Rural Bank (A Division of Bendigo and Adelaide Bank Ltd) v McCAGH

[2022] WASC 339

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   RURAL BANK (A DIVISION OF BENDIGO AND ADELAIDE BANK LTD) -v- McCAGH [2022] WASC 339

CORAM:   TOTTLE J

HEARD:   9 FEBRUARY 2022

DELIVERED          :   13 OCTOBER 2022

FILE NO/S:   CIV 1855 of 2011

BETWEEN:   RURAL BANK (A DIVISION OF BENDIGO AND ADELAIDE BANK LTD)

Plaintiff

AND

DAVID THOMAS McCAGH

First Defendant

MAUREEN McCAGH

Second Defendant

DAVID THOMAS McCAGH IN HIS CAPACITY AS THE EXECUTOR OF THE ESTATE OF THE LATE CECIL ROBERT McCAGH

Third Defendant

Catchwords:

Contract law - Banking - Finance facility agreements - Where claim for default on facility agreements - Whether borrowers were in default under the facility agreements - Whether the terms of the facility agreements providing for the payment of interest were void for uncertainty - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 20 r 10

Result:

Judgment for the plaintiff

Category:    B

Representation:

Counsel:

Plaintiff	:	Mr M D Cuerden SC
First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	No appearance

Solicitors:

Plaintiff	:	Corrs Chambers Westgarth
First Defendant	:	In person
Second Defendant	:	In person
Third Defendant	:	In person

Case(s) referred to in decision(s):

Australia and New Zealand Banking Group Ltd v Fink [2013] NSWSC 1781

Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130

Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214

Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643

Eshelby v Federated European Bank Ltd [1932] 1 KB 254

Financial Institutions Services Ltd v Negril Negril Holdings Ltd [2004] UKPC 40

Hempel v Robinson [1924] SASR 288

Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950

Nikoloff v Perpetual Trustee Co Ltd [No 2] [2022] WASCA 16

Permanent Trustee Co Ltd v Gulf Import and Export Co [2008] VSC 162

Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444

Water Authority of Western Australia v AIL Holdings Pty Ltd [No 2] (1992) 10 WAR 233

Wigan v Edwards (1973) 47 ALJR 586

Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560

TOTTLE J:

Summary

1. The plaintiff sues to recover monies it claims are owing under five finance facilities made available to the first and second defendants and the late Mr Cecil Robert McCagh described as 'the Trading Limit Facility', 'Term Loan Facility 1', 'Term Loan Facility 2', 'Term Loan Facility 3', and 'Term Loan Facility 4' (collectively 'the Facilities').  Monies were advanced under the Facilities for purposes associated with the defendants' farming business.  The advances were secured by a mortgage of land registered in the names of the first and second defendants and the late Mr Cecil McCagh, and by three mortgages of land registered in the name of the first defendant.  In addition to its money claims the plaintiff seeks vacant possession of the mortgaged land.

2. The plaintiff is the successor in law of Rural Bank Ltd (RBL).[1]  RBL commenced the action on 16 May 2011.  At various stages in its corporate history RBL was named Elders Rural Services Limited and Elders Rural Bank Limited. 

   [1] Exhibit 1.50, certificate of transfer dated 3 May 2019 issued under the Financial Sector (Transfer and Restructure Act 1999 (Cth).

3. The key details of the Facilities are as follows:

Facility	Date of facility agreement	Principal advanced	Expiry date
Trading Limit Facility	16 July 2004	$700,000	Upon demand after default
Term Loan Facility 1	23 September 2005	$225,000	31 October 2010
Term Loan Facility 2	22 June 2007	$420,000	1 February 2012
Term Loan Facility 3	June 2007	$900,000	30 June 2012
Term Loan Facility 4	31 October 2007	$395,000	30 November 2012
Total	$2,640,000

1. The Trading Limit Facility was an overdraft account to which interest, fees and charges incurred on each of the term loan facilities were debited.  Legal costs incurred in relation to the enforcement of the Facilities have also been debited to the Trading Limit Facility.

2. The defendants did not attend the trial and were not represented.  The circumstances in which this occurred are described in the next section of these reasons.  At an earlier stage in the proceedings, when the defendants were represented, their lawyers had filed several versions of a defence and counterclaim in which they admitted entering into the facility agreements and the mortgages.[2] 

   [2] Defence and Counterclaim filed 15 November 2012 [5]; Amended Defence, Set-Off and Counterclaim filed 18 August 2014 [5]; Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [5].

3. The principal ground of defence articulated by the defendants was a contention to the effect that the express terms of the Facilities governing interest were void for uncertainty and that by relying on those provisions, RBL contravened the statutory prohibitions against misleading or deceptive conduct or unconscionable conduct (or both). The defendants' contentions are outlined in more detail at [93].

4. For the reasons I will explain I have concluded that the terms in the facility agreements providing for the payment of interest are not void for uncertainty.

5. At the trial the plaintiff relied on Dobbs' certificates to establish the amounts due by the defendants under the Facilities. [3] 

   [3] ts 229.

6. Before turning to the substance of the plaintiff's claims it is necessary to record some of the procedural history.

Procedural History

Representation of the defendants

1. Between 2012 and 2017 the defendants were represented by legal practitioners.  In February 2017 the defendants' lawyers obtained orders to the effect that they were no longer required to act for the defendants.[4]

   [4] Orders of Registrar Whitbread dated 23 February 2017.

2. In June 2017 another firm of lawyers gave notice they were acting on the defendants' behalf.

3. On 16 October 2017 the defendants gave notice they intended to act in person and since that date the first defendant has conducted the defence of the action on his own behalf and in his capacity as executor of the estate of Mr Cecil McCagh.  The second defendant has not participated in the proceedings otherwise than when she was represented.  The first defendant informed the court that the second defendant is his elderly mother and that she is bedridden.  The first defendant has effectively acted on behalf of the second defendant by communicating with the court on behalf of himself and the second defendant.  In these reasons, unless the context indicates otherwise, in relation to events that took place up to and including 2010, a reference to the defendants is a reference to the first and second defendants and Mr Cecil McCagh.  In relation to events from 2010 onwards a reference to the defendants is a reference to the first and second defendants in their personal capacities and a reference to the first defendant in his capacity as the executor of the estate of Mr Cecil McCagh.

Pleadings

1. The pleadings in this action have been the subject of many amendments.  RBL amended the statement of claim on 26 May 2014, 9 April 2015, 15 May 2015, 18 December 2015 and 21 December 2016 and the plaintiff filed a substituted statement of claim on 22 April 2021.  The defendants filed a defence to the statement of claim indorsed on the writ on 15 November 2012 together with a counterclaim.  They filed an amended defence, set-off and counterclaim on 18 August 2014 and a re-amended defence, set-off and counterclaim on 3 July 2015.  The re-amended defence pleaded to the plaintiff's further re-amended statement of claim filed on 15 May 2015.

2. As shown in the table under [3] Term Loan Facilities 2, 3 and 4 expired after the writ commencing the action had been issued (16 May 2011).  After judgment was reserved, the court extended an opportunity to the parties to make submissions about the basis upon which claims in respect of those facilities were included in the action given that the relevant causes of action arose after the writ was issued and to make submissions about the consequences that might follow if those claims were disallowed, and about one other matter to which reference will be made later.  The plaintiff filed and served submissions concerning the circumstances in which those claims came to be included in the action.[5]  The explanation of the circumstances that follows draws heavily on those submissions. 

   [5] Plaintiff's Outline of Submissions filed 12 September 2022.

3. The statement of claim indorsed on the writ did not include any claims based on the expiry by the effluxion of time of Term Loan Facility 1.  It had expired on 31 October 2010.  Term Loan Facilities 2, 3 and 4 expired on 1 February 2012, 30 June 2012 and 30 November 2012 respectively.

4. In early 2015 RBL gave notice that it intended to re-amend the amended statement of claim to include a further claim in respect of Term Loan Facility 1.  Additionally, in early 2015 RBL served demands in respect of Term Loan Facilities 2, 3 and 4.  RBL's lawyers gave notice to the defendants' lawyers that new proceedings would be commenced in respect of the debts allegedly due under Term Loan Facilities 2, 3 and 4.[6]  

   [6] Affidavit of John Andrew Robertson sworn 2 April 2015, Attachment 'JR1', 3 - 4.

5. The defendants resisted RBL's proposal to commence new proceedings and consented conditionally to the claims in respect of Term Loan Facilities 2, 3 and 4 being included in the existing proceedings.  The condition the defendants sought to impose was that RBL agree that it would not apply for summary judgment.[7]

   [7] Plaintiff's Outline of Submissions filed 12 September 2022, 9.

6. Initially RBL did not accept the condition proposed by the defendants and on 9 April 2015 RBL filed its re-amended statement of claim in which it included a claim based on the expiry of Term Loan Facility 1.  Subsequently, however, RBL accepted the defendants' condition and filed its further re-amended statement of claim which included claims based on the expiry of Term Loan Facilities 2, 3 and 4.  An order was made by a registrar of the court permitting RBL to file and serve its further re-amended statement of claim including claims based on each of the Term Loan Facilities.[8]

   [8] Orders of Registrar Whitbread dated 7 May 2015.

7. A cause of action arising after the date on which proceedings were commenced can be included in those proceedings if the defendant consents.[9]  In this case the defendants consented to causes of action that arose after the date of the writ being included in the proceedings - indeed they objected to RBL's foreshadowed further proceedings.

   [9] Eshelby v Federated European Bank Ltd [1932] 1 KB 254, 259, 262 (Swift J); Wigan v Edwards (1973) 47 ALJR 586, 596 (Mason J); Water Authority of Western Australia v AIL Holdings Pty Ltd [No 2] (1992) 10 WAR 233, 234 - 235 (Acting Master Hawkins).

8. In the substituted statement of claim the plaintiff pleaded its claim for interest on each of the Facilities on five alternative bases.  It may be inferred that the alternative pleas were made in anticipation of the defence that the contractual terms governing interest were void for uncertainty.  At trial the plaintiff relied solely on its 'scenario 1' pleas.[10]

   [10] ts 237.

9. In their re-amended defence, set off and counterclaim filed on 3 July 2015 the defendants admitted the facility agreements on which the plaintiff sued and admitted the mortgages on which the plaintiff relied.[11] 

   [11] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [5].

10. The defendants made three claims in their counterclaim.  In summary, first, they sought a refund of the interest debited to the Trading Limit Facility.[12]  Secondly, the defendants claimed $47,800 arising out of an allegation that an employee of RBL represented that he would submit an application for an interest rate subsidy on behalf of the defendants but did not do so.[13] Thirdly, the defendants claimed approximately $311,000 arising out of an agreement concerning sheep that the defendants were induced to enter by misleading or deceptive conduct for which RBL was responsible.[14]

Pre-trial events

[12] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [63].

[13] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [66] - [67.3].

[14] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [69] - [74].

1. The action was listed for a trial commencing on 23 January 2018.  The trial was adjourned at the parties' request because they thought there was a prospect of a negotiated outcome.

2. On 14 August 2019 there was a hearing at which directions were made for the amendment of pleadings and for the filing of a list of the documents of which the defendants sought further discovery.  There was also discussion about the possibility of a judicial mediation. 

3. At a further hearing held on 30 August 2019 the parties informed the court that the action was stayed as a matter of law because the defendants had made a complaint to the Australian Financial Complaints Authority (AFCA).[15]  At the hearing the first defendant raised an issue about the plaintiff's standing to sue.[16] 

   [15] ts 30 August 2019, 41.

   [16] ts 30 August 2019, 47 - 49.

4. The complaint to AFCA was determined sometime between August 2019 and June 2020.  On 27 August 2020 a registrar of the court set aside a subpoena the first defendant had caused to be issued to the plaintiff filed on 24 June 2020.[17]

   [17] Orders of Registrar McDonald dated 27 August 2020.

