things to be done which went beyond the ordinary range of what the Court would order in such a suit, or (iii) if its enforcement involved giving effect to equities of a different nature from those involved in the suit, or (iv) if there were parties to the agreement who were not parties to the suit.
(b)On the other hand in cases not falling within this first general category the Court would ordinarily enforce the agreement in the suit compromised. In particular this was so if the agreement related solely to the conduct or prosecution of that suit, or to the staying or dismissal thereof, or to the granting of the whole or part of the relief claimed therein or to the doing of that which the suit was brought to enforce.
(c)For the purpose of deciding which of these two general categories a case fell within, the Court did not look merely at the particular obligations sought to be enforced. It looked also at the obligations of the applicant, so far as justice required that the application should not be granted without ensuring that they too would be performed. But it would disregard altogether obligations already fully performed. It may be observed that in order to ensure the performance of obligations by the applicant the Court could make an order conditional upon such performance.
(d)If there was a substantial question to be determined as to what were the terms of the agreement, or as to whether it was valid or specifically enforceable, as for example where a substantial case was put forward of material mistake or of other circumstances such as would afford a defence to a suit for specific performance, a party would ordinarily be left to proceed by separate bill so that the matters raised might be fully investigated.
(e)The fact that the only outstanding obligation under the agreement of compromise was one for the payment of an ascertained sum of money did not preclude the Court from enforcing the agreement in the suit. ...

His Honour also stated:
In deciding whether justice can be done under the summary procedure the Court, of course, needs to consider a variety of matters involving questions of degree. These, I think, must include the extent to which extraneous matters are involved, how substantial are the questions to be determined, to what extent questions of credibility are likely to arise, and whether pleadings and discovery may be desirable.

The authorities were also considered in Seachange Management Pty Ltd v Pital Business Pty Ltd, where Maxwell P and Nettle JA stated:
In summary, therefore, the net effect of the authorities to this point seems to be that, although the power summarily to enforce a compromise is discretionary and is wider now than once was the case, it is not to be invoked unless the court is ‘clearly satisfied that justice can be done’; and whether justice can be done is a question of degree. Consistently with the equitable origins of the power, one must weigh among other competing considerations the extent to which enforcement would involve extraneous matters, how substantial the questions to be determined as a precursor to enforcement may be, and procedural considerations like the desirability of pleadings and discovery and substantial cross-examination.

Their Honours accepted that the decision whether to allow the use of the summary procedure involved the exercise of a discretion. The mere fact that the appeal court might take a different view from that of the judge below is not a ground of appellate intervention.[10]

[10]Barratt v Rees [2014] VSCA 327, [12]–[15] (citations omitted).

Thus, when determining whether the Barratt v Rees procedure is appropriate in a particular case the issue is whether the Court is clearly satisfied that justice can be done on a summary application, as opposed to requiring the matter to be determined after the usual interlocutory steps, including pleadings and discovery, and the usual trial process, including cross-examination, have been undertaken. In assessing this issue it will be relevant to take into account the extent to which issues outside the ambit of the compromised proceeding are raised, how substantial are any issues which need to be determined before summary enforcement might be granted, and the desirability in the particular case of the usual interlocutory and trial procedures.

Smith J in Roberts characterised the relevant dichotomy as being between enforcement ‘in the suit compromised’, that is, summarily; and proceeding ‘by separate bill’, that is, after the usual interlocutory steps and a trial. The applications here were made by BABL in separate proceedings, not in the proceedings compromised. Haque contends that that cannot be done.

The issues now before this Court

The central issues on these applications are the efficacy of the arrangements pursuant to which the loan deeds were created, the effect on the applicants of the deed of settlement, and whether the Barratt v Rees procedure was properly invoked in these cases. We earlier referred to Croft J’s statement in the Approval Reasons that enforceability of the loan deeds was at the very heart of the group proceedings. That is so. The relief sought in the group proceedings included declarations that the loan deeds were void and unenforceable and orders that money paid under the loan deeds be repaid.[11] But the grounds upon which the validity and enforceability of the loan deeds was contested in the group proceedings were different to the grounds now sought to be relied upon.
[11]Approval Reasons [88].

Before addressing these issues in the applications now before the Court, it is necessary to set out the relevant terms of the deed of settlement; to give a brief overview of how the loan deeds were created; to address the terms and effect of the loan deeds; and to then review the relevant debt recovery judgments which have been delivered, including those against the applicants.

The deed of settlement

For the purposes of these applications the deed of settlement has two key provisions.

The first is clause 4.1.4. It provides:

The Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs’ Loan Deeds and the Group Members’ Loan Deeds.

The ‘Lead Plaintiffs’ are the named individuals who commenced the sixteen group proceedings which were the subject of the trial before Croft J. The ‘Group Members’ are defined as follows:

‘Group Members’ means each person or entity falling within the definition of a group member in any one or more of the Group Proceedings and who has not opted out of the Group Proceeding.

As previously indicated, amongst the ‘Group Proceedings’, being the 16 group proceedings the subject of the trial before Croft J, was a group proceeding (S CI 2011 04862) as to which it is alleged that Laszczuk and Cairncross were group members, and two group proceedings (S CI 2011 04476 and S CI 2011 03513) as to which it is alleged that Haque was a group member.

The ‘Loan Deeds’, the validity and enforceability of which is acknowledged and admitted by clause 4.1.4, are relevantly defined as follows:

‘Loan Deeds’ means the Loan Agreements the subject of the Group Proceedings … entered into between:
(a)the Lead Plaintiffs, Group Members … and GSF, which were subsequently assigned by GSF to one or more of the BEN Parties … or
(b)the Lead Plaintiffs, Group Members … and ABL Nominees Pty Ltd, which were subsequently assigned by ABL Nominees to one or more of the BEN Parties.

The BEN Parties are BABL, ABLC, ABLN and ABL.

The term ‘Loan Agreements’ is relevantly defined as follows:

‘Loan Agreements’ means the loan agreements under which monies were advanced to Scheme Members to finance their interest in managed investment schemes of which GSMAL … is or was the responsible entity.

The second key provision is clause 4.1.10 which provides:

The Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members release the BEN Parties and their Related Entities … from all Claims.

A ‘Claim’ is defined as follows:

‘Claim’ means any claim, demand, action, suit or proceeding for damages, debt, restitution, equitable compensation, account, injunctive relief, specific performance, declaratory relief or any other remedy, whether by original claim, cross-claim, claim for contribution or otherwise whether presently known or unknown and whether arising at common law, in equity, under statute or otherwise and whether involving a third party or party to this Agreement and all liabilities, losses, damages, costs (including legal costs on a full indemnity basis), interest, fees, and penalties of whatever description (whether actual, contingent or prospective) arising out of, or in connection with the contents of or the facts giving rise to, the PDSs, the Loan Agreements and or the allegations made in or the facts giving rise to each of the Proceedings.

Brief overview of loan deed creation

The Great Southern managed investment schemes were designed in such a way that an investor, by signing an application form and (where applicable) an application for term finance form, appointed designated corporations and persons as their attorneys to execute agreements on their behalf, including (where applicable) a loan deed. The arrangements in relation to execution of the loan deeds were not completely uniform, but for present purposes the Cairncross arrangements might serve as an example.

The Cairncross arrangements were as follows:

·Cairncross signed an application for term finance form dated 6 June 2007. The form sought a loan of $340,657 for a term of 10 years.
·Immediately above Cairncross’ signature on the form were a number of statements, including two which (relevantly) read:
I/We:
…
•apply for term finance from either Great Southern Finance Pty Limited (GSF) or ABL Nominees Pty Ltd (ABL) with the lender to be determined in GSF’s discretion;
…
•hereby grant the power of attorney as set out in part 7.

·Part 7 was headed ‘Power of Attorney’ and relevantly provided:
(a)By signing this finance application, the Borrower and the Guarantor (if any) (Appointor) agree to appoint:
(i)where Great Southern Finance Pty Ltd (GSF) is the lender under the proposed loan, GSF and each director, company secretary and attorney of GSF, jointly and severally; or
(ii)where ABL Nominees Pty Ltd (ABL) is the lender under the proposed loan, each of ABL and GSF and each director, company secretary and attorney of ABL or GSF, jointly and severally, to be attorney for the Appointor (Attorney) on the terms specified herein and to exercise the powers as follows;
(iii)to enter into and execute a loan deed or loan deeds in the form attached to this finance application (Loan Deed) on behalf of the Appointor.

…
(h)The Power of Attorney is executed as a deed.

·A document headed ‘Term of Loan Deed — Term Finance’ was attached to the form. It contained a section designating the parties, a section with recitals, a section with terms numbered 1 to 33, a schedule with blank details, and a section for execution. The section which designated the parties named GSF or ABLN as lender with a bracketed instruction — ‘delete as applicable’.
·The first page of the form was headed ‘Checklist for applicants’ and contained a passage which read:
SECTION 7 POWER OF ATTORNEY AND SIGNATURE
The applicants and guarantors are not required to sign the loan deed attached to this application (and other documents connected with, or related to, the loan deed) as the loan deed will be completed and signed by the lender (or the lender’s attorney) as attorney for the applicants and guarantors pursuant to Section 7 of this application.
·Cairncross’ loan deed was dated 15 June 2007, and was executed, or purportedly executed, by two ‘duly appointed attorneys’ of ABLN as the ‘Lender’. The bracketed instruction in the section designating the parties was not complied with, in that neither GSF nor ABLN was deleted.
·The loan deed was executed, or purportedly executed, by Cairncross by her ‘duly appointed attorney’ GSF ‘in accordance with section 127 of the Corporations Act 2001’. That execution was constituted, or purportedly constituted, by signatures of John Carlton Young as director and Cameron Arthur Rhodes as secretary. Those signatures were not personally signed, instead facsimiles of their signatures were affixed.

Relevant provisions and effect of the loan deeds

Continuing to use Cairncross as an example, the loan deed contained the following recitals:

A.GSMAL has established the Projects in accordance with the relevant Product Disclosure Statement relating to each Project.
B.The Borrower has decided to participate in each Project specified in item 2 of the Schedule and to carry on the relevant Business.
C.The Lender will finance a portion of the Borrower’s interest in each Project on the terms and conditions set out in this document.

Clause 2 provided:

PROVISION OF FACILITY
(a)The parties agree that the Lender will lend the Funds to the Borrower at the date on which the Fees are payable as specified in item 5 of the Schedule. The Funds may be advanced in more than one tranche on different dates to make the Borrower’s payment obligations in respect of participation in the Project.
(b)The Borrower irrevocably directs the Lender to advance the Funds by satisfying on the due date:
(1)the loan establishment fee included in the Costs and Expenses; and
(2)the Fees payable under the Agreement or a portion of them equal to the balance of the Funds after the payment of the Costs and Expenses specified in subclause (1) above.

(c)The Funds are provided on the terms and conditions of this Document.

‘Funds’ was defined to mean the financial accommodation set out in item 4 of the Schedule.

‘Fees’ were defined to mean the fees payable by the borrower to GSMAL under each ‘Agreement’, which was variously defined as the applicable land and management agreement or lease and management agreement between the borrower and GSMAL.

