Timbercorp Finance Pty Ltd (In Liq) v Lefam Holdings Pty Ltd
[2023] VSC 623
•26 October 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2014 05807
| TIMBERCORP FINANCE PTY LTD (IN LIQUIDATION) (ACN 054 581 190) | Plaintiff |
| v | |
| LEFAM HOLDINGS PTY LTD (ACN 104 100 708) | First Defendant |
| MICHAEL STEPHEN LEASK | Second Defendant |
| JULIE ANN DIRUBE | Third Defendant |
| STEPHEN ARTHUR LEASK | Fourth Defendant |
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JUDGE: | Stynes J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 October 2023 |
DATE OF JUDGMENT: | 26 October 2023 |
CASE MAY BE CITED AS: | Timbercorp Finance Pty Ltd (In Liq) v Lefam Holdings Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2023] VSC 623 |
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APPEAL — Appeal from determination of an Associate Justice under Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 77.06 — Application for leave to appeal out of time — Relevant test — Supreme Court (General Civil Procedure) Rules2015 (Vic) r 77.06.2(6) —Extension granted.
APPEAL — Appeal from determination of an Associate Justice under Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 77.06 — Application for leave to introduce fresh evidence upon an appeal — ANZ Banking Group Ltd v Loftus [2014] VSC 342 applied — Leave not granted.
APPEAL — Appeal from determination of an Associate Justice under Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 77.06 —Whether primary judge erred in fact and in law by reaching conclusions based on material in evidence before her — Whether primary judge erred by not exercising her discretion under s 64 of the Civil Procedure Act 2010 (Vic) —Appeal dismissed on all grounds.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | C O H Parkinson with J W G Grant | Mills Oakley |
| For the Second and Third Defendants | S Rubenstein | None |
Contents
A.. Introduction
B... Issues for determination
C.. Background
C.1 The parties
C.1.1 Timbercorp Finance
C.1.2 The appellants
C.2 The Loan
C.3 The underlying dispute
C.4 The decision of Steffensen AsJ
D.. Legal principles
D.1 Appeals from an Associate Judge
D.1.1 Extensions of time
D.1.2 Nature of appeal
D.1.3 Adducing further evidence
E... Issue 1 - Should the appellants be granted an extension of time to file and serve their notice of appeal?
E.1 Submissions
E.2 Consideration
F... Issue 2 – Should the appellants be granted leave to rely on the Leask Affidavit?
F.1 Submissions
F.2 Consideration
G.. Issue 3 - Does the evidence which was before Steffensen AsJ show that on 18 October 2010, a sum of $32,405.21 was paid to Timbercorp Finance and applied to the Loan?
G.1 Submissions
G.2 Consideration
H.. Issue 4 – Is there otherwise a factual dispute about the existence of the debt that should be dealt with at trial?
H.1 Submissions
H.2 Consideration
I.... Issue 5 - Did Steffensen AsJ err in law by not exercising her discretion under s 64 of the CPA to allow for the proceeding to proceed to trial?
J.... Orders
HER HONOUR:
A Introduction
This is an appeal from the Orders of Steffensen AsJ, made on 30 January 2023, granting summary judgment in the proceeding in favour of the plaintiff (the respondent in this appeal), ‘Timbercorp Finance’. Her Honour gave ex tempore reasons for her decision.[1]
[1]Transcript of Proceeding, Timbercorp Finance Pty Ltd (In Liquidation) v Lefam Holdings Pty Ltd & Ors (Supreme Court of Victoria, Steffenson AsJ, 30 January 2023) (‘Ruling’).
The proceeding concerns an alleged loan between Timbercorp Finance and the first defendant (‘Lefam’), and the enforcement of a guarantee and indemnity granted by the second and third defendants – Michael Leask and Julie Dirube – in respect of that loan.
Based on the material before her, Steffensen AsJ concluded that Timbercorp Finance had established all of the elements of its cause of action, namely that:
(a)there was a debt due and payable by Lefam for which the second and third defendants were liable;
(b)the defences relied upon by the second and third defendants had no real prospects of success; and
(c)there was no other reason for the matter to proceed to trial.
Her Honour made orders for the payment of $146,447.81 to Timbercorp Finance on that basis.
This appeal is brought by the second and third defendants (the ‘appellants’).
The appellants served their notice of appeal out of time. The appellants also sought to rely on an affidavit of Mr Leask sworn on 21 September 2023 (‘Leask Affidavit’) which was not in evidence in the hearing before Steffensen AsJ. The parties proceeded on the basis that I would hear and determine the appellants’ application for an extension of time, their application for leave to rely on the Leask Affidavit, and the appeal, concurrently.
A proposed amended notice of appeal was served by the appellants on 21 September 2023. That notice operated to significantly narrow the issues in dispute between the parties. Sensibly, Timbercorp Finance did not oppose the amendment to the notice and the hearing proceeded on the basis that if an extension of time were granted, the appeal would proceed on the proposed amended notice.
The appellants advance the following five grounds of appeal in their proposed amended notice of appeal:
(a)(Appeal Ground 1): Her Honour erred in law and in fact in finding that Timbercorp Finance had established all of the elements of its cause of action, namely that there was a debt due and payable by the first defendant (Lefam) for which the appellant’s were liable as guarantors.
