Vannin Capital Operations Limited v QNI Resources Pty Ltd - [2023] QSC 1

SUPREME COURT OF QUEENSLAND

CITATION: Vannin Capital Operations Limited v QNI Resources Pty Ltd
& Ors [2023] QSC 1
PARTIES: VANNIN CAPITAL OPERATIONS LIMITED
(Company Number C74594)
(plaintiff)
v
QNI RESOURCES PTY LTD
(ACN 054 117 921)
(first defendant)
QNI METALS PTY LTD

(ACN 066 656 175) (second defendant)
PALMER AVIATION PTY LTD
(ACN 158 870 789) (in liquidation)
(third defendant)
QUEENSLAND NICKEL PTY LTD
(ACN 009 842 068) (in liquidation)
(fourth defendant)
FILE NO/S: BS No 13947 of 2018
DIVISION: Trial Division
PROCEEDING: Claim filed on 18 December 2018
ORIGINATING Supreme Court at Brisbane
COURT:
REASONS: 13 January 2023
JUDGMENT: 1 February 2023
DELIVERED AT: Brisbane
HEARING DATE: 27 April 2021 – 30 April 2021; written submissions on behalf

of the plaintiff dated 10 June 2021; outline of submissions on behalf of the first and second defendants dated 11 June 2021; further written submissions on behalf of the plaintiff dated 6 July 2021; reply submissions on behalf of the first and second defendants dated 19 July 2021; 13 January 2023; email correspondence from the parties regarding the terms of the judgment dated 20 January 2023 (plaintiff), 27 January 2023 (first and second defendants) and 30 January 2023 (plaintiff)
JUDGE: Burns J
ORDER: ON 13 JANUARY 2023, THE COURT ORDERED THAT:

1. The defendants’ application to further amend their
counterclaim is refused;
2. The plaintiff and the first, second and fourth defendants are directed to bring in minutes of judgment to reflect these reasons within fourteen days.
3. Liberty to apply on the giving of three days’ notice.

ON 1 FEBRUARY 2023, THE COURT DECLARED
THAT:
1. The fourth defendant entered into the agreement
styled “US$ Aircraft Loan Facility Agreement” and
dated 28 June 2012 (“the Agreement”) as agent for
and on behalf of the first and second defendants.
2. The first and second defendants are jointly and severally liable as guarantors pursuant to the terms of clause 16 and schedule 2 of the Agreement.

AND PRONOUNCED JUDGMENT AS FOLLOWS:
1.       Judgment is entered for the plaintiff against each of the first, second and fourth defendants jointly and severally in the sum of US$30,835,112.14.
2.       The first, second and fourth defendants pay to the plaintiff, jointly and severally, the sum of US$30,835,112.14.
3.       The counterclaim is dismissed.
4.       The first, second and fourth defendants are to jointly
and severally pay the plaintiff’s costs of the

proceeding on a full indemnity basis pursuant to
clause 4 of schedule 2 of the Agreement.

CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL
PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – GENERALLY –
where a predecessor in right to the plaintiff funded the purchase of an aircraft by the third defendant pursuant to a loan
facility and associated documents – where repayment of the loan was secured by a mortgage over the aircraft – where the
repayment obligations of the third defendant under the loan was the subject of a guarantee and indemnity provided by the
fourth defendant – where the fourth defendant was the general
manager of a joint venture in which the first and second
defendant were participants – where the third and fourth defendants became insolvent and the loan was called up –
where the liquidators of the third defendant later sold the
aircraft to reduce the indebtedness under the loan – where the debt was subsequently assigned to the plaintiff – where the
plaintiff sued the defendants for the outstanding debt under the
loan – whether the existence and amount of the debt was proved – whether the fourth defendant entered into the
guarantee and indemnity as agent for the first and second
defendants – whether a condition should be implied in the
guarantee and indemnity which, if breached, would relieve any
guarantor from liability – whether the aircraft mortgage was discharged by variation – whether the liquidators marketed
and sold the aircraft as agent for the predecessor in right to the
plaintiff – whether the predecessor in right to the plaintiff
owed a duty to the defendants, or any of them, in connection
with the marketing and sale of the aircraft
Corporations Act 2001 (Cth), ss 436A, 439C, 477, 1305;
Evidence Act 1977 (Qld), s 84;
Property Law Act 1974 (Qld), s 57(1);
Uniform Civil Procedure Rules 1999 (Qld), rr 5, 190, 367(3).
Akins v National Australia Bank (1994) 34 NSWLR 155, cited
Aurizon Network Pty Ltd v Glencore Coal Queensland Pty Ltd
& Ors [2019] QSC 163, cited
Australia and New Zealand Banking Group Ltd v Bangadilly
Pastoral Co Pty Ltd (1978) 139 CLR 195, cited
Australian Competition and Consumer Commission v CG
Berbatis Holdings Pty Ltd [2003] HCA 18, cited
Australian Trade Commission v Goodman Fielder Industries
Limited (1992) 36 FCR 517, cited
Baburin v Baburin (No 2) [1991] 2 Qd R 240, cited
Bank of Western Australia Ltd v Abdul [2012] VSC 222, cited
Beefeater Sales International Pty Ltd v MIS Funding No 1 Pty
Ltd [2016] NSWCA 217, cited
Blomley v Ryan (1956) 99 CLR 362, cited
BM Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd
(1976) 51 ALJR 254, cited
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977)
180 CLR 266, cited
Buckeridge v Mercantile Credits Ltd (1981) 147 CLR 654,
cited
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR
477, cited
Commonwealth v Verwayen (1990) 170 CLR 394, cited
Diddams v Commonwealth Bank of Australia Ltd (unreported,
Federal Court of Australia, Branson J, 17 July 1998), cited
Dobbs v The National Bank of Australasia Limited (1935) 53
CLR 643, followed
Fitzgerald v Masters (1956) 95 CLR 420, followed
Florgale Uniforms Pty Ltd v Orders (2004) 11 VR 54, cited
Forsyth v Blundell (1973) 129 CLR 477, cited
GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No 3)
(1990) 20 NSWLR 15, cited
Green & Ors v Pearson [2014] QCA 110, cited
Hawkesbury Valley Developments Pty Ltd v Custom Credit
Corporation Ltd
(1994) 8 BPR 15,581, cited cited
Herrod v Johnston [2013] 2 Qd R 102, cited
Julong Pty Ltd v Fenn & Anor [2002] QCA 529, cited
Kyuss Express Pty Ltd v Sellers (2001) 37 ACSR 62, cited
Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128
CLR 336, cited
Mitchell v 700 Young Street Pty Ltd [2003] VSCA 42, cited
MBF Investments Pty Ltd v Nolan (2011) 37 VR 116, cited
Medforth v Blake [2000] Ch 86, cited
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd
(2015) 256 CLR 104, cited
National Australia Bank Limited v Anderson [2004] VSC 193,
cited
NMFM Property Pty Ltd v Citibank Ltd (No 8) (1999) 161
ALR 581, cited
Noble v State of Victoria [2000] 2 Qd R 154, cited
Norman v Federal Commissioner of Taxation (1963) 109 CLR
9, cited
Pendlebury v Colonial Mutual Life Assurance Society Ltd
(1912) 13 CLR 676, followed
Perpetual Nominees Ltd v McGoldrick (No 3) (2017) 120
ACSR 32, followed
Pukallus v Cameron (1982) 180 CLR 447, cited
Queensland Independent Wholesalers Ltd v Coutts Townsville
Pty Ltd [1989] 2 Qd R 40, cited
Railway Commissioners for New South Wales v Orton (1922)
30 CLR 422, cited
State Bank of NSW v Chia (2000) 50 NSWLR 587, cited
SHA Premier Constructions Pty Ltd v Niclin Constructions Pty
Ltd [2019] QCA 201, cited
Simic v New South Wales Land and Housing Corporation
(2016) 260 CLR 85, followed
Slee v Warke (1949) 86 CLR 271, cited
Tarrant v Statewide Secured Investments Pty Ltd [2012] FCA
582, cited
The Fletcher Organisation Pty Ltd v Crocus Investments Pty
Ltd [1988] 2 Qd R 517, cited
UBS v Tyne (2018) 265 CLR 65, cited
Ultimate Property Group Pty Ltd v Lord (2004) 60 NSWLR
646, cited
Upton v Tasmanian Perpetual Trustees Ltd (2007) 158 FCR
118, cited
Young v Queensland Trustees Ltd (1956) 99 CLR 560, applied
Zhu v Treasurer of the State of New South Wales (2004) 218
CLR 530, cited
Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445, cited

