Bega v Lauvan Pty Ltd

Factual background

1. Mrs Bega's husband Peter and son Aidan gave evidence. The former had been declared bankrupt in August 2012. Mr Dominic Mullins was a director and shareholder of South Townsville Developments Pty Ltd (STD), a company which in 2013 commenced development of the Allure Apartments, which comprised 42 residential units and some commercial units in South Townsville. The trial judge recorded (at [14]) that there was a dispute whether Mr Peter Bega or the Bega family was the beneficial owner of STD.
2. In June 2013, the respondents made a construction loan of $9.5 million to STD for the development of the Allure Apartments. Mr Aidan Bega and Mr Mullins guaranteed STD's obligation to repay that loan. Construction was completed in around August 2014, but the primary judge recorded at [41] that: "It is common ground that sales were slow and STD experienced difficulty in selling the apartments on the open market at prices that would enable the construction loan to be fully repaid. Peter Bega was frustrated with how long it was taking to pay out the construction loan."
3. In the meantime, the respondent lenders issued a notice of default to STD for failing to repay the principal, and capitalised interest, totalling $10,700,000.
4. Mr Aidan Bega was also appointed the sole director of AB Veritas Pty Ltd when it was incorporated in September 2014. On 20 February 2015, STD as vendor entered into a contract with AB Veritas as purchaser, guaranteed by Aidan Bega, for the sale of seven of the units in the Allure Apartments for a total purchase price of $3,080,000. Settlement of that sale was due at the end of March 2015. AB Veritas obtained approval for mortgage finance on 20 March 2015 in the amount of $1,820,000 from Arch Finance Pty Ltd, a company which appears to have been unrelated to the parties to the litigation. The balance of the purchase price was to come from funds lent by the respondents. Arch Finance's approval expired on 31 March 2015.
5. At around the same time, there were put in place two further sales of units in the Allure Apartments, referred to as "Tranche 2" and "Tranche 3". These were described by the primary judge at [57]-[58] as follows: "Tranche 2 involved the sale of five units (units 306, 406, 504, 506 and 605) to Matab Investments Pty Ltd (Matab), a company owned and controlled by Matthew Bega, another son of Peter and Helen Bega, with net funds of approximately $1,345,000 available to the plaintiffs. These transactions were to be financed by Arch Finance. Tranche 3 involved the sale of three units (units 201, 402 and 502) to Balis Properties Pty Limited (Balis), a company owned and controlled by George Balis, the brother of Mrs Bega, with net proceeds of approximately $1,125,000. These transactions were to be financed by National Australia Bank Limited."
6. On 1 and 2 April 2015, Mrs Bega executed the facility agreement for a loan of $1,000,000, for a term of 6 months, with interest at 20% per annum, rising to 30% if not repaid in full at the end of the term, and with interest of $104,260.42 payable in full even if the loan were repaid early. The loan was secured by a mortgage over her Denham Court land.
7. Because the $1 million the respondents agreed to lend Mrs Bega was to be paid by her to AB Veritas, and by it to STD, and returned to the respondents, at settlement there was a round robin of cheques. STD also provided a further $359,000 to make up the difference between the purchase price and the moneys to be provided to AB Veritas by Arch Finance and Mrs Bega. STD was represented by a Mr Stathakis and a settlement clerk from STD's solicitors. Mr Stathakis was a director and shareholder of STD but he held his shares on trust for the Bega family and acted on Peter Bega's direction (Judgment [26] and [39]). Mr Mullins was also a shareholder and director of STD. He also held his shares on trust for Peter Bega's sons and acted on Peter Bega's directions (Judgment [39]). Mr Delaney was the solicitor for AB Veritas.