(b)(Appeal Ground 2): Her Honour erred in fact by failing to consider:
(i)the evidence that on 18 October 2010, a net sum of $32,405.21 was paid by Timbercorp Securities Limited to Timbercorp Finance as a credit or amount to offset the loan due by Lefam and guaranteed by the appellants;
(ii)that the loan statement relied on as evidence of the sum payable by Lefam to Timbercorp Finance contains no credit entry for that sum;
(iii)that payment of that sum to Timbercorp Finance ought to have fully discharged the debt due to Timbercorp Finance by Lefam; and
(iv)consequently, that there was no debt due and payable to Timbercorp Finance by Lefam and therefore no liability to Timbercorp Finance under the guarantee.
(c)(Appeal Ground 3): Further or alternatively, her Honour erred by not finding that:
(i)there was a conflict in the evidential material supporting a key element of Timbercorp Finance’s claim;
(ii)alternatively, there was a genuine factual dispute about the matters referred to in Appeal Ground 2; and
(iii)it was not appropriate to determine the disputed questions of fact on an application for summary judgment.
(d)(Appeal Ground 4): Her Honour erred in law and in fact by failing to consider:
(i)the appellants’ defences concerning the failure by Timbercorp Finance to account for the 2008 and 2009 olive harvest proceeds;
(ii)whether such proceeds might also have been credited to Timbercorp or used to offset the loan due by Lefam;
(iii)whether there was a genuine factual dispute about the proceeds from the 2008 and 2009 olive harvest and how such proceeds had been accounted for by Timbercorp Securities and Timbercorp Finance; and
(iv)that the appellants’ defences concerning the harvest proceeds might be raised by them in defence of their liability to Timbercorp Finance, in circumstances where there was evidence that the harvest proceeds had actually been paid to Timbercorp Finance.
(e)(Appeal Ground 5): Her Honour erred in law by not exercising her discretion under s 64 of the Civil Procedure Act 2010 (Vic) (‘CPA’) for the proceeding to proceed to trial.
The appellants rely on written submissions dated 15 May 2023 and 21 September 2023, and seek to also rely on the Leask Affidavit.
Timbercorp Finance relies on:
(a)written submissions dated 1 June 2023 and 28 September 2023; and
(b)material referred to in those submissions, including affidavit material that was before Steffensen AsJ in support of its application for summary judgment heard on 24 January 2023. Those affidavits are:
(i)the affidavit and exhibit of Mark Korda sworn 21 November 2022 (‘Korda Affidavit’);
(ii)the affidavit and exhibit of Shoshana May affirmed 19 January 2023 (‘January May Affidavit’); and
(iii)the affidavit and exhibit of Shoshana May affirmed 27 September 2023 (‘September May Affidavit’), which exhibited a clearer version of a document exhibited to the January May Affidavit.
If the appellants are granted leave to rely on the Leask Affidavit, Timbercorp Securities also seeks to rely on the responsive affidavit and exhibit of Elizabeth Rowney affirmed 28 September 2023 (‘Rowney Affidavit’).
B Issues for determination
The following issues arise for determination:
(a)Issue 1: Should the appellants be granted an extension of time to file and serve their notice of appeal?
(b)Issue 2: Should the appellants be granted leave to rely on the Leask Affidavit?
(c)Issue 3: Does the evidence which was before Steffenson AsJ show that on 18 October 2010, a sum of $32,405.21 was paid to Timbercorp Finance and applied as a credit to the loan guaranteed by the appellants? This issue underpins Appeal Grounds 1, 2 and 3.
(d)Issue 4: Is there otherwise a factual dispute about the existence of the debt due and payable by Lefam that should be dealt with at trial? This issue underpins Appeal Ground 4.
(e)Issue 5: Did Steffenson AsJ err in law by not exercising her discretion under s 64 of the CPA to allow the proceeding to proceed to trial?
C Background
C.1 The parties
C.1.1 Timbercorp Finance
Timbercorp Finance and Timbercorp Securities Ltd were part of the Timbercorp Group to which liquidators were appointed in June 2009. Timbercorp Securities was the responsible entity of a number of agricultural managed investment schemes, including what is referred to as the ‘2001 Timbercorp Olive Scheme’. Timbercorp Finance provided finance to investors (referred to as ‘Growers’) and prospective Growers in connection with the investment schemes.
Extensive litigation followed the appointment of liquidators to the Timbercorp Group. A group proceeding brought in the Federal Court by the Growers against Timbercorp Finance and Timbercorp Securities, amongst others, was dismissed on 1 September 2011. An appeal from that order was dismissed on 10 October 2013 and special leave to appeal to the High Court as refused on 11 April 2014.
Timbercorp Finance thereafter commenced applications for summary judgment against the remaining Growers. I was informed by Timbercorp Finance’s counsel that this proceeding is one of two active debt recovery proceedings brought by Timbercorp Finance.
C.1.2 The appellants
The appellants, Mr Leask and Ms Dirube, were each directors of Lefam from March 2003 to September 2014, save that Mr Leask was not a director between May and July 2008.
Lefam was deregistered in 2018.
C.2 The Loan
It is common ground that Timbercorp Finance’s claim arose in the following circumstances:[2]
(a)An entity which is related to the defendants (‘Spectrum Decorating’) invested in the 2001 Timbercorp Olive Scheme by the acquisition of 38 grovelots (‘Grovelots’). Spectrum Decorating did not finance its investment via a loan from Timbercorp Finance; rather, its investment was funded from Spectrum Decorating’s cash resources.
(b)In 2006, Spectrum Decorating borrowed $49,950.18 from Timbercorp Finance in order to fund management fees owing to Timbercorp Securities in respect of the 2001 Timbercorp Olive Scheme.