5. The action was relisted for directions on 17 March 2021.  The relisting was at the request of the first defendant who had sent an email to the court complaining about delay in the progress of the action.  At the hearing the first defendant raised an issue about the plaintiff's standing to sue.  He contended there had been some form of unlawful securitisation of the loans made to the defendants by RBL and one legal consequence was that the plaintiff did not have standing to sue.  The first defendant read a statement to the court which included a reference to those contentions.[18]  The first defendant also asked for the production of what he described as the 'wet-ink mortgages'.[19]  Further the first defendant said 'tongue-in-cheek'[20] he was hoping for an estoppel, a reference understood as a hope the court would make an order to the effect that the plaintiff should be prevented from prosecuting its action further.  An order was made for the filing and service of a substituted statement of claim and the trial was listed to commence on 7 February 2022 for 10 days.  This listing took account of the first defendant's limited availability because of the demands of the farming business. 

   [18] ts 17 March 2021, 93 - 95.

   [19] ts 17 March 2021, 97.

   [20] ts 17 March 2021, 100.

6. A further directions hearing listed for 4 May 2021 was vacated and was re-listed to take place on 25 May 2021.  By email sent to the court on 23 May 2021 the first defendant confirmed the availability of the defendants for trial commencing on 7 February 2022.  The hearing on 25 May 2021 was subsequently adjourned at the first defendant's request.

7. On 18 August 2021 there was a further hearing.  A direction was made for the service by the defendants of a schedule identifying the documents of which they sought further discovery and relating those documents to the issues raised on the pleadings.  At the hearing on 18 August 2021 the first defendant repeated the contention that there had been some unlawful form of securitisation and challenged the plaintiff's entitlement to sue.  That submission digressed into a submission that raised allegations of forgery and fraud against the plaintiff which in turn led to a further request for inspection of 'the wet-ink mortgages'.[21]  A further direction was made to the effect that the defendants file a minute setting out any contentions on which they wished to rely in support of their defence and which were not contained in the re-amended defence and counterclaim filed on 3 July 2015.

   [21] ts 18 August 2021, 134 - 136, 143 - 144.

8. Following the hearing on 18 August 2021 the plaintiff's lawyers produced to the first defendant documents which they said were the 'wet-ink mortgages'.  The inspection led to the first defendant making allegations of fraud, forgery and other misconduct.  In particular, the first defendant alleged the mortgages produced to him for inspection were forgeries even though, as has been noted, in the re-amended defence, set‑off and counterclaim filed on 3 July 2015 the defendants had admitted granting the mortgages.  The allegations of misconduct extended to the plaintiff's lawyers and the court.[22] 

   [22] Affidavit of David McCagh sworn 3 August 2021.

9. The defendants did not comply with the direction made on 18 August 2021 that they file a schedule of the documents of which they sought further discovery.  Further, the defendants did not file a minute setting out the contentions on which they wished to rely in support of their defence and counterclaim.

10. A further hearing was held on 4 November 2021.  At that hearing the first defendant contended the plaintiff's action should be dismissed summarily on the basis there had been fraud and forgery.  In support of that contention, the first defendant made a reference to proceedings that had been taken in Victoria against the Premier of the State of Victoria.[23]  The first defendant informed the court he was taking steps to obtain legal representation and that he was hopeful that he would secure legal representation in December 2021.[24]  The date for the commencement of the trial was changed from 7 February 2022 to 9 February 2022.  The hearing was adjourned to 15 December 2021. 

    [23] ts 4 November 2021, 177 - 179.

    [24] ts 4 November 2021, 192.

11. On 10 December 2021 the first defendant filed an affidavit sworn by him expressed to be in support of an application for judicial review.  The affidavit contained a number of complaints about my conduct.

12. At the hearing on 15 December 2021, I explained to the first defendant that the proposed application for judicial review was misconceived but enquired whether I should treat the affidavit he had filed as an application that I should recuse myself.[25]  The first defendant said he would consider his position but ultimately did not pursue any application.  Additionally, the first defendant explained that his attempts to obtain legal representation had not been successful.[26]  Some minor amendments were made to the trial directions. 

    [25] ts 4 November 2021, 210.

    [26] ts 4 November 2021, 208.

13. By an email sent to the court on 17 December 2021 the first defendant said that he was withdrawing from any participation in the trial of the action.  He stated:

    I would also like to inform the Court that it is my intention to withdraw my participation from the Court case CIV 1855 of 2011.

14. On 3 February 2022 there was a directions hearing.  The hearing had been convened at the request of the plaintiff for the purpose of varying the trial directions including varying the length of the trial in the light of the first defendant's stated intention not to participate in the action any further. 

15. Notwithstanding his stated intention to withdraw from participation in the action, the first defendant did attend the directions hearing on 3 February 2022 and once again sought a dismissal of the action.  In support of that application the first defendant read to the court a prepared statement in which the first defendant used a variety of legal expressions which had no relevance to the issues in this action.[27]  The first defendant's submissions did not disclose a cogent reason for adjourning the trial.

    [27] ts 3 February 2022, 219 - 220.

16. On 7 February 2022 the first defendant sent an email to the court in which he requested the trial be vacated on the basis that:

    (a)he had not been vaccinated against the COVID-19 virus;

    (b)he was concerned for his health and for the health of his family;

    (c)he had only just received the trial bundle and papers for the judge;

    (d)he wanted to 'try mediation' before the trial; and

    (e)he wanted to make an application for further and better discovery.

1. There were a series of emails from the first defendant to the court on 7, 8 and 9 February 2022.  In his emails the first defendant pressed for the trial dates to be vacated.  The first defendant was offered the opportunity to make an application for an adjournment by appearing either by telephone or by means of an audio-visual link but he did not take up that opportunity.  He did not file a formal application for an adjournment nor did he swear any affidavit verifying the matters referred to in his email of 7 February 2022 to the court.

2. Had the first defendant raised his health concerns before 7 February 2022 arrangements could and would have been put in place to enable him to participate in the trial of the action remotely. 

3. At the start of the trial I ruled that the trial should proceed in the absence of the first and second defendants and gave oral reasons for that ruling.

4. As I have recorded at [14] the parties were given the opportunity to file further submissions on certain issues and the plaintiff did so.  The defendants did not do so even though their time within which to do so was extended to 10 October 2022.  Although the defendants did not file any further submissions, for the sake of completeness, I record that in an email sent to my associate on 13 September 2022 the first defendant asked that I recuse myself on the grounds of apprehended bias without the need for a formal application.  The allegation of apprehended bias had no foundation in fact.  No grounds for recusing myself existed.

The evidence

1. The plaintiff tendered the documents on which its claims were founded.[28]  In addition the plaintiff called Mr Brian Norman Patton to give evidence.  Mr Patton had been employed as a manager in the plaintiff's Asset Management department since 2019.  Between 2009 and 2019 Mr Patton was employed by RBL.  Mr Patton produced 'Dobbs certificates' prepared by him in respect of the amounts owing under each of the Facilities.[29]

   [28] Exhibit 1.

   [29] Exhibits 2, 3, 4, 5, and 6.

Common features of the Facilities

1. The Facilities and the agreements under which they were established had a number of common features.  To avoid unnecessary repetition it is convenient to set out those features before setting out the factual foundation for the claims based on each facility.

2. Each facility was established by a letter of offer addressed to the defendants which was signed by them and returned to RBL to indicate their acceptance of the offer.

3. The letters of offer followed the same format.  Each letter:

   (a)stated that RBL was making an offer of financial accommodation to the defendants;

   (b)stated the offer was to be read with the 'facility terms' which were enclosed with the letter, the facility terms were entitled the 'Facility Terms (Version 2: March 2004)' (the Facility Terms);[30]

   (c)used italic typescript to identify expressions in the letter which were defined in the Facility Terms and stated that those expressions were to bear the defined meaning;

   (d)in some but not all instances identified an 'approved purpose' of the finance;

   (e)specified the amount of the facility by identifying a 'facility limit' as a dollar amount 'or such other amount as might be approved by the Bank in writing';

   (f)in the case of Term Loan Facility 2 specified the 'repayment date' by reference to a calendar date and in the case of each of the other Facilities specified how the repayment date was to be ascertained;

   (g)set out how interest on the facility was to be calculated and paid, in each case the interest rate was expressed to be a certain annual percentage (I will refer to this percentage as the margin) less than a rate described in words (I will refer to this rate as the benchmark rate).  In addition, the letter recorded the interest rate applicable to the facility at the date of the offer (calculated by deducting the margin from the benchmark rate and expressed as an annual percentage).  An example of how the interest rate provision was structured may be found at [67];

   (h)identified the security to be provided for the facility; and

   (i)listed the special conditions that formed part of the offer.

   [30] Exhibit 1.21.

4. The terms of each facility were varied by further letters of offer which followed the same format as the letters establishing the facility.  Most of the letters of offer which varied the facility terms contained a provision to the effect that by signing the letter the defendants acknowledged that the amount owing under the facility was the amount specified in the provision. 

5. The defendants signed the letters of offer and returned them to RBL to signify their acceptance of the varied terms.

The Facility Terms

1. Clause 1.1 of the Facility Terms defined expressions used in them.  Relevantly: 

   (a)'Bank' was defined as:[31]

   [31] Exhibits 1.21 and 1.22, cl 1.1.

   '[RBL] and its successors and assigns'.

   (b)'authorised officer' was defined as: [32]

   [A]ny director, secretary or attorney of the Bank, any lawyer acting for the Bank and any employee of the Bank whose title includes the word "manager".

   (c)'relevant document' was defined as follows: [33]

   'relevant document' means the letter of offer, these terms, the securities, terms and conditions, each fees and charges schedule, any indemnity given to the Bank in connection with an external obligation and any other agreement or arrangement made between the borrower and/or any guarantor (whether alone or jointly with any other person) and the Bank;

   [32] Exhibits 1.21 and 1.22, cl 1.1.

   [33] Exhibit 1.21, cl 1.1.  The words 'terms and conditions' are omitted and the words 'accessing your account' are included in the definition in the Facility Terms contained in Exhibit 1.22, cl 1.1.

2. Clause 4.2 of the Facility Terms governed the accrual and payment of interest.  Among other matters it provided:

   The borrower must pay interest on the debit balance of each account.  Subject to clause 4.7, interest is payable on the debit balance of an account calculated at the interest rate applicable to the relevant facility and will (unless otherwise provided for in the letter of offer) be debited to that account (or to such other account specified in the letter of offer) on the first day of each month in arrears.  The interest rate (unless otherwise specified in the letter of offer) is variable and the current interest rate applicable to the relevant facility can be obtained from any office of the Bank.  Any indicative interest rate set out in the letter of offer may not apply during the term of the facility and may change even before the first advance is made.  (original italics and emphasis)

3. Clause 4.5 of the Facility Terms imposed an obligation on the defendants to repay RBL any outstanding sum under a facility on or before the repayment date, or if no repayment date was specified, on demand.

4. Clause 4.6 of the Facility Terms imposed an obligation on the defendants to pay on demand all costs including reasonable legal costs on a full indemnity basis in connection with, among other matters, the enforcement or attempted enforcement or preservation by RBL of its rights under any of the facility agreements and authorised to debit such costs to the relevant account.

5. Clause 8 of the Facility Terms governed 'events of default'.  Clause 8.1 specified the events which were 'events of default' and they included the following:[34]

   [T]he borrower or a guarantor fails to pay to the Bank when due any amount required to be paid under any relevant document;

   [T]he borrower or a guarantor does not perform or comply with any other covenant, agreement or undertaking on its part contained in any relevant document;

   …

   [A]ny other indebtedness of the borrower or a guarantor in excess of $10,000 becomes due and payable or capable of being declared due and payable before its stated maturity;

   …

   [A]ll or any part of any relevant document is terminated or is able to be terminated or is, or becomes capable of becoming void, voidable, illegal, invalid or unenforceable or of limited force and effect.

   [34] Exhibit 1.21. Plaintiff's Substituted Statement of Claim filed 22 April 2021 [8(d)]; admitted by the Defendants in the Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [36].

6. Clause 8.2 of the Facility Terms set out RBL's rights in the event of a default as follows:[35]

   If the borrower fails to pay to the Bank any money payable on demand or if any other event of default occurs the Bank may do any one or more of the following:

   ·cancel all or any part of any facility;

   ·make the outstanding sum under or in connection with the facility immediately due for payment or payable on demand; or

   ·enforce its rights under any relevant document.