8. The primary judge described settlement, which occurred in Brisbane on the afternoon of 2 April 2015, as follows (at [105]-[106]): "The bank cheque in favour of Lauvan in the sum of $1,395,000 was handed over by Mr Stathakis on settlement, although he could not recall the person to whom he gave the bank cheque. It may be inferred that he provided the bank cheque to Mr Delaney who was present as the solicitor for AB Veritas. As I have said, Mr Delaney had been told the previous day by Mr Mullins of the intended 'round-robin' of cheques to be provided by the plaintiffs, instead of reliance on an offset deed to make up the shortfall in the purchase price. Although Mr Delaney deposed that the passing of cheques was simply a matter between STD and the plaintiffs, he acknowledged that the settlement statements prepared by STD's solicitors and Ms Pukallas of his firm were changed to reflect the request by Mr Mullins that the plaintiffs would attend settlement with a cheque for $1,395,000. Mr Delaney noted in his evidence that settlement proceeded even though there was a shortfall of $146,847.54 in the purchase price provided by AB Veritas. At the conclusion of the settlement, Mr Stathakis received two bank cheques payable to Lauvan, one being the bank cheque for $1,395,000 (which he had provided on settlement) and the other being a bank cheque for $1,450,000 (provided by the incoming mortgagee). Mr Stathakis was unable to bank the cheques in Brisbane as the bank had already closed and the next day was a public holiday. Upon returning to Sydney, he gave the bank cheques to Mr Danesi. The two cheques were subsequently banked by Lauvan after the Easter long weekend."
9. The upshot of the transaction was that, from the perspective of the new mortgagee, Arch Finance, it had lent funds to AB Veritas, comprising what appeared to be 60 per cent of the purchase price of seven units. However, the balance of the purchase price was provided by the outgoing mortgagee, which (on its case) had lent those funds to Mrs Bega secured by a mortgage over her home. Hence the reference to the "round robin" and to Mr Stathakis providing one bank cheque when he attended settlement, and leaving with that bank cheque and the other provided by AB Veritas. Hence also the significance of Mrs Bega's complaint that there was no drawdown notice. Although the stated purpose of the facility was "short term on lending", this was not a case where the $1,000,000 was ever transferred into Mrs Bega's bank account or provided to her personally in the form of a cheque.
10. I shall return to tranches 2 and 3 when dealing with ground 5A below.

Grounds 1 and 2

1. Grounds 1 and 2 of Mrs Bega's appeal are as follows: "His Honour erred in failing to hold that clause 4.1(a) of the facility agreement was a contingent condition on the exercise by the appellant of her rights under the facility agreement to utilise the facility which could not be waived unilaterally by the respondents. His Honour erred in failing to hold that, as the appellant did not complete or deliver any drawdown notice under clause 4.1(a) of the facility agreement, no monies were advanced by the respondents to the appellant pursuant to the facility agreement."
2. These grounds turn upon the construction of the facility agreement which was signed by Mrs Bega on 1 April 2015. The clauses upon which most reliance was placed for the purposes of argument were cll 2.1, 2.2, 3.1-3.4 and 4.1. Those clauses are as follows: "2. The Facility 2.1 Accessing the Facility (a) Subject to the terms of the Finance Documents, the Financier agrees to make available to the Borrower the Facility in a fully drawn cash advance the Net Available Amount. (b) The maximum amount available to the Borrower under the Facility is the Facility Limit less taxes, fees and expenses. 2.2 Purpose (a) The net proceeds of all Advances provided under the Facility must be used by the Borrower for the Purpose. (b) The Financier is not responsible for, or obliged to enquire about, the use or application of amounts borrowed under this agreement. 3. Borrower Conditions precedent 3.1 Conditions precedent to the Advance The Financier may fund the Advance once it has received all of the documents and information specified in Schedule 1 in form and substance satisfactory to it (or the Financier is satisfied that, immediately after the making of the Advance, it will receive those documents and that information in form and substance satisfactory to it). 3.2 Conditions precedent to all Advances The Financier is not obliged to fund an Advance unless the following conditions are fulfilled to the Financier's satisfaction: (a) (Drawdown Notice): the Borrower has delivered a Drawdown Notice to the Financier requesting a single Advance of the total amount of the Facility available to be drawn by the Borrower, in accordance with this agreement; (b) (Drawdown Date): the Drawdown Date for the Advance is a Business Day within the relevant Availability Period; (c) (limits): the Facility will not be exceeded by providing the Advance; (d) (no Default): no Default has occurred which is continuing and no Default will result from the Advance being provided; (e) (certificates) such other certificates, approvals, evidence, documents and information requested by the Financier (acting reasonably); and (f) (fees and expenses) payment of all fees, costs and expenses as required by the Finance Documents which are due and payable. 3.3 Certified copies Upon request by the Financier, the Borrower must certify a copy of a document given to the Financier under this clause 3 to be a true, complete and up-to-date copy of the original document. The certification must be made no more than five Business Days before the date on which it is provided. 3.4 Benefit of conditions precedent A condition in this clause 3 is for the benefit of the Financier and only the Financier may waive it. 4. Facility 4.1 Drawdown Notices (a) To utilise the Facility the Borrower must deliver to the Financier a duly completed Drawdown Notice not later than 10.00am two Business Days before the proposed Drawdown Date. (b) Each Drawdown Notice delivered to the Financier must be in writing. (c) A Drawdown Notice once given may not be withdrawn or revoked, unless withdrawn or revoked by written notice to the Financier at least one Business Day prior to the proposed Drawdown Date specified in the relevant Drawdown Notice."