(c)By deed of assignment dated 22 June 2007, Spectrum Decorating assigned to Lefam, as trustee for the Leask Family Trust, all of its rights, title and interest in the 2001 Timbercorp Olive Scheme.
(d)The loan taken out by Spectrum Decorating was refinanced by a new loan numbered L0022218 (the ‘Loan’). The opening balance for the Loan was $40,165.04.
(e)The appellants entered into a guarantee of Lefam’s indebtedness under the Loan.
[2]Ruling (n 1), 5-6.
The investment in the Grovelots entitled Lefam to the benefit of harvest proceeds.
There was a distribution of harvest proceeds to Lefam in relation to the 2007 harvest.
During the period from 31 July 2007 to 31 October 2008, monthly repayment instalments were made in respect of the Loan in the sum of $1,059.57. By 31 October 2008, the balance of the Loan had reduced to $28,006.50.[3] After 31 October 2008, the Loan fell into default.
[3]Korda Affidavit, Exhibit MAK-1, 58.
On 1 October 2008, Timbercorp Securities issued an invoice to Lefam (invoice number 002291011) in the sum of $77,040.74 for operation and management fees in respect of the 2001 Timbercorp Olive Scheme.[4]
[4]January May Affidavit, Exhibit JMA-1, 104.
On 26 March 2009, the Loan was credited with an amount of $4,238.28. The Loan statement’s description of this amount is ’Offset from Harvest’.[5]
[5]Korda Affidavit, Exhibit MAK-1, 58.
In April 2009, Timbercorp Securities and Timbercorp Finance entered into administration and were subsequently placed into liquidation. Mr Korda is the liquidator of both companies.
By 30 September 2010, the balance of the Loan was $29,605.20.[6]
[6]Korda Affidavit, Exhibit MAK-1, 59.
On 26 October, 2010 Timbercorp Securities issued an invoice to Lefam in relation to ’2008 Crop Harvest Proceeds’. It states that a sum of $32,405.21 excluding GST had been distributed in relation to harvest proceeds to ’offset to Project Arrears/Loans’. This invoice was not before Steffensen AsJ in the summary judgment application. It was exhibited to the Leask Affidavit, which the appellants now seek to rely on.
Timbercorp Finance demanded repayment of the Loan from Lefam. Separate demands were made to the appellants pursuant to the guarantee and indemnity.
C.3 The underlying dispute
Timbercorp Finance commenced this proceeding by writ filed on 30 October 2014.
Timbercorp Finance asserts that the Loan remains outstanding and that the amount outstanding as at 1 December 2022 was $146,447.81.
On 21 November 2022, Timbercorp Finance applied for summary judgment against the appellants.
C.4 The decision of Steffensen AsJ
Associate Justice Steffenson heard Timbercorp Finance’s application for summary judgment on 24 January 2023 and delivered an ex tempore ruling on 30 January 2023.
Her Honour first found that Timbercorp Finance had proved the elements of its cause of action.[7] More particularly, she found that Timbercorp Finance had established that:
(a)Lefam offered to borrow funds from Timbercorp Finance and the appellants offered to guarantee the repayment of those funds;[8]
(b)Timbercorp Finance accepted the offer;[9]
(c)Timbercorp Finance had discharged the previous loan owing by Spectrum Decorating to Timbercorp Finance;[10]
(d)between 31 July 2007 and 31 October 2008, repayment instalments were made in respect of the Loan but thereafter, the Loan fell into default due to payment not being made on the last business day of November 2008;[11]
(e)Timbercorp Finance demanded repayment of the Loan from Lefam. Separate demands were made in July 2014 to Mr Leask and Ms Dirube pursuant to the guarantee and indemnity;[12] and
(f)the debt remains outstanding. As at 1 December 2022, the quantum of the debt was $146,447.81.[13]
[7]Ruling (n 1) 7.
[8]Ibid 6.
[9]Ibid 7.
[10]Ibid.
[11]Ibid.
[12]Ibid.
[13]Ibid.
Having determined that Timbercorp Finance had established all of the elements of its cause of action, Steffensen AsJ considered whether the defendants had shown cause as to why judgment should not be entered. She addressed each of the defendants’ defences (raised in their pleaded defence and in written and oral submissions) in turn and determined that the defendants had not shown cause as to why judgment should not be entered.
The defences raised included, in summary, the following:
(a)First, they denied any liability to Timbercorp Finance. They contended that Timbercorp Finance was not permitted to make payment to Timbercorp Securities of the Loan repayments by way of journal entries, but rather those payments were required to be in bankable form, so as to provide Timbercorp Securities with actual money to meet repayment of the management costs, rent and other expenses associated with the scheme. They contended that by paying the Loan amounts to Timbercorp Securities using journal entries, Timbercorp Finance had not complied with its obligations under the Loan agreement.[14]
(b)Second, they alleged a failure on the part of Timbercorp Finance and/or its liquidator to apply the proceeds of sale of Lefam’s interest in the 2001 Timbercorp Olive Scheme to the Loan balance. They said that the proceeds of sale of the Grovelots should have been returned to Lefam in cash or by allocation against any outstanding Loan amounts owing to Timbercorp Finance. They further contended that the assets of the 2001 Timbercorp Olive Scheme were sold at an undervalue on the basis that it was well-established and the trees were of significant value.[15]
(c)Third, they made various allegations of misconduct and/or misrepresentations in relation to the 2008 and 2009 harvest proceeds. They alleged that the 2008 and 2009 harvest proceeds have not been accounted for, or have been misapplied by, the responsible entity, Timbercorp Securities, or by its liquidators. They allege that the liquidators misrepresented the quantum of the harvest proceeds held by Timbercorp Securities on trust for Lefam and concealed their true value.[16] They relied on these allegations as the basis for claiming they should be granted leave to defend in order to obtain discovery addressing the true value of harvest proceeds.[17]
(d)Fourth, they alleged that Timbercorp Finance failed to issue any writ for outstanding amounts until more than six years after the default in repayment of the Loan.[18]
(e)Finally, as a defence to the summary judgment application, they contended that the question of how much Lefam owes pursuant to the Loan needs to be addressed at trial, particularly given the amounts held by Timbercorp Securities in respect of the sale of the 2001 Timbercorp Olive Scheme assets and harvest proceeds. They argued that the matter ought to proceed to trial so as to ascertain the true amount owing by Lefam.[19]
[14]Ibid 8-9.