Clause 3 of the loan deed provided that the lender was not obliged to provide the funds unless it was satisfied that GSMAL had received all of the documents required.

Clause 4 provided for repayment of the principal sum in accordance with repayment dates set out in items 7 and 8 of Schedule 1 of the deed and on an incorporated ‘Loan Repayment Schedule’. Clause 5 provided that the borrower was required to pay interest to the lender from the later of the date upon which the lender advanced the funds or the interest start date specified in item 6 of the Schedule. The ‘Costs and Expenses’ payable by the borrower were identified in clause 7.

Clause 19 permitted the lender to assign its rights. Clause 32 provided that where ABLN was the lender it could appoint GSF as its agent to service the arrangements under the loan deed.

The Schedule specified (among other things) the Project, the Business, and the interest start date and repayments dates.

The deed was executed in the manner previously described.

The fact that the finance arrangement was documented, or purportedly documented, as a deed is potentially significant.

Deeds are a very ancient form of transaction by which a person legally binds themselves to an obligation. The nature of a deed is such that compliance with formalities is critical. In Morley v Boothby, Best CJ said:

The common law protected men against improvident contracts. If they bound themselves by deed, it was considered that they must have determined upon what they were about to do, before they made so solemn an engagement; and therefore it was not necessary to the validity of the instrument, that any consideration should appear on it.[12]

[12](1825) 3 Bing 107; 130 ER 455, 456.

In Manton v Parabolic Pty Ltd, Young J reviewed the nature of a deed in its historical context, and then said:

Thus the substantial requirement of a deed is that it be intended by the party who does it to be the most solemn indication to the community that he really means to do what he is doing. The solemn indication is given by sealing a deed which witnesses to what has been done. … So then, a deed is the most solemn act that a person can perform with respect to a particular property or contract involved, and the form of that deed is as laid down by the law from time to time.[13]

[13](1985) 2 NSWLR 361, 367–8.

One consequence of the solemnity required in relation to deeds is that consideration is not required, as the quotation from Best CJ reveals.[14]
[14]See also Spicer v Hayward (1700) Prec Ch 114; 24 ER 55, Pinnel’s Case (1602) 5 Co Rep 117a; (1602) 77 ER 237, Leonard v Booth (1954) 91 CLR 452, 474; [1954] HCA 64. A deed will not be invalid because the consideration expressed in it does not in fact exist: Reid Murray Holdings Ltd (in liq) v David Murray Holdings Pty Ltd (1972) 5 SASR 386.

A characteristic of a deed, which is important in the present context, is that once delivered, it cannot be recalled.[15] This is so even before another party to the deed has signed it, or where another party to the deed never signs it, unless the deed was executed on condition that it not be binding unless and until signed by all parties, in which case it will not have been ‘delivered’.[16]
[15]Hooker Industrial Developments Pty Ltd v Trustees of the Christian Bros [1977] 2 NSWLR 109, 118, cited in LexisNexis, Halsbury’s Laws of Australia, service 445 (as at 7 October 2016), 140 Deeds and other Instruments, ‘Effect of a Deed’ [140–165].
[16]Mirzikinian v Tom & Bill Waterhouse Pty Ltd [2009] NSWCA 296, [50]–[52] citing Lady Naas v Westminster Bank Ltd [1940] AC 366, 374–5, Federal Commissioner of Taxation v Taylor (1929) 42 CLR 80, 87; [1929] HCA 13. This is so unless the failure of a party to sign has the effect of increasing the burden on another party.

The critical concept in this context is ‘delivery’. Delivery is a question of intention and fact. In Windsor Refrigerators Co Ltd v Branch Nominees Ltd, Cross J said:

A deed, whether executed by a corporation or by an individual, does not necessarily bind the grantor as soon as it is sealed. It only becomes binding when it has been ‘delivered’ by the grantor as his deed, ie, when the grantor has indicated by words or conduct that he intends the deed which he has executed to be binding on him.[17]

[17][1961] Ch 88, 98 quoted in Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers [1977] 2 NSWLR 109, 118. See also Netglory Pty Ltd v Caratti [2013] WASC 364 (Edelman J), Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1, 81 [260]–[261]; [2016] HCA 26, [260]–[261] (Gordon J).

A further significant difference between simple contracts and deeds is the fact that the limitation periods differ. An action on a simple contract must, under the applicable legislation in all States be brought within six years of breach (in the Northern Territory the period is three years). Limitation periods where the obligation is under a deed are longer, twelve years from breach in all States and Territories other than South Australia and Victoria and fifteen years in South Australia and Victoria.

The relevant financing arrangements in issue here involved two purported deeds. One deed, purportedly constituted by the loan application form, appointed attorneys for the investor. The other was a loan deed purportedly executed by the attorney for the investor.

Debt recovery judgment prior to settlement approval — Wade

As indicated, the settlement constituted by the deed of settlement was approved by Croft J on 11 December 2014. Prior to that approval, ABLC and BABL had taken debt recovery proceedings in the County Court against a Great Southern investor named John Wade. Judge Lacava in the County Court delivered judgment on that matter on 12 July 2013.[18]
[18]ABL Custodian Services Pty Ltd v Wade [2013] VCC 878 (‘Wade’).

Judge Lacava held in Wade that the purported power of attorney in the loan application form did not constitute an actual appointment because it was prospective. He focused upon the words ‘agree to appoint’ and held there had been an agreement to make an appointment, not the exercise of an appointment.[19] For that reason he concluded that the loan deed purportedly executed by the attorney was unenforceable.
[19]Ibid [17].

Judge Lacava then went on to find that the loan deed was also unenforceable for another reason. He found that the law applicable to the validity of the purported power of attorney was the law of Victoria. He referred to the provisions of ss 106 and 107 of the Instruments Act 1958 and to ss 73 and 73A of the Property Law Act 1958. He found that the purported power of attorney did not comply with these provisions.[20]
[20]Ibid [30].

Judge Lacava concluded that the plaintiffs were nevertheless entitled to judgment as a loan had been made by GSF to the investor and the plaintiffs had proved an assignment of that loan to them.[21] The judge expressed his conclusion in favour of the plaintiffs as being ‘on a restitutionary basis’.[22] As indicated, this judgment was prior to the settlement approval.
[21]Ibid [33], [38].
[22]Ibid [45].

Byrne and Pekell

Not long after the settlement approval, a debt recovery proceeding came before this Court in Byrne v Javelin Asset Management Pty Ltd.[23]
[23][2016] VSCA 214 (‘Byrne’).

The decision in Byrne concerned Javelin. The provisions of the deed of settlement concerning Javelin are different to those concerning the BEN parties. In particular, the Javelin provisions expressly contain an entitlement to make application to enter judgment against the investor should there be default in the obligations provided for in the deed of settlement. Javelin sought judgment against an investor by filing an originating motion, relying on the provisions of the deed of settlement. No issue was raised in Byrne concerning what might be termed the formalities of the underlying loan obligation, or concerning the procedure Javelin had taken in seeking judgment.

The first relevant issue dealt with in Byrne was a submission put on behalf of the investor that the relevant provisions of the deed of settlement should not be construed in accordance with the ordinary principles applicable to commercial contracts and that the deed should be construed, and confined, by reference to the matters that were in issue in the group proceeding. The Court rejected that approach, stating that the deed of settlement had to be construed by reference to ordinary principles of construction of written instruments.[24] The Court went on:

The fact that the deed emerged from proceedings in which certain matters were, and others were not, in issue, does not dictate any special approach to its construction. That is a commonplace occurrence when litigation is settled. As the respondent submitted, it would be wrong to approach the deed on the basis that it is to be assumed that it goes no further than to resolve issues that were previously in dispute in the group proceedings. Instead, the scope of the proceedings might be relevant in the construction of aspects of the deed, as part of the context in which it was executed. The circumstance that, as the applicant submitted, the existence of the loans in question was not litigated in the group proceedings is therefore a matter to be taken into consideration in applying ordinary principles of construction of contracts.[25]

[24]Ibid [31].

[25]Ibid [32].

In Byrne the investor also put a separate argument in relation to the deed of settlement insofar as it affected his liability in relation to one particular project. The investor submitted that the deed of settlement could not affect his liability in relation to that project because he had not been a party to the group proceeding concerning that project. Javelin submitted in response that it was simply not relevant whether the investor had been a party to the group proceeding as parties were free to compromise proceedings on terms extending beyond the pleaded issues. The Court rejected the investor’s argument. It expressed the relevant conclusions as follows:

There are two reasons why this argument must be rejected. The first is that parties to a deed of settlement are bound by the settlement, once it is approved by the Court, by virtue of being parties to the deed. The respondent was so bound here. By the further operation of the statute, whether directly through s 33ZB or indirectly by orders made under s 33ZF, group members as well become bound to the deed of settlement. The terms of the deed then apply to the group members and the other parties to the deed take the benefit of the obligations which group members thereby owe. But the rights of other contractual parties as against group members flow from the deed which the Court has approved, not from such other contractual parties having been parties to the anterior proceeding. Their status as parties to the proceeding, or otherwise, is of no relevance. As the respondent submitted, persons who were not parties to the group proceeding at all may none the less be parties to the settlement of that proceeding.
The second reason is that it is not in doubt that the respondent was entitled to the benefit of the deed of settlement by virtue of its status as a party in group proceedings other than the Wine Grape proceeding. In that circumstance, there was no reason why, as part of the settlement of those proceedings to which the respondent was a party, the parties to the deed of settlement could not also settle other disputes, including disputes being litigated in proceedings to which the respondent was not a party. Having done so, the group members became bound by the settlement once the orders of the Court were made.[26]

[26]Ibid [58]–[59].

Issues concerning enforcement of the deed of settlement returned to this Court in Bendigo & Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd.[27]
[27](2017) 118 ACSR 592; [2017] VSCA 51 (‘Pekell’).

Between the decision in Byrne and the decision in Pekell, the High Court had determined in Timbercorp Finance Pty Ltd v Collins[28] that, where a group proceeding had gone to judgment, individual group members were not precluded from subsequently litigating claims and defences which were outside the ambit of the common questions of law or fact which had been determined in the judgment.
[28](2016) 259 CLR 212; [2016] HCA 44 (‘Timbercorp’).

In Pekell a corporate investor had applied to set aside a statutory demand served by BABL. An associate judge set aside the statutory demand and BABL appealed that decision to this Court.

Relying on the High Court decision in Timbercorp, the corporate investor contended that there was a genuine dispute in relation to the statutory demand because the deed of settlement and Croft J’s orders had to be ‘read down’ so as not to extend to issues other than the common claims in the group proceedings.[29] To the extent this was inconsistent with Byrne it was submitted that Timbercorp meant Byrne should not be followed.
[29]Pekell (2017) 118 ACSR 592, 604 [41]–[42], 606 [49]; [2017] VSCA 51, [41]–[42], [49].

This Court rejected the investor’s contentions for two reasons.

First, Croft J had approved the settlement under s 33V, and he had also ordered that the plaintiffs in the group proceedings have the authority of the group members to enter into and give effect to the deed of settlement. That order had not been set aside. The Court said that the submission that the order be confined so as to confer authority to enter into the deed only so far as the deed dealt with issues raised in the group proceeding would

have the effect of fundamentally altering the commercial arrangements embodied in the deed … A fundamentally different deed would take the place of the one contemplated by the order. That would be to amend, rather than construe, the order.[30]

[30]Ibid 607 [54].