3. As earlier stated, the "Purpose" referred to in cl 2.2(a) was defined to mean "assisting with short term on lending to family members for proposed commercial investment opportunities". "Drawdown Notice" was defined to mean "a notice in a form acceptable to the Financier" and "Advance" was defined to mean "the principal amount of the advance to be made under the Facility".
4. Clause 19.2(a) made provision for notices as follows: "19.2 Notices (a) Any notice, demand, consent or other communication given or made under this document must be: (i) clearly readable; (ii) signed by the party giving or making it (or signed on behalf of that party by its authorised representative); and (iii) left at the address or sent by pre-paid security post (air mail if outside Australia) to the address or to the fax number of the Financier."
5. Clause 19.6 provided that the agreement could only be amended or varied in writing and signed by the parties, while cl 19.9 provided that the documents were an entire agreement. Clause 19.8 dealt with the subject of waivers as follows: "19.8 Waivers (c) Waiver of any right arising from a breach of the Finance Documents or of any power arising on default under any Finance Document must be in writing and signed by the party granting the waiver. (d) A failure or delay in exercising, or partial exercise of, any right or power under any Finance Document will not operate as a waiver of that right or power, or preclude any further exercise of that right or power. (e) The rights and remedies provided in the Finance Documents are cumulative and not exclusive of any rights and remedies provided by law and all those rights and remedies will, except where expressly provided otherwise in any Finance Document, be available to the Financier."
6. Submissions were also directed to the following defined terms: "Authorised Representative means: (a) in relation to the Financier any officer of the Financier whose title or office includes the word "manager" or "director" and any other person appointed by the Financier to act as an Authorised Representative for the purposes of this agreement; and (b) in relation to the Borrower, a director or secretary, or a person notified in writing to the Financier to be an Authorised Representative, of the Borrower. Capitalised Interest means $104,260.42 calculated in accordance with clause 5.1, plus any additional capitalised amounts that may be calculated in accordance with clauses 5.3 and 7.3."

The reasons of the primary judge relevant to grounds 1 and 2

1. At [203]-[205] the primary judge summarised, uncontroversially, the relevant principles of construction of commercial contracts, including the requirement to have regard to all the words used "so as to render them all harmonious with one another": Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; [1973] HCA 36. His Honour then rejected Mrs Bega's submission that a drawdown notice was required, at [206]-[210]: "Drawdown notice not required The starting point is to consider the commercial purpose underlying the requirement that the borrower deliver a drawdown notice under the facility agreement. Three features of cl 4.1 warrant emphasis. The first is the requirement for writing. The second is the temporal specification of two business days' notice. The third is the borrower's ability to withdraw a drawdown notice once delivered, by giving at least one business days' notice prior to the proposed drawdown date. Plainly, the giving of a drawdown notice by the borrower to the financier is directed to providing the financier with reasonable notice of the amount to be drawn under the facility. The giving of such notice is one of the conditions precedents specified in cl 3.2(a) to the financier's obligation to provide a single advance of the total amount of the facility available to be drawn by the borrower. Nonetheless, cl 3.4 makes plain that the conditions precedent in cl 3.2, including cl 3.2(a) with respect to the giving of a drawdown notice, are for the benefit of the financier, and that only the financier may waive the conditions precedent. The evident commercial purpose of cl 3.4 is to permit the financier flexibility in providing an advance under the facility when requested by the borrower, without the need for giving two business days' notice of the proposed drawdown by the borrower. While cl 4.1(a) uses the language of command ('must') when specifying the time by which the borrower is required to deliver a duly completed drawdown notice to the financier, its terms are not inconsistent with the flexibility provided by cl 3.4 that the requirement of a drawdown notice is for the benefit of, and may only be waived by, the financier. Similarly, that cl 4.1(b) requires any drawdown notice to be in writing does not indicate an intention that the financier is unable unilaterally to waive that requirement. That the financier can waive the requirement for a drawdown notice is readily understandable. It affords the parties with the flexibility that the financier may dispense with the requirement in appropriate circumstances as determined by the financier. I reject the defendants' construction of the facility agreement that cl 4.1(a) is a mandatory precondition to an advance under the facility agreement. That Mrs Bega did not execute a drawdown notice is not determinative of whether or not the plaintiffs made an advance of $1 million to her under the facility agreement."