   [35] Exhibit 1.21. Plaintiff's Substituted Statement of Claim filed 22 April 2021 [8(e)]; admitted by the Defendants in the Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [36].

7. Clause 12.1 of the Facility Terms provided:

   A certificate signed by the Bank or any authorised officer stating an amount owing to the Bank at a particular date or as to any other matter or thing, is conclusive evidence against the borrower and the guarantor (as the case may be) unless proved incorrect.

The mortgage provisions

1. The four mortgages were as follows:

   (a)a mortgage numbered H****17 dated 12 July 1999 granted by the defendants over the land specified therein (Mortgage 1);

   (b)a mortgage numbered H****18 dated 12 July 1999 granted by the first defendant over the land specified therein (Mortgage 2);

   (c)a mortgage numbered J****09 dated 23 September 2005 granted by the first defendant over the land specified therein (Mortgage 3); and

   (d)a mortgage numbered K****57 dated 29 November 2007 granted by the first defendant over the land specified therein (Mortgage 4).

2. Clause 1 in each of Mortgage 1 and Mortgage 2 incorporated the provisions of the Memorandum of Common Provisions of Mortgage numbered 129 (Memorandum of Common Provisions 1).[36]

   [36] Exhibits 1.23 and 1.24.

3. Memorandum of Common Provisions 1 included terms to the effect that:

   (a)A failure by the mortgagor to pay when due any 'Secured Money' ('Secured Money' was defined in broad terms and extended to money due under the Facilities) was an event of default.[37]

   (b)On the occurrence of an event of default RBL was entitled to possession of the mortgaged land.[38]

   (c)The mortgagor was obliged to pay on demand legal costs on a solicitor and own client basis or on a full indemnity basis whichever is the higher relating to, among other matters, the enforcement of the mortgage.[39]

   [37] Exhibit 1.25, cl 10.1.

   [38] Exhibit 1.25, cl 11.3.1.

   [39] Exhibit 1.25, cl 17.

4. Clause 19.0 of the Memorandum of Common Provisions 1 provided:[40]

   A certificate signed by any officer of Elders stating the amount of the money due under this Mortgage by the Mortgagor or the amount of the Secured Money at the date mentioned in any such certificate is conclusive evidence that the amount stated is the amount due under this Mortgage by the Mortgagor or the amount of the Secured Money relating to the Mortgagor at the date stated in that certificate.

   [40] Exhibit 1.25.  Plaintiff's Substituted Statement of Claim filed 22 April 2021 [56], [60]; admitted by the Defendants in the Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [37], [39].

5. Clause 1 in Mortgages 3 and 4 incorporated the provisions of the Memorandum of Common Provisions numbered H591942 (Memorandum of Common Provisions 2).

6. The Memorandum of Common Provisions 2 included terms to the same effect as those summarised at [58(a)] and [58(b)].[41]  The provision regarding the recovery of legal costs was expressed in slightly different terms.  It provided that RBL recover all costs including reasonable legal costs on a full indemnity basis in connection with, among other matters, the enforcement or attempted enforcement or preservation by RBL of its rights under any of the facility agreements.[42]

   [41] Exhibit 1.26, cl 11.1 and cl 12.3.

   [42] Exhibit 1.26, cl 18.

7. Clause 19.1 of the Memorandum of Common Provisions 2 provided:[43]

   A certificate signed by the Bank or any authorised officer stating an amount owing to the Bank at a particular date or as to any other matter or thing is conclusive evidence against the mortgagor unless proved incorrect.

   [43] Exhibit 1.26.

Trading Limit Facility

1. Prior to 29 June 2004 the defendants had obtained finance from Elders Ltd under various facility agreements.  The defendants' indebtedness to Elders Ltd was secured by Mortgages 1 and 2.  On 29 June 2004 Elders Ltd assigned to RBL all its rights in respect of the finance advanced by it to the defendants and all of its rights to the securities granted by the defendants.[44]

   [44] Exhibit 1.28.

2. By letter of offer dated 29 June 2004, RBL offered to make available to the defendants a finance facility described as a 'trading limit facility' that incorporated the financial accommodation provided under the existing facility assigned by Elders Ltd to RBL.  The letter stated that the approved purpose of the facility was to 'continue to assist the borrower in meeting seasonal and livestock expenses or for such other purposes approved by the Bank in writing'.  The limit of the facility offered by RBL was $700,000 and that amount was expressed to include the debt under the facility assigned by Elders Ltd.[45]

   [45] Exhibit 1.13. Plaintiff's Substituted Statement of Claim filed 22 April 2021 [46]; admitted by the Defendants in the Defendants' Re-Amended Defence, Set-Off and Counterclaim dated 3 July 2015 [28].

3. The letter of 29 June 2004 provided that the date for repayment of the facility was to be the earlier of: [46]

   (a)the date specified in a notice from RBL requiring repayment of the outstanding sum; and

   (b)the date of demand from RBL for repayment of the outstanding sum after the occurrence of an event of default. 

   [46] Exhibit 1.13, cl 4.2.

4. The letter stated that in the absence of an event of default, unless following an annual review RBL notified the defendants to the contrary, RBL could not give a notice requiring repayment of the outstanding sum before the date on which the next annual review was scheduled; and any notice was required to give not less than three months to repay the outstanding sum.[47]   Thus, absent an event of default the facility was in effect an annual one.

   [47] Exhibit 1.13, cl 4.3.

5. Clause 5 of the letter of 29 June 2004 governed interest and fees and was in the following terms:[48]

   The interest rate is the rate being 1.55% per annum less than the Bank's variable secured seasonal rate from time to time.

   The interest rate at the date of this letter of offer (less the 1.55% margin) is 10.20% per annum.

   The borrower must pay all applicable fees and charges specified in the then current fees and charges schedule.  A copy of the current fees and charges schedule is available on the Bank's website ( or by contacting the Bank on 1300 660 115.

   Interest and any applicable fees and charges will be debited to the account.  (original italics)

   [48] Exhibit 1.13.

6. Although the word 'secured' was italicised in the first sentence of cl 5 it was not a term defined in the Facility Terms.

7. Clause 6 of the letter of 29 June 2004 specified the securities to be provided for the facility and these included Mortgage 1 and Mortgage 2 which were to be assigned to RBL by Elders Ltd.[49]

   [49] Exhibit 1.13, cl 6.1.

8. Each defendant accepted the offer of finance contained in the letter dated 29 June 2004 by signing a copy of the letter on 16 July 2004.[50]  By accepting the offer the defendants acknowledged that the debt due on 29 June 2004 under the Trading Limit Facility was $593,878.46.[51]

   [50] Exhibit 1.13.

   [51] Exhibit 1.13, cl 8.1.

9. Mortgage 1 and Mortgage 2 were transferred by Elders Ltd to RBL and the transfers were registered on 20 October 2004.[52]

Variations to the Trading Limit Facility

[52] Exhibits 1.30 and 1.31.

1. Between 2004 and 2009 the terms of the Trading Limit Facility were varied seven times.  The variations were effected in the manner described at [47] ‑ [48].

Trading Limit Facility variation 1 - 26 August 2004

1. By a letter dated 26 August 2004 from RBL to the defendants, which was signed by the defendants and returned to RBL, the terms of the Trading Limit Facility were varied by:[53]

   (a)increasing the facility limit to $850,000;[54] and

   (b)reducing the margin from 1.55% per annum to 1.25% per annum - the benchmark rate remained 'the Bank's variable secured seasonal rate from time to time' and the letter recorded that on 26 August 2004 the applicable interest rate as varied was 10.50% per annum.

   [53] Exhibit 1.14, cl 1.1 and cl 1.2.

   [54] When setting the facility limit of each facility, RBL specified the limit by reference to a specific dollar amount and added the phrase 'or such other amount as might be approved in writing by [RBL]'.  To avoid unnecessary repetition this phrase will be omitted when making further references to the facility limits specified in letters of offer in respect of any of the facilities.

2. By signing the letter dated 26 August 2004 the defendants acknowledged that the debt due on 1 August 2004 under the Trading Limit Facility was $721,979.04.[55]

Trading Limit Facility variation 2 - 8 September 2005

[55] Exhibit 1.14, cl 3.1.

1. By a letter dated 8 September 2005 from RBL to the defendants, which was signed by the defendants and returned to RBL, the terms of the Trading Limit Facility were varied by increasing the facility limit to $900,000.[56]  The letter recorded that the approved purpose of the facility was 'to continue to assist the borrower in meeting seasonal and livestock expenses or for such other purposes approved by the Bank in writing'.[57]

   [56] Exhibit 1.15, cl 2.

   [57] Exhibit 1.15, cl 1.

2. The interest rate was not varied - the margin remained 1.25% per annum and the benchmark rate remained 'the Bank's variable secured seasonal rate from time to time'.  The letter recorded that on 8 September 2005 the interest rate was 10.75% per annum.[58] 

   [58] Exhibit 1.15, cl 5.

3. The varied terms required further securities to be provided by the defendants including Mortgage 3.[59]

   [59] Exhibit 1.15, cl 6.

4. By signing the letter dated 8 September 2005 the defendants acknowledged that the debt due on 1 September 2005 under the Trading Limit Facility was $804,340.61.[60]

Trading Limit Facility variation 3 - 7 September 2006

[60] Exhibit 1.15, cl 8.1.

1. By a letter dated 7 September 2006 from RBL to the defendants, which was signed by the defendants and returned to RBL, the terms of the Trading Limit Facility were varied by increasing the facility limit to $1,050,000.[61]  The letter recited the approved purpose of the facility in the same terms as used in the letters of offer of 29 June 2004 and 8 September 2005.  The interest rate was not varied.  The letter recorded that on 7 September 2006 the interest rate was 11.25% per annum.[62]  The varied terms required further security to be provided in the form of a crop lien over the defendants' barley and lupin crop.[63]

   [61] Exhibit 1.16, cl 2.

   [62] Exhibit 1.16, cl 5.

   [63] Exhibit 1.16, cl 6.

2. By signing the letter dated 7 September 2006 the defendants acknowledged that the debt due under the Trading Limit Facility on 1 September 2006 was $889,930.76.[64]

Trading Limit Facility variation 4 - 7 May 2007

[64] Exhibit 1.16, cl 8.1.

1. By a letter dated 7 May 2007 from RBL to the defendants, which was signed by the defendants and returned to RBL, the terms of the Trading Limit Facility were varied as follows:[65]

   (a)the facility limit was reduced to $625,000; and

   (b)the margin rate was increased to 1.75% - the benchmark interest rate remained 'the Bank's variable secured seasonal rate' and the letter recorded that on 7 May 2007 the interest rate was 11.0% per annum.

   [65] Exhibit 1.17, cl 2 and cl 5.

1. The approved purpose of the facility was stated in the same terms as in the earlier letters of offer.

2. By signing the letter dated 7 May 2007 the defendants acknowledged that the debt due under the Trading Limit Facility on 1 May 2007 was $1,292,850.58.[66]

Trading Limit Facility variation 5 - 19 May 2008

[66] Exhibit 1.17, cl 8.1.

1. By a letter dated 19 May 2008 from RBL to the defendants, which was signed by the defendants and returned to RBL, the terms of the Trading Limit Facility were varied:[67]

   (a)by increasing the facility limit to $975,000 until 30 November 2008, following which it was to be reduced to $600,000 and further reduced on 31 January 2009 to $175,000; 

   (b)by reducing the margin rate to 0.85% - the benchmark rate remained 'the Bank's' variable secured seasonal rate' and the letter recorded that on 19 May 2008 the interest rate was 13.50% per annum; and 

   (c)by requiring further security, including Mortgage 4 from the first defendant.

Trading Limit Facility variation 6 - 18 May 2009

[67] Exhibit 1.18, cl 2, cl 5 and cl 6.

