P J Nash Pty Ltd v Food and Beverage Australia Limited - [2021] SASCA 86

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
P J NASH PTY LTD v FOOD AND BEVERAGE AUSTRALIA LIMITED
[2021] SASCA 86
Judgment of the Court of Appeal
(The Honourable Justice Lovell, the Honourable Justice Livesey and the Honourable Justice Bleby)
2 September 2021

APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - FUNCTIONS OF APPELLATE COURT
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - ADMISSION OF FURTHER EVIDENCE - IN GENERAL
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS
The parties were involved in a registered managed investment scheme for the development of cherry orchards in Tasmania and the cultivation, harvesting, marketing and sale of cherries. The scheme was governed by a number of contractual documents. The scheme was ultimately unsuccessful and a dispute arose regarding the distribution of proceeds from the 2014/15 harvest. The respondent sued the appellant in an action for debt for $1,125,581 being the total net proceeds from the 2014/15 harvest. The Trial Judge largely rejected the respondent's claim, however found the respondent was entitled to receive $156,456 being 13.9% of the harvest net proceeds under the scheme's contractual documentation. The appellant appealed that finding.
The appellant complained that the Trial Judge erred in finding that the respondent had a claim in debt. Further, the appellant contended the Trial Judge erred in holding that the respondent was entitled to 13.9% of the harvest net proceeds; rather, the appellant contended that the respondent could only be entitled to 5.9% of the harvest net proceeds. The appellant also sought to adduce fresh evidence on appeal that the respondent was no longer in a position within the scheme to bring the proceedings or receive any judgment sum.
Held (by the Court), dismissing the appeal:
1. The Trial Judge was correct to hold that, upon proper construction of the scheme's contractual documentation, the respondent had a claim in debt against the appellant;
2. The Trial Judge's findings of fact with respect to the evidence were open to him and, upon review of the evidence, were correct;
3. The appellant's application to adduce fresh evidence on appeal is refused;
4. The appeal is dismissed;
5. Parties will be heard on the question of costs.
Attorney General (SA) v Marmanidis (2019) 132 SASR 320; Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64; Crampton v The Queen (2000) 206 CLR 161; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; Fox v Percy (2003) 214 CLR 118; JGS v R [2020] SASCFC 48; Lee v Lee (2019) 266 CLR 129; Nash v Food and Beverage Australia Ltd [2021] SASCA 59; Perara-Cathcart v The Queen (2017) 260 CLR 595; Price v Spoor [2021] HCA 20; R v Birks (1990) 19 NSWLR 677; R v Moores (2017) 128 SASR 340; Rocky Castle Finance Pty Ltd v Taylor (2014) 118 SASR 349; Rothenberger Australia Pty Ltd v Poulsen & Anor (2003) 58 NSWLR 288; Rothwells Ltd v Nommack (No 100) Pty Ltd [1990] 2 Qd R 85; South Australia v McKendrick Ahern Pty Ltd (Supreme Court of South Australia, Olsson J, 9 December 1997); Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138; Steicke v Pederick (2019) 134 SASR 114; Sunlight Nominees Pty Ltd v Zotti and Zotti [2019] SASCFC 11; Viscariello v Livesey [2013] SASC 99; Warren v Coombes (1979) 142 CLR 531; Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 361; Young v Queensland Trustees Ltd (1956) 99 CLR 560, considered.

P J NASH PTY LTD v FOOD AND BEVERAGE AUSTRALIA LIMITED
[2021] SASCA 86

THE COURT: The appellant, PJ Nash Pty Ltd, the respondent, Food and Beverage Australia Limited, and Aussie Cherries Limited were all involved in a registered managed investment scheme involving the development of cherry orchards in Tasmania and the cultivation, harvesting, marketing and sale of cherries. The managed investment scheme was not successful and disputes about the 2014/15 harvest arose. Food and Beverage Australia Limited sued PJ Nash Pty Ltd for $1,125,581 being the total net proceeds from the 2014/15 harvest. The Trial Judge largely rejected Food and Beverage Australia Limited’s claim, but found it was entitled to receive $156,456 being 13.9% of the harvest net proceeds. PJ Nash Pty Ltd appeals that finding.
Background
The background facts in this matter are set out comprehensively in the Trial Judge’s reasons[1] and more recently by this Court in related proceedings.[2] We provide the following as a summary to the extent necessary to understand the issues in this appeal.
[1] Food and Beverage Australia Limited v P J Nash Pty Ltd & Anor [2019] SASC 208 (“Trial Judge’s Reasons”).
[2] Nash v Food and Beverage Australia Ltd [2021] SASCA 59.
Food and Beverage Australia Limited (“FABAL”) was the responsible entity of a registered managed investment scheme known as the Tasmanian Premium Cherries Project (“the Project”). The Project commenced in early 2008; it involved establishing cherry orchards, and the cultivation, harvesting, marketing and sale of cherries (“the Project cherries”). The Project was undertaken on land in Tasmania purchased by Aussie Cherries Limited (“ACL”) from the Driessen family (“the Land”).
There were three initial promotors of the Project: Mr Philip Nash, as sole director of PJ Nash Pty Ltd (trading as Westmores) (“PJN”), Mr Christopher Day (through FABAL), and Mr Peter Holt, through his accounting company, Holt Norman & Co. An agreement was entered for developing the Project whereby Holt Norman & Co would attain investors in the Project, FABAL would be the responsible entity, and PJN would arrange the marketing and sale of the Project cherries.[3] As at February 2008, ACL’s directors included Mr Nash, Mr Day and Mr Holt.
[3] The Managed Investment Scheme Development Agreement on 9 October 2007.
The Project documentation included a Managed Investment Scheme Development Agreement,[4] the Project Constitution,[5] and a Product Disclosure Statement (“PDS”).[6] Investors in the Project would acquire Interests through the PDS. Each Interest entitled the Investor to one Allotment, a 0.10 hectare space on the Land. Approximately 100 cherry trees would be farmed on each Allotment. Pursuant to the Project Constitution, upon acquiring an Interest, an Investor in the Project became a “Grower” and was further required to enter into a Licence Agreement (with FABAL and ACL) and a Management Agreement (with FABAL).