COUNSEL: J Bell KC, with A O’Brien, for the plaintiff
P Dunning KC, with M Karam and K Byrne, for the first and
second defendants
SOLICITORS: Ashurst Australia for the plaintiff
Robinson Nielsen Legal for the first and second defendants

In June 2012, GE Commercial Australasia Pty Ltd (GEC), the predecessor in right to the plaintiff, Vannin Capital Operations Limited (Vannin), loaned money to the third defendant, Palmer Aviation Pty Ltd (PAPL), to finance the purchase of a 2001 Bombardier Global Express aircraft.
The loan was the subject of several transaction documents but central to those was a written facility agreement between GEC as lender and PAPL as borrower, with the
performance of the latter’s obligations guaranteed by the other signatory to the
agreement being the fourth defendant, Queensland Nickel Pty Ltd (QN). At the time, the first defendant, QNI Resources Pty Ltd (Resources), and the second defendant, QNI Metals Pty Ltd (Metals), were participants in a joint venture by which a nickel refinery in Townsville was conducted. QN was the general manager of the joint venture and was owned by Resources and Metals. Mr Clive Palmer was a director of
each of the defendant companies – Resources, Metals, PAPL and QN.
For the purposes of the loan, Resources and Metals entered into a deed in which they confirmed, agreed and acknowledged that, inter alia, QN entered into the transaction in its personal capacity, as their nominee and agent under the joint venture and as general manager of the joint venture. The deed was provided to GEC.
On 18 January 2016, PAPL and QN were both placed into voluntary administration, an event of default under the loan. Demands for payment of the amount due under the loan went unsatisfied and, by April 2016, both companies had been wound up in insolvency. After a long marketing campaign, the aircraft was sold by the liquidators of PAPL on 23 February 2018.
GEC changed its name to Harrenvale Australasia Pty Ltd (Harrenvale) on 4 May 2016 and, in October 2018, assigned all of its rights under the loan to Vannin. Earlier, on 9 November 2015, GEC had been acquired by Bain Capital Ltd (Bain) and, so, Bain was the ultimate beneficial owner of GEC/Harrenvale at the time when the aircraft was marketed for sale and sold.
On 16 October 2018, Harrenvale assigned all its rights under the loan (including the security for the loan) to Vannin.
By this proceeding, Vannin claims recovery of the amounts it alleges are outstanding under the loan for principal and interest. Resources and Metals have defended the claim and advanced a counterclaim. They also obtained leave to defend the claims made against QN.
The defendants[1] raised a number of grounds of defence and also alleged that
GEC/Harrenvale breached a duty owed to them to achieve the “best price obtainable”
on the sale of the aircraft. That price, they say, would have been paid by Mr Palmer or another company controlled by Mr Palmer, Mineralogy Pty Ltd (Mineralogy). Had that come to pass, the difference between what could have then been obtained on sale and what was actually obtained gives rise, they contend, to a setoff in the form of an account or equitable compensation in the amount of their counterclaim which would be by itself sufficient to extinguish the whole of the debt claimed by Vannin.
[1] Here, and throughout these reasons, a reference to “the defendants” means Resources, Metals and QN.
The loan transaction
It is useful to commence with the joint venture. It was governed by an agreement
dated 17 September 1992 and entitled, “Queensland Nickel Joint Venture
Agreement” (JVA).
By clause 5.1 of the JVA, QN’s appointment as general manager was confirmed. By
clause 5.2(a) it was agreed that the general manager would (subject only to the direction of a committee of owners) be in charge of, and responsible for the overall management, operation and administration of the joint venture, the management of the funds of the joint venture and the management and control of the joint venture property and all operations of the joint venture as agent for, and for the account of, the joint venturers. By clause 5.2(b) the general manager was required to undertake various activities including the acquisition of materials, supplies, machinery, equipment and services, the negotiation of financing on behalf and with the approval of each of the joint venturers in relation to their involvement in any activity of the

joint venture and the doing of all “acts and things as may be necessary or advisable
for efficient and economic operation” of the joint venture.

Clause 5.5 of the JVA dealt with the performance of management functions. Amongst other things, it provided that, as one of the managers under the agreement, QN was prohibited from directly or indirectly carrying on or being interested in any other
business or activity or other operation and, further, it was made plain that QN did “not have the authority to act for or to assume any obligation or liability on behalf of” the

joint venturers, except such authority as was conferred on it by the agreement or by
the joint venturers.