2. Mrs Bega maintained that the requirement for a drawdown notice in cl 4.1 was for the joint benefit of financier and borrower. It may be inferred that that submission was driven by the express language in cll 3.1 and 3.2, not to mention the provision in cl 3.4, to the effect that all of those clauses insofar as they required a written drawdown notice were expressly for the benefit solely for the financier, and could be waived. Mrs Bega said that both parties derived a benefit, namely, commercial certainty from the requirement of writing, and that such benefit was of heightened importance in the present case, where the intention was for funds to be transferred not to the borrower but to a son's nominated company for commercial investments. Further, because all of the guarantors had irrevocably appointed Mrs Bega their agent for the purposes of, inter alia, notice, there was yet further reason for such certainty to be provided. It was also put that the general provision governing notices in cl 19.2 extended to a drawdown notice, and that the reference there for such notices to be signed by an (uncapitalised) "authorised representative" not only implied that the notice must be in writing but also picked up the defined term "Authorised Representative" and required that person's authority to have been notified in writing. Reference was also made to provisions dealing with the making of electronic instructions which, through their elaborateness, was said to reinforce the primary objectively manifested intention of commercial certainty.
3. A further matter relied upon was the possibility of more than one advance, which was said to support the proposition that a written drawdown notice was required.
4. The clause imposing an obligation upon the financier to lend funds is cl 2.1. There is a difficulty in construing cll 3 and 4 because of the inconsistencies in those clauses, principally, whether there was to be one or more advances. The headings to cl 3.1 ("the Advance") and 3.2 ("all Advances") are inconsistent, although telling against the significance of this was cl 1.3(f), which provided that "the headings in this agreement are inserted for convenience only and are to be ignored in construing this agreement". But the inconsistency is maintained in the operative provisions. Clause 3.2(a) refers to a request for "a single Advance of the total amount", whereas cl 4.1 refers to multiple drawdown notices, not only in its heading but also, at least implicitly, by the words "each drawdown notice" in cl 4.1(b). A similar inference may be drawn by the use of the indefinite article in cl 4.1(c). Against all of that is the operative provision cl 2.1(a) which refers to "a fully drawn cash advance" of the "Net Available Amount". (The "Net Available Amount" was defined to mean "the facility less the fees and costs".) Further, the obligation to pay interest had already been determined and on the basis that the entire amount will be drawn down.
5. There is much that reflects the parties' use of an unnecessarily elaborate template document for a simple purpose, in circumstances of considerable haste (it is to be borne in mind that STD was incurring interest at the rate of some $20,000 per week and the loan approval from Arch Finance was for a limited time). But the infelicities and inconsistencies in the drafting ultimately bear little weight in determining the question of construction arising on these grounds, which is whether Mrs Bega could be said to have borrowed funds under the facility, and therefore become liable to repay them, in the absence of a drawdown notice. It is not necessary to determine whether the facility permitted only one, or more than one, Advance, in order to resolve this appeal.