The second reason concerned the reliance placed upon Timbercorp. This Court distinguished Timbercorp from the case before it on the ground that Timbercorp was a matter where the group proceeding had gone to judgment. This Court held that it did not follow from the High Court’s conclusion that a judgment in a group proceeding would not bind group members in relation to ‘individual claims’, that ‘a plaintiff in a group proceeding cannot settle that proceeding in a manner which affects the individual claims of group members’.[31] This Court said that the assumption that the observations in Timbercorp concerning a group proceeding which went to judgment applied with equal force to group proceedings which settled was erroneous.[32] The Court continued:

It would be highly surprising if pt 4A precluded parties to a group proceeding from resolving the common claims between them on terms which also bring finality to other issues outstanding between those parties or, in the case of a plaintiff, the group members that the plaintiff represents. For releases of all outstanding claims, whether at issue in the relevant proceedings or not, are not uncommon. … [A]s explained in Byrne, section 33ZF enables the Court approving a proposed settlement of a group proceeding to make orders binding a plaintiff, group members and other parties to the settlement or authorising a plaintiff to enter into and give effect to the settlement on behalf of the group members. Such an order supplies the privity which, as the High Court observed in Timbercorp, is otherwise absent in respect of the individual claims of group members. This then enables the group proceeding to be settled on whatever terms the parties have agreed and the Court has approved. Because the privity which is absent in respect of a judgment is able to be provided by virtue of the Court’s orders when approving a settlement, Timbercorp and Byrne are addressed to different situations.[33]

[31]Ibid [56].

[32]Ibid.

[33]Ibid [57]–[58].

The orders made by Croft J on 11 December 2014 have been set out earlier. The first order he made was an order approving the settlement under s 33V(1) of the Supreme Court Act 1986. This Court in Byrne and Pekell said the effect of that order was to bind all persons who were group members at the time the order was made by virtue of s 33ZB. Croft J also ordered that the lead plaintiffs were authorised nunc pro tunc to enter into and give effect to the deed of settlement. This Court has characterised that as an order made under s 33ZF of the Supreme Court Act. This Court has distinguished the position which applies in relation to settlement of a group proceeding from that which applies in relation to judgment.

Byrne and Pekell establish that the provisions of the deed of settlement are to be interpreted like any other contract and are not to be read down by reference to the matters that were in issue in the group proceedings.

Under Byrne and Pekell, group members bound by the deed of settlement are in the same position as any other litigant who agrees to settle a case and binds themselves to written terms of settlement.

Other debt recovery proceedings prior to Laszczuk, Cairncross and Haque

Shortly prior to the decision in Pekell, ABLC had succeeded at trial (not on a summary application) in recovering a loan made to an investor named Kunz in the District Court of South Australia.[34] The judgment in Kunz foreshadowed issues which were to gain increasing prominence later, in particular, the use of facsimile signatures, proof of the assignment of the loans, and whether a relevant investor was a ‘group member’. The fact that the director and the secretary of GSF had executed the loan deed by what was described as ‘electronic signatures’ was raised but was not seen as significant in that case.[35] The defendant in that case did not challenge the assignment of the loan,[36] or his status as a group member,[37] but those issues were referred to. The point particularly litigated in that case concerned whether the borrower was the defendant himself or a related corporate entity. The defendant failed on that issue. The judge did find that the power of attorney did not authorise the inclusion of an overdue interest rate which had been inserted into the loan deed, but he held that that matter could not be relied upon by the defendant because of the deed of settlement.[38]
[34]ABL Custodian Services Pty Ltd v Kunz [2016] SADC 145 (‘Kunz’).
[35]Ibid [63], [68].
[36]Ibid [101].
[37]Ibid [124].
[38]Ibid [203]–[204].

The issue of whether an investor borrower was a ‘group member’ and thereby bound by the deed of settlement was raised soon afterwards in a recovery proceeding in the District Court of Queensland in Bendigo and Adelaide Bank Ltd v Gaedtke.[39] Based upon inferences drawn from the documents in evidence, admissions made by the investor, the terms of the deed of settlement, the fact that there was no evidence that the investor had ever ‘opted out’, and the taxation returns which the investor had filed and the distributions which he had received, the judge concluded that the investor was a group member.[40] The judge held this conclusion meant the investor was ‘estopped’ by reason of the deed of settlement from denying that the loan deed executed on his behalf was valid and enforceable.[41]
[39][2017] QDC 202 (‘Gaedtke’).
[40]Ibid [50].
[41]Ibid [51]–[52].

The effect of the deed of settlement on investors’ ability to resist recovery proceedings by the financiers led to a belated attempt to set aside Croft J’s approval orders in the High Court[42] and before this Court.[43] The application before this Court was made by Laszczuk and Cairncross together with another investor, Peter Dimitrov, who was the applicant in the High Court. Those attempts were unsuccessful.
[42]Dimitrov v Supreme Court of Victoria (2017) 263 CLR 130; [2017] HCA 51.
[43]Dimitrov v Bendigo & Adelaide Bank Ltd [2019] VSCA 41.

In Bendigo & Adelaide Bank Ltd v Howard[44] Davies J in the Supreme Court of New South Wales heard an appeal, confined to questions of law, from a magistrate’s decision rejecting a loan recovery claim by BABL against an investor. It is not apparent that any issue was raised in that proceeding concerning the deed of settlement, presumably because the borrower was not a group member. BABL had failed before the magistrate on a number of grounds, principally because it could not prove that the borrower had intended to nominate ABLN as ‘lender’, as opposed to GSF. The bank’s attempt to overturn the magistrate’s decision by establishing an error of law was unsuccessful. For present purposes, a significant matter is Davies J’s finding that, if the loan deed had not been validly executed because it was executed by the wrong entity (not the ‘lender’ — as the magistrate had found), then, even if it had been established that ABLN had loaned the funds, the claim was statute barred as it had been instituted in 2016 for a loan made in 2006 which went into default in 2009.[45]
[44][2018] NSWSC 383 (‘Howard’).
[45]Ibid [73].

On 3 July 2018 Croft J gave judgment in two debt recovery matters pursuant to applications made under the summary procedure described in Barratt v Rees. They are ABL Custodian Services Pty Ltd vFreer[46] and Bendigo & Adelaide Bank Ltd v Lonergan.[47]
[46][2018] VSC 355 (‘Freer’).
[47][2018] VSC 357 (‘Lonergan’).

ABLC’s application in Freer was to recover a loan allegedly made by GSF pursuant to a loan deed between GSF and the investor dated 5 October 2006. ABLC claimed that the advance had been made by GSF on 1 July 2006, and that GSF had assigned its rights under the loan deed to ABLN, which had assigned its rights to ABL, which had assigned its rights to ABLC.

The judge referred to the fact that the application was made under the procedure discussed in Barratt v Rees.[48] The judge concluded that the case was an appropriate one to be determined summarily.[49]
[48]Freer [2018] VSC 355, [6].
[49]Ibid [9].

The judge addressed the question of group membership, referring to the definition of ‘group member’ in the statement of claim of the relevant group proceeding, and briefly referring to evidence that the investor met the description of a ‘group member’ in that statement of claim, before observing:

In any event, the defendant admits that he was a group member in the 2005–2006 plantations group proceeding.[50]

[50]Ibid [13].

The judge set out the relevant terms of the deed of settlement in a section of the judgment headed ‘Consequences of being a Group Member’.[51] He addressed in some detail the decisions in Byrne and Pekell.[52] The judge concluded that the defendant was bound by the provisions of the deed of settlement and then said:

It follows that he is not now able to dispute or deny the validity or enforceability of the Loan Deed … .[53]

[51]Ibid [15].

[52]Ibid [16]–[22].

[53]Ibid [24].

The judge considered that this meant that Freer ‘as a group member’ could not contest the making of the advance to him,[54] and also could not contest the assignment of his loan,[55] although the judge also held that the evidence before him provided details of the assignment and transfer of the loan and that that evidence should be accepted.[56] Orders were made in favour of ABLC.
[54]Ibid [25].
[55]Ibid [26].
[56]Ibid.

In Lonergan, the nature of the application was the same, and, save in relation to the issue of ‘group membership’, the judge’s treatment of the relevant issues was substantially identical to that in Freer.

The issue of group membership was different in Lonergan because, whilst in relation to one of the group proceedings the investor did ‘not dispute’ that he was a group member,[57] in relation to another he did not admit being a group member and advanced submissions as to why he was not a group member.[58]
[57]Lonergan [2018] VSC 357, [21].
[58]Ibid [24].

In each relevant group proceeding, group members were defined as persons who had acquired or held an interest as a member in the particular scheme, who had entered into a land and management agreement with GSMAL, and who had entered into a loan with ABLN to fund the application fees. The judge briefly referred to evidence given as to these matters in relation to the scheme where group membership was not disputed.[59] He referred in greater detail to the evidence in relation to the scheme where group membership was contested.[60] The judge found that group membership had been proved based upon evidence given in an affidavit of Stephen Flamer-Smith, an officer of BABL.
[59]Ibid [21].
[60]Ibid [25]–[26].

Otherwise, the judge’s analysis of the position in relation to Lonergan was substantially identical to that in relation to Freer.

The Laszczuk and Cairncross judgment

Laszczuk and Cairncross were each alleged to have been group members of group proceeding S CI 2011 04862 concerning the 2007 Vineyards Scheme. As indicated earlier, this group proceeding was one of the sixteen group proceedings which were the subject of the deed of settlement and Croft J’s orders of 11 December 2014.

The judge outlined the claims made against each of Laszczuk and Cairncross and then addressed the nature of the application, which was an application against each of the investors for summary judgment on terms of settlement, as described in Barratt v Rees. As to whether the Court should proceed in that way, the judge said:

In the present circumstances, I am of the opinion that the discretion of the Court should be exercised in favour of proceeding summarily to enforce the settlement approved in the Great Southern Group Proceedings. Laszczuk and Cairncross are group members and therefore bound by the Deed of Settlement of these group proceedings. For the reasons which follow, the defences available to them are severely constrained. Consequently, extraneous matters are not involved, the questions to be determined are not substantial or of a nature which would lead to questions of credibility being raised and where justice and procedural fairness between the parties would only be served by trial of all issues on pleadings and with discovery.[61]

[61]Laszczuk and Cairncross [2018] VSC 388, [16].

The judge referred to the evidence in each application, which, in each case, was constituted by affidavits of Mr Flamer-Smith and an affidavit of Cameron Arthur Rhodes, the former chief executive officer of GSL and a former director of GSF. The judge observed that there had been objections to Mr Flamer-Smith’s affidavits. They had been resolved on the basis that the objectionable material would be treated as merely providing ‘context’ to the documents which were relied upon.[62]
[62]Ibid [17].