PAPL was incorporated on 7 June 2012 as a special purpose vehicle to borrow money from GEC and use that money to purchase the aircraft.
The facility agreement – entitled, “US$ Aircraft Loan Facility Agreement” – was
entered into on 28 June 2012. It was executed by Mr Palmer on behalf of PAPL and QN and secured by a mortgage over the aircraft and guaranteed by QN on terms set out in a guarantee and indemnity set out in a schedule to the agreement.[2]
[2] Facility agreement, Schedule 2.
By clause 2 of the facility agreement, GEC agreed to provide PAPL with the facility on the terms set out in the agreement and PAPL was obliged to use the facility only to purchase the aircraft. The agreed limit of the facility was up to US$24,500,000. By clause 3, if PAPL decided to use the facility, it could do so by one drawing and a mechanism to achieve that was specified.
It is apparent from a reading of the facility agreement that the joint venturers – Resources and Metal – stood with PAPL and, indeed, QN. For example, the term “obligor” was defined in clause 1.1 to mean “individually or collectively, as the
context may require, or permit, [PAPL], [QN] and any other person (if any) who gives, grants, enters into or otherwise provides any Security in connection with the
Facility and/or any Transaction Document (each in any capacity)”. The expression,
“Transaction Documents”, was in turn defined by clause 1.1 to include (in addition
to the facility agreement) a document described as a “Joint Venturer Letter”. This document was defined by the same provision to mean “the letter dated on or about the date of this Agreement given by the joint venturers in favour” of GEC.
A Joint Venturer Letter was indeed given in favour of GEC by Resources and Metals, and on the same day the facility agreement was executed. It took the form of a deed. It was signed by Mr Palmer along with the secretary of the companies, Mr Derek Payne. The letter contained these acknowledgements:
“1. Acknowledgements
Each of [Resources] and [Metals] (Joint Venturers) confirm, agree and acknowledge that:

(a) the Joint Venturers have appointed [QN] as the ‘General
Manager’ of the Joint Venture under the [JVA], and such
appointment includes the appointment of [QN] as manager for all purposes of the Joint Venture, inter alia, including in connection with the Transaction Documents;

(b) [QN] is and remains the ‘General Manager’ of the Joint
Venture and has not been removed as ‘General Manager’;

(c) [QN] enters into the Transaction Documents in its personal capacity, as nominee and agent of the Joint Venturers under the [JVA] and as General Manager;
(d) the Secured Property does not constitute Joint Venture Property;
(e) all approvals required under the terms of the [JVA] for each of
[QN] and Joint Venturer’s entry into, delivery and
performance of the Transaction Documents to which it is a party and for its carrying out the transactions contemplated by those Transaction Documents have been obtained and remain in full force and effect;

(f)

the entry by [QN] into, delivery and performance of the Transaction Documents to which it is a party and its carrying out of the transactions contemplated by those Transaction Documents are actions taken by it in the performance of its duties and responsibilities as General Manager;

(g)

the costs, liabilities and expenses under or in connection with the Transaction Documents incurred by [QN] under this Agreement are:

(i)

costs, liabilities and expenses properly incurred by it in performing its obligations under the [JVA]; and

(ii)

under the terms of the [JVA], required to be met by, and are, liabilities of the Joint Venturers; and

(h)

the copy of the [JVA] provided by [QN] to [GEC] is a true and complete copy of the [JVA], and the [JVA] remains in full force and effect and has not been terminated; and
(i) the Joint Venturers have received a copy of the Facility
Agreement.”[3] [Emphasis in original]
[3] The terms and expressions used in these acknowledgments were stated to have the meanings ascribed to them in the facility agreement.

Resources and Metals went on in the Joint Venturer Letter to “agree and acknowledge” that GEC “entered into the Transaction Documents in reliance of the
confirmations, agreements and acknowledgements in this document”.
A “verification certificate” was also provided by QN on the same day. This was
required by clause 3.4 of the facility agreement.[4] Amongst other things, it was there
certified that QN “enters into the Transaction Documents in its own capacity as
nominee and agent for the joint venturers of the Queensland Nickel Joint Venture,
and as General Manager of that Joint Venture”. It was also signed on behalf of QN
by Mr Palmer as chairman and Mr Payne as secretary. The certificate attached a copy of the minutes of a meeting of the Board of Directors of QN on the previous day (27 June 2012) where a draft of the facility agreement and associated documents were tabled, and this was recorded:
“Capacity
The Chairman noted that the Company would be entering into the [tabled] Documents personally (and not as trustee of any trust), as nominee and agent of the joint venturers of the Queensland Nickel Joint
Venture, and as General Manager of that joint venture.” [Emphasis in
original].
[4] And see facility agreement, Schedules 3 and 4.
That explained, by clauses 4.1 and 5.1 of the facility agreement, PAPL agreed to repay the principal outstanding under the agreement plus interest in accordance with a repayment schedule which formed part of the agreement. By clause 13.1, an event of default would occur, relevantly, if an obligor did not pay on time an amount payable under any Transaction Document in the manner required or if an obligor or any of its subsidiaries or any party to a Transaction Document (other than GEC) became insolvent.
Clause 8.1(x) of the facility agreement was in these terms:
“8.1 Representations and warranties by Obligors
Each of the Obligors (to the extent applicable) represents and warrants (except in relation to matters disclosed to the Lender by it and accepted by the Lender in writing) that:
…
(x) (not a trustee, agent or nominee) it does not enter into any Transaction Document or hold the Secured Property as trustee, agent or nominee for any person except in the case of the Guarantor, as set out in clause 1.4(c); and
…” [Emphasis in original].
Clause 13.2 allowed that, in the event of default, GEC had the right to declare at any time by notice to PAPL the principal outstanding, accrued but unpaid interest on the principal outstanding, and all other amounts owing or to become owing under the Transaction Documents to be immediately due for payment. By clause 15, if PAPL failed to pay an amount due under the agreement by the due date for payment, then GEC had the right to interest, payable on demand, on the unpaid amount at a higher rate of interest than would (without default) have otherwise applied along with a right to interest on the combined sum of the unpaid amount and that interest at the higher rate.