[15]Ibid 12.
[16]Ibid 15-16.
[17]Ibid 16.
[18]Ibid 18.
[19]Ibid 22.
Associate Justice Steffensen determined that each of the defences had no reasonable prospects of success. Relevant to this appeal, and amongst other things, she records the following in her Ruling:
(a)In relation to the defence that there was a failure to account for sale proceeds, she held that any claim with respect to the sale of the assets of the 2001 Olive Project is a claim by Lefam against Timbercorp Securities, and did not answer a claim by Timbercorp Finance as against the guarantors, being Mr Leask and Ms Dirube.[20]
[20]Ibid 12.
(b)In relation to the defences regarding misconduct and misrepresentations, and the application for leave to defend in order to obtain discovery:
(i)the guarantors (being Mr Leask and Ms Dirube) expressly acknowledged in their Loan application form that the obligation to repay the Loan exists regardless of the success or failure of Lefam’s investment in the 2001 Timbercorp Olive Scheme;[21]
[21]Ibid 17.
(ii)the Loan agreement does not contain any provision that requires the harvest proceeds to be applied to reduce the balance of the Loan;[22]
[22]Ibid 17.
(iii)no evidence was adduced in support of the allegation that the liquidators have misapplied the 2008 and 2009 harvest proceeds by paying them to Timbercorp Finance and that this was done fraudulently;[23]
[23]Ibid.
(iv)similarly, no evidence was adduced which identified that any payment in respect of the 2008 and 2009 harvest proceeds had been paid to Timbercorp Finance.[24] Two invoices for the distribution of harvest proceeds were noted by her Honour. First, an invoice dated 18 October 2010 with harvest proceeds totalling $33,274.19.[25] This amount was applied in partial satisfaction of a management fees invoice issued by Timbercrop Securities in relation to the 2001 Timbercorp Olive Scheme. Second, an invoice dated 23 February 2012 with harvest proceeds totalling $15,923.96, which amount Timbercorp Securities continues to hold. It has not been paid to Timbercorp Finance or applied against the Loan;[26] and
[24]Ibid.
[25]Ibid 18.
[26]Ibid.
(v)in any event, assuming there was a claim with respect to the collection and allocation of harvest proceeds, this would be a claim against Timbercorp Securities and/or its liquidators. Such a claim does not answer the guarantors’ liability under the Loan agreement, which is separate and distinct.[27]
[27]Ibid 16.
(c)In relation to the submission that, having regard to the amounts held by Timbercorp Securities in respect of the sale of the assets of the 2001 Timbercorp Olive Scheme and harvest proceeds, how much Lefam owes under the Loan needs to be addressed at trial, she determined that it was not necessary for those amounts to be allocated against the Loan prior to entering judgment against the guarantors. Her Honour made that determination for the following reasons:
(i)Any claim with respect to a failure to account for capital proceeds or harvest proceeds is a claim that may be made by Lefam, as the borrower, against the responsible entity, Timbercorp Securities. It is not a claim as between the guarantors and Timbercorp Finance.[28]
[28]Ibid 22-23.
(ii)Under the terms of the guarantee:
(1)Timbercorp Finance is entitled to pursue either the guarantors or Lefam with respect to the amount it is owed;[29] and
[29]Ibid 23.
(2)so long as an amount remains payable under the Loan agreement, the guarantors may not, without Timbercorp Finance’s consent, reduce their liability by claiming that the guarantors or the borrower have a right of set-off or a counterclaim, nor may the guarantors claim the benefit of the security interest granted over Lefam’s interest in the 2001 Timbercorp Olive Scheme.[30]
[30]Ibid.
(iii)In short, under the terms of the guarantee, the guarantors have agreed that their liability may not be reduced by reference to the amounts held by Timbercorp Securities so long as an amount payable under the Loan agreement remains unpaid.[31]
D Legal principles
D.1 Appeals from an Associate Judge
[31]Ibid.
D.1.1 Extensions of time
An appeal from a determination of an Associate Judge brought under r 77.06 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) must be served within 14 days after the day the judgment or order of the Associate Judge was given or made.[32]
[32]Rules, r 77.06.2(1)(a).
The Court may extend time for the appeal to be brought.[33] In exercising such discretion, the Court shall have regard to:[34]
(a)the length and reasons for the delay;
(b)prejudice to the respondent; and
(c)whether the proposed appeal so lacks merit as to be futile.
[33]Ibid r 77.06.2(6).
