Primary Yield Finance Pty Ltd v Meyer - [2012] VSC 595

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2009 05451

PRIMARY YIELD FINANCE PTY LTD (in liquidation) (receivers and managers appointed) and others	Plaintiffs
– and –
PHILIP MEYER	Defendant

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JUDGE:	MUKHTAR AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	20 November 2012
DATE OF JUDGMENT:	10 December 2012
CASE MAY BE CITED AS:	Primary Yield Finance Pty Ltd and ors v Meyer
MEDIUM NEUTRAL CITATION:	[2012] VSC 595

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DEBTS AND CHOSES IN ACTION ― Equitable assignments ― Loan agreement ― Loan to enable participation in managed investment scheme ― First assignment by deed ― Second assignment not by deed ― Related corporations ― Evidence of transfer of debt by book entries ― Sufficient evidence of intention to establish equitable assignment

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr C M Scerri QC with Dr O. Bigos	Allens
For the Defendant	No appearance

HIS HONOUR:

This is a claim by a lender ― in congress with two assignees ― for repayment of a loan made to the defendant in March 2000. The loan had an expiration date of July 2010. The principal amount was $4 499 028. The rate of interest was 8.25% payable in advance on 1 July in each year of the loan. The loan enabled the defendant borrower to invest in a registered management investment scheme which subsequently failed. The scheme project was known as The Environinvest Eucalypt Project 2000 in which investors became “Growers” in the forestry industry by taking leasehold allotments in commercial plantations. In this case, it was a plantation of Eucalyptus Globus or Tasmanian Blue Gum.

It is unnecessary to expose the legal or operational elements of the project. These forestry schemes are quite well known as an investment product with tax benefits, and variously as the subject of litigation. It is sufficient to say, in elementary terms only, that under these schemes the grower acquires a proprietary (leasehold) interest in the plantation by leasing allotments with annual payments of rent; the grower can borrow the money to finance the acquisition of allotments; the grower makes a management agreement with the scheme operator for the cultivation and management and eventual felling of trees in the plantation; management and maintenance fees are payable per allotment; the deferred income of the project comes from the eventual harvesting of trees for hardwood or wood chips; there are “upfront” tax deductions for the investment and the charges payable under the various agreements are regarded as being on revenue account and deductible. I mention this only to put the loan agreement and the assignments in commercial context. Otherwise there is nothing at all extraordinary, as a matter of legal features, about the loan agreement on which the plaintiffs sue.

The scheme failed and was eventually wound up by the Court. This case is concerned with nothing more than the repayment of the principal amount of the loan with simple interest at 8.25%. The default was the failure to pay…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Primary Yield Finance Pty Ltd v Meyer

Details

AGLC: Primary Yield Finance Pty Ltd v Meyer [2012] VSC 595
Case: [2012] VSC 595
Decision Date: 10 December 2012

CaseChat Overview and Summary

The case of Primary Yield Finance Pty Ltd v Meyer was heard in the Federal Court of Australia. The dispute centred around an assignment of a debt from Meyer to Primary Yield Finance. Meyer had borrowed money from Primary Yield, evidenced by a loan agreement, to participate in a managed investment scheme. The loan was subsequently assigned to another entity, which also claimed the debt from Meyer. The legal issues before the court were whether the second assignment of the debt was valid and enforceable, and whether the assignment was effective despite not being in writing. The court needed to determine if there was sufficient evidence to establish an equitable assignment.

The court held that the first assignment of the debt, made by deed, was valid and enforceable. The second assignment, which was not made by deed, was also valid if it could be shown that there was an intention to transfer the debt and that this intention was communicated to the assignee. The court found that the evidence provided by Primary Yield, including book entries and related corporation agreements, was sufficient to establish an intention to transfer the debt. The court emphasised that while a written assignment is preferable, the absence of one did not preclude the existence of an equitable assignment if the necessary intention and communication were present.

The court concluded that the second assignment was valid and that Primary Yield was entitled to enforce the debt against Meyer. The court held that the evidence of the intention to transfer the debt, supported by the book entries and related corporation agreements, was sufficient to establish an equitable assignment. The court recognised that while the assignment was not in writing, the circumstances surrounding the transaction and the conduct of the parties demonstrated a clear intention to transfer the debt.

The final orders of the court were that Primary Yield was entitled to enforce the debt against Meyer, and that the second assignment of the debt was valid and enforceable. The court ordered Meyer to pay the debt to Primary Yield, reflecting the court's determination that the equitable assignment was effective. The court's decision underscores the importance of clear communication and evidence of intention in establishing equitable assignments, even in the absence of a written agreement.

Orders