By clause 16, on execution and delivery of the facility agreement, QN agreed to be bound by the provisions of the guarantee and indemnity set out in the schedule to the
agreement[5] in consideration of GEC “providing the Facility under this Agreement
and for other good and valuable consideration, the receipt and sufficiency of which
[was thereby] acknowledged”.
[5] Facility agreement, Schedule 2.
By clause 2 of the guarantee and indemnity the expression, “Guaranteed Money”,
was defined to include all outstanding principal advanced by GEC to an obligor under the facility agreement including interest payable on that principal and the expression,
“Guaranteed Obligations”, was defined to include the obligations of an obligor to pay
the Guaranteed Money. By clause 3, QN unconditionally and irrevocably guaranteed payment to GEC of the Guaranteed Money and, further, guaranteed to GEC the due and punctual performance by each obligor of the Guaranteed Obligations as a principal obligation. In this regard, it was further provided that, if an obligor did not pay the Guaranteed Money on time, QN agreed to pay that sum to GEC on demand.
By clause 4 of the guarantee and indemnity, QN “unconditionally and irrevocably” indemnified GEC as a “separate and independent principal obligation” against any
loss arising, and any costs and taxes GEC suffers or incurs if, relevantly, an obligor did not (or is unable to) pay the Guaranteed Money in accordance with the Transaction Documents or defaults under the agreement or under any Transaction Document.
Lastly, and as earlier mentioned, the facility was secured by a mortgage over the
aircraft. This was recorded in a “Deed of Mortgage of Aircraft and Contractual Rights” executed by PAPL as mortgagor and GEC as mortgagee on the same day as
the facility agreement and associated documents.
On the following day (29 June 2012), PAPL drew down the facility to the full extent
of its limit – US$24,500,000 – and, with that, the aircraft was acquired by PAPL.
Default
On 18 January 2016, PAPL and QN were placed into voluntary administration pursuant to s 436A of the Corporations Act 2001 (Cth). This was, as earlier mentioned (at [20]), an event of default within the meaning of clause 13.1 of the facility agreement.
On 28 January 2016, GEC sent a letter to PAPL in terms notifying the default, declaring pursuant to clause 13.2 of the facility agreement the total of the outstanding principal and interest (then, US$18,640,195.88) and demanding payment of that sum by 5 February 2016.
PAPL failed to pay any part of the sum demanded by 5 February 2016. Accordingly, on 8 February 2016, GEC forwarded another letter to PAPL in which it demanded pursuant to clause 15.1 of the facility agreement that PAPL pay interest on the amount owing at the higher rate of interest payable under the facility agreement. On the same day, GEC also forwarded letters to QN, Resources and Metals in which each was notified of the default, advised that GEC had declared the amount owing to be immediately due for payment and further advised that PAPL had failed to pay the amount owing in accordance with the demand made on it on 28 January 2016. In each
letter, GEC demanded that the recipient – QN, Resources and Metals – pay the
amount owing under the guarantee and indemnity.
None of PAPL, QN, Resources or Metals complied with these demands, whether in whole or in part, and that remained the position at trial.
On 23 February 2016, PAPL was wound up in insolvency by resolution of its creditors pursuant to s 439C of the Corporations Act.
On 22 April 2016, QN was also wound up in insolvency by resolution of its creditors and, on 27 February 2017, it was ordered to be wound up in insolvency.
On 4 May 2016, GEC changed its name to Harrenvale.
On 23 February 2018, the aircraft was sold by the liquidators of PAPL for US$5,600,000.
Assignment
On 16 October 2018, a few things happened.
First, under clause 18.13 of the facility agreement, the lender (as well as its successors and permitted assigns[6]) had the right to give an obligor a certificate about an amount payable under, inter alia, the facility agreement and, in that event, such a certificate would constitute conclusive evidence of the amount payable in the absence of manifest error. On that date, Harrenvale issued to PAPL, QN, Resources and Metals a certificate pursuant to that provision certifying that the amount of US$20,886,002.06 was due and payable by each of them jointly and severally under the guarantee and indemnity.
[6] Facility agreement, clauses 1.2(i) and 18.11.
Second, Harrenvale “absolutely and unconditionally” assigned to Vannin “all of its rights, title, interests and benefits in respect of” the facility agreement and the aircraft
mortgage pursuant to a deed of assignment entered into by them on that date.
Third, notices of assignment in writing were given to each of PAPL and QN.[7]
[7] On 14 December 2018, notices of assignment were also given to Resources and Metals.
This proceeding
This proceeding was commenced by claim on 18 December 2018. As of that date, it was alleged that the amount of US$20,886,002.06 was outstanding.
On 5 December 2019, Resources and Metals were given leave to defend the claims made against QN. On 29 January 2020, Vannin was granted leave to proceed against QN pursuant to s 471B of the Corporations Act.
By the time of trial, the pleadings were constituted by an amended claim filed on 5 February 2020, a second further amended statement of claim filed on 19 February 2021, a defence of the first and second defendants to the second further amended statement of claim filed on 2 March 2021, a reply and answer to the further amended defence of the first and second defendants filed on 9 March 2021, an amended rejoinder filed by the first and second defendants on 12 March 2021 and the first and
second defendants’ reply to the answer to the amended counterclaim filed on 12
March 2021.
Vannin’s claim and the pleaded defences
By the time of trial, Vannin contended – based on a certificate of indebtedness dated 27 April 2021 and given pursuant to clause 18.13 of the facility agreement – that
US$26,973,811.08 was then outstanding under the loan, and that it was entitled to judgment in that amount against Resources, Metals and QN.
The basis of Vannin’s claim against QN is as guarantor[8] but neither Resources nor Metals was named as a party to the facility agreement. However, Vannin’s primary
case was that, on the proper construction of that agreement, QN entered into the guarantee and indemnity which forms part of that agreement as agent for and on behalf of Resources and Metals and, on that basis, that Resources and Metals are jointly and severally liable with QN for the debt. Alternatively, Vannin alleged that, by executing the Joint Venturer Letter, Resources and Metals are estopped from denying that QN was authorised to enter into the guarantee as agent for and on behalf of them. In the further alternative, Vannin contended, it is entitled to have the facility
agreement rectified to reflect the parties’ subjective intention that QN was to enter
into the guarantee as agent for and on behalf of Resources and Metals.
[8] Vannin also advanced a further basis for liability on the part of QN as a principal debtor under clause 4 of the guarantee and indemnity. See below at [71].
For the defendants, it was pleaded and argued that there are several obstacles standing between Vannin and the success of its claim.
First, the defendants argued that the certificate of indebtedness by which Vannin seeks to prove the overall debt is invalid and, for that reason, the debt has not been proved.
Second, the defendants alleged that an essential condition to be implied in the guarantee and indemnity had been breached by GEC/Harrenvale with the consequence that they were entitled to terminate, and by their pleading terminated, the guarantee and indemnity and stand discharged from any liability under it.[9]
[9] Defence of the first and second defendants to the second further amended statement of claim, paragraphs 27-29.
Third, the defendants alleged that the aircraft mortgage had been discharged by variation and that this had the same consequence, that is to say, that the defendants are discharged from any liability under the guarantee and indemnity.[10]
[10] Defence of the first and second defendants to the second further amended statement of claim, paragraphs 28, 30, 31.
Fourth, the defendants disputed each of the bases advanced by Vannin for its claim against Resources and Metals.
Last, the defendants claimed an entitlement to an equitable set off or compensation based on the allegation to which I earlier referred (at [8]) that GEC/Harrenvale
breached a duty owed to them to achieve the “best price obtainable” on the sale of the
aircraft.[11]
[11] Defence of the first and second defendants to the second further amended statement of claim, paragraph 32.
I shall deal with each of these issues in turn.
Has Vannin proved the debt?
A number of certificates of indebtedness are in evidence but Vannin relies on the last in time, being a certificate issued by the regional managing director of Vannin, Mr McDonald, on 27 April 2021.[12]
[12] On 24 April 2020, written notice was given to PAPL and QN of Mr McDonald’s appointment as an “authorised officer” for the purpose of the agreement.
The certificate was given under clause 18.13 of the facility agreement. Although I have already touched on the effect of this provision (at [37]), it is worth setting it out in full:

“18.13 Certificates
The Lender may give an Obligor a certificate about an amount payable or other matter in connection with a Transaction Document. The certificate is conclusive evidence of the amount or matter in the absence
of manifest error.” [Emphasis in original]