[34]Spanovic v Carter Holt Harvey Ltd (Unreported, 2 May 2014), [4] (Ashley JA with whom Almond AJA agreed).
If there is a proper explanation for the delay and non-compliance with the Rules, then the interests of justice ordinarily require an extension of time be granted.[35]
[35]Slaveski v State of Victoria [2009] VSCA 6, [77] (Kellam JA with whom Dodds-Streeton JA agreed), citing Jackamarra v Krakouer (1998) 195 CLR 516, 521 [7] (Brennan CJ and McHugh J).
D.1.2 Nature of appeal
An appeal brought under r 77.06 of the Rules is to be conducted by way of rehearing. Before appellate power can be exercised by this Court to overturn the Ruling, the appellants must demonstrate that a factual, legal or discretionary error was made by Steffensen AsJ. As stated in Oswal v Carson (citations omitted):[36]
Such appeals are no longer by way of rehearing de novo. Instead, they are rehearings which, in the absence of further evidence or a change in the law, ordinarily require the appellant to show error on the part of the Associate Judge before appellate power may be exercised. In addition, if the orders from which an appeal is brought relate to a matter of practice and procedure … an appellate court will exercise particular caution in reviewing the decision.
[36][2013] VSC 355, [11] (Ferguson J). This principle has been applied with approval many times: see eg, Andrianakis v Uber Technologies; Taxi Apps Pty Ltd v Uber Technologies (Appeal) [2022] VSC 643, [36] (John Dixon J).
D.1.3 Adducing further evidence
Leave to introduce fresh evidence upon an appeal should be given only if:[37]
(a)by the exercise of reasonable diligence, such evidence could not have been discovered in time to be used in the original hearing;
(b)it is reasonably clear that if the evidence had been available at the original hearing, and had been adduced, an opposite result would have been produced;
(c)the evidence proposed to be adduced is reasonably credible.
E Issue 1 - Should the appellants be granted an extension of time to file and serve their notice of appeal?
[37]ANZ Banking Group Ltd v Loftus [2014] VSC 342, [38] (Ginnane J), citing Clark v Stingel [2007] VSCA 292, [25] (Warren CJ, Chernov and Kellam JJA).
Associate Justice Steffensen made Orders and delivered her Ruling on 30 January 2023. The last day for the filing of a notice of appeal was 13 February 2023, being 14 days after 30 January 2023. The appellants’ original notice of appeal was not filed until 2 March 2023.
E.1 Submissions
The appellants submit that:
(a)their delay was not long — it was a matter of days, not months;
(b)there is a real issue that needs to be tried; and
(c)the reason for the delay is that the appellants were unrepresented litigants at the time. Mr Leask was confused about the process and had a lack of knowledge of the applicable Court rules.
Timbercorp Finance submits that the appeal is without merit and that an extension of time should be refused for that reason.
E.2 Consideration
Having regard to the following matters, I will grant the appellants an extension of time to file and serve their original notice of appeal to 2 March 2023:
(a)The period of delay was short.
(b)There was no evidence of prejudice suffered by Timbercorp Finance.
(c)While the grounds of appeal described in the notice did not appear strong, I was not satisfied that the appeal on the face of that notice could be characterised as so lacking merit as to be futile.
As I have noted above, Timbercorp Finance did not oppose the amendment to the notice of appeal and the hearing before me proceeded on the basis that if an extension of time were granted to the appellants to file their original notice of appeal to 2 March 2023, the appeal would proceed on the scope of the amended notice.
F Issue 2 – Should the appellants be granted leave to rely on the Leask Affidavit?
The appellants seek to rely on new evidence for this appeal, namely the Leask Affidavit. It was an affidavit produced in support of the matters the subject of the amended notice of appeal. By that affidavit, Mr Leask gives evidence about:
(a)the projected proceeds from the investment in the 2001 Timbercorp Olive Project as set out in the product disclosure statement and prospectus;
(b)the actual harvest proceeds paid in respect of the 2006 and 2007 harvest;
(c)his expectation in relation to harvest proceeds for later years;
(d)the fact that Lefam received no further cash payments in respect of harvest proceeds after 2007; and
(e)a payment of $4,238.28 that was credited to the Loan account balance as an Offset from Harvest’ without any further explanation.
Exhibited to the Leask Affidavit is an invoice dated 26 October 2010 issued by Timbercorp Securities to Lefam in relation to the ’2008 Crop Harvest Proceeds’. It states that a sum of $32,405.21 excluding GST had been distributed in relation to harvest proceeds as an ’Offset to Project Arrears/Loans’.
F.1 Submissions
The appellants submit that:[38]
(a)the new evidence is not necessary to establish the existence of the alleged error on the part of Steffensen AsJ but rather it assists counsel to be able to explain the error;
(b)the invoice dated 26 October 2010 is contemporaneous and the credibility of it isn’t being challenged;
(c)as set out in the Leask Affidavit, Mr Leask only located the invoice when asked by his counsel (engaged to appear in this appeal) to look for documents relating to harvest proceeds and how they might have been applied to the Loan. It was in fact located by Mr Leask’s father among his papers. Mr Leask further deposes that he did not appreciate the significance of the invoice at the time of the hearing of the summary judgment application at which time he was self-represented;
(d)a diligent search by Mr Leask would not have found the document had he not had the benefit of his legal representative focussing attention on critical issues; and
(e)the interests of justice are an important consideration in dealing with the admission of further evidence on appeal, in particular in cases such as this where there has been no trial.[39]
[38]Transcript of Proceeding, Timbercorp Finance Pty Ltd (In Liquidation) v Lefam Holdings Pty Ltd & Ors (Supreme Court of Victoria, Stynes J, 4 October 2023), 40-46 (‘Appeal Transcript’).