6. Although cl 3.2(a) makes a drawdown notice a condition precedent to funding an Advance, cl 3.4 unequivocally provides that that provision is for the lender's benefit and could be waived by the lender. Mrs Bega's submission that a drawdown notice was for the joint benefit of borrower and lender, and could therefore only be waived by both parties, is said to be supported by cl 4. But cl 4 goes to timing; the fact that a drawdown notice is a condition to the making of an Advance comes from cl 3.2, not cl 4. Further, the implication sought to be derived from cl 4, that the need for a drawdown notice could only be waived jointly by borrower and lender, is inconsistent with the express language of cl 3.4. None of the matters to which Mrs Bega points undercuts the force of the clear language which was squarely directed to the benefit of the obligation being solely that of the lender who might unilaterally waive it.
7. These were in essence the matters on which the primary judge relied in rejecting the identical submission. His Honour's reasons, reconciling cll 3.2, 3.4 and 4.1, are, with respect, compelling.
8. These grounds are not made out.

Grounds 4 and 5

1. Grounds 4 and 5 are as follows: "His Honour erred in holding that Peter Bega had the actual authority of the appellant to request the advance of $1 million under the facility agreement. His Honour erred in holding that Mr Mullins had the ostensible authority of the appellant to request the advance of [$1 million] under the facility agreement."
2. The primary judge rejected the lenders' threshold submission that the facility agreement did not require any request or direction to have been given by Mrs Bega to advance the $1 million: at [211]-[213]. His Honour also rejected the lenders' submission that the acknowledgement of receipt in the executed mortgage was decisive, on the basis that it referred to the executory promise to advance the $1 million: at [214]. Ultimately, his Honour found in favour of the lenders on the basis that Mr Peter Bega had actual authority, and (if it were necessary to decide) Mr Mullins had ostensible authority, on behalf of Mrs Bega to request the advance of $1 million. His Honour rejected the submission that this was outside the lenders' case, and although this was challenged by ground 3, that ground was abandoned by Mrs Bega in submissions in reply.
3. The primary judge addressed the submissions based on actual and ostensible authority with some care. His Honour addressed the applicable legal principles, in a way which is not challenged on appeal, at [217]-[224], and then turned and addressed, separately, the authority of Mr Peter Bega and Mr Mullins. His Honour's conclusion was at [225]: "In my view, the evidence establishes that Peter Bega had the actual authority of Mrs Bega to request the $1 million advance under the facility agreement for the purpose of on-lending by Mrs Bega to Aidan Bega to assist his company, AB Veritas, complete the purchase of the units in the Allure Apartments. Further, I am satisfied that Mr Mullins was acting as a subagent of Peter Bega in his actions in requesting the plaintiffs to provide the bank cheque for $1,395,000, which included the $1 million advance under the facility agreement."
4. It will be seen that grounds 4 and 5 challenge each of the findings of authority. It is desirable, having regard to the way in which submissions in support of these grounds were advanced on appeal, to reproduce the reasoning of the primary judge in full, despite its length.
5. The primary judge concluded that Mr Peter Bega had actual authority at [226]-[235]: "The oral evidence of Mrs Bega makes plain that she entrusted Peter Bega with legal and business matters. Critically, at the request of her husband, Mrs Bega had previously provided three mortgages over the Denham Court property (and also a mortgage over the Menangle Road property) to secure loans made to her with the loan monies being applied for the benefit of Peter Bega or his companies. On no occasion had she received any of the monies secured by the mortgages, and it was her evidence that she regarded it the responsibility of Peter Bega to arrange for their repayment. The inference to be drawn is that her husband had the implied, if not express, authority of Mrs Bega to deal with lenders on her behalf in all matters concerning the borrowing of money on the security over the Denham Court property. That is consistent with the course of conduct within the Bega family where authority to make decisions of significance in respect of family-related matters was conferred by family members (including Mrs Bega and Aidan Bega) upon Peter Bega. The value of the loans secured by the prior mortgages over the Denham Court property increased from $100,000 and $50,000 (in June 1994 and March 1998, respectively) to $1.5 million in December 2007, which sum was on-lent to an entity controlled by Peter Bega. Mrs Bega was not concerned with the precise details of business ventures undertaken by Peter Bega for the benefit of the family. That she was aware of and agreed to the loans for which she was providing security, however, demonstrates her acquiescence to Peter Bega's decisions. On my findings, Mrs Bega agreed with her husband's request in March 2015 to borrow $1 million from the plaintiffs on security over the Denham Court property. She understood that she would not personally receive any money as she was on-lending the $1 million advance to her son, Aidan, to assist him to purchase a unit investment. She knew that there was a sense of urgency in the signing