Under the heading ‘Background’ the judge addressed the question of whether Laszczuk and Cairncross were relevantly ‘group members’. He referred to the definition of group members in the proceeding concerning the 2007 Vineyards Scheme (S CI 2011 04862). Group members were defined as persons who had acquired an interest as a member in the 2007 Vineyards Scheme during a specified period, had entered into a lease and management agreement with GSMAL, and had entered into a loan with ABLN. The judge referred to admissions made on the pleadings. The relevant lease and management agreements had been entered into under a power of attorney arrangement similar to that which we have previously set out in relation to the loan deeds. The relevant PDS provided that, on acceptance of an application, a lease and management agreement would be executed by the responsible entity as attorney for and on behalf of the applicant. The judge concluded:

Having regard to these matters, it is, in my view, a reasonable inference, and the Court should so find, that Laszczuk and GSMAL entered into an LMA as contemplated by the 2007 Vineyards PDS, as did Cairncross and GSMAL. Moreover, had this not occurred, neither Laszczuk nor Cairncross would have been entitled to claim tax deductions in respect of their respective investments in the 2007 Vineyards MIS. In any event, Laszczuk and Cairncross admit that they were members of the 2006/2007 Vineyards Originated Group Proceeding.[63]

[63]Ibid [26].

The judge footnoted his statement that each of Laszczuk and Cairncross had admitted that they were members of the relevant group proceeding by reference to paragraph 8 of each of their defences and counterclaims. Paragraph 8 of BABL’s statement of claim in each case had alleged that the defendant was a member of the applicable group proceeding, giving as particulars the fact that the defendant had not opted out, and each amended defence and counterclaim had admitted that allegation.

In terms very similar to those employed in Lonergan and Freer, the judge then said that as group members Laszczuk and Cairncross were bound by the terms of the deed of settlement, set out the applicable terms of the deed of settlement, and addressed the judgments in Byrne and Pekell.[64]
[64]Ibid [27]–[29].

The judge referred to the judgments in Freer and Lonergan, summarising the conclusions he had reached there, before turning to the specific defences and counterclaims raised by Laszczuk and Cairncross.[65]
[65]Ibid [30]–[32].

The judge detailed the defences and counterclaims as follows:

In their Amended Defences and Counterclaims, Laszczuk and Cairncross raise defences and bring counterclaims alleging that:
(a)the defendant’s Loan Deed was made in circumstances that made it unjust or unfair pursuant to various statutes;
(b)the defendant is not bound by his or her Loan Deed because it was not validly executed;
(c)no power of attorney was given by the defendant to enter into a loan contract;
(d)if the Loan Deed was effective as a contract, but not a deed, the plaintiff’s claim is statute barred;
(e)the orders approving the settlement of the group proceeding should be construed in a way that confines them, or the Deed of Settlement, to the common issues in the group proceedings; and
(f)they have claims against the plaintiff pursuant to the linked credit provider provisions in section 73 of the Trade Practices Act 1974 (Cth) (‘TPA’).[66]

For simplicity the judge addressed the defences in the Laszczuk proceeding observing that his analysis applied with equal force to the Cairncross proceeding.

[66]Ibid [33].

In relation to the defences based upon an allegation that the loan deeds were unjust or unfair pursuant to various statutes, the judge rejected the defences on the grounds that none of the statutes relied upon applied.[67]
[67]Ibid [34]–[40].

In relation to the defences concerning the validity of the execution of the loan deeds and the purported power of attorney, the judge commenced his analysis as follows:

Arising out of the Amended Defence and Counterclaim and the elements to which reference has been made, Laszczuk submits that the Bank has failed to prove:
(a) a Loan Deed ever existed;
(b) any money was loaned under the Loan Deed; and
(c)rights under the Laszczuk Loan Deed were assigned to the plaintiff.[68]

[68]Ibid [41].

The judge said he accepted BABL’s contention that the effect of the deed of settlement was to preclude a group member from raising these arguments but that it was desirable nevertheless to address them.[69]
[69]Ibid.

The judge rejected the contention that the Bank had not proved a loan deed ever existed. He stated that the loan deeds relied upon by the bank were loan deeds which fell within the definition of ‘Loan Deeds’ in the deed of settlement. The judge set out the section of the loan deed describing the parties, the recitals, some of the terms, and the execution section and then observed:

This document also makes it clear — having regard to both its substantive content and structure — that it is made between [ABLN] and Laszczuk. The power of attorney under which GSF executed the Laszczuk Loan Deed on Laszczuk’s behalf is contained in the Loan Application.[70]

[70]Ibid [42].

In relation to execution of the loan deed by GSF the judge held that the execution was valid under s 127 of the Corporations Act 2001 (Cth). The judge observed that to the extent that there was any inconsistency between that provision and provisions of the Property Law Act 1969 (WA) concerning execution of deeds, the Commonwealth legislation must prevail. He held that the Western Australian legislation insofar as it dispensed with the need for delivery would still apply.[71]
[71]Ibid [44].

In relation to the signatures of the GSF officers, affixed electronically, the judge said:

As to the form of the signatures, it should be borne in mind that a signature is only a mark. A signature may be impressed upon a document by a stamp with the authority of the person signing. The evidence of Mr Rhodes is that this is how the loan deeds were executed by GSF. Moreover, there is no reason why the assumptions a person is entitled to make under s 129(5) of the Corporations Act should be confined to signatures made with a pen in the usual way.[72]

[72]Ibid [45] (citations omitted).

As to the assertion that BABL had failed to prove assignment of the loans, the judge initially observed that Laszczuk and Cairncross ‘as group members’ could not contest the assignment. He nevertheless dealt with the issue, finding in favour of BABL relying upon the affidavit evidence of Mr Flamer-Smith.[73]
[73]Ibid [48]–[49].

The judge rejected a limitation defence on the basis that the relevant loan deeds were deeds to which a twelve year limitation period applied.[74]
[74]Ibid [50].

He rejected a submission that the construction of the deed of settlement had to be confined to the issues raised in the group proceedings, for the reasons set out by the Court of Appeal in Byrne and Pekell.[75]
[75]Ibid [51].

The judge rejected submissions made concerning constitutional and related issues, which he held were also inconsistent with the decisions in Byrne and Pekell.[76]
[76]Ibid [52]–[66].

The judge rejected submissions made that reliance upon the deed of settlement was unconscientious, and rejected an ‘invitation’ to reconsider the decision approving the deed of settlement.[77]
[77]Ibid [71].

The Haque judgment

Haque was alleged to have been a group member of two group proceedings, one concerning the 2007 Plantation Scheme (S CI 2011 04476), and one concerning the 2008 Almond Scheme (S CI 2011 03513).

Unlike Laszczuk and Cairncross, Haque had not admitted that he was a group member.

The judge referred to the nature of the application. He said it was ‘an application for judgment to give effect to terms of settlement of the kind discussed by the Court of Appeal in Barratt v Rees’.[78] The judge then referred to Haque’s submission that the procedure was inappropriate relying upon Smith J’s description of when a party would usually be required to proceed ‘by separate bill’ (quoted earlier) and said:
[78]Haque [2018] VSC 406, [6].

In this respect, counsel for the Defendant noted that the effect of the decision of the Court of Appeal in Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd is that the Deed of Settlement compromised not only the Great Southern proceedings, but also claims which were not raised in those group proceedings. It is said that as a result, the present application seeks to enforce a settlement agreement which involves matters extraneous to the suit, and therefore ought not to be granted. Yet as the Defendant accepts, the Plaintiffs have not sought to enforce the Deed of Settlement by summons in the relevant group proceedings but instead via a separate bill in issuing the present, separate, proceeding. In essence, the present application for judgment is a trial on the following questions:

(a) Is the Defendant a group member?
(b)If the Defendant is a group member, is he bound by the Deed of Settlement?
(c)If the Defendant is bound by the Deed of Settlement, are there any defences upon which the Defendant relies which are such as to prevent judgment being granted in favour of the Plaintiffs in respect of his loans in accordance with the Deed of Settlement?

In the submission of the Plaintiffs these questions should be answered as ‘yes’, ‘yes’ and ‘no’ respectively, with the effect that judgment should be entered in their favour. The Defendant only submits that the first question should be answered ‘no’, and does not cavil with the submissions of the Plaintiffs with respect to the second and third question. On this basis alone, the Defendant submits that judgment should not be entered, the Court should find that he is not a group member, and the matter should proceed to trial on that basis.
However, with respect to the Defendant’s submission that the present procedure was inappropriate, it was open to the Defendant to identify any defences which would be open to him even if he was subject to the Deed of Settlement and upon which he would seek to rely at trial if the present application were refused on the basis that this summary procedure was inappropriate. Given that the Defendant had this opportunity and has not identified any defences which are incompatible with the grant of judgment if the Court is satisfied that the Defendant is a group member, there is in my view no barrier to proceeding to enforce the Deed of Settlement in the manner referred to in Barratt v Rees, subject of course to consideration of the submissions of the Defendant with respect to the question of his group membership. Indeed, this approach is concordant with the comments of Maxwell P and Nettle JA in Seachange Management Pty Ltd v Pital Business Pty Ltd, as well as with the overarching purpose of the Civil Procedure Act 2010.[79]

[79]Ibid [8]–[9] (citations omitted).

The judge referred to the evidence before the Court, five affidavits of Mr Flamer-Smith,[80] before turning to the question of whether Haque was a group member.
[80]Ibid [10].

The relevant definitions were essentially the same as the definitions applicable to Laszczuk and Cairncross. Each group proceeding defined the group members as persons who had acquired an interest in the relevant scheme, entered into a land and management agreement with GSMAL, and entered into a loan with ABLN.

The judge observed that it was clear, and Haque did not contend otherwise, that Haque held an interest in each relevant scheme.[81]
[81]Ibid [13].

As to the land and management agreements, the judge observed that they were in evidence.[82]
[82]Ibid [14]–[15].

The judge said that the evidence ‘prima facie’ established that ABLN was the lender. The loan deeds were signed by ABLN, and the judge said that all of the monies lent to Haque were advanced by ABLN, footnoting in that respect one of Mr Flamer- Smith’s affidavits.

The defendant had filed evidence on affidavit asserting that he had applied for finance from GSF (not ABLN). The judge set out submissions made on behalf of Haque in relation to that matter and, in particular, in relation to the procedures under two agreements called ‘Loan Sale and Servicing Deed’, one in 2006 and one in 2007.

It was submitted on Haque’s behalf that there was ‘sufficient ambiguity’ arising out of the circumstances of the loans, and whether or not they had indeed been made by ABLN under what was called ‘the Origination Procedure’, to ‘justify the matter proceeding to trial’.

The judge observed that it was ‘common ground’ that ABLN could only have been the lender if the ‘Origination Procedure’, as opposed to what was called ‘the Assignment Procedure’ had been employed.[83] The judge then said:

The Defendant accepts that an origination notice was issued under the Loan Sale and Servicing Deed in respect of the First Loan. However, he submits that the letter from ABL Nominees to GSF in response, which is relied upon by the Plaintiffs to establish that funds were advanced by ABL Nominees, is ambiguous because it refers to ‘Sale and Origination Notices’, and a ‘Sale Notice’ is a document which is used only under the Assignment Procedure. While it is accepted that the ‘Sale Notice’ ostensibly referred to in that letter is not in evidence, the Defendant submits that it is a matter giving rise to sufficient ambiguity to justify discovery and a full trial on this issue. Yet this misunderstands the nature of the present application: it is a trial on those issues which remain open to the Defendant in light of the Deed of Settlement, including of course the issue of the applicability of the Deed of Settlement. In any event, I am satisfied that while the reference to a ‘sale notice’, and indeed other documents relating to the Origination Procedure and the Assignment Procedure, may be confusing for the reasons submitted on behalf of the Defendant, any such confusion evaporates once regard is had to the evidence as a whole, and in particular to the applicable PDS.[84]

[83]Ibid [23].