[39]Relying on ANZ Banking Group Ltd v Loftus [2014] VSC 342, [63]-[64] (Ginnane J).
Timbercorp Finance submits that:[40]
(a)the appellants should not be granted leave to adduce further evidence because it does not improve their position;
(b)further, the evidence the appellants seek to adduce could have been discovered and adduced before Steffensen AsJ had reasonable diligence been exercised. It is apparent from the Leask Affidavit that Mr Leask was aware of the October invoice albeit that he did not have it available to him or appreciate its significance;
(c)in relation to Mr Leask’s evidence to the effect that that there was no distribution of harvest proceeds after 2007, there is no basis for that fact to be put before the Court. It was a fact known to him at the time of the hearing before Steffensen AsJ and he didn’t raise it. In any event, it is irrelevant to Timbercorp Finance’s debt; and
(d)in relation to the fact that Mr Leask was unrepresented at the hearing of the application for summary judgment, this proceeding has been on foot since 2014. Over that time, the appellants have had multiple sets of lawyers. They have considered and pleaded available defences and have had the opportunity to look at documents. If this evidence has any relevance, it was a matter within Mr Leask’s knowledge to raise before the Court at a previous time.[41]
[40]C O H Parkinson and J W G Grant, Plaintiff’s Supplementary Submissions on Second and Third Defendants’ Application for an Extension of Time to Appeal, 28 September 2023, [15]-[22] (‘Timbercorp Finance’s Supplementary Submissions’).
[41]Appeal Transcript (n 38) 101.
If the appellants are granted leave to rely on the Leask Affidavit, Timbercorp Finance seeks to rely on the Rowney Affidavit which concerns the $32,405.21 payment and the 26 October 2010 invoice. This was not opposed by the appellants. The Rowney Affidavit does two things:
(a)First, it exhibits a copy of invoice 002291011 rendered by Timbercorp Securities to Lefam on 1 October 2008 in the sum of $77,040.74 (referred to at paragraph [22] above).
(b)Second, it exhibits an extract from the Timbercorp Information System, a system that records individual loan and receipting transactions. That extract records that the amount of $32,405.21 was applied on account of invoice 002291011 on 18 October 2010 by way of an EFT, leaving an outstanding balance of $33,006.45 (following another receipt in December 2008 and a partial ’write-off’ in July 2010).
F.2 Consideration
I will not grant leave to the appellants to rely on the Leask Affidavit.
In relation to paragraphs 18 to 24 of the Leask Affidavit, which concern the 26 October 2010 invoice, I accept that:
(a)absent the refinement of the grounds of appeal by the appellants’ counsel, the significance of that invoice may have been overlooked by the appellants; and
(b)the invoice was not in the possession of the appellants but rather in the possession of Mr Leask’s father.
In those circumstances, I am satisfied that the exercise of reasonable diligence by them would not have resulted in its discovery in time for the original hearing.
I also accept that the invoice is a contemporaneous document directly relevant to an issue in dispute on this appeal, specifically whether the payment of $32,405.21 has been applied to reduce the Loan.
However, it is clear, for the reasons given at paragraphs [64]-[70] below, that if the 26 October 2010 invoice had been available to Steffensen AsJ for the summary judgment application, it would not have changed the result.
Further, for the following reasons, leave will not be granted to the appellants to rely on the balance of the Leask Affidavit:
(a)The other new evidence adduced via the Leask Affidavit (being a letter received from Timbercorp Securities on 27 June 2007 confirming payment of harvest proceeds partly from the 2006 harvest and partly from the 2007 harvest, and a report prepared by Timbercorp Securities in 2008 for the Growers in relation to projected performance) could have been discovered and adduced before Steffensen AsJ had reasonable diligence been exercised.
(b)It is clear that the availability of that evidence along with the balance of the Leask Affidavit at the summary judgment application, would have had no impact on the outcome. In particular, I note that:
(i)the Loan account statement, referred to in paragraph 7 of the Leask Affidavit, was already exhibited to the Korda Affidavit; and
(ii)the product disclosure statement, referred to in paragraph 8 of the Leask Affidavit, was already exhibited to the January May Affidavit.
(c)As conceded by the appellants’ counsel, this evidence was not necessary for him to substantiate the grounds of appeal, but rather served the purpose of assisting him to explain the appellants’ position.
G Issue 3 - Does the evidence which was before Steffensen AsJ show that on 18 October 2010, a sum of $32,405.21 was paid to Timbercorp Finance and applied to the Loan?
G.1 Submissions
By their counsel’s written submissions, the appellants submit that all of the appeal grounds are premised on a discrete evidentiary point, namely that the Loan statement and outstanding balance alleged by Timbercorp Finance is incorrect because the evidence before Steffensen AsJ demonstrated that on 18 October 2010, a sum of $32,405.21 was paid to Timbercorp Finance and applied as a credit to the Loan guaranteed by the appellants.[42] However, by oral his oral submissions, the appellants’ counsel submitted that the factual dispute is more complex than simply that narrow issue, and that the distribution by Timbercorp Securities of a sum of $4,238.28 in March 2009 was significant.[43] This second point is the subject of, and is addressed below in Part H of this judgment in relation to, Issue 4.