1. By a letter dated 18 May 2009 from RBL to the defendants, which was signed by the defendants and returned to RBL, the terms of the Trading Limit Facility were varied:[68]

   (a)by increasing the facility limit to $975,000 until 31 December 2009 with a reduction thereafter to $550,000; and 

   (b)by increasing the margin rate to 1.75% per annum and the benchmark rate was varied to 'the Bank's seasonal account secured basic rate from time to time' and the letter recorded that on 18 May 2009 the interest rate was 11.90% per annum.

Trading Limit Facility variation 7 - 16 September 2009

[68] Exhibit 1.19, cl 2 and cl 5.

1. By letter dated 16 September 2009 the terms of the Trading Limit Facility were varied by increasing the facility limit from $975,000 to $1,060,000 on a temporary basis until 29 November 2009.[69]  The letter of 16 September 2009 did not vary the obligation imposed on the defendants to reduce the amount owing under the Trading Limit Facility to $550,000 on 1 January 2010.  No alteration was made to the interest rate.  The letter of 16 September 2009 was not signed by the defendants.

Variation in interest rate - 22 July 2011

[69] Exhibit 1.20.

1. On 22 July 2011 (after the writ was issued) RBL gave notice to the defendants that the interest rate in respect of the Facilities was varied.  The interest rate under the Trading Limit Facility was varied to RBL's seasonal account secured basic rate minus a margin of 4.5%.[70]  This was a reduction in the interest rate.

   [70] Exhibit 1.04.

2. The plaintiff pleaded that the 22 July 2011 variation in interest rates constituted an offer to vary the Trading Limit Facility by reducing the interest rate, which was accepted by the defendants by their conduct in failing to object.[71]  In the alternative, the plaintiff pleaded the variation in the interest rate was a variation RBL was entitled to make from time to time under the Facility Terms.[72]  In its submissions the plaintiff characterised the varied rate as a concessional rate which, it was appropriate for it to plead given that it was a reduction in the rate.[73]

   [71] Plaintiff's Substituted Statement of Claim filed 22 April 2021 [9].

   [72] Plaintiff's Substituted Statement of Claim filed 22 April 2021 [10].

   [73] Plaintiff's Outline of Submissions filed 12 September 2022 [12] - [13].

3. Whether the plaintiff's pleading of the 22 July 2011 variation constituted a pleading of a cause of action that arose after the writ was issued was one of the matters on which the parties were provided with the opportunity to make submissions after judgment was reserved. In its submissions, the plaintiff contended that its pleading did not amount to the plea of a cause of action arising after the date of the writ but to the plea of a matter which the plaintiff was entitled to plead whether it arose before or after the issue of the writ by reason of O 20 r 10 of the Rules of the Supreme Court 1971 (WA).[74]

   [74] Plaintiff's Outline of Submissions filed 12 September 2022 [12].

4. I consider that the variation is to be characterised as an interest rate variation made pursuant to the Facility Terms rather than a variation to the Trading Limit Facility agreement.  If it is neither, however, then it is simply a unilateral concession made in the defendants' favour that it was proper for the plaintiff to plead.  Whether characterised as a variation to the interest rate made in accordance with the Facility Terms or a unilateral concession made after the expiry of the Trading Limit Facility, it does not amount to a new cause of action.

Trading Limit Facility interest rate term not uncertain

Preliminary observation

1. I refer later in these reasons to the conclusive effect of the Dobbs certificates, in particular, I refer to the authorities in which it has been held that such certificates are conclusive of the legal existence of the debt which is the subject of the certificate.  The plaintiff submitted that given the Dobbs certificates were conclusive of the legal existence of the debts claimed by them it was unnecessary to engage with the defendants' pleaded case in respect of the interest rates under the Facilities.[75] 

   [75] Plaintiff's Outline for Trial filed 23 December 2021 [36] - [40].

2. On the basis of the authorities there is considerable force in the plaintiff's submission but out of an abundance of caution I will consider the defendants' case with respect to interest rates to the extent to which that is possible given the defendants did not participate in the trial.  Thus, their contentions must be considered on the basis of the evidence adduced by the plaintiff and without the benefit of any submissions from the defendants. 

The defendants' contentions

1. As pleaded in the re-amended defence filed on 3 July 2015, the defendants' contentions were to the following effect:[76]

   (a)a rate of interest known as the 'variable secured seasonal rate' did not exist as RBL did not publish or offer a variable rate of interest to its customers titled 'variable secured seasonal rate of interest';[77]

   (b)the 'variable secured seasonal rate' and 'the seasonal account secured basic rate' were varied without notice to the defendants;[78]

   (c)neither 'variable secured seasonal rate' nor 'the seasonal account secured basic rate' were capable of being determined by the defendants by reference to any document published or produced by RBL and 'the seasonal account secured basic rate' was incapable of being determined by the defendants by reference to any formula that was published, produced or made available to the defendants;[79] and

   (d)as a consequence of (a) to (c) the provision for interest in RBL's letters of offer was void for uncertainty, alternatively RBL's conduct in respect of interest constituted misleading or deceptive conduct or unconscionable conduct (or both) contrary to the prohibitions against such conduct in the Australian Securities and Investments Commission Act 2001 (Cth).[80]

   [76] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015.

   [77] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [29.1(f)].

   [78] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [29.1(g)], [29.2(a)].

   [79] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [29.1(h)], [29.2(b)] - [29.2(c)].

   [80] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [29.1(i)], [29.2(d)].

2. On the basis of these contentions the defendants contested the amounts RBL (and subsequently) the plaintiff alleged were owing under the Trading Limit Facility and contested the validity of the demands made by RBL.

3. The contentions outlined above about the interest rate in the Trading Limit Facility were repeated in substantially the same terms in respect of each of the other Facilities.

Relevant legal principles

1. It is helpful to begin by stating some general propositions.  This is most conveniently done by reproducing the statements of principle by reference to which the authorities are analysed in The Interpretation of Contracts in Australia:[81]

   (a)A contract, or a provision in a contract, may be uncertain if it is unintelligible; if it is meaningless; if a court is unable to select between a variety of meanings fairly attributable to it, and the circumstances are not such that one or other party to the contract may elect between meanings; where the court is unable to discern the concept which the parties had in mind; or where the terms of the contract require further agreement between the parties in order to implement its terms.[82]

   (b)The task of the court is to construe the document according to the ordinary canons of construction and then to determine whether the document so construed is void for uncertainty.[83]

   (c)That which can be made certain is itself certain.[84]

   (d)Where parties have entered into what they believe to be a binding agreement the court is most reluctant to hold that their agreement is void for uncertainty and will only do so as a last resort.[85]

   (e)The court's reluctance to hold a provision in a contract void for uncertainty is greater in a case where the agreement is no longer executory but has been partly performed.[86]

   (f)A provision in a contract will only be void for uncertainty if the court cannot reach a conclusion as to what was in the parties' minds or where it is not safe for the court to prefer one possible meaning to other equally possible meanings.[87]

   [81] Lewison K and Hughes D, The Interpretation of Contracts in Australia (2012).

   [82] Lewison K and Hughes D, The Interpretation of Contracts in Australia (2012) [8.09].

   [83] Lewison K and Hughes D, The Interpretation of Contracts in Australia (2012) [8.10] and the cases cited therein.

   [84] Lewison K and Hughes D, The Interpretation of Contracts in Australia (2012) [8.11] - 'id certum est quod certum reddi potest'.

   [85] Lewison K and Hughes D, The Interpretation of Contracts in Australia (2012) [8.12] and the cases cited therein.

   [86] Lewison K and Hughes D, The Interpretation of Contracts in Australia (2012) [8.13] and the cases cited therein.

   [87] Lewison K and Hughes D, The Interpretation of Contracts in Australia (2012) [8.14] and the cases cited therein.

2. The reluctance of the courts to hold a provision in a contract void for uncertainty in a partly performed contract was expressed in the following terms by Murray CJ and Napier J in Hempel v Robinson:[88]

   When a contract has been concluded the Court has to discover the meaning if it can.  When a contract has been partially executed the Court will struggle to overcome any objection on the ground of uncertainty … that is to say it will go to some length in its search for a definite meaning.

   [88] Hempel v Robinson [1924] SASR 288, 292 (Murray CJ & Napier J).

3. The point was made in equally emphatic language by Templeman LJ in Sudbrook Trading Estate Ltd v Eggleton[89] as follows:[90]

   Where an agreement which would otherwise be unenforceable for want of certainty or finality in an essential stipulation has been partly performed so that the intervention of the court is necessary in aid of a grant that has already taken effect, the court will strain to the utmost to supply the want of certainty even to the extent of providing a substitute machinery.

   [89] Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444.

   [90] Sudbrook Trading Estate Ltd v Eggleton (484) (Lord Fraser of Tullybelton).

4. In Biotechnology Australia Pty Ltd v Pace,[91] Kirby P summarised the applicable principles in terms generally reflecting the principles stated at [96].[92]  Among other points his Honour observed:[93]

   The determination of every case depends on its own facts.  The meaning of the agreement between the parties must be discovered objectively.  Where there is suggested ambiguity or vagueness or where it is urged that a term is illusory, it may sometimes be both necessary and appropriate to have regard to extrinsic evidence in order to give meaning to that which the parties have agreed.  (footnotes omitted)

   [91] Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130.

   [92] Biotechnology Australia Pty Ltd v Pace (135 - 136) (Kirby P).

   [93] Biotechnology Australia Pty Ltd v Pace (135 - 136) (Kirby P).

5. There are a number of decisions in which the question of whether terms for the payment of interest in loan agreements or mortgages are void for uncertainty has been considered.  In Kabwand Pty Ltd v National Australia Bank Ltd (Kabwand)[94] the borrowers contended that the following term was void for uncertainty:[95]

   Interest shall initially be calculated at the rate set out in Item 3 in the Schedule but the Bank may at any time hereafter at its sole discretion vary either by way of increase or decrease the said rate of interest conforming with general movements in the Bank's interest rates without any obligation on the Bank to notify you of such variation.

   [94] Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950.

   [95] Kabwand Pty Ltd v National Australia Bank Ltd (50,379) (Lockhart, Hartigan & Hill JJ).

6. The court identified three distinct principles that were of potential application.  They were expressed as follows:

   (a)A failure by parties to a contract to agree upon a fundamental term means that there is no contract at all, a consequence that also arises if the terms they do agree on 'are so vague that no precise meaning can be attributed to them'.[96]

   (b)A contract will be unenforceable if one of the parties is left to choose whether or not to perform it though in such a case the court said that the reason why there is no contract may not depend on certainty, rather it is that the consideration given is illusory.[97]

   (c)There can be no concluded bargain if a vital matter has been left to the determination of one of the parties.[98]

   [96] Kabwand Pty Ltd v National Australia Bank Ltd (50,380) (Lockhart, Hartigan & Hill JJ).

   [97] Kabwand Pty Ltd v National Australia Bank Ltd (50,380) (Lockhart, Hartigan & Hill JJ).

   [98] Kabwand Pty Ltd v National Australia Bank Ltd (50,380) (Lockhart, Hartigan & Hill JJ).

7. In Kabwand the court reached the following conclusion:[99]

   Whatever may be the case where a loan agreement provides that the lender may select any interest rate it pleases, the present is not that case.  Here the rate of increase or decrease of interest must conform to the general rates of interest charged to customers of the bank, that is to say there is an objective market standard to be applied at all times.  In these circumstances we do not think that it can be said that any of the three principles sought to be applied have application.  As the trial Judge said, and we agree, the present clauses as to interest are "not to be construed as giving to the cross-claimant a power at large.  A borrower may challenge any increase on the basis that it has been fixed otherwise than in conformity with the general movements referred to".

   [99] Kabwand Pty Ltd v National Australia Bank Ltd (50,381) (Lockhart, Hartigan & Hill JJ).

8. The principles stated in Kabwand were applied by Adams J in Australian and New Zealand Banking Group Ltd v Fink,[100] who held, on a summary judgment application, that a contractual provision for interest to be charged by reference to an 'ANZ Home Loan Index' was not void for uncertainty.[101]

   [100] Australia and New Zealand  Banking Group Ltd v Fink [2013] NSWSC 1781.