of the documents on 2 April 2015. It can be inferred that she understood that the urgency related to the impending settlement of Aidan's purchase and for that to occur, the advance of $1 million would need to be made to her with the monies being applied towards Aidan's purchase. Mrs Bega also knew that Mr Mullins was dealing with the lenders on her behalf; she knew that he had arranged a loan for her of $1 million; she had told Mr Ciappara this when they first discussed the matter during their telephone conversation on 31 March 2015. That remained her understanding when she discussed the transaction with Mr Ciappara on 1 April 2015 and again on 2 April 2015. She knew that her husband and Mr Mullins were assisting her in organising the execution of the documents, the delivery of the title deed to the lenders and the advance by the lenders of $1 million to her for the stated purpose in the facility agreement. Knowing that Mr Mullins was dealing with the lenders on her behalf, Mrs Bega did not remonstrate about his role in organising the loan for $1 million. Peter Bega instructed Mr Mullins to ensure that the sale of the units to AB Veritas completed on 2 April 2015, knowing that the shortfall in the purchase price was to be met (at least substantially) by the plaintiffs' advance of $1 million to Mrs Bega which was to be on-lent to Aidan Bega to assist him to complete the purchase. Peter Bega understood when speaking to Mr Mullins, after the documents had been signed on 2 April 2015, that the cheque for the $1 million advance would not be drawn by the plaintiffs before the signed documents were returned to the plaintiffs' solicitors (which Peter Bega attended to that morning); he understood that Mr Mullins was to meet with Mr Danesi and Mr Stathakis to obtain the bank cheque in respect of the $1 million advance under the facility agreement, which Mr Stathakis was taking to the settlement in Brisbane to be provided to AB Veritas, and that the cheque would be used in a round-robin to discharge the outgoing mortgages held by the plaintiffs. I have rejected Peter Bega's evidence that he believed that the funds advanced under the facility agreement had been "nicked". Peter Bega may be taken to have authorised Mr Mullins to request the plaintiffs to advance $1 million to Mrs Bega by means of the bank cheque which the plaintiffs provided to AB Veritas on the settlement of the purchase of the units in the Allure Apartments. I reject the submission of counsel for Aidan Bega and AB Veritas that the conversation between Mr Mullins and Mr Danesi on the morning of 2 April 2015 did not constitute an oral direction to pay, given by Mr Mullins to Mr Danesi. The sale of the units from STD to AB Veritas could not settle without the loan of $1 million from the plaintiffs to Mrs Bega, which funds were to be provided by her to Aidan Bega. Consistently with the bank cheque round-robin arrangement, the settlement statement prepared by STD's solicitors and agreed to by Mr Delaney on behalf of AB Veritas, recorded that after taking into account the mortgage advance from Perpetual Trustee Company Limited (arranged by Arch Finance), the amount required from AB Veritas to complete settlement was $1,395,000 (Ex B, tab 91). That is the amount of the cheque to which Mr Mullins was referring when he told Mr Danesi that he would take him to his bank to get the $1.395 million bank cheque. That bank cheque included the $1 million advance to Mrs Bega. In my view, the scope of Peter Bega's actual authority from Mrs Bega included agreeing to the transaction with the plaintiffs by which Mrs Bega would borrow $1 million from the plaintiffs on security over the Denham Court property for the purpose of on-lending to Aidan Bega to assist him with the purchase of units in the Allure Apartments. Peter Bega's authority extended to agreeing to the bank cheque round-robin at settlement of the purchase by AB Veritas using, in part, the $1 million advance to Mrs Bega and authorising Mr Mullins to request that the advance be provided to AB Veritas on settlement of its purchase. That is what Mr Mullins did on 2 April 2015. The general rule is that an agent has no authority to appoint a subagent except with the express or implied authority of the principal: John McCann & Co v Pow [1974] 1 WLR 1643 at 1647. Here, there was at least implied authority, if not express authority, given by Mrs Bega to her husband to appoint Mr Mullins to attend to requesting the drawdown of the $1 million advance under the facility agreement for on-lending to her son, Aidan, to assist with the purchase of a unit investment. Mrs Bega knew that Mr Mullins was arranging the $1 million loan to her for that purpose. She knew that the purchase of the unit investment by Aidan Bega could not proceed without the lenders making the advance of $1 million to her under the documents she had signed. She knew that the monies to be advanced to her would be applied to Aidan's purchase. She was content for her husband and Mr Mullins to attend to the mechanics of obtaining the $1 million advance on her behalf and applying those monies to Aidan's purchase. Plainly, Mrs Bega had the benefit of the advance of $1 million under the facility agreement by its application by the plaintiffs in accordance with the instructions given by her agent, Peter Bega, via Mr Mullins. That was consistent with the arrangement that had been put to Mr Danesi, and which Mr Mullins had confirmed with Mr Danesi, for the bank cheque round-robin at settlement of the purchase by AB Veritas of the units in the Allure Apartments."