[42]S Rubenstein, Appellants’ Submissions, 21 September 2023, [18] (‘Appellants’ Submissions’).
[43]Appeal Transcript (n 38) 2.
As set out above, the appellants sought to rely on the invoice dated 26 October 2010 exhibited to the Leask Affidavit. The appellants submit that the invoice discloses that on 18 October 2010, Timbercorp Securities paid to Timbercorp Finance the sum of $32,405.21 which was applied to the Loan. They rely on the fact that the payment is described in that invoice as ‘Offset to Project Arrears/Loans’.
The appellants submit that:
(a)the credit of $32,405.21 on 18 October 2010 towards the Loan was sufficient to discharge the balance outstanding at that time;
(b)to determine that Timbercorp Finance had established an outstanding debt in the amount of $146,447.81, Steffensen AsJ had relied on the Loan account statement exhibited to the Korda Affidavit. That Loan account statement was admissible as prima facie evidence of the outstanding Loan balance. However, that evidence was rebuttable; and
(c)the Loan account statement was inconsistent with other documentary evidence, namely the extract from the Timbercorp Information System at page 104 of the exhibit to the January May Affidavit.[44] The extract records the payment on 18 October 2010 of $32,405.21 to Timbercorp Finance towards the Loan.
[44]The September May Affidavit exhibits a clearer copy of that document.
This issue is relevant to Appeal Grounds 1, 2 and 3. The appellants submit:
(a)in relation to Appeal Ground 1, that Steffensen AsJ erred in finding that Timbercorp Finance had established there was a debt due. Once the payment to Timbercorp Finance of $32,405.21 on 18 October 2010 is taken into account, the Loan was discharged and no further amount was payable by Lefam, meaning nothing is owed by the appellants; and
(b)in relation to Appeal Grounds 2 and 3, Steffensen AsJ erred in failing to consider the evidence in relation to the payment of $32,405.21. That evidence established:
(i)at its highest, that the Loan was discharged; or
(ii)otherwise, that there is an unresolved inconsistency in the evidence that ought not be resolved on a summary basis.
Timbercorp Finance submits that:[45]
(a)there is no evidence to support the proposition that the $32,405.21 was paid to Timbercorp Finance;
(b)the evidence is clear that the money was paid to Timbercorp Securities and it follows from that conclusion that Steffensen AsJ did not err; and
(c)accordingly, Appeal Grounds 1, 2 and 3 must fail.
[45]Appeal Transcript (n 38) 79-82.
G.2 Consideration
To succeed on appeal, the appellants must show an error on the part of Steffensen AsJ. The relevant alleged error is her Honour’s finding that Timbercorp Finance had established an outstanding debt in the sum of $146,447.81. It is said she ought not to have been satisfied of it on the material before her.
The narrow issue in dispute on appeal is whether a payment of $32,405.21 was made by Timbercorp Securities to Timbercorp Finance and applied to discharge the Loan. Alternatively, the appellants say there is enough ambiguity in the evidence that her Honour should not have been satisfied that the Loan was outstanding.
Her Honour addressed the relevant payment in her Ruling, noting that harvest proceeds totalling $33,274.19 (i.e., 32,405.21 plus GST) were applied in partial satisfaction of a management fee invoice issued by Timbercorp Securities to Lefam in relation to stage 9 of the 2001 Timbercorp Olive Scheme.
The evidence before her in support of that finding included the extract from the Timbercorp Information System at page 104 of the exhibit to the January May Affidavit. That extract records that:
(a)invoice 002291011 had been issued in relation to stage 9 of the 2001 Timbercorp Olive Scheme in the sum of $77,040.74, and that the sum of $44,034.29 had been paid towards that invoice; and
(b)various distributions had been made in relation to Lefam’s investment since liquidation including a payment made in the sum of $33,274.19 under invoice number H0045000751. It records that it had been paid to an account with the name ‘Timbercorp Securities Limited (in Liquidation)’.
I reject the appellants’ submission that the extract is evidence of a payment on 18 October 2010 of $32,405.21 to Timbercorp Finance towards the Loan. It does not, and could not reasonably be construed to, record that any such payment was made by Timbercorp Securities to Timbercorp Finance.
The additional material the appellants sought to rely on in relation to this issue is invoice H0045000751 recording a net distribution of harvest proceeds in connection with Lefam’s investment in the sum of $33,274.19 ($32,405.21 plus GST). It further records that the sum was Offset to Project Arrears/Loans’ with nil being paid to the Growers.
If leave had been granted to the appellants to rely on that invoice, Timbercorp Finance sought to rely on the Rowney Affidavit, the contents of which are described in paragraph [50] above.
Together, the additional materials referred to in the preceding two paragraphs confirm the finding of Steffensen AsJ that on 18 October 2010, the sum of $32,405.81 was paid to Timbercorp Securities and applied against the invoice 002291011 dated 1 October 2008 in respect of outstanding management fees. There is no conflict in the evidential material supporting that finding which was before her Honour.
For these reasons, I find no error in the on the part of Steffensen AsJ. Her Honour was correct to find that Timbercorp Finance had proved the outstanding debt under the Loan. The evidence supports her finding that the sum of $32,405.21 was paid to Timbercorp Securities. There was no failure on her part to consider evidence of the discharge of the Loan or of any factual dispute about the distribution of that sum. In those circumstances, Appeal Grounds 1, 2 and 3 must fail.
H Issue 4 – Is there otherwise a factual dispute about the existence of the debt that should be dealt with at trial?