   [101] Australia and New Zealand Banking Group Ltd v Fink [23] (Adams J).

9. In Nikoloff v Perpetual Trustee Company Ltd [No 2],[102] the Court of Appeal referred to the discussion of the principles in Kabwand.  The Court of Appeal referred in particular to the third principle and held that a term which provided for the payment of interest at the lender's 'specialist lending variable rate' which was defined as 'the rate we publish from time to time as our advertised "specialist lending variable rate" or a name we substitute for that name' was not void for uncertainty and was not conditioned by an implied term that the contractual power to vary the interest rate was limited to rates set by the Reserve Bank of Australia.[103]  In addition to referring to the principles in Kabwand, the Court of Appeal referred to a number of decisions in which it had been held that provisions conferring an open ended and unconfined discretion to vary interest rates without constraint or reference criteria were, or might be, invalid.  The Court of Appeal observed:[104]

   The above cases support an argument that a contractual provision giving a lender an unfettered power to fix interest rates without constraint or reference criteria (including a lender's own benchmark rates) may be void for uncertainty.  The open question of whether or not such a provision is void is not appropriately resolved on a summary judgment application.

   However, nothing in those decisions indicates that a lender may not be empowered to vary an interest rate by reference to a general market rate advertised as available to all qualified customers taking up certain categories of loan.  As a matter of practice, that is the common means by which financial institutions provide variable interest rate loans.

   The acting master found that the present case clearly fell within the category illustrated by the decision in Kabwand, observing:

   The 'specialist lending variable rate' does not apply solely to the loan in question but [to] all customers of [Perpetual] taking a loan of the same kind and so, to adopt the language of Kabwand at [50382], this clause requires the interest rate to 'conform to the general rates of interest charged to customers of the bank, that is to say there is an objective market standard to be applied at all times'.  

   In this case, as in Kabwand, borrowers under a specialist lending variable rate 'may challenge any increase in the rate of interest applied on the basis that it has been fixed otherwise than in conformity with the general movements referred to'.  It follows that it is not arguable that the provisions of the loan agreement as to interest are void for uncertainty.  (citations omitted)

   We see no error in that approach.  The acting master correctly held that the provisions for interest are not arguably void for uncertainty.  Grounds 1 - 5 are not established.  (footnotes omitted)

   [102] Nikoloff v Perpetual Trustee Co Ltd [No 2] [2022] WASCA 16.

   [103] Nikoloff v Perpetual Trustee Co Ltd [No 2] [35], [43] (Quinlan CJ, Mitchell & Vaughan JJA).

   [104] Nikoloff v Perpetual Trustee Co Ltd [No 2] [32] - [35] (Quinlan CJ, Mitchell & Vaughan JJA).

10. In Financial Institutions Services Ltd v Negril Negril Holdings Ltd,[105] the Privy Council held a term in a banking agreement which required the customer to pay interest on an overdraft 'at the Bank's usual rate of interest' was so uncertain as to be unenforceable.  The Board was careful, however, to emphasise that it had reached that conclusion on the unusual facts of the case and stated:[106]

    On the first issue, concerning [the enforceability of the provision for the payment of interest], their Lordships consider that the courts below were correct.  They wish to emphasise, however, that they reached this conclusion on the particular (and unusual) facts of the case, and their decision certainly does not establish any general proposition that references to a bank's "usual rate of interest" or "usual terms" are insufficiently certain to amount to a contractual term (compare the observations of Lord Wright in G Scammell & Nephew Ltd v Ouston [1941] AC 251, 273). Whether such a provision fails for uncertainty must depend on the evidence placed before the court.

    In this case the Bank was at the material times (between 1984 and 1987) a mere fledgling in the world of banking (indeed it was still not much more than a fledgling when it succumbed in the harsh financial conditions of the mid-1990s).  It did not publish or display at its premises a rate of interest as its usual lending rate.  It did not in terms inform the Companies (or, so far as the evidence went, any others of its customers) of the interest rates which it was charging (although a financially competent customer would have been able to obtain, from his bank statements, information enabling him to make a rough calculation).  Mr Garcia (who followed the Solicitor-General on this point, and did so with considerable ability) explained that in practice the rate of interest charged to a customer depended on a number of factors (including the cost of funds, the personality of the customer, the security offered, and the size of the transaction).  That was a realistic submission but it completely undermined the notion that the Bank had a single usual rate.  The Bank was finally driven to the position that its "usual rate" was whatever rate it chose to charge from time to time, which cannot be the right answer.

Relevant facts

[105] Financial Institutions Services Ltd v Negril Negril Holdings Ltd [2004] UKPC 40.

[106] Financial Institutions Services Ltd v Negril Negril Holdings Ltd [27] - [28].

1. On the basis of Mr Patton's evidence, the documentary evidence and inferences drawn from both those sources, I make the following findings.   

2. RBL offered financial accommodation at interest rates classified according to the purpose of funding, the type of facility (term loan or overdraft) the credit rating of the borrower and the security provided.  Each classification of interest rate was given a name which corresponded in general terms with purpose and type of the facility to which the interest rate was to be applied.  These interest rate classifications were benchmark rates.  Each office of RBL maintained a record of these benchmark rates.  RBL's records included a schedule which listed the rates by reference to each benchmark and the dates on which the rates changed.[107]   

   [107] Exhibit 1.37.

3. Between June 2004 and 2 March 2009 there were six benchmark rates for overdraft facilities.  The descriptions applied to them were: 'standard unsecured', 'seasonal account standard secured base rate', 'special land secured [overdraft] rate', 'special stock/crop secured [overdraft] rate', 'seasonal benchmark rate' and 'agrimanager'.  The 'seasonal account standard secured base rate', 'special land secured [overdraft] rate', 'special stock/crop secured [overdraft] rate' and 'seasonal benchmark rate' were available to customers with a credit rating of 'CRR 1 - 3'.  The 'agrimanager' interest rate does not appear to have been tied to a particular credit rating. 

4. On 2 March 2009 RBL added further benchmark interest rates.  The terms used to describe these rates were as follows:  'seasonal account secured variable rate', 'special land standard rate', 'special stock/crop standard rate', 'seasonal account benchmark variable rate', 'seasonal account secured basic rate', 'special land basic rate', 'special stock/crop basic rate' and 'seasonal account benchmark rate'.  The first four of these rates were available to customers with a credit rating of 'CRR 4 - 5' and the second four were available to customers with a credit rating of 'CRR 6 - 9'. 

5. I infer from the existence of the various benchmark rates that each benchmark rate was made available to customers of RBL who fulfilled the credit rating and security criteria applicable to that benchmark and who sought finance for purposes that coincided with the purposes indicated by the description given to the benchmark.  Put more simply, each benchmark interest rate was a general market rate available to customers who wanted a facility of the nature to which the benchmark rate applied and who satisfied the credit criteria for such a facility.  This conclusion is reinforced by cl 4.2 of the Facility Terms which provided that 'the current interest rate [could] be obtained from any office of RBL' (emphasis added) which implies the interest rate was one made available generally to customers.[108]

   [108] Exhibits 1.21 and 1.22.

6. RBL tailored the application of each benchmark rate to individual customers by applying a margin (as was done with the Trading Limit Facility) which reflected RBL's assessment of the credit risk presented by that particular customer.

7. The term 'variable secured seasonal rate' was not used by RBL in its internal records to describe any benchmark rate of interest made available by RBL to its customers between 2004 and 2009.  The term did, however, convey that:

   (a)the interest rate was variable;

   (b)the interest rate was 'seasonal' (implying that its purpose was to assist customers with a need for finance that fluctuated with the seasons and that the facility was to be reviewed on a seasonal basis); and

   (c)it was a rate applicable to a facility that was secured.

8. In these respects, the term 'variable secured seasonal rate' conveyed the same essential features as those conveyed by the term 'seasonal account standard secured base rate'.

9. On the date of each letter of offer sent by RBL to the defendants between 29 June 2004 and 19 May 2008 in respect of the Trading Limit Facility the benchmark interest rate calculated by adding the margin to the interest rate specified in the letter of offer as current at the date of the letter corresponded with the 'seasonal account standard secured base rate' in RBL's records.  This is illustrated in the table below:

Date	Letter of Offer interest rate plus margin	Seasonal Account Standard Secured Base Rate[109]
29 June 2004	10.20% + 1.55%	11.75%
26 August 2004	10.50% + 1.25%	11.75%
8 September 2005	10.75% + 1.25%	12.00%
7 September 2006	11.25% + 1.25%	12.50%
7 May 2007	11.00% + 1.75%	12.75%
19 May 2008	13.50% + 0.85%	14.35%

[109] Exhibit 1.37.

1. In the letter of offer dated 18 May 2009 the benchmark interest rate was described as 'the Bank's seasonal account secured basic rate'.  From 2 March 2009 this term was used by RBL in its internal records to refer to a benchmark interest rate made available by RBL to its customers.  The 'seasonal account secured basic rate' on 18 May 2009 was 13.65% and this corresponded with the interest rate specified in the 18 May 2009 letter of offer after account was taken of the margin - (11.90% + 1.75% margin = 13.65%).

2. The final factual matter to record is that statements in respect of the Trading Limit Facility were sent to the defendants on a monthly basis.  The first page of each statement contained a panel summarising the key details relating to the account for the month to which the statement related.  By way of example the information for the month of September 2004 was displayed as follows:[110]

Consideration

[110] Exhibit 1.

1. My consideration of the defendants' contentions is informed by the observations in the authorities to which I have referred to the effect that when a contract has been partially executed the court will go to some length in its search for a definite meaning.  In this case, of course, the defendants had the use of the money advanced to them for a number of years before the occurrence of the defaults on which the RBL relied.

2. The defendants' pleaded contentions were directed primarily to engaging the first and third principles stated in Kabwand.  Thus, the defendants contended in effect that in the absence of an interest rate in RBL's records answering the description 'variable secured seasonal rate', the term for payment of interest at 'the Bank's variable secured seasonal rate' less a margin was unenforceable because the expression had no meaning.  Secondly, the defendants contended the absence of a reference in the Trading Limit Facility to any objective criteria governing the variation of interest rates meant that RBL had an open ended and unconfined discretion to vary interest rates, the effect of which was there was no concluded bargain in relation to interest.

3. As to the first contention, it may be accepted that the lack of conformity between the term used to describe the benchmark rate in the letters of offer and the terms used in RBL's internal records created an element of uncertainty.  In my judgment, however, the defendants' contention overstates the extent of this disconformity and its effect.  This is a case in which what is uncertain may be made certain by comparing the annual percentage of the benchmark rate referred to in the letters of offer with the annual percentage of the benchmark rates in RBL's records.  And, as is demonstrated by the table at [114] when calculated by adding the margin to the interest rate at the date of the letter of offer 'the Bank's variable secured seasonal rate' corresponded exactly with the 'seasonal account standard secured base rate' making it plain that the 'seasonal account standard secured base rate' was the benchmark rate which was to apply to the Trading Limit Facility. 

4. This conclusion is reinforced by the fact that the 'seasonal account secured base rate' was the only benchmark rate operated by RBL which was expressed to be both seasonal and secured.

5. Expressed in more practical terms, had the defendants inquired at any office of RBL what interest rate applied to the Trading Limit Facility they would have been given the annual percentage rate recorded in RBL's records under the description 'seasonal account secured base rate' for two reasons.  First, because the benchmark interest rate at the date of the letter of offer corresponded with the 'seasonal account secured base rate' and, secondly, because 'seasonal account secured base rate' was the only benchmark rate that was applied to overdraft facilities that was described as both 'seasonal' and 'secured'.

6. The defendants' first contention was not advanced in respect of the term as to interest in the letter of offer of 18 May 2009 and so I will turn to consider the defendants' second contention.

7. I have made factual findings to the effect that the 'seasonal account standard secured base rate' and the 'seasonal account secured basic rate' were benchmark rates that did not apply solely to the facilities made available to the defendants.  Rather those benchmark rates governed the rates of interest charged generally to customers who had facilities to which those benchmark rates applied. 