6. The primary judge addressed Mr Mullins' ostensible authority at [236]-[241]: "Alternatively, if it were necessary to decide, I would find that Mr Mullins had ostensible authority to request the drawdown of $1 million under the facility agreement. This is a case in which there was a holding out of Mr Mullins to the plaintiffs by both the principal and a person to whom the principal had given actual authority. Knowing that Mr Mullins was arranging a $1 million loan from the lenders, Mrs Bega permitted Mr Mullins to deal with the plaintiffs on her behalf in relation to that transaction. She allowed Mr Mullins to act in a position of dealing with Mr Danesi to obtain the $1 million advance for the intended purpose, namely applying those monies to the investment unit purchase by Aidan Bega. That conduct involved a representation by silence: that Mr Mullins had authority to act on her behalf in respect of the loan, including requesting the $1 million advance under the facility agreement be applied for the intended purpose. Further and in any event, since Peter Bega had actual authority from Mrs Bega to request the $1 million advance under the facility agreement be applied for the intended purpose (the investment unit purchase by Aidan Bega), he had actual authority to hold out Mr Mullins to make that request. That is, Peter Bega had actual authority to make the representation which would give Mr Mullins ostensible authority: Crabtree-Vickers at 80. And that is what Peter Bega did in his dealings with Mr Danesi of the plaintiffs. Peter Bega expressly held out Mr Mullins to Mr Danesi at their 25 March 2015 meeting (see [52] above) as the person representing Mrs Bega with respect to the transaction. Mr Mullins confirmed to Mr Danesi on about 28 March 2015 that Mrs Bega had agreed to borrow $1 million and grant a mortgage over the Denham Court property (see [61] above). Peter Bega was aware of and agreed to the cheque round-robin arrangement with respect to the $1 million advance under the facility agreement; Mr Mullins confirmed this arrangement with Mr Danesi; and Peter Bega understood that the cheque for the $1 million advance would not be drawn by the plaintiffs without their solicitors receiving the signed documents (which he returned to those solicitors on the morning of 2 April 2015) and that Mr Mullins would meet Mr Danesi and Mr Stathakis to get the settlement cheque which Mr Stathakis would take to the settlement in Brisbane (see [168], [176], and [101] above). Peter Bega allowed Mr Mullins to act in a position of dealing with Mr Danesi with respect to the application of the $1 million advance for the intended purpose, by requesting that the $1 million advance under the facility agreement be provided to AB Veritas at the settlement of its purchase of the units in the Allure Apartments. That is what Mr Mullins did on 2 April 2015. On this analysis, Mr Mullins had ostensible authority to give the direction to the plaintiffs to pay the $1 million advance under the facility agreement for the purpose intended by Mrs Bega, namely, Aidan Bega's purchase (through AB Veritas) of the units in the Allure Apartments. The plaintiffs, through their solicitors, believed that Mr Mullins was representing Mrs Bega in relation to the loan. Mr Roth said so expressly in his letter to Mr Mullins dated 31 March 2015, which attached the mortgage and other documents. Mrs Bega knew that the $1 million advanced by the lenders would not be received by her personally; the monies advanced to her would be applied towards the purchase of a unit investment by her son. She was content to leave it to her husband and Mr Mullins to deal on her behalf with the mechanics of obtaining the monies under the facility agreement which were to be provided to her son for the purchase by his company. I accept that the plaintiffs acted to their detriment in providing the bank cheque for $1.395 million to AB Veritas on settlement."