[84]Ibid [24].

The defendant put forward other circumstances upon which he relied in submitting that the lender had been GSF rather than ABLN. These contentions were rejected by the judge.[85]
[85]Ibid [25]–[33].

Haque particularly relied upon the decision in Howard, but the judge rejected the applicability of that judgment on the basis that the evidence before him was different and because, critically, in Howard the investor had ticked a box specifying GSF as the lender.

The judge concluded that it was ‘plain’ that the lender was ABLN.[86]
[86]Ibid [38].

Having reached that conclusion, the judge then addressed the issue of the effect of the deed of settlement in terms relevantly identical to those in Freer and Lonergan, concluding that the loan deeds were enforceable in accordance with their terms and those of the deed of settlement.

Judgment after a trial — DY

After the Laszczuk andCairncross judgment and the Haque judgment, Croft J determined two debt recovery proceedings concerning Great Southern investors, not on summary Barratt v Rees applications but after a full trial. He delivered judgment on the first, Bendigo & Adelaide Bank Ltd v DY Logistics Pty Ltd,[87] on 21 September 2018. He delivered judgment on the second, Burkett v Bendigo & Adelaide Bank Ltd [No 2],[88] on 7 December 2018.
[87][2018] VSC 558 (‘DY’).
[88][2018] VSC 723 (‘Burkett’).

DY began as a proceeding brought by BABL and ABLN against DY Logistics Pty Ltd (‘DY Logistics’), GSF, and David William Young, who was the sole director of DY Logistics, to recover two loans made in relation to Great Southern schemes. The relevant investor in each case was DY Logistics and a claim was made against Young as guarantor. It was only the claim against Young which went to trial. Young was not a group member. The case was argued on the basis that the deed of settlement did not apply to him.[89]
[89]DY [2018] VSC 558, [59]

Young admitted having signed applications for term finance and admitted that the loans had been made to DY Logistics by GSF. Young resisted the claims made by BABL and ABLN against him as guarantor on the following grounds:

(a) The plaintiffs relied upon powers of attorney in favour of GSF purportedly created by the applications signed by Young. The powers of attorney were invalid, including for the reasons which Judge Lacava had articulated in Wade.

(b) If the powers of attorney purportedly granted in favour of GSF were valid, GSF had not executed the relevant loan deeds containing the guarantees relied upon as required by s 127 of the Corporations Act.

(c) The purported guarantees in the loan deeds were not within the ambit of the powers of attorney granted.

(d) The loan deeds had not been validly executed on behalf of DY Logistics so that the obligation purportedly guaranteed did not exist. Young contended that DY Logistics was not a ‘group member’, and that it was accordingly not bound by the deed of settlement.[90]

[90]Ibid [3].

The judge referred to witness statements of Cameron Arthur Rhodes and Stephen Flamer-Smith which had been admitted at the trial, and to documents which had been exhibited to those witness statements.[91] The judge went through the relevant documents. The relevant provisions (apart from some difference in numbering) are the same as those previously set out in the brief overview of the loan deed creation.
[91]Ibid [4].

In DY, BABL and ABLN relied upon a difference between the applications in that case and the finance application which had been before Judge Lacava in Wade. The finance application that Judge Lacava had dealt with did not have the provision which relevantly read: ‘I … grant the power of attorney as set out … ‘. The judge accepted the significance of that difference.[92] The judge said, however, that there were further issues with respect to the validity of the power of attorney.
[92]Ibid [19]–[20].

There was a dispute in DY as to whether the validity of the power of attorney was to be determined under Victorian or Western Australian law. Croft J determined that it was Victorian law which was applicable and, as Judge Lacava had found in Wade, that the relevant provisions of the Instruments Act 1958 and the Property Law Act 1958 had not been complied with.[93] After referring to relevant English authority the judge said:

Applying the reasoning adopted in the English cases to which reference has been made, it follows that the law applicable to the creation of a power of attorney is the law of the jurisdiction in which it was made, but as to its construction and operation, the applicable law is that of the jurisdiction (or jurisdictions) where the power operates or is intended to operate. In the present circumstances, Young was based with an address in Victoria as he indicated in the Finance Applications—as was the witness to his signature, Mr Wills—and there was no evidence that they signed the Applications for Finance in any place other than Victoria. In my view, the inference must follow that they signed them in Victoria. Moreover, in the absence of evidence to the contrary, there appears to be no basis for the proposition which is, in effect, advanced by the Plaintiffs, that the Court should assume that the power of attorney was executed outside the jurisdiction. It follows, in my view, that Victorian law governs the issue whether Young’s signing of the Finance Applications constituted his making valid deeds granting the powers of attorney. Consequently, the effect of Victorian law is, as previously indicated, that the Finance Applications do not operate as deeds and, consequently, the powers of attorney are not executed as deeds. Execution of a power of attorney as a deed is necessary for it to be valid and, since the Third Defendant, Young, did not execute the Finance Applications as deeds, no powers of attorney were thereby granted. Moreover, as the purpose of the purported powers of attorney was to authorise a person or entity to execute a deed on the Third Defendant’s, Young’s (and the borrower’s) behalf, the general law also requires that such a power also be granted by deed.[94]

[93]The relevant provisions and related authorities are set out in Wade [2013] VCC 878, [25]–[30]

[94]DY [2018] VSC 558, [27] (citations omitted).

The judge then turned to the question of whether GSF had acted outside the scope of the power conferred upon it in completing schedules to the loan deed. The issue did not need to be determined as the judge had already concluded that the loan deed was invalid, but he nevertheless addressed it. In that context he referred to the decision in Kunz. He distinguished Kunz, insofar as it had been found in that case that there had been an unauthorised addition to the schedule by the insertion of an overdue interest rate, and found that GSF had acted within its powers in completing the schedules.[95]
[95]Ibid [28]–[41].

The judge then addressed the question of whether GSF had executed the loan deeds in accordance with s 127 of the Corporations Act. The judge said:

It is common ground that the Loan Deeds were not actually, physically, signed by the director and secretary of GSF whose names are recorded on these documents, that is by personally writing their signatures. Moreover, it is apparent from the witness statements relied upon in these proceedings that no evidence is adduced as to which person or persons affixed or personally authenticated the affixing of the purported facsimile signatures of the directors and secretary of GSF whose names are recorded on the Loan Deeds.[96]

[96]Ibid [44].

The reference to ‘witness statements’ must be taken to have included reference to the witness statement of Cameron Arthur Rhodes, who was one of the signatories on behalf of GSF. On this issue BABL and ABLN had relied upon Croft J’s earlier decision in Laszczuk, and his acceptance of Mr Rhodes’ evidence in that case. The judge, after quoting from his judgment in Laszczuk, said:

It must be remembered, however, that the evidence, circumstances and arguments advanced in different proceedings are not to be assumed as relevantly analogous and that is not the position here. I turn, therefore, to these issues in the context of the present proceedings.[97]

[97]Ibid [47].

The judge reviewed the authorities and concluded that for a signing to be effective when a document is not personally signed there must be some kind of ‘personal authentication’.[98]
[98]Ibid [50]–[53].

In our view, it is clear from the reasons that the judge considered that what was required was personal authentication of the particular document to which the facsimile signature had been affixed. The judge expressed his relevant conclusion as follows:

In the present circumstances, there is no evidence with respect to the Loan Deeds of authentication. More particularly there is no evidence that either the director or secretary whose signatures are purportedly affixed to those Deeds authenticated their facsimile signatures in any way. There is not even evidence in the form of GSF Board Minutes authorising and, depending on their content, authenticating such signatures generally, or more particularly. Moreover, there is no evidence that, after the facsimile signatures were attached, either Mr Young or Mr Rhodes personally authenticated the affixation of their signatures. I accept that Bendigo and Adelaide Bank Ltd v Laszczuk is not an authority to the contrary. The question in that case was whether a signature within the meaning of s 127 of the Corporations Act could be impressed upon a document by a stamp. The question in this case is whether the affixing of a facsimile purporting to be the signature of a director or secretary of a company constitutes the signature of that officer for the purposes of s 127 of the Corporations Act, notwithstanding that the officer did not intend to authenticate the document by authorising the affixing of the facsimile to that particular document and, indeed, had no involvement in the production or authentication of the particular document. For completeness, I note that Mr Rhodes was erroneously described as a signatory to the Loan Deeds as secretary when he was, in fact, then a director. As indicated in the present context this error is of no significance.
For the preceding reasons, I find that the Loan Deeds have not been validly executed for the purposes of s 127 of the Corporations Act.[99]

[99]Ibid [54]–[55] (emphasis added).

The question of whether DY Logistics was a group member did not need to be decided given the judge’s other conclusions but he nevertheless dealt with it. Young contended that DY Logistics was not a group member because of the deficiencies in the execution of the loan deeds, but the judge found that the loan deeds were not the relevant defining characteristic of group membership, which was, rather, whether DY Logistics had entered into a loan with GSF. Young had admitted that it had done so.[100]
[100]Ibid [56].

The fact that DY Logistics was a group member and accordingly bound by the deed of settlement did not affect Young’s position, as he was not bound by the deed of settlement and any liability he had could only arise under the loan deeds themselves, which the judge had found were not validly executed.[101]
[101]Ibid [63]–[64].

For these reasons BABL and ABLN failed in DY.

Judgment after a trial — Burkett

In Burkett, BABL and ABLN sought recovery against Paul Burkett, as a guarantor in relation to one claim, and as an investor in relation to another. In the course of closing submissions, the Court was informed that the claim against Burkett as a guarantor had been resolved. Croft J then gave judgment on the claim against Burkett as an investor.

The relevant facts were as follows.

On 18 June 2007 Burkett signed an application form and an application for term finance form, containing provisions as previously described in relation to Cairncross. On 1 July 2007 GSF purportedly executed a loan deed as attorney for Burkett, which ABLN executed as ‘lender’. GSF executed the loan deed in the same way, by facsimile signatures, as had been done in DY.

ABLN, ABL, GSMAL and GSF were parties to a Loan Sale and Servicing Deed regulating the funding of Great Southern investments. Under this Loan Sale and Servicing Deed (‘LSSD’) loans could either be funded by GSF and assigned to ABLN (or a related entity), or the loans could be made by ABLN through the agency of GSMAL, a process referred to as ‘origination’.

ABLN, ABL and AB Management Pty Ltd also entered into a related agreement called the ‘Supplementary Terms Notice Agreement’ and ABLN and ABL entered into an agreement referred to as the ‘Side Letter’.

BABL’s claim against Burkett was as the transferee of the assets of ABL pursuant to the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth). ABL’s assets allegedly included the loan by ABLN to Burkett which had been assigned by ABLN to ABL.