[4]     Executed on 9 October 2007.
[5]     Executed on 23 January 2008.
[6]     Issued by FABAL on 29 February 2008 with supplementary PDSs issued on 30 May 2008 and 26 March 2009.
ACL also had their own business of cultivating and selling cherries on the Land (“the ACL cherries”). Pursuant to a bilateral agreement between FABAL and ACL, the Orchard Management Agreement, ACL appointed FABAL to manage the ACL cherries.[7] Consequently, both the Project cherries and the ACL cherries were harvested on the Land.
[7] Executed on 29 July 2010, operating from 26 May 2008. ACL and FABAL also entered into a Services Agreement for administrative services and a Grading, Packing & Storage Agreement: Trial Judge’s Reasons [78]–[79].
A Cherry Marketing Agreement was executed on 20 December 2011 between FABAL, ACL and PJN which formalised existing arrangements between the parties. Under the Cherry Marketing Agreement, PJN was responsible for the marketing and sale of all of the cherries grown on the Land; that is, the Project cherries and the ACL cherries.[8] PJN was responsible for then remitting the net proceeds to FABAL, on behalf of the Project and ACL, after deducting its commission and expenses from the gross proceeds.[9] PJN was also required to account for and pay FABAL, on behalf of the Project and ACL, the net and proper sale proceeds not more than 45 days after the sale of any lot of cherries.[10] FABAL would then distribute the proceeds attributable to the Project cherries in accordance with the Project Constitution;[11] the ACL cherries would be attributed to ACL pursuant to the Orchard Management Agreement.
[8] Cl 3 Cherry Marketing Agreement.
[9] Cl 3 Cherry Marketing Agreement.
[10] Cl 4.9.4 Cherry Marketing Agreement.
[11] Cls 33 and 34 Project Constitution.
The proceedings before the Trial Judge concerned a dispute regarding the payment of the net proceeds from the sale of cherries from the 2014/15 harvest (“the harvest net proceeds”) pursuant to the Cherry Marketing Agreement.
By December 2014, ACL and FABAL had fallen into dispute. ACL purported to terminate or withdraw FABAL’s authority to manage its business on the Land (ie the ACL cherries under the Orchard Management Agreement). ACL also purported to terminate or withdraw FABAL’s authority to receive the proceeds of the harvest of the ACL cherries under the Cherry Marketing Agreement.
As a result of ACL and FABAL’s dispute, FABAL ceased involvement in the 2014/15 harvest and ACL assumed responsibility for all of the cherry trees for the remainder of the 2014/15 harvest. FABAL contended that despite being willing and able to carry out the 2014/15 harvest, it was prevented from having any such involvement.
In the context of these disputes, ACL directed PJN to pay it the harvest net proceeds directly, rather than to FABAL.[12] Despite correspondence in January 2015 suggesting it would pay the harvest net proceeds to FABAL per the Cherry Marketing Agreement, PJN ultimately acceded to ACL’s request and paid the harvest net proceeds in the sum of $1,125,581 directly to ACL.[13]
[12] By letter on 9 February 2015.
[13] A series of payments were made between late February and early April 2015.
The practical effect of ACL’s direction, and PJN’s compliance with it, is that ACL received not only the proceeds from the sale of its own ACL cherries but also the proceeds from the sale of the Project cherries. FABAL was deprived of the ability to distribute, to the Growers in the Project, the proceeds from the sale of the Project cherries and ACL received monies to which it was not entitled.
Trial proceedings and Trial Judge’s findings
FABAL alleged that PJN’s failure to pay it the harvest net proceeds involved a breach of the Cherry Marketing Agreement. FABAL’s primary claim against PJN was for the entire harvest net proceeds in the sum of $1,125,581[14] in debt or by way of damages for breach of contract. In support of its claim to be entitled to that sum, FABAL relied particularly upon cls 3 and 4.9.4 of the Project Constitution. In the alternative, FABAL sought to recover at least the portion of the harvest net proceeds referrable to the Project cherries; FABAL contended that that portion equated to 13.9% of the harvest net proceeds, or $156,456.
[14] The amount of $1,125,581 was agreed to be the net proceeds of the 2014/15 harvest after PJN’s commission, levy and GST had been deducted from the gross proceeds of $1,315,696: Trial Judge’s Reasons at [159].
PJN defended FABAL’s claims in both debt and for damages at various levels.[15] Focusing upon those relevant to the present appeal, PJN raised different issues in relation to the portion of the harvest net proceeds relating to the ACL cherries, and the portion relating to the Project cherries.
[15] Including that FABAL had engaged in a repudiatory breach of the Orchard Management Agreement and Cherry Marketing Agreement, respectively, and that the Cherry Marketing Agreement had been frustrated – all of which were rejected by the Trial Judge.
The ACL cherries’ proceeds
Regarding the net proceeds from the sale of the ACL cherries, PJN contended that its failure to pay these proceeds to FABAL did not involve any breach of the Cherry Marketing Agreement. PJN contended that ACL had terminated or withdrawn FABAL’s authority to receive payment of the ACL cherries’ proceeds such that its obligations to pay FABAL under the Cherry Marketing Agreement were either frustrated or fell away. Alternatively, PJN contended that payment of this portion of the harvest net proceeds directly to ACL was sufficient to discharge PJN’s obligations to FABAL under the Cherry Marketing Agreement.