The term, “Lender” is defined in clause 1.1 of the facility agreement as “the person
described as such in the Details section” and, there, one finds this:

“Lender: Name: GE Commercial Australasia Pty Ltd
ABN: 98 096 876 292
Address: Level 13, 255 George Street
SYDNEY NSW 2000
Facsimile: (02) 8249 3784

Attention: Corporate Aviation, Director –

Underwriting.” [Emphasis in original]

The defendants argued that the certificate was invalid because “the lender is not the plaintiff” and, therefore, Vannin was not entitled to give the certificate. The certifier,
they submitted, should have been GEC and, more probably, the person identified i.e.,
the person occupying the position of “Corporate Aviation, Director – Underwriting”.
Further, although it was conceded that clause 18.13 was “for the advantage of the
lender so that it has a ready and easy means of proving the amount of indebtedness,
and that the borrower agreed to that”, it was submitted that “the parties did not agree that just anybody could issue such a certificate”, such as an assignee. Rather, they argued, the agreement “contemplated only an individual in a position to have actual
knowledge of the indebtedness to be able to provide such certification”, a topic that
was explored with Mr McDonald in cross-examination at the trial.
Whether the defendants’ arguments in this respect have substance will depend on the
proper construction of the facility agreement.[13] However, as to that, the agreement
makes clear that a reference to “a party to any document” includes “that party’s successors and permitted assigns”[14] and the right on the part of the lender to assign
the whole of its rights under the agreement is expressly preserved.[15] That bundle of rights must necessarily include the right to issue a certificate of indebtedness; there is nothing in the agreement to even suggest that such a right is incapable of being
assigned or was in some way excluded from the express right to “assign, sell, transfer,
encumber or otherwise deal with the whole or any part of its rights under the
Transaction Documents in any way it sees fit”.[16] The defendants’ construct of the
facility agreement cannot be accepted.
[13]           Beefeater Sales International Pty Ltd v MIS Funding No 1 Pty Ltd [2016] NSWCA 217, [98].
[14]           Facility agreement, clause 1.2(i).
[15]           Facility agreement, clause 18.11.
[16]           Norman v Federal Commissioner of Taxation (1963) 109 CLR 9, 21; Beefeater Sales International Pty Ltd v MIS Funding No 1 Pty Ltd [2016] NSWCA 217, [96], [99].
It follows that, from the point in time when Harrenvale assigned to Vannin “all of its rights, title, interests and benefits in respect of” the facility agreement, Vannin
became the “Lender” for the purposes of that agreement and the only entity entitled
to issue a certificate of indebtedness under clause 18.13.
There was otherwise no challenge to the correctness of the certificate. It was not, for example, suggested when Mr McDonald was cross-examined that the certificate was
affected by “manifest error” or even that it was incorrect in some respect. As such, it

affords at least prima facie evidence of the fact of the indebtedness – the “amount
[17] The facility agreement was governed by the law in force in Victoria: clause 18.16. Although no submissions were directed to this point at trial, if in that jurisdiction there is a provision to the same effect as s 57(1) of the Property Law Act 1974 (Qld) or, given the place of trial, the Queensland provision governs the reception in evidence of the certificate, it must be read down: Julong Pty Ltd v Fenn & Anor [2002] QCA 529, [50]-[52]. In either case, the certificate is not received as conclusive evidence of the facts certified but is received as prima facie evidence of those facts, that is to say, the fact of the indebtedness and its amount: Dobbs v The National Bank of Australasia Limited (1935) 53 CLR 643, 651.
payable” – and the quantum of that debt at the date of issue.[17]

The onus of showing that the certificate is wrong is on the defendants.[18] As the prima facie proof of the indebtedness and its amount has not been put in issue, the certificate must stand as proof on the balance of probabilities of the amount of the debt.[19] It is otherwise supported by the spreadsheets containing detailed calculations of the overall debt that were placed in evidence through Mr McDonald.[20] Of those spreadsheets, as Mr McDonald made plain in a supplementary statement, a spreadsheet prepared by Harrenvale (around the time of the assignment) contained some minor errors but these were corrected in the spreadsheet later prepared by Vannin. It was the latter spreadsheet on which the certificate was based. It was not to the point, as the defendants attempted at trial, to demonstrate that Mr McDonald had limited personal knowledge of the source documents for the Harrenvale spreadsheet; the certificate being validly issued, it was for the defendants to show that it was wrong and they did not do that.
[18] Young v Queensland Trustees Ltd (1956) 99 CLR 560, 562; Noble v State of Victoria [2000] 2 Qd R 154,158.
[19] Julong Pty Ltd v Fenn & Anor [2002] QCA 529, [52].
[20] And admissible in proof of the transactions recorded in them pursuant to s 1305 of the Corporations Act and s 84 of the Evidence Act 1977 (Qld).
I am satisfied that Vannin has proved the debt in the amount certified on 27 April 2021, that is to say, US$26,973,811.08.
Was there an implied condition of the guarantee that GEC hold a legal mortgage over the aircraft to secure the debt?
The defendants allege that it was an “implied essential condition” of the guarantee
and indemnity that GEC would hold a legal mortgage in its name as security for the debt owing by PAPL under the facility agreement and then act in accordance with, comply with, and enforce the terms of the aircraft mortgage. This implied condition, they allege, was breached by GEC because it failed to take any steps to perfect the legal transfer of ownership of the aircraft as contemplated by the aircraft mortgage, that it permitted PAPL to register itself as the owner of the aircraft on the Australian civil aircraft register, and that it then authorised or permitted PAPL or its liquidators to sell the aircraft.
The implication, it is alleged, arises on the proper construction of various clauses of the facility agreement and the guarantee and indemnity[21] and because, it was argued, such an essential condition was necessary to give business efficacy to the agreement. In consequence, the defendants allege, QN was entitled to terminate the guarantee and be discharged from liability thereunder and, if Resources and Metals are found to be guarantors under the facility agreement, they were also entitled to do so.
[21] Which provisions are particularised in subparagraph 27(b) of the defence of the first and second defendants to the second further amended statement of claim.
It cannot be doubted that the aircraft mortgage, by its terms, transferred and assigned the aircraft to GEC “by way of legal mortgage”[22] and that it further provided for the
“transfer back” and reassignment of the aircraft to PAPL when there was no longer
any money owing with respect to the facility.[23] Equally, there can be no doubt that the parties did not take any steps to perfect the legal transfer of ownership of the aircraft to GEC. To the contrary, they seem to have conducted themselves as though PAPL was at all times the legal owner of the aircraft, and that remained the position
right up until the point in time when PAPL’s liquidators sold it on 23 February 2018.
It should be added though for completeness, it was always contemplated that PAPL would retain possession of the aircraft and, under the aircraft mortgage, PAPL was
authorised to sell it with GEC’s consent.[24]
[22]           Aircraft mortgage, clause 2.1. To similar effect were the short particulars of the mortgage created by PAPL when the mortgage was registered in the Isle of Man Register of Aircraft Mortgages on 29 June 2012 (as required by paragraph 6(c) of the conditions precedents set out in Schedule 3 to the facility agreement).
[23]           Aircraft mortgage, clause 2.2.
[24]           Aircraft mortgage, clause 5.2(a).
I am not persuaded that there is a proper constructional basis for the implication of such a condition, let alone a condition so fundamental that a breach of it could have the consequence that the defendants are relieved from liability under the facility agreement (including the guarantee and indemnity). Nor am I persuaded that the implication of such a condition is necessary to give the agreement (including the guarantee and indemnity) business efficacy or, to use the well-known formulation, so obvious that it goes without saying.[25]
[25] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283; SHA Premier Constructions Pty Ltd v Niclin Constructions Pty Ltd [2019] QCA 201, [28].
Importantly, to be implied, the provision “must not contradict any express term of the
contract”.[26] Here, a condition to the effect contended by the defendants would fly in
[26] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283.
the face of express terms of the guarantee and indemnity, as well as the aircraft mortgage. Subclauses 6.1(f) and (h) of the guarantee and indemnity were in these terms:

“6.1 Preservation of rights
Rights given to the Lender under this Guarantee (and each
Guarantor’s liabilities and obligations under it) are not affected by
any act or omission by the Lender or by anything else that might
otherwise affect them under law or otherwise, including:
…

(f) the loss or impairment of a Security[27] or a negotiable instrument;
…
(h) a person dealing in any way with a Security Interest,[28] guarantee, judgment or negotiable instrument (including, taking, abandoning, or releasing (wholly or partially), realising, exchanging, varying, abstaining from perfecting or taking
[27] By clause 1.1 of the facility agreement, the term, “Security”, is defined to include the aircraft mortgage.
[28] By clause 1.1 of the facility agreement, the expression, “Security Interest”, is defined to mean “an
advantage of it).” [Emphasis added].

The effect of these provisions is that QN bargained away the right to be discharged from liability because of conduct on the part of the lender about which it complains.[29] Such a conclusion is also consistent with the terms of the aircraft mortgage which
provided that the rights of enforcement of the security were in GEC’s discretion.[30]
[29] See Buckeridge v Mercantile Credits Ltd (1981) 147 CLR 654, 671, 675.
[30] Aircraft mortgage, clauses 9.2 and 20.3. And see clause 18.4 of the facility agreement.
It was not an “implied essential condition” of the guarantee and indemnity that GEC
would hold a legal mortgage in its name as security for the debt owing by PAPL under the facility agreement and then act in accordance with, comply with, and enforce the terms of the aircraft mortgage. It is therefore unnecessary to consider to any further degree whether such a condition was breached.
Was the guarantee discharged by variation of the mortgage?
As to the defendants’ contention to the effect that the guarantee and indemnity has
been discharged by variation of the aircraft mortgage, this it was said could be
inferred from the same conduct it alleged constituted a breach of the “essential implied condition” and was to the effect that GEC and PAPL had agreed to vary
clauses 2.1, 5.2 and 9.1(a)(ii) of the aircraft mortgage and, or alternatively, clause 9.2 of the same instrument to permit PAPL to sell the aircraft contrary to these terms. The defendants complained that QN was not notified of that variation, that it was not self-
evidently beneficial, or not prejudicial, to QN and that it gave rise to “a new arrangement” which was “not within the contemplation of the Guarantors as defined in the Facility Agreement when the Guarantee was granted” to GEC. On that basis,
the defendants claim that the guarantee was discharged.
Reference again to clause 6.1 of the guarantee and indemnity puts these claims to rest. Subclauses 6.1(c) and (f) provided as follows:

“6.1 Preservation of rights
Rights given to the Lender under this Guarantee (and each
Guarantor’s liabilities and obligations under it) are not affected by
any act or omission by the Lender or by anything else that might
otherwise affect them under law or otherwise, including:
…

(c) any variation or novation of the Lender’s rights or a right of
any other person, or of any document (including, a material alteration of any document or an increase in the limit of accommodation or advances);

…
(f) the loss or impairment of a Security or a negotiable
instrument.” [Emphasis added].

Even if, as appears to be the case, the parties conducted themselves as though PAPL was at all times the legal owner of the aircraft and GEC failed to take any steps to
perfect the legal transfer of ownership of the aircraft to it, GEC’s rights under the
guarantee are, by these express provisions, unaffected. Again, that state of affairs is consistent with the terms of the aircraft mortgage as well as the facility agreement.[31]
[31] Aircraft mortgage, clauses 9.2 and 20.3; Facility agreement, clause 18.4.
Furthermore, by clause 4 of the guarantee and indemnity, QN “unconditionally and
irrevocably” indemnified GEC “as a separate and independent principal obligation”
against any loss suffered or incurred if, amongst other things, an obligor is not obliged
to pay under the guarantee. By this provision, QN “agreed to be sued as if it was the
principal debtor”,[32] so even if Vannin’s rights under the guarantee and indemnity
[32] The Fletcher Organisation Pty Ltd v Crocus Investments Pty Ltd [1988] 2 Qd R 517, 527.

were in some way compromised, it is nonetheless entitled to hold QN to account as a
principal debtor.
Did QN enter into the guarantee as agent for Resources and Metals?