Croft J summarised Burkett’s arguments in resisting the banks’ claims as being that ABLN did not make the advance; that no valid power of attorney had been granted for the purpose of executing the loan deed; that GSF rather than ABLN was the lender; and that the loan deed, even if otherwise validly executed, was executed in circumstances where the parties were not ascertained with the result that it was ineffective.[102] Apart from resisting Burkett’s defences, BABL and ABLN contended that Burkett was precluded from raising any of these matters by virtue of the deed of settlement.[103] Burkett had admitted to being a group member.
[102][2018] VSC 723, [5].
[103]Ibid [6].

The judge referred to affidavits which had been admitted as evidence at the trial, including five affidavits of Mr Flamer-Smith, and an affidavit of a Mr Frantz. The judge observed that where the deponents had no personal knowledge of the matters referred to, their affidavits were treated as explanatory of the documents which they had produced.[104]
[104]Ibid [7].

The judge summarised the key issues,[105] and reviewed in some detail the relevant provisions of the PDS, the application for term finance, and the loan deed.[106]
[105]Ibid [8].
[106]Ibid [9]–[29].

The judge addressed the issue of which entity was the lender and whether any advance was made. He began as follows:

On 1 July 2007, the Bank Parties plead that ABLN made the relevant advance to Burkett. Burkett does not admit these allegations and submits that the evidence does not establish that ABLN advanced any monies at all pursuant to any loan agreement or deed with Burkett, whether on 1 July 2007 or on any other date. Moreover, Burkett contends that the Bank Parties have failed to establish on the balance of probabilities that ABLN made the relevant advance.[107]

It was submitted that the applicant had not sought to cross-examine the respondents’ deponent, Mr Flamer-Smith, and had not sought orders for discovery. It was said that before the primary judge the applicant had submitted no more than that ‘further relevant documents might wash up on discovery’.

In relation to the complaint as to the judge’s reasons, the respondents’ submission referred to the evidence which the primary judge had set out in some detail, contending that there was no substance in the applicant’s contention that the primary judge had failed to provide adequate reasons.

As indicated, Haque filed further submissions addressing the matters raised in the written cases on the applications for leave to appeal in Burkett and in DY which did not proceed.

In his further submission counsel for Haque submitted that the Burkett judgment, the DY judgment, and the submissions made by the parties on the applications for leave to appeal in relation to those matters revealed clearly and compellingly that there were significant issues which ought to have gone to trial in Haque’s case. Haque particularly relied upon a contention of the bank parties in the Burkett application for leave to appeal to the effect that the evidence in Haque was the same as the evidence in Burkett. Haque emphasised, as he had throughout, that, unlike Burkett, he had not admitted group membership. If there had been no advance by ABLN, as had been found to be the case in Burkett on the same evidence, it was submitted that Haque could not be a group member. Haque also relied upon the decision in DY in relation to the issue of the facsimile signatures.

Haque submitted that to the extent that the respondents relied upon the primary judge’s treatment of the application as a ‘trial’ on limited matters, no prior notice of that had been given to him.

Haque submitted that what he sought was a trial on all issues after completion of the usual interlocutory steps and, if his submissions were accepted, the order made below should be set aside and the matter should be remitted to the Trial Division for the completion of interlocutory steps and a trial.

The respondents’ further submission in response described what the primary judge had done as follows:

While the primary judge exercised his discretion to permit the respondents to proceed summarily to enforce the terms of settlement approved in the Great Southern group proceedings (Deed of Settlement), in accordance with the principles in Barratt v Rees …, his Honour made clear that the matter would proceed as a trial on the question whether the Deed of Settlement applied, so as to permit the respondents to proceed in this way against the applicant.

The respondents’ submissions sought to uphold the primary judge’s conclusion that the applicant was a group member contending that Croft J’s judgment in Burkett on the issue of whether ABLN had made the advance was erroneous. In relation to the issue of facsimile signatures, the respondents also contended that Croft J’s judgment in DY was erroneous.

The respondents’ further submission sought to rely upon an affidavit of the respondents’ solicitor producing transcript of various directions hearings. The transcript was relied upon in support of a submission that it was ‘disingenuous’ of the applicant to submit that he had had no prior notice that there was to be a trial on some of the issues. Haque objected to reliance on the affidavit and upon the submissions made based upon it. It was for this reason that a further hearing was required.

At the further hearing the respondents were given leave to rely on the affidavit. The transcripts relied upon were addressed. It emerged that some of them did not concern Haque’s matter. Otherwise, the transcripts did not reveal Haque was given notice that the application would be a trial on some issues. In the end, the affidavit did not relevantly advance the respondents’ position.

Haque application — analysis

In our opinion, the procedure adopted in Haque’s case, where there was both a trial ‘in essence’ on some issues and a summary application on others, is not the procedure described in Barratt v Rees. Indeed, the primary judge’s statements that some issues were to be the subject of a trial was a recognition of the fact that something other than the Barratt v Rees procedure was being undertaken. The respondents did not establish that Haque had consented to, or even had prior notice of, the procedure adopted.

In Burkett and DY, after trials, almost every issue, apart from the effect of the deed of settlement, was determined against the bank parties. The deed of settlement does not apply if Haque is not a group member. Haque wishes to contest the issue of whether or not he is a group member. There are arguable grounds upon which he can contest that issue which warrant the usual interlocutory steps and a trial. Subsequent decisions by the same judge have demonstrated that, where the deed of settlement does not apply, there are substantial questions to be determined on the bank parties’ claims which also warrant discovery and a trial.

It may well be that a form of ‘hybrid’ summary enforcement/trial or preliminary question procedure could be adopted, if the powers existing under s 49 of the Civil Procedure Act or Rule 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 were employed. But it was not suggested that the primary judge had expressly adopted that course, and no order or direction under s 49 of the Civil Procedure Act or Rule 47.04 was ever made in Haque’s case. Obviously, such a procedure could only be adopted where the parties were given the opportunity to address its appropriateness in advance.

Leave to appeal should be granted. The appeal should be allowed and the orders of the primary judge should be set aside. In lieu thereof, an order should be made dismissing the respondents’ application for judgment. The proceeding should then proceed in the Trial Division. Whether the issue of the application of the deed of settlement is to be determined separately or not will be an issue for the judge responsible for the proceeding in the Trial Division.

We do not consider that Haque’s submission that a Barratt v Rees application cannot be made in a separate proceeding was well founded. There is no reason in principle why a separate proceeding ought not be permitted. That was the procedure adopted in Byrne, and this Court made no comment on it. In the context of group proceedings there is a practical reason why a separate proceeding is preferable. It means only the parties directly affected are concerned, rather than the many other parties who were parties to the group proceeding.

Cairncross and Laszczuk

Proposed grounds of appeal

Laszczuk and Cairncross’ proposed grounds of appeal are identical. They are prolix and include submissions. They are set out in full in the annexure to these reasons.

The proposed grounds, and the amended written cases in support of them, raise a great many issues. For present purposes, it suffices to observe that the issues raised include the contentions that:

(1)the primary judge erred by failing to construe the deed of settlement as applicable only to the common issues raised in the group proceedings, or by failing to otherwise confine its operation to those issues; and
(Grounds 1, including 1A–1D, 2, 4, 6(a) and (b))

(2)the primary judge erred by failing to find that BABL had not proved the loan deeds relied upon were ‘Loan Deeds’ as defined in the deed of settlement.
(Grounds 3, 5, and 6(c))

When commencing his oral submissions on 12 February 2019 counsel for Laszczuk and Cairncross advised the Court that, apart from their contentions seeking to set aside the approval orders, Laszczuk and Cairncross ‘are only running a limitations defence and putting Bendigo to proof’. In the context, we took that to mean that they contended that BABL had not proved the elements of its cause of action, including that the deed of settlement applied to them, and that, if the loan deeds were invalid and the deed of settlement did not apply, any claim BABL might have had is statute barred.

In the course of his oral submissions on 12 February 2019, counsel for Laszczuk and Cairncross handed up a bundle of materials which articulated, and illustrated by reference to extracts from documents in the application books, particular matters relied upon. Those matters were:

(1)The loan deeds had not been executed in accordance with s 127 of the Corporations Act. This was the point concerning the use of facsimile signatures determined against the bank parties in DY.
(2)The parties to the loan deeds had not been unambiguously identified, as the identity of the lender was uncertain. It could be either GSF or ABLN. In Burkett it was said that this militated against a finding there had been ‘delivery’ of the loan deed, and it was held that the loan deeds were ineffective because it was unclear which entity was the ‘donee’ of the power of attorney.
(3)It had not been proved that the persons who purportedly executed the loan deed on behalf of ABLN as attorneys were authorised to do so, and that s 127 of the Corporations Act had not been complied with.
(4)There had been a failure to prove any assignment by ABLN to one of the BEN parties.
(5)There had been a failure to prove any advance by ABLN.

All of these matters were put as arising under proposed ground 5.

Of the matters pleaded in their defences, contentions that the loan deeds were made in circumstances that rendered them unjust or unfair pursuant to various statutes, and the contention the applicants had claims pursuant to the linked credit provider provisions of the Trade Practices Act 1974 (Cth), which the primary judge rejected, are not repeated in the proposed grounds of appeal.

Admissions on the pleadings

In their defences each of Laszczuk and Cairncross admit BABL’s allegation that they were a member of the group proceeding called in the statements of claim ‘the 2006/2007 Vineyards Originated Group Proceeding’. Group members in that proceeding were defined as persons who (relevantly):

(e) at any time during the period 16 June 2006 and 15 June 2007 inclusive acquired and/or held an interest as a member in the scheme called the ‘2007 Wine Grape Scheme’;

(f) entered into a lease and management agreement with GSMAL for vinelots in the 2007 Wine Grape Scheme; and

(g) entered into a loan with ABLN to fund payment of the application fees in respect of the 2007 Wine Grape Scheme.[126]

[126]See Laszczuk and Cairncross [2018] VSC 388, [19] and the Further Amended Statement of Claim in the 2006/2007 Vineyards Originated Group Proceeding [2]. Laszczuk and Cairncross in their written case submitted that the admission in their defences to being group members, did not extend past the ‘colloquial sense of group membership’. The writ in both matters pleads that the applicants were group members in proceeding S CI 2011 04862. The admission to group membership must be an admission to what was pleaded. It was never made clear what was meant by ‘colloquial sense’. In any event, after being given the opportunity to apply to withdraw the admissions, they determined not to do so.

In her amended defence and counterclaim Cairncross also admitted entering into a loan deed on or about 15 June 2007 as alleged by BABL,[127] but later in that defence (or an amended defence) she alleged the loan deed was not validly executed. Laszczuk admitted that he made an application for term finance by submitting a written application to GSF but otherwise denied the allegation made by BABL that he had entered into a loan deed dated 15 June 2007.
[127]See Statement of Claim at Application Book E 404 (‘AB’) and Defence AB E 421, whilst denying liability under that loan deed by reason of matters set out in her counterclaim.

Given these admissions, it must be accepted that Laszczuk and Cairncross completed and submitted applications for term finance, that they each acquired interests in the relevant managed investment scheme, that they each entered into a lease and management agreement with GSMAL, and that they each entered into a loan with ABLN to fund the payment of application fees in relation to the relevant scheme.