The Trial Judge, while largely rejecting the submissions made by PJN, ultimately found that payment of the ACL cherries’ proceeds to ACL was sufficient to discharge PJN’s obligations under the Cherry Marketing Agreement. The Trial Judge found that even though the Cherry Marketing Agreement contemplated the ACL cherries’ proceeds would be paid to FABAL, it expressly provided FABAL was to receive said proceeds “on behalf of” ACL as principal. Accepting that it was open for an agent to sue to enforce a contractual right, that right was destroyed by the intervention of the principal in its own right. As ACL had intervened by directing PJN to make the payment direct to it, the Trial Judge found that the payment, given the contractual arrangements, discharged PJN’s obligations under the Cherry Marketing Agreement to FABAL. Consequently, FABAL’s claim in debt or for damages for breach of contract failed in respect of the ACL cherries’ proceeds. It is not necessary for us to decide whether the principle applied by the Trial Judge is one of general application as his finding on the facts was not challenged by FABAL.
The Project cherries’ proceeds
At trial, PJN conceded that ACL’s purported termination or revocation of FABAL’s authority to receive the harvest net proceeds was only valid insofar as it related to dealings with the ACL cherries; it did not extend to the Project cherries. In any event, the Trial Judge found that ACL’s purported termination of FABAL’s authority could not impact FABAL’s contractual right under the Cherry Marketing Agreement to receive the Project cherries’ proceeds “on behalf of” the Project.
Consequently, the Trial Judge held that PJN’s payment of the Project cherries’ proceeds directly to ACL was not a basis for discharging PJN’s contractual obligation under the Cherry Marketing Agreement to pay that portion of the harvest net proceeds to FABAL. The Trial Judge held that FABAL was, and remained, entitled under the Cherry Marketing Agreement to payment from PJN of the net proceeds from the sale of the Project cherries as a contractual debt.
PJN further contended that only 5.9% (not 13.9%) of the harvest net proceeds were referrable to the Project cherries such that any entitlement of FABAL to receive the Project cherries’ proceeds should reflect that percentage.[16] PJN submitted that certain Licence Agreements had been terminated, therefore terminating the Grower’s entitlement (and by extension, FABAL’s entitlement) to the proceeds from the sale of cherries grown on those Allotments. The Trial Judge found there was insufficient evidence to draw such a conclusion. In any event, the Trial Judge found that the termination of a Licence Agreement did not mean that the related trees on that Allotment ceased to be Project trees; without more they did not become ACL trees. The Trial Judge held that the proper percentage of the harvest net proceeds referrable to the Project trees and therefore recoverable by FABAL was 13.9%, as evidenced by the extant Interests recorded in the Grower’s Register at the relevant time.
[16] PJN contended only 13 Growers with 26 Interests remained, equating to 4.95% however adopted a slightly higher figure of 5.9%: Trial Judge’s Reasons at [221].
Accordingly, FABAL was granted judgment against PJN in the amount of $156,456. These findings with respect to the Project cherries’ proceeds are subject to challenge in the present appeal.
Grounds of appeal
The amended Notice of Appeal contains 11 grounds but the parties, helpfully, accepted that the grounds raised three main issues.[17]
[17] PJN was permitted to file, with FABAL’s consent, revised grounds of appeal at the commencement of the appeal hearing. The revised grounds were indicated to have only minor amendments.
The issues agitated by PJN were summarised as follows:
Issue 1Grounds 2, and 9 to 11: FABAL’s entitlement to receive the Project cherries’ proceeds was as the responsible entity of the Project; without the status of “responsible entity”, FABAL did not, and cannot, have capacity to make a claim for a contractual debt against PJN. Resolution of this issue in PJN’s favour is dependent upon the Court permitting PJN to adduce fresh evidence on appeal.
Issue 2 Grounds 3 to 8: The Trial Judge erred in holding that there was insufficient evidence to conclude that certain Licence Agreements had been terminated, such that the Grower’s Interest was also terminated; an Interest in the Project with no valid licence was an “empty vessel”. Consequently, FABAL could not have an entitlement to the proceeds of the Project cherries where there had been a terminated Licence Agreement, the result being that only 5.9% (opposed to 13.9%) of the harvest net proceeds were available to be claimed as relating to the Project cherries.
Issue 3Grounds 1 and 2: FABAL’s claim was properly one for breach of contract, not debt, as cl 4.9.4 of the Cherry Marketing Agreement under which FABAL’s entitlement arose was not for a certain or liquidated sum. Further, the certainty of any sum FABAL was entitled to under the Cherry Marketing Agreement was dependent upon the existence of valid Licence Agreements.
Issues 1 and 3, if successful, provide PJN with a complete answer to FABAL’s claim. Under Issue 1, PJN contended that it should be permitted on appeal to adduce fresh evidence establishing that the Project was wound up and therefore FABAL was not the “responsible entity” under the scheme at the time of trial. As FABAL’s claim was brought in its capacity as the “responsible entity” of the Project, PJN submitted that the winding up of the Project was fatal to FABAL’s claim. Under the related matters in Issue 3, PJN contended that FABAL’s claim, if it had one at all, was properly one for damages for breach of contract rather than a liquidated claim in debt. To put it bluntly, PJN contended that FABAL pursued the wrong cause of action.
Under Issue 2, assuming it fails on Issues 1 and 3, PJN accepted that it paid some money to ACL to which ACL was not entitled, namely the harvest net proceeds attributable to the Project Cherries. FABAL contended, and the Trial Judge accepted, this portion equated to 13.9% of the harvest net proceeds, reflective of 13.9% of the trees being Project trees at the relevant time. However, PJN contended that ACL had terminated the Licence Agreements over a number of trees such that they were no longer Project trees; consequently, PJN submitted that FABAL had no right to receive the proceeds of the sale of cherries from the trees were the Licence Agreements had been terminated. PJN contended, in effect, the cherries from the trees with no valid Licence Agreements equated to 8% of the harvest net proceeds, limiting any claim FABAL may have had to 5.9% (not 13.9%) of the harvest net proceeds.
PJN seeks an order that FABAL’s claim be dismissed and seeks a favourable costs order for the first instance and appeal proceedings.