8. Construed against that factual background RBL's discretion to vary the interest rate under the Trading Limit Facility was not at large.  The interest rate could only be varied in accordance with variations in the benchmark rates that governed the rate of interest charged to customers with facilities to which those benchmark rates applied.  That being so it could not be said that there was no concluded bargain.

9. Finally, three points may be made about the defendants' contention that they were not given notice of variations in the interest rates.  First, the absence of notice does not make the term as to interest uncertain.  Secondly, the Trading Limit Facility did not oblige RBL to give notice of variations in the interest rate.  Rather, as has been seen, cl 4.2 of the Facility Terms provided that 'the current interest rate [could] be obtained from any office of RBL'.  Thirdly, because the defendants did not participate in the trial, they did not adduce evidence that they did not receive notice of particular variations in the interest rate.  In any event, any absence of notice was perhaps relevant only to the defendants' claims of misleading or deceptive conduct or statutory unconscionability.  Even in those contexts its significance is limited given the defendants received monthly statements which clearly stated the rate at which interest was being charged and variations in the interest rate could be readily discerned by comparing the interest rate on a statement for one month with the statement for the immediately preceding month.

Default by the defendants under the Trading Limit Facility

1. Under the terms of the Trading Limit Facility (as varied on 18 May 2009) the defendants were required to reduce the amount owing to $550,000 by 31 December 2009.  The plaintiff pleads that the defendants failed to make the required reduction.[111]  The defendants did not admit that they failed to reduce the amount owing as they were required to do but made no positive allegation that they did so.[112]  The onus was on the defendants to allege and prove payment of the amount required to reduce the amount owing under the Trading Limit Facility.  In Young v Queensland Trustees Ltd,[113] Dixon CJ, McTiernan and Taylor JJ observed:[114]

   The law was and is that, speaking generally, the defendant must allege and prove payment by way of discharge as a defence to an action for indebtedness in respect of an executed consideration.

   [111] Plaintiff's Substituted Statement of Claim filed 22 April 2021 [73] - Exhibit 1.19, cl 2.

   [112] Defendants' Re-Amended Defence, Set-Off and Counterclaim filed 3 July 2015 [48].

   [113] Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560.

   [114] Young v Queensland Trustees Ltd (569 - 570).

2. The defendants did not plead or attempt to prove that they had discharged their obligation to reduce their indebtedness to RBL under the Trading Limit Facility on 31 December 2009.  I find that they did not make the reduction in their indebtedness as they were required to do.

3. RBL served a notice of demand dated 5 August 2010 on the defendants on about 10 August 2010.[115]  By that notice RBL terminated the Trading Limit Facility and each of the Term Loan Facilities and demanded repayment of the amounts alleged to be owing under the Facilities.  The notice dated 5 August 2010 did not specify the default relied on by RBL but, as I have found, the defendants were in default under the terms of the Trading Limit Facility by failing to reduce the facility to $550,000 by 31 December 2009.

   [115] Exhibits 56 - 64.

4. RBL served a further notice of demand dated 12 April 2011 on 19 April 2011.  The notice dated 12 April 2011 was expressed to be 'without prejudice' to RBL's rights to rely on the notice dated 5 August 2010.[116]  The notice dated 12 April 2011 identified the default as 'exceeding the limit of the Trading Limit Facility'.[117]  The notice terminated the Facilities and demanded payment of amounts alleged to be owing under the Facilities.

   [116] Exhibits 65 and 66 [5].

   [117] Exhibits 65 and 66 [2].

5. I find that the defendants did not make any payment to RBL in response to the demands served on them and have not made any payment to the plaintiff in reduction of their indebtedness under the Trading Limit Facility. 

The amount due to the plaintiff under the Trading Limit Facility

1. Contractual provisions such as cl 12.1 of the Facility Terms and cl 19.0 of the Memorandum of Common Provisions 1 and cl 19.1 of the Memorandum of Common Provisions 2 are known as 'Dobbs clauses' and certificates given under such clauses are known as 'Dobbs certificates'. 

2. This terminology is derived from the decision of the High Court in Dobbs v National Bank of Australasia Ltd.[118]  In that case the High Court rejected an argument that contractual provisions which made the certificate of some person conclusive of some possible question did not constitute an attempt to oust the jurisdiction of the court.  Referring to a clause expressed in terms very similar to cl 12 of the Facility Terms, Rich, Dixon, Evatt and McTiernan JJ observed:[119]

   The bank could recover without the production of a certificate if, by ordinary legal evidence, it proved the actual indebtedness of the customer.  But the clause, if valid, enables the bank by producing a certificate to dispense with such proof.  It means that, for the purpose of fixing the liability of a surety, the customer's indebtedness may be ascertained conclusively by a certificate.  It was contended, however, for the appellant that, upon its true construction, the clause did not make the certificate conclusive of the legal existence of the debt but only of the amount.  It is not easy to see how the amount can be certified unless the certifier forms some conclusion as to what items ought to be taken into account, and such a conclusion goes to the existence of the indebtedness.  Perhaps such a clause should not be interpreted as covering all grounds which go to the validity of a debt; for instance, illegality, a matter considered in Swan v. Blair.  But the manifest object of the clause was to provide a ready means of establishing the existence and amount of the guaranteed debt and avoiding an inquiry upon legal evidence into the debits going to make up the indebtedness.  The clause means what it says, that a certificate of the balance due to the bank by the customer shall be conclusive evidence of his indebtedness to the bank.  (footnote omitted)

   [118] Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643.

   [119] Dobbs v National Bank of Australasia Ltd (651 - 652) (Rich, Dixon, Evatt & McTiernan JJ).

3. A Dobbs certificate is conclusive as to both the legal existence of the debt and of the amount owing.[120]

   [120] Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214 [39] - [43] (Hansen, Ferguson & McLeish JJ); Permanent Trustee Co Ltd v Gulf Import and Export Co [2008] VSC 162 [84] ‑ [85] (Hansen J).

4. In his capacity as Asset Management Manager of the plaintiff Mr Patton certified that on 9 February 2022:[121]

   (a)the amount payable by the Defendants to the Bank under the Trading Limit Facility Agreement and the Mortgages is $8,268,150.82; and

   (b)interest continues to accrue on the amount referred in paragraph 12(a) above in the sum of $1,944.90 per day, or at the rate of 8.60% per annum on the Trading Limit Facility.

   [121] Exhibit 2 [12].

5. The amount certified by Mr Patton included legal costs incurred by RBL.[122]

   [122] ts 266.

6. In accordance with the certificate signed by Mr Patton I find that on 9 February 2022 the defendants were indebted to the plaintiff in the sum of $8,268,150.82 under the terms of the Trading Limit Facility and interest continued to accrue on that sum at a daily rate of $1,944.90.

Term Loan Facility 1

1. By letter dated 8 September 2005 RBL offered to make available to the defendants a term loan facility.  The limit of the facility offered by RBL was $225,000.[123] The approved purpose was 'to assist the borrower to purchase farm land or for such other purpose approved in writing by the Bank'.[124]

   [123] Plaintiff's Substituted Statement of Claim filed 22 April 2021 [11]; admitted by the Defendants in the Defendants' Re-Amended Defence, Set-Off and Counterclaim dated 3 July 2015 [6]. The defendants did not admit the terms of Term Loan Facility 1, for this it was necessary to look to Exhibit 1.01.

   [124] Exhibit 1.01, cl 1.

2. The date for repayment of the facility was the last day of the 60th month after the month in which the advance was made or such later date as might be approved in writing by RBL.[125]

   [125] Exhibit 1.01, cl 4.

3. The letter of 8 September 2005 included the following terms relating to interest and fees:[126]

   The interest rate is the rate being 2.50% per annum less than the Bank's standard variable term loan rate from time to time. 

   The interest rate at the date of this letter of offer (less the 2.50% margin) is 9.50% per annum.

   The borrower must pay all applicable fees and charges specified in the then current fees and charges schedule.  A copy of the current fees and charges schedule is available on the Bank's website ( or by contacting the Bank on 1300 660 115.

   Interest and any applicable fees and charges will be debited to the borrower's trading limit account with the Bank No. *********.

   An Establishment Fee of $800.00 will apply upon acceptance of this offer.

   [126] Exhibit 1.01, cl 5.

4. Among other securities, the facility offered by RBL was to be secured by Mortgage 3 which was required to be 'upstamped'.[127]

   [127] Exhibit 1.01, cl 6 and cl 7.5.

5. Each defendant accepted the offer of the term loan facility contained in the letter dated 8 September 2005 by signing a copy of the letter on 23 September 2005 and returning it to RBL.[128]

   [128] Exhibit 1.01, p 4.

6. In the period between 8 September 2005 and 2 March 2009 there were 10 benchmark rates of interest for term loan facilities offered by RBL to its customers generally.  Those rates were described as follows:  'Standard Variable Base Rate', 'Premier Variable Base Rate', 'Evergreen Variable Base Rate', 'Term Loan Benchmark Rate', 'Term Loan Plus Variable Base Rate', 'Flock Builder', 'Herdbuilder', 'Drought Breaker', 'Trust', and 'Standard P&I Variable Base Rate'.  The first four of these benchmark rates were available to customers with a credit rating 'CR 1‑3'.  The other benchmark rates were not tied to particular credit ratings.[129] 

   [129] Exhibit 1.37.

7. As with the benchmark rates governing the rate at which interest was charged to RBL's customers who had overdraft facilities, I infer that the benchmark rates described above were general market rates made available to customers who wanted a facility of the nature to which the benchmark rate applied and who satisfied the credit criteria for such a facility.

1. The term 'standard variable term loan rate' was not used by RBL to describe any benchmark rate of interest made available to its customers in respect of term loan facilities between 2005 and 2010.

2. On 8 September 2005 RBL's 'Standard Variable Base Rate' was 12% per annum which corresponded with the interest rate referred to in the letter of 8 September 2005 (9.50% per annum) when the margin of 2.5% per annum is taken into account. 

Term Loan Facility 1 interest rate not uncertain

1. Applying the reasoning set out at [119] - [121] to the term governing interest in the letter of 8 September 2005 that term was not uncertain.  I do not accept that a meaning cannot be attributed to the term.

2. The element of uncertainty arising from the disconformity between the term used in the letter, 'standard variable term loan' and the term used in RBL's records, 'Standard Variable Base Rate' is resolved by the exact correspondence between the rate recorded in RBL's records as the 'Standard Variable Base Rate' - 12%  per annum - and the benchmark rate referred to in the letter of 8 September 2005 calculated by adding the margin to the rate specified as the annual interest rate on the date of the letter - 9.5% per annum + 2.5% per annum = 12.0% per annum.

3. Further I hold that the interest rate is not uncertain on the alternative basis contended by the defendants, that is, that RBL had an unconstrained discretion to vary the interest rate.  I have reached this conclusion on the basis of the reasoning set out at [123] ‑ [124] taking into account my factual finding that the 'Standard Variable Base Rate' was a rate generally available to customers of RBL.

Variations to Term Loan Facility 1

1. Between 2005 and 2009 the terms of Term Loan Facility 1 were varied on two occasions.  The variations were effected in the manner described at [47] ‑ [48].

Variation 1 to Term Loan Facility 1 - 7 May 2007

1. By letter dated 7 May 2007 from RBL to the defendants, which was signed by them and returned to RBL, the terms of Term Loan Facility 1 were varied by providing that the interest rate was to be 3.25% per annum less than '[RBL's] variable secured seasonal rate from time to time'.  The letter recorded the interest rate on 7 May 2007 was 9.50% per annum.[130]

   [130] Exhibit 1.02, cl 1.1.

2. By signing the letter dated 7 May 2007 the defendants acknowledged that the debt due under Term Loan Facility 1 on 1 May 2007 was $225,000.[131]

   [131] Exhibit 1.02, p 4.

3. RBL did not offer an interest rate termed 'variable secured seasonal interest rate' to customers who took out term loans.  On 7 May 2007 RBL's 'Standard Variable Base Rate' was 12.75% per annum which corresponded with the interest rate specified in the letter of 7 May 2007 (9.5% per annum) when account was taken of the margin of 3.25% per annum. 