I turn now to a consideration of the bases advanced by Vannin for its claim against Resources and Metals.[33]
[33] Summarised above at [44].
Vannin’s primary contention was that, on the proper construction of the Transaction
Documents, the guarantee and indemnity was provided by QN in its own capacity and as agent for Resources and Metals. I accept that contention.
As earlier discussed (at [12]), QN was the general manager of the JVA but was prohibited from carrying on or being interested in any other business, activity or operation. Importantly for the purposes of this discussion, QN did not have authority to act for or to assume any obligation or liability on behalf of Resources or Metals save for such authority as was conferred on it by the JVA or those companies. On the other hand, Resources and Metals agreed to share in the benefits and to assume the obligations arising out of the actions of QN in the performance of its duties and responsibilities as general manager of the JVA.
That said, the verification certificate (and attached minutes of meeting) supplied by QN and executed by Mr Palmer at the time of the transaction confirmed that QN entered into the Transaction Documents in its own capacity and as nominee and agent for Resources and Metals, as well as in its capacity as general manager of the JVA.
The Joint Venturer Letter further supplies Resources and Metals’ confirmation and
agreement that QN entered into the transaction in its personal capacity and as nominee and agent of them under the JVA. To the point, each of Resources and Metals
confirmed and agreed in the Joint Venturer Letter that the “costs, liabilities and
expenses” properly incurred by QN under the Transaction Documents, including as
they did the guarantee and indemnity were their liabilities.
How the rights and obligations of the respective parties came to be recorded in this way is important.
In the negotiation of the documents that would govern the loan transaction, it was originally proposed by GEC that QN would be the borrower under the proposed facility and that it would enter into it as agent for Resources and Metals. As will appear in more detail from the summary below (at [93] to [99]) in connection with
Vannin’s claim for rectification, in emails exchanged between Mr Perry on behalf of
GEC and Mr Tam on behalf of QN, Resources and Metals on 6 and 7 June 2012, and in an email forwarded by Mr Wolfe on behalf of PAPL, QN, Resources and Metals to Mr Nolan on behalf of GEC on 8 June 2012, the parties discussed a new structure for the facility which would involve a special purpose vehicle, PAPL, being the
borrower, QN providing a guarantee of PAPL’s obligations as borrower and Resources and Metals acknowledging that QN’s liabilities as guarantor would be
binding on each of them. In consequence of those discussions, a revised draft facility agreement was emailed by Mr Nolan to Mr Tam on 13 June 2012 under which PAPL replaced QN as borrower, QN became a party to the facility agreement as guarantor
of PAPL’s obligations, Resources and Metals were also parties to the agreement and
each of QN, Resources and Metals expressly confirmed, agreed and acknowledged that QN would enter into the facility agreement in its own capacity and as agent of Resources and Metals. Subsequently, it was agreed that Resources and Metals would be removed as parties to the facility agreement on the basis that the confirmation, agreement and acknowledgement supplied by Resources and Metals in the 13 June draft of the agreement would be removed but still recorded in the Joint Venturer Letter (as well as the verification certificate).
Contrary to one of the submissions made on behalf of the defendants,[34] as Transaction Documents, the facility agreement and the Joint Venturer Letter must be read and construed together. Put another way, the facility agreement must be given a construction that is conformable with the Joint Venturer Letter and in a way that avoids “making commercial nonsense or working commercial inconvenience”.[35] Its
meaning is to be objectively determined by reference to a consideration of the language used, the circumstances addressed by the contract and the commercial purpose secured by the contract.[36]
[34]           See, for example, paragraph 44 of the defendants’ closing submissions.
[35]           Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530, [82].
[36]           Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, [47].
Also, it is not to be overlooked that both Resources and Metals, as providers of a
Transaction Document, that is to say, the Joint Venturer Letter, was each an “obligor”
for the purposes of the facility agreement and therefore the guarantee and indemnity. It is also consistent with the role of QN, limited as it is by the terms of the JVA. Simply, it could not have given the guarantee and indemnity other than with the actual authority of Resources and Metals and, if there was any doubt about that, the purpose
of the Joint Venturer Letter was to make express QN’s authority to bind Resources
and Metals and to give it as their agent.
Further support for Vannin’s construction can be found in clause 1.4(a) of the facility
agreement which was in these terms:

“1.4 Dealings with the Guarantor
The parties agree and acknowledge that:

(a)

The Lender shall be entitled to treat any receipt, discharge, act or other matter or thing given or done by the Guarantor in connection with the Transaction Documents as having been given or done on behalf of and with the full authority and consent of the Joint Venturers;
…” [Emphasis added]