Principles on appeal
The principles guiding an appellate court’s role upon a rehearing are well settled. An appellate court is to conduct a real review of the evidence given at first instance and of the trial judge’s reasons, with the power to receive fresh evidence on appeal. Appellate restraint must be exercised so as not to interfere with a trial judge’s findings unless they are “glaringly improbable”, having due regard for the benefit a trial judge has in hearing and seeing any witnesses. Thereafter, in general terms, an appellate court is in as good a position as the trial judge to decide the proper inference to be drawn from undisputed or established facts.[18]
[18] See Lee v Lee (2019) 266 CLR 129 at [55]; Fox v Percy (2003) 214 CLR 118 at [25]–[29]; Warren v Coombes (1979) 142 CLR 531 at 551.

As mentioned, the issues identified are, to an extent, interrelated. The determination of Issue 3 depends to a large extent on the determination of Issue 2. It is therefore convenient to start with Issue 2.
Issue 2: Termination of the Licence Agreements
Before turning to the substance of the parties’ submissions on Issue 2, it is helpful to outline the relevance and operation of the Licence Agreements in the Project generally.
The Licence Agreements
Recital “b” of the Project Constitution stated that Investors in the Project would become “Growers” upon acquiring “Interests” in the Project through a PDS, and would be bound by the terms of the Project Constitution. An “Interest” was defined in Schedule 1 of the Project Constitution as:[19]
An Interest in the [Project] that a Grower acquires once a Grower’s Application is accepted by the Responsible Entity [FABAL]. An Interest includes a Grower’s rights and liabilities pursuant to the Constitution, the Management Agreement and the Licence Agreement. Each Interest is attached to one Allotment. An Interest also includes the Grower’s Business and the net proceeds which are a result of the same.
(emphasis added)
“Business” was further defined as:[20]
The business of developing, planting, growing, maintaining, cultivating and harvesting a cherry crop on Land for the purposes of marketing and selling that cherry crop for commercial gain and all activities that are reasonably incidental thereto.
(emphasis added)
[19] Sch 1 Project Constitution.
[20] Sch 1 Project Constitution.
The PDS offered 465 Interests or, upon oversubscription, up to 700 Interests in the Project. As noted earlier, each Interest entitled a Grower to a 0.10 hectare Allotment upon which approximately 100 trees would be farmed. An Interest would be vested directly as an asset of the Grower, as would the produce grown on the Allotment.[21] Investors could attain an Interest in the Project by completing an application form and paying a fee for each Interest of $26,504 (inclusive of GST).
[21] Cl 6.1.1 Project Constitution.
Growers were also required to enter into a Licence Agreement (with FABAL and ACL) and Management Agreement (with FABAL).[22] The Licence Agreement entitled ACL to fees from Growers for the services it provided under that agreement, and the Management Agreement entitled FABAL to fees from Growers for the services it rendered under that agreement. Both agreements were to be read as being subject in all regards to the Project Constitution.[23] Except where specified, the terms of the agreements would also have the same meaning as in the Project Constitution.[24]
[22] Cls 20, 21 Project Constitution; PDS.
[23] Cl 21.1 Project Constitution; Cl 15 Licence Agreement.
[24] Cl 1 Licence Agreement; Cl 1 Management Agreement.
The Licence Agreement provided that ACL would grant the Grower a licence, for the term of the Project, to use and occupy their Allotment for the purposes of carrying out their business under the Project.[25] This included the use of suitable plant and equipment owned by ACL.[26]
[25] Cl 3 Licence Agreement.
[26] Cl 4 Licence Agreement.
The issue of a Grower’s title and interest under the Licence Agreement was addressed in cl 9. In particular, cl 9.1 provided that the Grower’s title to, and Interest in, the trees of their Allotment was limited to such title and Interest as was required for them to grow and maintain the trees, and to harvest and sell cherries from those trees. Under cl 9.2, the Grower had full title in and to any cherries grown on the trees.
Clause 10 of the Licence Agreement dealt with the default by a Grower in respect of any payment or other obligation under the Licence Agreement. Upon a Grower’s default, ACL was to provide written notice to remedy the default within seven days, after which ACL could terminate the Licence Agreement.[27] If the Licence Agreement was terminated, the Grower lost all rights as a Grower in the Project; they remained liable to pay all amounts under the Licence Agreement; the Grower’s Interest in the Project would be terminated; the Responsible Entity (FABAL) could take steps to sell the Grower’s Interest in accordance with the Project Constitution; and the Responsible Entity could terminate its Management Agreement with the Grower.[28]
[27] Cls 10.2–10.3 Licence Agreement.
[28] Cl 10.4 Licence Agreement.
Clause 22 of the Project Constitution outlined the consequences of a default by a Grower under the Licence Agreement or Management Agreement. Relevantly, cl 22.3 provided that FABAL “may, in its absolute discretion, terminate the Interest of a Defaulting Grower although any such termination must be in accordance with this Constitution.” The discretion not to terminate the Interest of a defaulting Grower could only be exercised if FABAL was reasonably satisfied that the interests of the Project and remaining Growers as a whole would not be prejudiced.[29] Clause 23 then provided the process for the sale by FABAL of any terminated Interest of a defaulting Grower. In the event that any such Interest could not be sold within three months, cl 24 provided the process for that Interest to be transferred to FABAL to be held on trust for the other Growers and managed by FABAL, and for the allocation of any income attributable to that Interest.
[29] Cl 22.4 Project Constitution.
Submissions
PJN contended that the Trial Judge erred in holding that there was insufficient evidence to conclude that certain Licence Agreements in the Project had been terminated by ACL prior to the 2014/15 harvest. Whether certain Licence Agreements had been terminated was relevant, in PJN’s submission, to identifying FABAL’s entitlement to the harvest net proceeds referrable to the Project cherries under cl 4.9.4 of the Cherry Marketing Agreement. As noted earlier, PJN’s submissions on Issue 2 are predicated on an acceptance that FABAL was entitled to receive the net proceeds referrable to the Project cherries; Issue 2 concerns PJN’s dispute as to identifying the correct percentage of the harvest net proceeds referrable to the Project cherries. PJN contended that where a Grower’s Licence Agreement had been terminated, so too was the Grower’s entitlement to the cherries and therefore the proceeds from the cherries’ sale. FABAL had claimed 13.9% of the harvest net proceeds related to Project cherries. PJN contended that of the 13.9% claimed, 8% of the harvest net proceeds referred to Interests held by Growers with no valid Licence Agreements. In PJN’s submission, an Interest in the Project with no valid licence was an “empty vessel”; if a Grower did not have an entitlement to the proceeds, neither could FABAL. Therefore, the most FABAL could claim was 5.9% of the harvest net proceeds, as this percentage reflected the extant Interests with valid Licence Agreements at the time of the 2014/15 harvest. The percentage of 13.9% was, in PJN’s submission, an essential element of FABAL’s claim that it was required to prove.