The admission by Laszczuk and Cairncross that they were group members in the 2006/2007 Vineyards Originated Group Proceeding also means that they are ‘Group Members’ as defined in the deed of settlement. That means they have acknowledged and admitted the validity and enforceability of the ‘Group Members’ Loan Deeds’, pursuant to clause 4.1.4 of the deed of settlement; and that they have released BABL and the other BEN parties from all ‘Claims’ pursuant to clause 4.1.10 of the deed of settlement.

Under the deed of settlement, the ‘Loan Deeds’, the validity and enforceability of which Laszczuk and Cairncross as ‘Group Members’ have acknowledged and admitted, are defined as being the ‘Loan Agreements’ the subject of the group proceedings ‘entered into between … Group Members’ and either GSF or ABLN ‘which were subsequently assigned [by ABLN] to one or more of the BEN Parties’.

The ‘Loan Agreements’ in turn are defined as ‘loan agreements under which monies were advanced to Scheme Members to finance their interest in managed investment schemes of which GSMAL … is or was the responsible entity’.

If the loan deeds which name Laszczuk and Cairncross as borrowers, upon which BABL sues, are ‘Loan Deeds’ as defined in the deed of settlement, then those loan deeds have been acknowledged and admitted by Laszczuk and Cairncross to be valid and enforceable in an agreement settling a litigated dispute, and Laszczuk and Cairncross have adopted the recitals in those deeds and have solemnly bound themselves to the obligations provided for in those deeds. Thus:

·They have adopted the recitals stating that they have decided to participate in the specified ‘Projects’ and to carry on the specified ‘Business’, and that the ‘Lender’ has agreed to finance them on the terms set out [see para [28] above].
·The named ‘Lender’ which executed the deed, ABLN, has bound itself to lend the specified ‘Funds’ to them and they have directed the ‘Lender’ to advance the ‘Funds’ to meet their obligations to GSMAL, once GSMAL is satisfied it has all the required documents [see paras [29]–[32] above].
·They have agreed to make repayments of principal and interest [see para [33] above].
·They have agreed that ABLN as the ‘Lender’ may assign its rights, and that ABLN as the ‘Lender’ may appoint GSF as its agent to service the arrangements [see para [34] above].

Once the loan deeds were ‘delivered’ (assuming validity), Laszczuk and Cairncross had no power of revocation, and the obligations created could not be withdrawn or recalled, even before the deeds were executed by ABLN.

Identifying the issues determining if the deed of settlement applies

In their further submissions concerning Burkett and DY, the applicants set out a four step process by which they contended the relevant issues ought to be addressed. The four steps were:

1.‘the advancement and the assignment issue’
2.‘whether the loan agreement between [them] and ABL Nominees was by deed or contract and its flow on effect to the limitation defence’
3.‘whether BABL has pleaded the limitations defence is not maintainable, and whether, if it did, it is entitled to rely on it (ie is its action an “action on a deed”)’
4.‘the proper construction of the Settlement Deed’.

In the course of the oral submissions on 27 November 2019 counsel for Laszczuk and Cairncross was asked to clarify why it was said that the deed of settlement did not apply to them, and he then did so.

Counsel for Laszczuk and Cairncross submitted that the deed of settlement does not apply to them (notwithstanding their admission of group membership) because BABL had failed to prove both the existence and the amount of an advance by ABLN, and because BABL had failed to prove an assignment by ABLN to one of the BEN parties. The deed of settlement was said not to apply to them because:

·If there was no proved advance by ABLN for a specific amount to finance an interest in a managed investment scheme, the relevant loan would not fall within the definition of ‘Loan Agreements’ in the deed of settlement, and the deeds would not fall within the definition of ‘Loan Deeds’, which applies only to ‘Loan Agreements’ as defined.
·If there was no assignment by ABLN to one or more of the ‘BEN Parties’ the deeds would not fall within the definition of ‘Loan Deeds’ in the deed of settlement because the ‘Loan Agreements’ would not have been ‘subsequently assigned’ by ABLN to one or more of the ‘BEN Parties’, as the definition of ‘Loan Deeds’ requires.

Thus, the issues which are determinative of whether the deed of settlement applies are what the applicants characterise as the ‘advancement’ issue and the ‘assignment’ issue.

It should be noted at this point that the definition of ‘Loan Agreements’ in the deed of settlement does not expressly refer to either the entity making the advance or the amount. Its express terms have been set out earlier [see para [23] above].

It is necessary to review the evidence relied upon and the submissions made on these two critical issues.

The assignment issue and the advancement issue — evidence and submissions before the primary judge and in the amended written cases

In each of the proceedings against Laszczuk and Cairncross the making of the advances and the assignment of the loans were the subject of an affidavit affirmed by Mr Flamer-Smith, on 24 July 2017 in relation to Laszczuk and on 14 August 2017 in relation to Cairncross. Each of the affidavits deposed that the relevant advances were made by ABLN as ‘originated’ loans. The individual loans were said to be part of a total payment to GSMAL of $24,643,142.21. In each case documents described as copies of an ‘Originating Notice’ and a ‘Settlement Report’ were produced to substantiate this proposition.

In each case the same affidavit deposed to assignment of the loans from ABLN to ABL (from whom BABL is the transferee under the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth)) pursuant to an ‘Assignment Letter’ dated 14 June 2006. The Assignment Letter was produced. It was signed on behalf of both ABLN and ABL by one Stuart Edward Gregory, in each case as the delegate under a power of attorney dated 31 March 2005 and a deed of delegation dated 13 June 2006.

In each proceeding Mr Flamer-Smith affirmed a second supplementary affidavit on 31 May 2018 in which he deposed, amongst other things, that the payment of $24,643,142.21 to GSMAL had been made by ABL and not ABLN because ABLN did not have a SWIFT Exchange Settlement Account with the Reserve Bank of Australia. He deposed that ‘journal entries’ had been created to reflect the fact that it was ABLN which had actually advanced the funds.

In the written submissions on behalf of Laszczuk and Cairncross relied upon before the primary judge[128] it was submitted that the defendants put BABL to proof ‘including proof that money was loaned under the Loan Deed (from ABL Nominees to GSMAL) and that there was a completed assignment (from ABL Nominees to BABL)’. The written submissions also sought to contest the effectiveness of the assignment on the basis that the loan deeds had not been properly executed, and that in taking the assignment, BABL could not rely upon assumptions pursuant to s 129(5) of the Corporations Act. Otherwise, the only specific submission made about the advance or the assignment was that notice of the assignment had not been given, reliance in that respect being placed upon the decision in Howard. On this issue the written submission in response on behalf of BABL was that ‘as a group member’ the defendants could not contest the assignment of the loan. BABL also relied on the matters to which Mr Flamer-Smith had deposed, and it contended that, as was found in Howard, the absence of a notice might render the assignment invalid at law but it was still valid in equity.
[128]The written submission on behalf of Cairncross adopted the submission on behalf of Laszczuk.

The primary judge heard BABL’s summary judgment applications on 11 July 2018 and delivered judgment on 10 August 2018. Laszczuk and Cairncross filed their applications for leave to appeal on 7 September 2018. On 21 September 2018 the judgment in DY was delivered. On 4 October 2018 the applicants filed amended written cases. The amended written cases contended there had been a failure to prove an advance by ABLN, and a failure to prove an assignment. As to the assignment, it was contended that the primary judge had failed to consider whether s 127 of the Corporations Act had been complied with. In response, BABL in its written case submitted that the document had not been executed under s 127, it had been executed by an attorney.

The assignment issue and the advancement issue — submissions on 12 February 2019 and in further submissions dated 16 September 2019

In relation to the assignment issue, at the hearing before us on 12 February 2019 Laszczuk and Cairncross submitted, for the first time, that there was no evidence that the attorney who had signed the Assignment Letter had been validly appointed as attorney for ABLN and ABL. This was, of course, different to their previous submission about the Assignment Letter which had relied upon s 127 of the Corporations Act. Counsel agreed that this submission relied upon a ‘lacuna’ in the evidence rather than a demonstrated defect. Then, in further submissions filed 16 September 2019 they submitted, again for the first time, that there had been no assignment ‘from any entity that had a loan to assign’, and that accordingly the deed of settlement did not apply.

In relation to the advancement issue, it was submitted on behalf of Laszczuk and Cairncross that on the evidence it had not been proved that ABLN had advanced any money to GSMAL or to the applicants, and that rather the advance had been made by BABL. This is relevantly the same issue as had arisen in Burkett, although the actual payments are different. ABL and BABL were referred to interchangeably, as BABL is the transferee of ABL’s assets. Reliance was placed upon what was said to be Mr Flamer-Smith’s admission that ‘BABL transferred the money not ABL Nominees’. It was submitted that, as in Burkett, the bank parties’ cause of action fails because they cannot establish that ABLN (as opposed to ABL/BABL) had made the advance. It was further submitted that there had been a failure to prove an advance of a specific amount.

On the assignment issue, BABL submitted that the absence of proof of the power of attorney under which the Assignment Letter had been executed had not been raised before the primary judge and should not be permitted to be relied upon on the applications for leave to appeal. BABL also argued that the deed of settlement had the effect that Laszczuk and Cairncross as group members could not contest the assignment.

In relation to the issue of whether the requisite ‘advance’ had been proved, BABL relied upon the fact that the ‘relevant criterion’ is entry into a loan to fund payment of application fees. It was submitted that it is not necessary to prove an advance by ABLN, either of a specified amount or otherwise.

The issue relied upon by Laszczuk and Cairncross in relation to the advance arose out of the finding in Burkett that the advance there had been made by ABL and not by ABLN. There was no finding that there had been no advance. It was clear there had been an advance. The issue was by which entity. The primary judge found the bank parties had failed to prove it was by ABLN. It was submitted by BABL that this finding in Burkett was erroneous.

Are Laszczuk and Cairncross bound by the deed of settlement?

The issue of whether BABL had proved the requisite advance so that the loan, the existence of which Laszczuk and Cairncross admit, falls within the definition of ‘Loan Agreements’ under the deed of settlement is to be determined by asking whether there was an advance ‘to finance their interest in a managed investment scheme’. The definition of ‘Loan Agreements’ does not require that the advance came from ABLN itself or that it be of any specified or quantified amount.

Laszczuk and Cairncross have admitted they completed and submitted applications for term finance and that they each acquired interests in the managed investment scheme of which GSMAL was the responsible entity. They have admitted they entered into a loan with ABLN to fund amounts due by them to GSMAL. It is clear that an advance to GSMAL was made, even if the proper characterisation of the arrangements (origination or assignment/sale), and by which entity (ABLN or ABL/BABL), is open to argument.

Given these factors, it seems to us that the conclusion is inevitable that there were loan agreements between Laszczuk and Cairncross and ABLN which fell within the definition of ‘Loan Agreements’ under the deed of settlement; that is, loan agreements under which monies were advanced to finance Laszczuk and Cairncross’ interests in managed investment schemes of which GSMAL was the responsible entity.

In relation to the question of whether the Assignment Letter was properly executed, the applicants’ initial submission was misconceived. Section 127 of the Corporations Act had no relevance. The document was not purportedly executed pursuant to s 127. It was purportedly executed under a power of attorney.