In the same vein was clause 13.1(h) of the facility agreement which extended events
of default to include the insolvency of “any party to a Transaction Document” as well
as clause 8.1(bb) which records, as representations and warranties by the obligors,
that QN’s entry into the Transaction Documents and its carrying out of the
transactions contemplated by those documents were “actions taken by it in the performance of its duties and responsibilities under” the JVA and clause 8.1(cc)
which records that QN’s “costs, liabilities and expenses under or in connection with
the Transaction Documents” are liabilities of the joint venturers.
The only support for the construction contended for by the defendants is to be found in clause 8.1(x) of the facility agreement (extracted above at [21]) because it would appear at first glance to be to the effect that, relevantly, QN did not enter into any
Transaction Document as agent or nominee for “any person” however, the opening
chapeau to clause 8.1 cannot be ignored and, in particular, the exception expressed in parenthesis in relation to matters disclosed to GEC by it and accepted by GEC in writing. Here, the Joint Venturer Letter which was of course accepted by GEC discloses the agency.
In addition, for the reasons I will shortly express in relation to Vannin’s claim for
rectification (below at [100] and [101]), clause 8.1(x) contains a mistake as well as
an omission, and both are obvious.[37] The facility agreement does not contain a “clause 1.4(c)”, but the Joint Venturer Letter contains a clause 1(c) which deals with precisely
the same subject matter – the capacities in which QN entered into the Transaction Documents. When the mistake is corrected and the omission is supplied – through removal of “1.4(c)” at the end of clause 8.1(x) and the addition of the phrase, “1(c)
of the Joint Venturer Letter”[38] – the result conforms with the other provisions of the
facility agreement (including the guarantee and indemnity) as well as the verification certificate and the Joint Venturer Letter. To approach this anomaly in any other way would give rise to patent inconsistency if not absurdity and, for those reasons, clause 8.1(x) should be read in this way.[39]
[37] Resort to evidence of surrounding circumstances is permissible where “something has clearly gone
[38] See [90] below.
[39] Fitzgerald v Masters (1956) 95 CLR 420, 426-427.
On the true construction of the Transaction Documents, QN entered into the guarantee and indemnity in its personal capacity, as nominee and agent of Resources and Metals and as general manager of the JVA.
It follows that QN, Resources and Metals are not only “obligors” within the meaning
of the facility agreement, they are liable for the debt as guarantors and, on the same basis, as principal debtors. This is not a case where, the existence and name of its principals having been disclosed, the agent can escape liability,[40] but one where the terms of the Transaction Documents make it clear that liability can still be imposed on QN as agent as well as on Resources and Metals as principals.[41]
[40] As to which, see Railway Commissioners for New South Wales v Orton (1922) 30 CLR 422, 425-426.
[41] See Australian Trade Commission v Goodman Fielder Industries Limited (1992) 36 FCR 517, 521-
Are the defendants estopped in any event?
If I am wrong about the conclusion just expressed then Resources and Metals ought be estopped from denying that QN was authorised to enter into the guarantee and indemnity as their agent.[42] Here, Resources and Metals represented in the Joint Venturer Letter that they had appointed QN as general manager of the JVA for all purposes including in connection with the Transaction Documents, that QN entered into the Transaction Documents as their agents as well as in its personal capacity and
as general manager of the JVA and that the “costs, liabilities and expenses” under or
in connection with the Transaction Documents incurred by QN were required to be
met by, and were liabilities of, them. GEC’s reliance on those representations in
entering the Transaction Documents is expressly acknowledged in clause 2 of the Joint Venturer Letter but was, in any event, just as apparent from the course of negotiations in relation to the structure (and terms) of the loan transaction.
[42] As to which, see Commonwealth v Verwayen (1990) 170 CLR 394, 413, 422.
Contrary to those representations, Resources and Metals maintain that they are not liable under the guarantee and indemnity. If they are permitted to depart from those representations, GEC would suffer obvious detriment because it will have lost the opportunity to structure the transaction in such a way as to ensure that Resources and Metals were bound by the guarantee and indemnity.
Indeed, the same facts give rise to an estoppel by convention to the same effect.[43] Shortly stated, GEC entered into the facility agreement in reliance on the assumption that QN was authorised by Resources and Metals to provide the guarantee and indemnity as their agent and, based at least on clause 2 of the Joint Venturer Letter, Resources and Metals adopted the same assumption as to the basis of the transaction. That being the case, the parties must be taken to have accepted that assumption as true and intended for it to govern the legal relationship with GEC on the one hand and Resources and Metals on the other.
[43] See Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40, 46; Moratic Pty Ltd v Lawrence James Gordon [2007] NSWSC 5, [31]-[33].
Rectification
Again, if I am wrong about those conclusions, a clear case emerges on the evidence for rectification of the facility agreement. Such relief is of course sought by Vannin in the alternative and it is for an order rectifying clause 8.1(x) by the addition of the phrase underlined below:
“(x) (not a trustee, agent or nominee) it does not enter into any Transaction Document or hold the Secured Property as trustee, agent or nominee for any person except in the case of the Guarantor, as set
out in clause 1(c) of the Joint Venturer Letter.”
A contract may be rectified in equity so as to make it “conform to the true agreement
of the parties where the writing by common mistake fails to express that agreement accurately”.[44] In order to succeed in a claim for rectification, it must be shown that,
at the time of the execution of the contract, there was an agreement between the
parties in the sense that the parties had a “common intention” and that the written
instrument was to conform to that agreement.[45] To do this, it must be demonstrated that the contract does not reflect the agreement between the parties because of a common mistake.[46] In Simic v New South Wales Land and Housing Corporation,[47] Gageler, Nettle and Gordon JJ had this to say about the approach the court should take:
“The issue may be approached by asking – what was the actual or true
common intention of the parties? There is no requirement for communication of that common intention by express statement, but
it must at least be the parties’ actual intentions, viewed objectively
from their words or actions, and must be correspondingly held by
each party.”[48] [References omitted]
[44]           Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336, 350; Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85, [103].
[45]           Slee v Warke (1949) 86 CLR 271, 281; Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336, 350-351; Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85, [103].
[46]           Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336, 350-351.
[47] (2016) 260 CLR 85.
[48] Ibid, [104].
The first thing to notice has already been highlighted (above at [83]); the facility agreement does not contain a clause 1.4(c) but the Joint Venturer Letter contains a clause 1(c) dealing with the same subject matter. Next, clause 8.1(x) in its current form provides that QN did not enter into any Transaction Document as, relevantly, agent for any person except as set out in the non-existing clause, clause 1.4(c). That is at odds with the Joint Venturer Letter which of course is one of the Transaction Documents and it is also inconsistent with the verification certificate (including the attached minutes of meeting) which was provided by QN on the day of the transaction.
Furthermore, reference to the documents which were generated during the course of negotiation of the facility agreement demonstrates that clause 8.1(x) does not accord with the actual common intention of the parties.
In that regard, on 4 June 2012, GEC emailed a draft of the facility agreement to the defendants which contained a clause 1.4 in terms to the effect that QN entered into
the agreement “in its personal capacity, in its capacity as nominee and agent for the Joint Venturers under the Joint Venture Agreement and as General Manager”. Clause 8.1(x) of that draft was to the effect that QN represented and warranted that “it does
not enter into any Transaction Document or hold the Secured Property as trustee,
agent or nominee for any person except as set out in clause 1.4”. This draft agreement
did not contain a guarantee.
Two days later, GEC forwarded an email to the defendants in which it advised that it
required a document described as a “Deregistration Power of Attorney” but stated
that, if this was not acceptable:
“[A] solution could be to create a SPV, with a guarantee from QN. The
SPV would own the Aircraft & be the GE borrower (with a guarantee from QN). Please note, this would require changes to the
documentation and would take some time to complete.”

Subsequently, email correspondence was received from the parties on 20 January 2023 (plaintiff), 27 January 2023 (first and second defendants) and 30 January 2023 (plaintiff) regarding the proposed minutes of judgment. In the end, the parties reached agreement on all but one issue and, on 1 February 2023, I heard argument and determined that issue. Final orders were then made as follows:
“THE COURT DECLARES THAT:
1.       The fourth defendant entered into the agreement styled “US$ Aircraft Loan Facility Agreement” and dated 28 June 2012 (“the Agreement”) as agent
for and on behalf of the first and second defendants.
2.       The first and second defendants are jointly and severally liable as guarantors pursuant to the terms of clause 16 and schedule 2 of the Agreement.
THE JUDGMENT OF THE COURT IS THAT:
3.       Judgment is entered for the plaintiff against each of the first, second and fourth defendants jointly and severally in the sum of US$30,835,112.14.
4.       The first, second and fourth defendants pay to the plaintiff, jointly and severally, the sum of US$30,835,112.14.
5.       The counterclaim is dismissed.
6.       The first, second and fourth defendants are to jointly and severally pay the
plaintiff’s costs of the proceeding on a full indemnity basis pursuant to
clause 4 of schedule 2 of the Agreement.”

interest in relation to property provided for by a transaction that, in substance, secures payment of money or performance of an obligation (without regard to the form of the transaction or the identity of
the person who has title to the property) … [and] also includes a guarantee”.
wrong with the language”: Aurizon Network Pty Ltd v Glencore Coal Queensland Pty Ltd & Ors [2019]
QSC 163, [107].
Guarantor’s liabilities and obligations under [the guarantee and indemnity] are not affected by any act
or omission by the Lender or by anything else that might otherwise affect them under law or otherwise,
including … (b) laches, acquiescence, delay, acts, omissions or mistakes on the Lender’s part or the
part of any other person or both”.
internal administration costs, and costs, charges and expenses in connection with advisers on a full
indemnity basis …”.

COUNSEL:	J Bell KC, with A O’Brien, for the plaintiff
P Dunning KC, with M Karam and K Byrne, for the first and second defendants
SOLICITORS:	Ashurst Australia for the plaintiff
Robinson Nielsen Legal for the first and second defendants

(c)	[QN] enters into the Transaction Documents in its personal capacity, as nominee and agent of the Joint Venturers under the [JVA] and as General Manager;
(d)	the Secured Property does not constitute Joint Venture Property;
(e)	all approvals required under the terms of the [JVA] for each of

(f)	the loss or impairment of a Security[27] or a negotiable instrument;
…
(h)	a person dealing in any way with a Security Interest,[28] guarantee, judgment or negotiable instrument (including, taking, abandoning, or releasing (wholly or partially), realising, exchanging, varying, abstaining from perfecting or taking

…
(f)	the loss or impairment of a Security or a negotiable
instrument.” [Emphasis added].