Despite finding insufficient evidence to support PJN’s argument, the Trial Judge went on to determine that, even if there had been sufficient evidence that the Licence Agreements had been terminated, the contractual documents in the Project did not support PJN’s claim of 5.9%. The Trial Judge accepted the first part of PJN’s argument that the Grower was not entitled to the net proceeds from the sale of cherries grown on an Allotment with no valid Licence Agreement, however, on proper construction of the Project documentation, he did not accept PJN’s submission that that affected FABAL’s right to same. PJN contended the Trial Judge erred in that finding. Further, the combination of these errors meant, in PJN’s submission, that the Trial Judge erred in finding that 13.9% of the harvest net proceeds related to Project cherries.
FABAL contended that the Trial Judge did not err in holding that there was insufficient evidence that ACL validly terminated the Licence Agreements. It submitted that as the claim was one in debt, not damages for breach of contract, the onus of proving a valid termination lay on PJN. Further, FABAL contended that the Trial Judge was correct when concluding that, upon proper construction of the Project Constitution and Licence Agreements, termination of a Licence Agreement did not terminate a subsisting Interest in the Project. FABAL relied, in particular, on cls 23 and 24 of the Project Constitution which set out the process whereby FABAL could exercise its absolute discretion to terminate the Interest of a defaulting Grower and sell the Interest as a Grower’s agent. Further, FABAL, as the responsible entity, if unable to find a buyer for an Interest, was to take a transfer of that Interest on trust for the other Growers in the Project. That is, the Interest was not, as claimed by PJN, an empty vessel.
Even if the Licence Agreements were relevant to FABAL’s entitlement to the Project cherries’ proceeds, FABAL contended that the question to be answered was whether the underlying ownership of the trees without a valid Licence Agreement vested in ACL such that, as principal, payment to it (rather than FABAL) constituted a valid discharge of that part of the debt owed under cl 4.9.4 of the Cherry Marketing Agreement. FABAL contended the Trial Judge’s finding that a valid discharge had not been established was correct; ACL was not the principal with respect to the Project cherries’ proceeds in the way it was with respect to the ACL cherries’ proceeds.
Consideration
The determination of this issue depends to an extent on the resolution of whether FABAL had a cause of action in debt or ought to have pursued damages for breach of contract. For the reasons set out later in this judgment, we consider that the Trial Judge was correct in finding that FABAL was entitled to pursue an action in debt for liquidated damages. The reasons dealing with Issue 2 need to be read in conjunction with the reasons in relation to Issue 3.
An objective approach is required to determine the rights and liabilities of a party to a commercial contract, by reference to its text, context and purpose. The meaning to be given to its terms is determined by reference to what a reasonable business person would have understood those terms to mean.[30]
[30] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544 at [16]–[17]; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]; Price v Spoor [2021] HCA 20 at [27].
Consideration may be given to the language used by the parties, the surrounding circumstances known to them, and the commercial purpose or objects to be secured by the contract.[31] Further, when construing various agreements that together comprise part of a managed investment scheme, and those agreements cross-reference one another, it is appropriate to read them as cognate documents.[32]
[31] Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35].
[32] Rocky Castle Finance Pty Ltd v Taylor (2014) 118 SASR 349 at [106]–[109].
It is useful to set out in full the Trial Judge’s findings subject to complaint in Issue 2. The Trial Judge held:
There is a tension between this clause [clause 10] of the Licence Agreement, and the Constitution. In particular, clause 22 of the Constitution, while treating the default of a Grower under a Licence Agreement as a matter that enabled the termination of their Interest in the Project, was nevertheless drafted in terms that assumed that FABAL, as the Responsible Entity, had a discretion whether or not to terminate the Interest in that circumstance. FABAL contends that there is thus an inconsistency between the Licence Agreement and the Constitution in this respect, and that the Constitution must prevail to the extent of this inconsistency.
While there is, as I have observed, a tension between the termination provisions of the Licence Agreements and the Constitution, I am not satisfied that there is an inconsistency sufficient to ignore the plain terms of the Licence Agreements. I accept PJN’s submission that where a Grower’s Licence Agreement has been terminated (as opposed to a Grower merely being in default), then their Interest is automatically terminated. This leaves the Responsible Entity with an additional discretion under the Constitution to terminate (or, indeed, not terminate) in circumstances where the Grower is merely in default under their Licence Agreement (but without that Licence Agreement having been terminated by ACL).
However, despite this conclusion, I do not think it provides PJN with an answer to FABAL’s use of 13.9 per cent. The first difficulty with PJN’s position is FABAL’s contention that ACL was not in a position to terminate the Licence Agreements for the late payment of licence fees because FABAL had earlier entered into payment plans with the relevant Growers. While there is reference to these matters in the evidence, there is insufficient evidence for me to determine the validity of ACL’s purported termination of the various Licence Agreements.
But more fundamentally, even accepting that some Licence Agreements were validly terminated and hence that some further Growers ceased to have an Interest in the Project, it does not mean that the trees in which they held an Interest ceased to be Project trees. Put another way, the trees did not, without more, become ACL’s trees with the result that payment of the net proceeds in respect of those trees to ACL discharged PJN’s obligation to pay FABAL the net proceeds under the CMA.