H.1 Submissions
This issue underpins Appeal Ground 4.
During the hearing, counsel for the appellants submitted that the evidence before Steffensen AsJ supports the proposition that there is a factual dispute about the existence of the debt that should be dealt with at trial.[46]
[46]Appeal Transcript (n 38) 32-33.
The appellants submit that:[47]
[47]Ibid 3, 18, 22, 23, 26, 27, 30, 33, 116.
(a)the Loan statement exhibited to the Korda Affidavit records a payment made on 26 March 2009 in the sum of $4,238.28 described as ’Offset from Harvest’ against the Loan. The details of that payment have not been explained by the liquidator, Timbercorp Securities or Timbercorp Finance;
(b)this sum (of $4,238.28) is much lower than the harvest proceeds for 2007, and is inconsistent with reports made thereafter about expected harvest yields;
(c)had harvest proceeds been consistent with the proceeds distributed in 2007, the Loan balance would have been totally extinguished;
(d)further it was a term of the Loan that if the Grower was in default, then Timbercorp Securities could arrange for the net proceeds of the Grower’s investment in the 2001 Timbercorp Olive Scheme (after payment of all amounts owing by the Grower in relation to that investment), to be applied against any amount due but unpaid under the Loan;
(e)having regard to that term of the Loan, it is arguable that the payment of $4,238.28 must be net of all of the expenses and management fees. That is:
(i)that amount may represent a net sum after the debt due to Timbercorp Securities for management fees had been paid; and
(ii)if harvest proceeds were applied to reduce the management fees owed to Timbercorp Securities to nil, then the payment of $32,405.21 could have been applied to reduce the Loan to nil; and
(f)the existence of the debt is therefore a fact in dispute and should be dealt with at trial.
Timbercorp Finance submits that:[48]
(a)the appellants raise a new argument that there is a pool of money within Timbercorp Securities in respect of harvest proceeds that may, at some point, have been applied to discharge Lefam’s liability to Timbercorp Finance;
(b)to the contrary, that could not have occurred because at the exact moment the Timbercorp Group became insolvent or administrators were appointed, all debtors including Lefam disputed their liability. It would have been a breach of the obligation for Timbercorp Securities and the liquidator thereof to have applied harvest proceeds which are held on trust for a Grower to discharge a debt to Timbercorp Finance in circumstances where the debt was disputed; and
(c)even if the appellants’ new argument could have actually occurred, this would give rise to a claim by Lefam against Timbercorp Securities, not Timbercorp Finance
[48]Ibid 48-49.
H.2 Consideration
It is asserted by the appellants that there is a factual dispute about the existence of the debt that should be dealt with at trial. My attention was directed to the payment of $4,238.28 applied against the Loan on 26 March 2009 . The appellants’ submissions in relation to that payment require me to speculate about what harvest proceeds Timbercorp Securities may have had available as a result of the 2008 and 2009 harvests and how they were applied.
However, there is simply no evidence to support the existence of the alleged factual dispute.
There is evidence of the payment of $4,238.28 against the Loan that is expressed to be an ‘Offset from Harvest’. It is a sum paid for the benefit of the appellants, operating to reduce the level of their indebtedness. In fact, it operated to correct their default at the time it was paid. That is, the Loan statement reveals that Lefam had failed to pay four monthly instalments in respect of the Loan, each in the sum of $1,059.57, in November and December 2008 and January and February 2009. The payment of $4,238.28 equates to four monthly payments. There is no dispute that the sum was paid by Timbercorp Securities or that it was credited to the Loan account.
There is no evidence to support the proposition that it was paid after the discharge of the Grower’s liability to Timbercorp Securities under invoice 002291011 for $77,040.74. Whether or not it was appropriate for Timbercorp Securities to make the payment under its arrangement with Lefam while there was an amount outstanding under invoice 002291011, is a matter as between the Grower and Timbercorp Securities.
Further, and as found by Steffensen AsJ,[49] any claim with respect to a failure by Timbercorp Securities to account for harvest proceeds is a claim that may be made by the Grower against the responsible entity, Timbercorp Securities. It is not relevant to a claim as between the appellants as guarantors of the Loan and Timbercorp Finance.
[49]Ruling (n 1) 22.
In those circumstances, I find no error on the part of Steffenson AsJ. Specifically, her Honour did not err by failing to consider any defence arising in relation the proceeds from the 2008 and 2009 olive harvest or how those proceeds had been accounted for by Timbercorp Securities and Timbercorp Finance.
In the absence of error, Appeal Ground 4 must fail.
Issue 5 - Did Steffensen AsJ err in law by not exercising her discretion under s 64 of the CPA to allow for the proceeding to proceed to trial?
Section 64 of the CPA provides that:
Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—
(a) it is not in the interests of justice to do so; or
(b) the dispute is of such a nature that only a full hearing on the merits is appropriate.
The appellants submit that in light of factual disputes alleged by them, there are concerns about the accuracy and reliability of the records maintained by Timbercorp Securities, Timbercorp Finance and the liquidators. For these reasons, Steffensen AsJ ought to have exercised her discretion under s 64 of the CPA to require the proceeding to proceed to full hearing.
I have found no error on the part of Steffensen AsJ. In circumstances where she determined that Timbercorp Finance had established all of the elements of its cause of action and that each defence raised had no reasonable prospect of success, it is entirely appropriate that this matter not be set down for trial.
Appeal Ground 5 must fail.
J Orders
I propose to dismiss the appeal. I will hear from the parties on the form of order and costs.
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