4. Having regard to the following:

   (a)the letter dated 8 September 2005 establishing Term Loan Facility 1 referred to RBL's, 'standard variable term loan rate';

   (b)the interest rate specified in the letter of 8 September 2007 as being current at the date of the offer corresponded with RBL's 'Standard Variable Base Rate';

   (c)RBL did not have an interest rate termed 'variable secured seasonal rate from time to time' that applied to term loans (or, as explained above, a rate so described that applied to overdraft facilities); 

   (d)the facility was a term loan facility and not a seasonal overdraft facility; and

   (e)the benchmark interest rate specified in the letter of offer dated 7 May 2007 in respect of Term Loan Facility 2 was described as the 'standard variable term loan rate';[132]

   I find the reference to 'variable secured seasonal rate from time to time' was included in the letter of 7 May 2007 by mistake and that the parties intended that the benchmark interest rate from which the margin was to be deducted was RBL's 'Standard Variable Base Rate'.

Variation 2 to Term Loan Facility 1 - 18 May 2009

[132] Exhibit 1.06, cl 5.

1. By letter dated 18 May 2009 from RBL to the defendants, which was signed by them and returned to RBL, the terms of Term Loan Facility 1 were varied by providing that the interest rate was to be varied to 'the  Bank's basic standard variable rate from time to time minus a margin of 2.50% per annum'.  The letter recorded that the interest rate on 18 May 2009 was 11.15% per annum.[133]

   [133] Exhibit 1.03, cl 1.1.

2. On 2 March 2009 RBL introduced further benchmark interest rates that applied to term loans.  On 18 May 2009 there was no disconformity between the benchmark interest rate specified in the letter of offer of that date and RBL's records of benchmark interest rates.  On 18 May 2009 RBL's basic standard variable rate was 13.65% which corresponded with the benchmark interest rate specified in the letter of 18 May 2009 from which the margin of 2.50% per annum was to be deducted and which resulted in an effective interest rate of 11.15%.  There was no uncertainty arising from the description of the applicable interest rate in the letter dated 18 May 2009 and, applying the reasoning set out earlier, RBL did not have an unconstrained discretion to vary the interest rate.  The interest rate that applied to the defendants' facility could only be varied in accordance with general variations in the benchmark rate. 

3. By signing the letter dated 18 May 2009 the defendants acknowledged that the debt due under Term Loan Facility 1 on 18 May 2009 was $225,000.  The defendants also acknowledged that:[134]

   (a)Repayment of all moneys now or in the future owing (actually or contingently) under or in connection with the facility (including those moneys referred to in paragraph 3.1) is or will be secured by the securities referred to in paragraph 6 of the existing letter of offer held by the Bank (as amended, varied, replaced or released) and in paragraph 2.2 of this letter; and

   (b)Each of those securities is or will be (as the case may be) valid, binding and enforceable.

Variation to interest rate - 22 July 2011

[134] Exhibit 1.03, cl 3.2.

1. I have referred at [87] - [89] above to RBL's letter of 22 July 2011. The letter recorded that the interest rate applicable to each of the term loan facilities was varied to RBL's standard variable rate from time to time less a margin of 5.5%.[135]  This was a reduction.

   [135] Exhibit 1.04.

2. The observations made in respect of the variation in the interest rate in respect of the Trading Limit Facility apply with equal force to the variation in the interest rate under Term Loan Facility 1.

Default by the defendants of Term Loan Facility 1

1. Under the terms of Term Loan Facility 1 the defendants were required to repay $225,000 by 31 October 2010.  The plaintiff pleads the defendants failed to make the required payment and that thus the defendants were in default on 1 November 2010.[136]  The onus was on the defendants to allege and prove repayment of the facility but they did not do so.[137]  I find that the defendants did not repay the amount due under Term Loan Facility 1 on 31 October 2010 and they have not repaid the amount due at any time thereafter.

   [136] Plaintiff's Substituted Statement of Claim filed 22 April 2021 [74].

   [137] Plaintiff's Outline for Trial filed 23 December 2021 [18].

2. As recorded earlier RBL served notices of demand in respect of the balance outstanding under Term Loan Facility 1 on about 10 August 2010 and on 19 April 2011 but no payment was made by the defendants.

3. I find that the defendants did not make any payment to RBL and have not made any payment to the plaintiff in discharge of their indebtedness under Term Loan Facility 1.

The amount due to the plaintiff under Term Loan Facility 1

1. In his capacity as Asset Management Manager of the plaintiff Mr Patton certified that on 9 February 2022:[138]

   (a)the amount payable by the Defendants to the Bank under the Term Loan 1 Facility Agreement and the Mortgages is $225,325.79; and

   (b)interest continues to accrue on the amount referred in paragraph 12(a) above in the sum of $46.54 per day, or at the rate of 7.55% per annum on the Term Loan 1 Facility.

   [138] Exhibit 3 [12].

2. In accordance with the certificate signed by Mr Patton I find that on 9 February 2022 under the terms of the Term Loan 1 Facility Agreement the defendants were indebted to the plaintiff in the sum of $225,325.79 and interest has continued to accrue on that sum at a daily rate of $46.54.

Term Loan Facility 2

1. By letter dated 7 May 2007 RBL offered to make available to the defendants a term loan facility.  The limit of the facility offered by RBL was $420,000.[139]  The approved purpose of the facility was to assist the defendants 'to rewrite the existing loan for a further 5 years'.  The existing loan was a loan by Elders Ltd to the defendants under the terms of an agreement made on 4 February 2002.[140]

   [139] Plaintiff's Substituted Statement of Claim filed 22 April 2021 [24]; admitted by the Defendants in the Defendants' Re-Amended Defence, Set-Off and Counterclaim dated 3 July 2015 [12]. The defendants did not admit the terms of Term Loan Facility 2, for this it was necessary to look to Exhibit 1.06.

   [140] Exhibit 1.05.

2. The date for repayment of the facility was 1 February 2012.[141]

   [141] Exhibit 1.06, cl 4.

3. The letter of 7 May 2007 provided that the interest rate was to be 3.25% less than 'the Bank's standard variable term loan rate from time to time' and that the applicable interest rate at the date of the offer was 9.50%.  The letter provided that interest, fees and charges were to be debited to the Trading Facility Limit.[142]

   [142] Exhibit 1.06, cl 5.

4. The letter of 7 May 2007 provided that the facility was to be secured by, among other securities, Mortgages 1, 2 and 3.[143]

   [143] Exhibit 1.06, cl 6.

5. Each defendant accepted the offer of the term loan facility contained in the letter dated 7 May 2007 by signing a copy of the letter on 22 June 2007 and returning it to RBL.[144]

   [144] Exhibit 1.06, p 4.

6. As recorded when reciting the facts in respect of Term Loan Facility 1, in May 2007 RBL offered a benchmark interest rate described as 'standard variable term loan rate'.[145]  On 7 May 2007 RBL's 'Standard Variable Base Rate' was 12.75% per annum which corresponded with the interest rate specified in the letter of 7 May 2007 (9.50% per annum) when the margin of 3.25% per annum is taken into account. 

   [145] Exhibit 1.06, cl 5.

7. On the basis of the reasoning set out in the context of the interest rates applicable to the Trading Limit Facility and Term Loan Facility 1 I find that the term governing interest in the letter of 7 May 2007 was not uncertain on either of the grounds contended for by the defendants.  The interest rate was the benchmark rate described as the 'Standard Variable Base Rate' - 13.75% per annum less a margin of 3.25% per annum making the rate 9.50% per annum.  The benchmark rate could only be varied in accordance with variations in that benchmark rate to the facilities of all customers to whom the rate applied.

Variation 1 to Term Loan Facility 2 - 18 May 2009

1. By letter dated 18 May 2009 from RBL to the defendants, which was signed by them and returned to RBL, the terms of Term Loan Facility 2 were varied in a number of respects including a variation in the interest rate.  The interest rate was varied to '[RBL's] basic standard variable rate from time to time less a margin of 2.50% per annum', the effect of which was that the interest rate was varied to 11.15%.[146]

   [146] Exhibit 1.07, cl 1.1.

2. By signing the letter dated 18 May 2009 the defendants acknowledged that the debt due under Term Loan Facility 2 on 15 May 2009 was $420,000.[147]

   [147] Exhibit 1.07, cl 3 and cl 4.

3. On 18 May 2009 there was no disconformity between the benchmark interest rate specified in the letter of offer of that date and RBL's records of benchmark interest rates.  On 18 May 2009 RBL's basic standard variable rate was 13.65% which corresponded with the benchmark interest rate specified in the letter of 18 May 2009 from which the margin of 2.50% per annum was to be deducted and which resulted in an effective interest rate of 11.15%.  There was no uncertainty arising from the description of the applicable interest rate in the letter dated 18 May 2009 and, applying the reasoning set out earlier, the interest rate applied to the defendants' facility could only be varied in accordance with variations in that benchmark rate as it governed the rate of interest charged to customers with facilities to which the rate applied.

Variation in interest rate - 22 July 2011

1. As recorded at [157] the letter of 22 July 2011 varied the interest rate in respect of Term Loan Facility 2 to RBL's standard variable rate from time to time less a margin of 5.5%.

Default by the defendants of Term Loan Facility 2

1. Under the terms of Term Loan Facility 2 the defendants were required to repay $420,000 by 1 February 2012.  The plaintiff pleads the defendants failed to make the required payment and that thus the defendants were in default on 2 February 2012.  The onus was on the defendants to allege and prove repayment of the facility but they did not do so.[148]  

   [148] Plaintiff's Outline for Trial filed 23 December 2021 [18].

2. Relevantly, on 26 February 2015 a notice of demand dated 4 February 2015 was served by RBL on the defendants giving notice to them that they were in default under the terms of Term Loan Facility 2.[149] 

   [149] Exhibit 1.67 [7]. Plaintiff's Substituted Statement of Claim filed 22 April 2021 [82]; Defendants admitted to the receipt of the notice in the Defendants' Re-Amended Defence, Set-Off and Counterclaim dated 3 July 2015 [52A].

3. I find that the defendants did not make any payment to RBL and have not made any payment to the plaintiff in discharge of their indebtedness under Term Loan Facility 2.

The amount due to the plaintiff under Term Loan Facility 2

1. In his capacity as Asset Management Manager of the plaintiff Mr Patton certified that on 9 February 2022:[150]

   (a)the amount payable by the Defendants to the Bank under the Term Loan 2 Facility Agreement and the Mortgages is $420,608.14; and

   (b)interest continues to accrue on the amount referred in paragraph 12(a) above in the sum of $86.88 per day, or at the rate of 7.55% per annum on the Term Loan 2 Facility.

   [150] Exhibit 4, cl 12.

2. In accordance with the certificate signed by Mr Patton I find that on 9 February 2022 under the terms of the Term Loan 2 Facility Agreement the defendants were indebted to the plaintiff in the sum of $420,608.14 and interest has continued to accrue on that sum at a daily rate of $86.88.

Term Loan Facility 3

1. By letter dated 7 May 2007 RBL offered to make available to the defendants a term loan facility.  The limit of the facility offered by RBL was $900,000.[151]  The purpose of the facility was to 'refinance hardcore debt from Seasonal Account or for such other purpose approved in writing by RBL'.[152] 

   [151] Plaintiff's Substituted Statement of Claim filed 22 April 2021 [31]; admitted by the Defendants in the Defendants' Re-Amended Defence, Set-Off and Counterclaim dated 3 July 2015 [17]. The defendants did not admit the terms of Term Loan Facility 3, for this it was necessary to look to Exhibit 1.08.

   [152] Exhibit 1.08, cl 1.

2. The date for repayment of the facility was the last day of the 60th month after the month in which the advance was made or such later date as might be approved in writing by RBL.[153]

   [153] Exhibit 1.08, cl 4.

3. The letter of 7 May 2007 provided that the interest rate was to be 3.25% less than RBL's standard variable term loan rate from time to time and that the applicable interest rate at the date of the offer was 9.50%.[154]  For essentially the same reasons as those given in relation to the interest rate specified in the letter of offer dated 7 May 2007 in respect of Term Loan Facility 2, the term governing interest was not uncertain.