Even accepting that the further Grower Interests were terminated by reason of their Licence Agreements being terminated, the evidence does not establish that those Interests, or the trees to which they related, had been acquired by ACL by the time PJN became obliged to pay over the net proceeds of sale from the 2014/15 harvest. In my view, the proceeds from these trees remained Project proceeds that were to be paid to FABAL as the Responsible Entity of the Project, for it to then apply and distribute in accordance with the Project documentation. It follows that FABAL is entitled to recover 13.9 per cent of the total net proceeds, or $156,456.
(emphasis added)
For the reasons that follow, we do not consider there to be any error identified in the Trial Judge’s approach.
Despite finding that there was insufficient evidence to support the claim that ACL had validly terminated certain Licence Agreements, the Trial Judge proceeded to consider the contractual construction issue. The Trial Judge identified the tension between the relevant clauses of the Project Constitution and the Licence Agreements. The Trial Judge accepted the plain terms of the Licence Agreement supported PJN’s submission that where a Grower’s Licence Agreement was terminated by ACL, the Grower’s Interest was also terminated. However, the Trial Judge rejected the next steps in PJN’s argument that the termination of the Grower’s Interest meant FABAL was not entitled to the proceeds from the sale of cherries from those Interests.
In considering this issue it is important to have regard to the Project Constitution. It provided that if a Grower’s default under a Licence Agreement remained unresolved for 28 days, that default would be taken to be a default under the Project Constitution.[33] Where a Grower so defaulted, FABAL could in its absolute discretion terminate the Grower’s Interest.[34] FABAL would then be entitled to sell the Grower’s Interest, to use the language of the Project Constitution, “as an attorney” (that is as an agent) of the Grower.[35] In the event FABAL could not sell the Interest within three months, FABAL was to take a transfer of that Interest to be held on trust for the other Growers.[36] FABAL would then continue to manage the Interest, and any income attributable to an Interest managed or purchased by FABAL was to be dealt with in accordance to cl 24.3 of the Project Constitution.
[33] Cl 22.1 Project Constitution.
[34] Cl 22.3 Project Constitution.
[35] Cl 23.1 Project Constitution.
[36] Cl 24 Project Constitution.
The practical effect of these clauses was that the trees grown and harvested upon the terminated Interest (and the proceeds from the sale of cherries from those trees) would be managed by and allocated to FABAL unless and until purchased by another Investor. Thus, even where a particular Grower’s Interest was terminated, the trees referrable to that terminated Interest did not cease to be Project trees: if no valid Licence Agreement existed over the Allotments upon which the trees existed and the Interest was terminated, the trees may not be attributable to a particular Grower, but they would be Project trees nonetheless in the sense that they were held on trust and managed by FABAL. FABAL claimed 13.9% of the harvest net proceeds were referrable to Project trees. Even accepting PJN’s argument about the terminated Interests, the result would simply mean that of the 13.9% of the harvest net proceeds said to be referred to the Project cherries’ proceeds, 5.9% would be referrable to particular Growers (ie those with valid Licence Agreements) and 8% would be referrable to Interests of defaulting Growers being held by FABAL as trustee for the other Growers. That is, PJN had a contractual obligation to forward to FABAL the proceeds from the sale of cherries even from an Interest that had been terminated.
Unless ACL purchased the available Interest after a Grower’s Interest had been terminated, ACL had no right to the proceeds from such an Interest. It necessarily follows that PJN’s payment to ACL of the Project cherries’ proceeds, whether those proceeds came from trees that had a valid Licence Agreement or not, could not discharge PJN’s obligation to pay FABAL the Project cherries’ proceeds under the Cherry Marketing Agreement. The Trial Judge was correct to hold that FABAL remained entitled to receive 13.9% of the harvest net proceeds under the Cherry Marketing Agreement.
PJN submitted that considering whether the trees had become ACL trees, the Trial Judge had asked himself the “wrong question”. We do not accept that submission. As FABAL submitted on appeal, the question to be answered was whether the underlying ownership of the trees not subject to a valid Licence Agreement vested in ACL such that, as principal, payment to it (rather than FABAL) constituted a valid discharge of its obligations under the Cherry Marketing Agreement. The Trial Judge answered that question, and was correct in doing so. The Trial Judge found that ACL had not acquired the trees the subject of the purported licence termination. However, importantly, he also found that even if a Grower’s Interest had been terminated, that did not mean “that the trees in which they held an Interest ceased to be Project trees.” In context, the Trial Judge addressed the correct question and resolved the issue against PJN.
It follows, as found by the Trial Judge, that even if PJN had established on the evidence that certain Licence Agreements were terminated, that did not affect FABAL’s right to receive the proceeds from the sale of cherries related to those Interests. As the Trial Judge found, correctly in our view, FABAL proved a right to payment. The onus of proving a discharge of the obligation to make that payment laid with PJN.
There has been no error demonstrated in the Trial Judge’s approach. We would dismiss the grounds subsumed in Issue 2.
Issue 3: Breach of contract not debt
PJN contended the Trial Judge erred in finding FABAL was entitled under the Cherry Marketing Agreement to the net proceeds relating to the Project cherries as a liquidated sum. PJN submitted that if FABAL had any claim, it was properly one for contractual damages, not a claim for a liquidated sum. Further, as FABAL had not proved any loss for breach of contract, PJN submitted the claim should have been dismissed.
The Trial Judge found:
I am satisfied that FABAL is entitled to recover the Project cherry proceeds as a contractual debt and is not merely reliant upon a claim for damages in respect of the same. These proceeds are recoverable as a liquidated sum due under the contract, and in my view, that is so regardless of the fact that as events transpired FABAL did not carry out the harvest. The [Cherry Marketing Agreement] did not make payment of the net proceeds by PJN to FABAL dependent upon FABAL carrying out the harvest, and FABAL was in any event only prevented from undertaking the harvest by the conduct of PJN and ACL.
There is, of course, a well-recognised distinction between a claim in debt and a claim in damages. And as a sum recoverable as a contractual debt there is no occasion or need in the present case to consider what, if any, loss was suffered by FABAL as a result of it not being paid the Project cherry proceeds, including by reference to what would have happened to those proceeds had they been paid over.
