Nelson (as trustee) v Supple and Anor (No.2)

This matter concerned an application by the plaintiff, Nelson (as trustee), for an order that the defendants, Supple and Anor, be restrained from proceeding with a sale of certain land. The plaintiff sought to enforce a charge over the land, which had been granted by the defendants to secure a loan. The defendants contended that the loan agreement was void for illegality, as it was alleged to have been entered into for the purpose of circumventing foreign investment restrictions. The proceedings were heard in the Supreme Court of Queensland.

The central legal issue before the Court was whether the loan agreement was void for illegality, rendering the charge unenforceable. This required the Court to determine whether the agreement was entered into for an illegal purpose and, if so, what the consequences of that illegality were for the enforceability of the charge. The Court also had to consider whether the plaintiff, as trustee, was aware of or complicit in any alleged illegality.

Judge Burchardt found that the evidence did not establish that the loan agreement was entered into for an illegal purpose. The Court applied the principles of contract law concerning illegality, noting that for a contract to be void for illegality, the illegal purpose must be a fundamental part of the agreement and must be known to both parties. In this instance, the Court was not satisfied that the defendants had discharged the onus of proving illegality. Consequently, the charge was held to be valid and enforceable.

The Court ordered that the defendants be restrained from proceeding with the sale of the land, and that the plaintiff was entitled to enforce the charge.