In relation to proof of the power of attorney, the applicants did not raise that issue before the primary judge, and did not raise it in their applications for leave to appeal or their amended written cases. They raised it for the first time during the oral submissions on the applications for leave to appeal.

In Vlahos Pty Ltd v Vlahos[129] Kyrou JA (with whom Tate and McLeish JJA agreed) said:

There is a fundamental principle that a point not taken at first instance cannot be taken on appeal if evidence could have been given at the first instance trial which by any possibility could have prevented the point from succeeding. Exceptional circumstances will be required in order for a party to introduce an issue for the first time on appeal. Even where the new point sought to be raised is a point not capable of being affected by further evidence, such as an argument as to the construction of a statute or document, the court may not permit it to be relied upon.[130]

[129][2017] VSCA 166.

[130]Ibid [49] (citations omitted).

The contention belatedly raised in relation to the Assignment Letter and the power of attorney is obviously one where there is a possibility that further evidence at first instance could have prevented the point from succeeding. As counsel for the applicants conceded in the course of oral submissions, his contention on this issue is not that there is an established deficiency, but rather that there is a lacuna. By its very nature, a lacuna is something that is capable of being filled. The applicants should not be permitted to rely upon the contention which they now make in relation to the Assignment Letter, which was raised for the first time in the course of oral submissions on the applications for leave to appeal.

In relation to the argument that the loan deeds were not properly executed and that in taking an assignment BABL could not rely upon the assumptions in s 129(5), satisfaction of the relevant definition in the deed of settlement does not require that there be an assignment of a validly executed loan deed; it requires that there be a ‘Loan Agreement’ as defined (and a loan with ABLN to fund the investments is admitted), which was then assigned by ABLN.

Finally, the very belated submission that there was no assignment ‘from any entity that had a loan to assign’ should be rejected both because it was first raised in the further submissions filed 16 September 2019, and because it is inconsistent with the admissions by Laszczuk and Cairncross that they entered into a loan with ABLN to fund their investments.

We do not accept the argument advanced on behalf of BABL that Laszczuk and Cairncross are in some way precluded from contending that there has been a failure to prove the assignment by virtue of the provisions of the deed of settlement. In this context, the contentions made concerning the assignment are directed to the issue of whether their loan deeds are ‘Loan Deeds’ as defined in the deed of settlement. If they are not, the deed of settlement does not apply. They cannot be precluded from contending that the deed of settlement does not apply by reliance upon provisions of the deed of settlement itself.

In our opinion, neither the assignment issue nor the advancement issue preclude the conclusion, which otherwise must be drawn in consequence of the admissions made, that Laszczuk and Cairncross are bound by the deed of settlement. They admit they are group members. The loan deeds in their names are ‘Loan Deeds’ as defined in the deed of settlement. Under the deed of settlement they have admitted the validity and enforceability of those deeds, and they have released BABL from all ‘Claims’ as defined.

The consequence of this conclusion is that Laszczuk and Cairncross cannot rely upon the large number of matters which have been put forward on their behalf in support of a conclusion that the loan deeds were not validly executed as deeds,[131] and the defences advanced in reliance upon that conclusion, including the defence that BABL’s claims are not actions ‘upon a deed’ and are statute barred. This was the conclusion which the primary judge reached in Burkett, correctly, in our opinion.
[131]In addition to the defences raised in reliance on Burkett and DY, the loan deeds were said to be invalid because the attorney purporting to execute the loan deeds on ABLN’s behalf was not authorised to execute the relevant loan deeds due to the incompleteness of the authorising power of attorney; various alleged non-compliances with the formalities; and that ABLN was not entitled to rely upon the assumption in s 129(5) that the loan deeds were duly executed.

Other issues raised by Laszczuk and Cairncross

Our conclusion in relation to the application of the deed of settlement means that proposed grounds 3 and 5, whilst arguable, should not be upheld. We would grant leave to appeal on those grounds but dismiss the appeal.

The contention in proposed ground 1 (including proposed grounds 1A–1D) that his Honour ought to have construed the deed of settlement as limited to the common issues, or otherwise confined its operation in that way, would require this Court to find that the decisions in both Byrne and Pekell are wrong. Whilst this Court is free to depart from its earlier decisions, it does so cautiously and only when compelled to the conclusion that the earlier decision is wrong.[132] This Court has reached a considered conclusion concerning the very deed of settlement which is now in issue on two separate occasions.
[132]Nguyen v Nguyen (1990) 169 CLR 245, 269; [1990] HCA 9, [21] (Dawson, Toohey and McHugh JJ).

As, in the absence of those two prior authorities, the position contended for on behalf of the applicants would be arguable,[133] we would grant leave to appeal. But we would dismiss the appeal as the contentions of the applicants are inconsistent with two prior decisions of this Court precisely on point. We are not compelled to the conclusion that those decisions are wrong.
[133]The position contended for by the applicants might be seen as supported by Lee J’s judgment in Dillon v RBS Group (Australia) Pty Ltd [No 2] [2018] FCA 395, see in particular [50], and by the High Court’s very recent decision in BMW Australia Ltd v Brewster [2019] HCA 45 insofar as this Court in Pekell relied upon s 33ZF. The High Court judgment was handed down after submissions on these applications had concluded. Ms P Neskovcin QC, counsel for the Respondents drew the Court’s attention to the judgment but no party sought to make further submissions on it.

Proposed ground 2 is not arguable. BABL relies upon the terms of the deed of settlement as they are written. We would refuse leave to appeal on that proposed ground.

We would also refuse leave to appeal on proposed ground 4. Submissions were made on behalf of the bank parties before the judge when approval of the settlement was being considered as to the effect of issue estoppel, Anshun[134] estoppel and abuse of process. It transpired that those submissions were inconsistent with the High Court’s later decision in Timbercorp. Notwithstanding that, there is nothing unconscientious about the submissions that were originally made, or about the bank parties’ subsequent reliance upon the deed of settlement as approved.
[134]A reference to Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45.

In the amended written case it was submitted that proposed ground 6 only arose if the Court found in the applicants’ favour on proposed ground 1 or one of the other grounds. We would refuse leave to appeal on that proposed ground.

Conclusion — Laszczuk and Cairncross

On proposed grounds 1 (including 1A–1D), 3 and 5 we would grant leave to appeal but dismiss the appeal. Otherwise, we would refuse leave to appeal.

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ANNEXURE
Ground 1: The Settlement Deed and the approval judgment’s orders in Clarke & Ors v Great Southern Finance Pty Limited [2014] VSC 516 (Clarke) should be construed, in the case of ambiguity, within power/jurisdiction (‘power’). The primary judge erred at [52]-[66] of the judgment by failing to construe
(i)the orders in Clarke within the power the Court had to make those orders,
(ii)the Settlement Deed, as approved by the Court in Clarke by way of judgment, as within the power the Court had to approve the Settlement Deed, and

alternatively, the primary judge erred by failing to consider the argument at all by saying his Honour was bound by Byrne v Javelin Assett Management PL [2016] VSCA 214 (Byrne) and or Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings PL (2017) 118 ACSR 592 (Pekell), in circumstances where neither decision considered the issues below in A, B, C and D.
Had the orders and or the Settlement Deed been construed within power, they would have related only to the applicants’ common issues and would have not prevented the applicants running any of the points that they ran below.

Ground 1A:    The primary judge erred at [29] of the judgment by finding that the approval judgment of the Court in its class action jurisdiction could go beyond the common issues.
Ground 1B:    The approval judgment and orders approving the settlement were beyond constitutional power for the reasons set out at [53] to [62] if they went beyond the group members’ common issues.
Ground 1C:    The primary judge erred by making a decision at [64] in relation to the Victorian Charter of Human Rights and Responsibilities Act 2006 that went against the Applicants, without giving the Applicants a right to be heard. In any event, it was wrongly decided against the Applicants.
Ground 1D:   The orders of the Court and the Settlement Deed (in Clarke) were ambiguous, because
(i)The orders of the Court in Clarke approving the Settlement Deed did not expressly give the Settlement Deed any power beyond the common issues yet the Court in Laszczuk and Cairncross applied the Settlement Deed as if the orders in Clarke determined the non-common issues;
(ii)The Deed of Settlement did not expressly exclude group members from running their non-common issues yet the Court in Laszczuk and Cairncross applied the Settlement Deed as if it did;

(iii) of Ground 2.

Ground 2:      BABL contended at trial, in effect, that the Settlement Deed said ‘from the judgment approval date, if BABL raises a claim against a group member then that group member can raise no defence’. There are no express words in the Settlement Deed that support that construction. BABL did not contend for an implied term or rectification. BABL said the Settlement Deed should be construed to that effect. The primary judge did construe the words to that effect. The primary judge erred at [31] and [51] of the judgment by failing to properly construe the Settlement Deed in Clarke v Great Southern Finance PL [2014] VSC 516. The Court failed to state the principles of construction it used. The Court should have found that the applicants could raise defences, including their limitations defence.
Ground 3:      The Settlement Deed on its own terms only applied if certain conditions precedent were made out. BABL failed to satisfy its burden of proof in relation to each condition precedent. The primary judge erred by not finding BABL had failed to meet its burden. Had BABL been put to proof by the trial judge, as it ought to have been, it would not have been proved by BABL that the applicants had a Loan Deed (as defined in the Settlement Deed) and thus the Settlement Deed would not have applied to them. Where the Settlement Deed did not apply to them, the applicants would have had no issue running their non-common issues below.
Ground 4:      BABL asked the Court to approve the Settlement Deed in Clarke on the basis that BABL were only asking for rights co-extensive with BABL’s common law rights (issue estoppel, Anshun estoppel and abuse of process) had the Court gone to judgment. It is unconscientious for BABL to now seek more rights than they bargained for, by seeking to foreclose the Applicants from running their non-common issue defences which they would have been able to run had the Clarke trial gone to final judgment at trial. It is further unconscientious for BABL to rely on the general words of a deed of settlement to determine what was unknown to the parties to the deed at the time they entered it. Namely, no party knew what the Applicants’ defences and cross-claims were at the time of entry into Settlement Deed. The primary judge erred at [67]-[69] of the judgment by deciding otherwise. Had the primary judge decided correctly, the applicants would have been able to run their non-common issues below.
Ground 5:      The primary judge erred by failing to find that BABL had not met its burden of proof on its statement of claim at [41] to [49]. Had BABL been put to proof by the trial judge, as it ought to have been, BABL would not have established that an action on a deed could have been brought under the document titled loan deed. Accordingly, the applicants would have had no debt to pay.
Ground 6:      The primary judge erred in his judgment by failing to consider the arguments put to the Court, including
(a)Hearing the defences of the Applicants pursuant to s 33Q of the Victorian Supreme Court Act (T98.3-100.4; T100.11-104.16) – a continuation of the class action proceedings in relation to the non-common issues, given that the common issues are now resolved, being the subject of an approval judgment;
(b)Hearing the defences of the Applicants pursuant to s 33ZF of the Victorian Supreme Court Act (T96.9-98.2; T100.11-104.16) – a re-opening of the class action proceedings;
(c)The non-applicability of s 129 of the Corporations Act (AS22-23; J45).

[2020] VSCA 17

14 February 2020