(citations omitted)

At common law, a debt is distinct from a liability in damages or some other unliquidated obligation.[37] It is distinct from a claim in damages particularly in that a claim in debt does not require proof of loss or damage. Actions in debt are, in essence, actions on the case where the damages for breach of the promise to pay the debt are equal to the amount owed.[38] As the High Court stated in Young v Queensland Trustees Ltd:[39]
The common law does not and never did conceive of indebtedness in a sum certain for an executed consideration as a mere breach of contract: it is rather the detention of a sum of money and that was so whether the creditor enforced his demand by an action of debt or by indebitatus assumpsit.
[37] Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64 at 68.
[38] Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64 at 68.
[39] (1956) 99 CLR 560 at 567.
A debt is a liquidated sum in money presently due, owing and payable by one person, called the debtor, to another person called the creditor.[40] A claim in debt arises at the moment the debt falls due.[41] A liquidated sum is one where the amount to which an applicant is entitled has been predetermined (by or pursuant to agreement or legislation) by reference to a fixed amount, scale or formula before the matter reaches court.[42] In Spain v Union Steamship Co of New Zealand Ltd Knox CJ and Starke J adopted a textbook definition that:[43]
… whenever the amount to which the plaintiff is entitled ... can be ascertained by calculation or fixed by any scale of charges, or other positive data, it is ... liquidated.
[40] Rothwells Ltd v Nommack (No 100) Pty Ltd [1990] 2 Qd R 85 at 86 (McPherson J); Young v Queensland Trustees Ltd (1956) 99 CLR 560.
[41] Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 361 at 379–380.
[42] Attorney General (SA) v Marmanidis (2019) 132 SASR 320 at [77].
[43] (1923) 32 CLR 138 at 142.
What constitutes a liquidated sum as opposed to an unliquidated sum can be difficult in some circumstances to ascertain. The distinction is that between agreed compensation calculated and quantified in a way specified in, or ascertainable from, the contract itself and damages which are to be assessed according to the ordinary principles for determining damages for breach of contract.[44] Thus, where a contract or agreement between parties provides for a mechanism to calculate or ascertain a specific amount that is due and payable, that amount is a liquidated sum.
[44] Rothenberger Australia Pty Ltd v Poulsen & Anor (2003) 58 NSWLR 288 at [27].
Consideration
FABAL’s entitlement to receive the harvest net proceeds arose under cls 3 and 4.9.4 of the Cherry Marketing Agreement. Clause 3 provided for PJN to “market and sell all and any cherries grown on the Land” and to remit the net funds “to FABAL on behalf of the [Project] and [ACL]” after deducting from the gross proceeds the various commissions and expenses identified in the balance of the clause. Clause 4.9.4 provided that PJN would:
… account for and pay to FABAL on behalf of the Tassie Cherries Project and Aussie Cherries the net and proper sale proceeds not more than forty five (45) days after the sale of any lots of cherries …
PJN submitted that its obligation to pay the net proceeds to FABAL under cl 4.9.4 was not for a certain or liquidated sum where failure to comply could give rise to a contractual debt. Rather, any sum which FABAL may have a claim to was the “net and proper proceeds”, the calculation of which depended upon the number of Project trees, which PJN submitted further depended upon how many Growers held Interests under valid Licence Agreements (Issue 2). PJN contended that the proper cause of action available to FABAL was therefore breach of contract whereby FABAL would have to prove loss and damage.
FABAL submitted that PJN’s complaint was predicated upon the erroneous proposition that termination of a Licence Agreement necessarily destroyed an Interest (Issue 2) and, in any event, a misunderstanding of the legal characteristics of a debt. FABAL argued that cl 4.9.4 provided an obligation to pay an ascertainable fixed sum of money at or by no later than a specified time. In that sense, failure to comply with the obligation gave rise to a cause of action in debt. FABAL submitted that a sum certain may be certain because it is either identified in strict numerical terms or it is capable of being identified in certain terms by reference to a formula or conditions; cl 4.9.4 of the Project Constitution provided a sum certain in the latter form.
We accept FABAL’s submissions. The case at bar is concerned with a sum certain in the latter form. We agree that whilst cl 4.9.4 of the Project Constitution does not provide a liquidated sum in the numerical sense, it does provide an amount to be calculated in a specific manner in clearly defined circumstances:[45] FABAL was to receive the net and proper proceeds from the sale of any lot of cherries within 45 days of their sale. FABAL was entitled to receive all proceeds attributable to the Project cherries on behalf of the Project. The net proceeds from the sale of the Project cherries was a sum that could be calculated in a way specified in, or ascertainable from, the contract itself. For the reasons discussed under Issue 2, we further reject PJN’s submission that the certainty of the sum in cl 4.9.4 of the Project Constitution was contingent upon valid Licence Agreements being in place. Thus, FABAL was entitled to sue PJN for a contractual debt when PJN failed to pay FABAL the net and proper proceeds from the 2014/15 harvest that were referrable to the Project cherries.
[45] South Australia v McKendrick Ahern Pty Ltd (Supreme Court of South Australia, Olsson J, 9 December 1997).
We would dismiss the grounds of appeal subsumed in Issue 3.
Issue 1: FABAL’s capacity
PJN contended that FABAL’s status as the responsible entity of the Project was essential to its success in claim for debt. Consequently, without the status as responsible entity, FABAL had no entitlement under the Project’s contractual documentation to receive the harvest net proceeds and therefore its claim must fail.[46] The success of this argument was contingent upon the admission of fresh evidence on appeal.
[46] A similar argument with respect to FABAL’s capacity, or lack thereof, as responsible entity to sue for Grower fees was subject to consideration recently in Nash v Food and Beverage Australia Ltd [2021] SASCA 59.