   [154] Exhibit 1.08, cl 5.

4. The letter of 7 May 2007 provided that the facility was to be secured by, among other securities, Mortgages 1, 2 and 3.[155]

   [155] Exhibit 1.08, cl 6.

5. Each defendant accepted the offer of the term loan facility contained in the letter dated 7 May 2007 by signing a copy of the letter and returning it to RBL.[156]

Variation 1 to Term Loan Facility 3 - 19 May 2008

[156] Exhibit 1.08, p 4.

1. By letter dated 19 May 2008 from RBL to the defendants, which was signed by them and returned to RBL, the terms of Term Loan Facility 3 were varied.  Additional security in the form of a registered crop lien over the 2008/2009 crop harvest was taken and the special conditions of the facility were varied in ways which are presently immaterial.  There was no variation to the provision governing interest.

2. By signing the letter dated 19 May 2008 the defendants acknowledged that the debt due under Term Loan Facility 3 on 18 May 2008 was $900,000.[157]

Variation 2 to Term Loan Facility 3 - 18 May 2009

[157] Exhibit 1.09, cl 3.

1. By letter dated 18 May 2009 from RBL to the defendants, which was signed by them and returned to RBL, the terms of Term Loan Facility 3 were varied in a number of respects including a variation in the interest rate.  The interest rate was varied to '[RBL's] basic standard variable rate from time to time less a margin of 2.50% per annum', the effect of which was that the interest rate was varied to 11.15%.[158]

   [158] Exhibit 1.10, cl 1.2.

2. For essentially the same reasons as those given at [173] the term governing interest in the letter dated 18 May 2009 was not uncertain.

Variation in interest rate - 22 July 2011

1. As recorded at [157] the letter of 22 July 2011 varied the interest rate in respect of Term Loan Facility 3 to RBL's standard variable rate from time to time less a margin of 5.5%.

Default by the defendants of Term Loan Facility 3

1. Under the terms of Term Loan Facility 3 the defendants were required to repay $900,000 by 30 June 2012.  The plaintiff pleads the defendants failed to make the required payment and that thus the defendants were in default on 30 June 2012.  The onus was on the defendants to allege and prove repayment of the facility but they did not do so.[159]  

   [159] Plaintiff's Outline for Trial filed 23 December 2021 [18].

2. On 26 February 2015 a notice of demand dated 4 February 2015 was served by RBL on the defendants, among other things, giving notice to them that they were in default under the terms of Term Loan Facility 3 and requiring the defendants to pay $900,000.[160] 

   [160] Exhibit 1.67 [7]. Plaintiff's Substituted Statement of Claim filed 22 April 2021 [82]; Defendants admitted to the receipt of the notice in the Defendants' Re-Amended Defence, Set-Off and Counterclaim dated 3 July 2015 [52A].

3. I find that the defendants did not make any payment to RBL and have not made any payment to the plaintiff in discharge of their indebtedness under Term Loan Facility 3.

The amount due to the plaintiff under Term Loan Facility 3

1. In his capacity as Asset Management Manager of the plaintiff Mr Patton certified that on 9 February 2022:[161]

   (a)the amount payable by the Defendants to the Bank under the Term Loan 3 Facility Agreement and the Mortgages is $901,303.15; and

   (b)interest continues to accrue on the amount referred in paragraph 12(a) above in the sum of $186.16 per day, or at the rate of 7.55% per annum on the Term Loan 3 Facility.

   [161] Exhibit 5.

2. In accordance with the certificate signed by Mr Patton I find that on 9 February 2022 under the terms of the Term Loan 3 Facility Agreement the defendants were indebted to the plaintiff in the sum of $901,303.15 and interest has continued to accrue on that sum at a daily rate of $186.16.

Term Loan Facility 4

1. By letter dated 10 October 2007 RBL offered to make available to the defendants a term loan facility.  The limit of the facility offered by RBL was $395,000.[162]  The purpose of the facility was to assist with the purchase of a new farming property.[163]

   [162] Plaintiff's Substituted Statement of Claim filed 22 April 2021 [38]; admitted by the Defendants in the Defendants' Re-Amended Defence, Set-Off and Counterclaim dated 3 July 2015 [22]. The defendants did not admit the terms of Term Loan Facility 1, for this it was necessary to look to Exhibit 1.11.

   [163] Exhibit 1.11, cl 1.

1. The date for repayment of the facility was the last day of the 60th month after the month in which the advance was made or such later date as might be approved in writing by RBL.[164]

   [164] Exhibit 1.11, cl 4.

2. The letter of 10 October 2007 provided that the interest rate was to be 3.25% less than RBL's standard variable term loan rate from time to time and that the applicable interest rate at the date of the offer was 9.75%.  The letter provided that interest, fees and charges were to be debited to the Trading Facility Limit.[165]

   [165] Exhibit 1.11, cl 5.

3. The letter of 10 October 2007 provided that the facility was to be secured by, among other securities, Mortgages 1, 2 and 3 and a mortgage over the property to be acquired, Mortgage 4.[166]

   [166] Exhibit 1.11, cl 6 and cl 7.5.

4. Each defendant accepted the offer of the term loan facility contained in the letter dated 10 October 2007 by signing a copy of the letter on 30 October 2007 and returning it to RBL.[167]

   [167] Exhibit 1.11, p 4.

5. For essentially the same reasons as those given at [170] I find the term governing interest rates in the letter of 10 October 2007 was not uncertain.

Variation to Term Loan Facility 4 - 18 May 2009

1. By letter dated 18 May 2009 from RBL to the defendants, which was signed by them and returned to RBL the terms of Term Loan Facility 4 were varied in a number of respects including a variation in the interest rate.  The interest rate was varied to 'RBL's basic standard variable rate from time to time minus a margin of 2.50% per annum'.  The letter recorded that the interest rate on 18 May 2009 was 11.15%.[168]  Other variations were made to the special conditions of Term Loan Facility 4 but those variations are presently immaterial.

   [168] Exhibit 1.12, cl 1.1.

2. By signing the letter dated 18 May 2009 the defendants acknowledged that the debt due under Term Loan Facility 4 on 15 May 2009 was $395,000.[169]

   [169] Exhibit 1.12, cl 3 and cl 4.

3. For essentially the same reasons as those given at [173] the term governing interest in the letter dated 18 May 2009 was not uncertain.

Variation in interest rate - 22 July 2011

1. As recorded at [157] the letter of 22 July 2011 varied the interest rate in respect of Term Loan Facility 4 to RBL's standard variable rate from time to time less a margin of 5.5%.

Default by the defendants of Term Loan Facility 4

1. Under the terms of Term Loan Facility 4 the defendants were required to repay $395,000 by 1 December 2012.  The plaintiff pleads the defendants failed to make the required payment and that thus the defendants were in default on 1 December 2012.  The onus was on the defendants to allege and prove repayment of the facility but they did not do so.[170]  

   [170] Plaintiff's outline for trial filed 23 December 2021 [18].

2. On about 26 February 2015 a notice of demand dated 4 February 2015 was served by RBL on the defendants giving notice to them that, among other matters, they were in default under the terms of Term Loan Facility 4 and requiring the defendants to pay $395,000.[171] 

   [171] Exhibit 1.67 [7]. Plaintiff's Substituted Statement of Claim filed 22 April 2021 [82]; Defendants admitted to the receipt of the notice in the Defendants' Re-Amended Defence, Set-Off and Counterclaim dated 3 July 2015 [52A].

3. I find that the defendants did not make any payment to RBL and have not made any payment to the plaintiff in discharge of their indebtedness under Term Loan Facility 4.

The amount due to the plaintiff under Term Loan Facility 4

1. In his capacity as Asset Management Manager of the plaintiff Mr Patton certified that on 9 February 2022:[172]

   (a)the amount payable by the Defendants to the Bank under the Term Loan 4 Facility Agreement and the Mortgages is $395,571.94; and

   (b)interest continues to accrue on the amount referred in paragraph 12(a) above in the sum of $81.71 per day, or at the rate of 7.55% per annum on the Term Loan 4 Facility.

   [172] Exhibit 6, cl 12.

2. In accordance with the certificate signed by Mr Patton I find that on 9 February 2022 under the terms of the Term Loan 4 Facility Agreement the defendants were indebted to the plaintiff in the sum of $395,571.94 and interest has continued to accrue on that sum at a daily rate of $81.71.

The claim for possession

1. The failure to pay the amount owing under the Facilities constituted a failure to pay the money secured by the mortgages which in turn constituted  defaults which entitled RBL to possession of the mortgaged land.  Given the time of year and the fact that the land is agricultural land I will extend the defendants' time to provide vacant possession until 13 January 2023.

Conclusion and orders

1. For the reasons given above the plaintiff is entitled to judgment in respect of the amounts set out in the certificates signed by Mr Patton and is entitled to possession of the mortgaged land. 

2. The following orders will be made:

   1Judgment be entered against the defendants in the amount of $10,210,959.83, together with interest calculated as follows:

   (a)on the sum of $8,268,150.82 at the rate of the plaintiff's seasonal account secured basic rate less a margin of 4.5% per annum from 1 April 2021 until the date of payment;

   (b)on the sum of $225,325.79 at the rate of the plaintiff's basic standard variable rate less a margin of 5.5% per annum from and including 9 February 2022;

   (c)on the sum of $420,608.14 at the rate of the plaintiff's basic standard variable rate less a margin of 5.5% per annum from and including 9 February 2022;

   (d)on the sum of $901,303.15 at the rate of the plaintiff's basic standard variable rate less a margin of 5.5% per annum from and including 9 February 2022; and

   (e)on the sum of $395,571.94 at the rate of the plaintiff's basic standard variable rate less a margin of 5.5% per annum from and including 9 February 2022.

   2An order that by 13 January 2023 the defendants give vacant possession of the Mortgage 1 Land being:

   (a)Lot 1757 on Deposited Plan 246785, being the whole of Volume 1856 Folio 684;

   (b)Lot 1391 on Deposited Plan 231869, being the whole of Volume 1856 Folio 683;

   (c)Lot 1756 on Deposited Plan 247785, being the whole of Volume 1856 Folio 682;

   (d)Lot 1015 on Deposited Plan 232622, being the whole of Volume 1856 Folio 681;

   (e)Lot 934 on Deposited Plan 247687, being the whole of Volume 1856 Folio 680;

   (f)Lot 1009 on Deposited Plan 231869, being the whole of Volume 1856 Folio 679;

   (g)Lot 955 on Deposited Plan 246936, being the whole of Volume 1863 Folio 494;

   (h)Lot 1859 on Deposited Plan 248681, being the whole of Volume 1003 Folio 646;

   (i)Lot 1858 on Deposited Plan 248674, being the whole of Volume 1003 Folio 645;

   (j)Lot 2133 on Deposited Plan 250913, being the whole of Volume 1206 Folio 284; and

   (k)Lot 1804 on Deposited Plan 246934, being the whole of Volume 1206 Folio 283.

   3An order that by 13 January 2023 the first defendant give vacant possession of the Mortgage 2 Land, Mortgage 3 Land and Mortgage 4 Land being:

   (a)Lots M464 and M465 on Plan 2946, being the whole of Volume 90 Folio 163A;

   (b)Lot 6476 on Deposited Plan 254718, being the whole of Volume 1242 Folio 472;

   (c)Lot 1746 on Deposited Plan 246933, being the whole of Volume 1702 Folio 36;

   (d)Lot 1944 on Deposited Plan 231869, being part of Volume 1071 Folio 175;

   (e)Lot 2326 on Deposited Plan 247784, being part of Volume 1071 Folio 175; and

   (f)Lot 6858 on Deposited Plan 248669, being part of Volume 1071 Folio 175.

   4An order that the defendants pay the plaintiff's costs on a full indemnity basis to the extent those costs are not otherwise included in paragraph 1.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

OK

Associate to the Honourable Justice Tottle

13 OCTOBER 2022

CORRIGENDUM

The date 1 April 2021 in paragraph 212(1)(a) should read 9 February 2022.