Submissions and application for fresh evidence
PJN sought to adduce documentary evidence that the Project was wound-up in August 2018, that it was deregistered on 23 December 2018, and that FABAL’s Australian Financial Services Licence was cancelled on 22 June 2019. The evidence was annexed to an affidavit of PJN’s solicitor who had conduct of the appeal proceedings and was “authorised” by Mr Nash to make the affidavit on PJN’s behalf.[47] The winding-up and deregistration occurred prior to the trial.[48] The cancellation of the licence occurred between trial ending and judgment being delivered.[49] PJN speculated that these matters “must have been known” by FABAL but were not pleaded or disclosed other than a brief mention in cross-examination.
[47] Affidavit of Daniel James Mackay sworn 21 July 2020.
[48] The trial took place between 25 February 2019 and 7 March 2019.
[49] Judgment was delivered on 6 December 2019.
FABAL submitted the application to adduce fresh evidence was deficient and should be refused. There was no reason to suggest the evidence was not available to PJN at the time of trial and, had the matter been raised, FABAL may have answered in respect of the Australian Securities and Investments Commission’s actions being premature or not justified.
In any event, FABAL contended the evidence sought to be adduced was irrelevant to its accrued right of action in debt. Further, FABAL submitted that the fact a managed investment scheme may cease to be for the purposes of the Corporations Act 2001 (Cth) does not deny or destroy contractual rights and obligations established by the scheme’s documents; the underlying contractual arrangements subsisted. It was also submitted that FABAL remained under a contractual and/or equitable duty to deal with the Project proceeds as required by the Project Constitution, irrespective of the label of “responsible entity”.
Consideration
The Court may, in its discretion, accept fresh evidence on appeal. In doing so, the Court must be satisfied the evidence could not, with reasonable diligence, have been obtained for use at trial and, if the evidence had been available, it is reasonably clear that an opposite outcome would have resulted.[50] The ultimate test is whether it is in the interests of justice to receive the fresh evidence. Public interest in the finality of litigation is also an important consideration.[51]
[50] Sunlight Nominees Pty Ltd v Zotti and Zotti [2019] SASCFC 11 at [39]–[42].
[51] Steicke v Pederick (2019) 134 SASR 114 at [7]; Viscariello v Livesey [2013] SASC 99 at [132].
It is important to consider the extent of the evidence supporting the application. The affidavit in support of the application was sworn by PJN’s solicitor, Mr McKay, on behalf of PJN; it was not sworn or affirmed by an authorised officer of PJN. FABAL did not dispute the accuracy of the affidavit. The affidavit establishes that FABAL must have known at trial that the Project had been wound up by virtue of the content of a document executed by FABAL’s secretary.
That said, the affidavit does not address the issue of PJN’s knowledge of these issues at trial. PJN of course was a party to the Cherry Marketing Agreement. Mr Nash, apart from his position with PJN, was a director of ACL. PJN was intimately involved in the Project, as was ACL. The fact that Mr McKay’s affidavit does not deal with the crucial issues of PJN’s knowledge of these matters, by itself, cannot lead to an inference adverse to PJN’s position. However, PJN bears the onus of proof in establishing that it did not know of the issues prior to or during the trial and that it could not, with reasonable diligence, have obtained the evidence. It has failed to discharge the burden of proof.
As noted above, the winding-up and deregistration of the Project occurred prior to the trial, and the cancellation of the licence occurred before judgment was delivered. Clearly evidence of those matters could have been obtained by the exercise of reasonable diligence; whilst it is not necessary to decide, it is likely, on balance, that PJN knew about both matters and it could have raised them at trial. In fact, the deregistration of the Project was raised, albeit in passing, during cross-examination of Mr Dundon (of FABAL).[52] The fact that counsel for PJN on appeal did not act in the trial proceedings is irrelevant.[53]
[52] Affidavit of Daniel James Mackay dated 21 July 2020 at [40].
[53] Affidavit of Daniel James Mackay dated 21 July 2020 at [21].
Issues argued on appeal need to be considered in the context of the manner in which the trial was conducted.[54] Decisions such as not objecting to evidence or not pursuing a particular line of defence are part of the wide discretion that counsel exercises at trial.[55] Thus, while there are exceptions, an appellant is generally bound by the case they ran at trial. [56]
[54] R v Moores (2017) 128 SASR 340 at [33] (Blue J) (Vanstone and Doyle JJ agreeing).
[55] Perara-Cathcart v The Queen (2017) 260 CLR 595 at [60] (Kiefel, Bell and Keane JJ).
[56] See Crampton v The Queen (2000) 206 CLR 161 at [16]; R v Birks (1990) 19 NSWLR 677 at 683; JGS v R [2020] SASCFC 48 at [39].
The fact that PJN has failed to establish that it could not, with reasonable diligence, have obtained the evidence for use at trial is not necessarily fatal to the application; the ultimate decision turns upon what the Court determines is in the interests of justice. However, we must further consider whether the evidence, if permitted, would be likely to have changed the outcome. As discussed earlier, FABAL’s pursuit of its action in debt was appropriate; it was entitled to sue PJN for the net proceeds from the sale of the Project cherries pursuant to PJN’s contractual obligation to pay arising under the Cherry Marketing Agreement. There was no dispute that FABAL was the responsible entity of the Project when the indebtedness arose in early 2015. Given a claim in debt, once accrued, generally survives the termination of the contract under which it arises,[57] evidence of the Project’s winding up and deregistration does not necessarily destroy FABAL’s cause of action. Further we accept FABAL’s submission that the cancellation of its Australian Financial Services Licence was an irrelevant issue as FABAL was no longer operating a managed investment scheme.
[57] Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 361 at 379–380.
Finally, public interest in the finality of litigation is also an important consideration. As submitted by FABAL, if the issue had been raised at trial, it would have potentially raised other evidential matters.
Taking into account these matters, it is not in the interests of justice to allow the application for fresh evidence. The application to adduce fresh evidence on appeal should be refused.
We would dismiss the grounds of appeal subsumed in Issue 1.
Orders
1. The appellant’s application to adduce fresh evidence on appeal is refused.
2.We dismiss the appeal.
3. Parties are to be heard on the question of costs.