7. There was no challenge made to any of these findings of primary fact, many of which appear not even to have been controversial. Rather, Mrs Bega relied on cl 1.1 of the contract, which required an authorised representative to be appointed in writing. Further, this submission was only advanced in her written submissions in reply, in six paragraphs occupying a page, in response to the respondents' observation in their written submissions that no submission at all had been made in chief. Mrs Bega's submission was only elaborated orally very briefly (transcript, 5 October 2018, 12.35 - 13.8): "[T]he provisions of the loan agreement requiring the written notification of the appointment of authorised representatives benefited both parties by promoting their objective as commercial certainty and clarity. That meant that neither party could be in any doubt about whether a third party was authorised to communicate on behalf of the party for the purposes of the agreement and that was a benefit for which the parties had bargained. This was more than usually important in this case where not only was the borrower needing to make communications on her own behalf but that the parties had appointed her as the agent of the guarantors to make communications on their behalf to the lender as well which emphasised the importance of there being clarity and certainty as to whether a representative had been authorised. Mrs Bega submits that it would be inconsistent with the intention of the parties discerned objectively from the loan agreement for either of them to be entitled or bound to act on the basis of communication from someone whose appointment was not notified in writing. The problems which otherwise arise are demonstrated by this case where it's been held that the lenders are entitled to act on the basis of a notification from someone who has said to be clothed with ostensible authority despite that person having an obvious conflict of interest with the borrower."
8. So far as I can see, this submission was not pleaded, nor was it put to the primary judge in written or oral submissions. That is the reason why it was not addressed by the primary judge who, as is clear from what has been reproduced above, carefully attended to the submissions made to him in light of the contemporaneous documents, commercial realities and inherent probabilities.
9. Clause 1.1, which was the foundation of the submission underlying both these grounds of appeal, provided: "Authorised Representative" means ... in relation to the Borrower, a director or secretary, or a person notified in writing to the Financier to be an Authorised Representative, of the Borrower.
10. The short answer to the submission is that neither the definition in cl 1.1, nor the provision in cl 19.2 for notices to be signed by a party or its authorised representative, mandated that all appointments of agents required written notification to the lender. The general rule at law is to the contrary. Unless there is some special provision to the contrary, a person may act in person or else by agent: see The Queen v The Justices of Kent (1873) LR 8 QB 305 at 307, where the reasons of each of Blackburn J, Quain J and Archibald J may be summarised by the statement: "We ought not to restrict the common law rule, qui facit per alium facit per se, unless the statute makes a personal signature indispensable."
11. This was approved by Jordan CJ in Grahame v Commissioner for Railways (1946) 46 SR (NSW) 430 at 435, by Gibbs CJ in O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1 at 11; [1983] HCA 47, and by the Privy Council in General Legal Council ex parte Whitter v Frankson (Jamaica) [2006] UKPC 42; [2006] 1 WLR 2803 at [4]. In Christie v Permewan, Wright & Co Ltd (1904) 1 CLR 693 at 701; [1904] HCA 35, Griffith CJ for the High Court described The Queen v The Justices of Kent as "that very great authority". One of the current editors of Bowstead and Reynolds on Agency has written that "[t]he starting point of the common law is that whatever can be done personally can be done by an agent": P Watts, "Some Aspects of the Intersection of the Law of Agency with the Law of Trusts" in P S Davies and J Penner, Equity, Trusts and Commerce (Bloomsbury Publishing, 2017) 29 at 33. It is the generality of the rule at common law that leads to the result that the decisions largely turn on statute, where it is said that statute requires personal performance of some function.
12. In principle, it would be open to the parties to contract to require that the performance of some act of their bargain, such as the service of a drawdown notice, be done personally, and in principle, they might provide that if the act were purportedly done by an agent, it was ineffective. But cl 1.1 does not go nearly so far. Clause 1.1 is a definition, which does not purport to impose any obligation or to detract from the parties' general power at common law. I see no reason, even having regard to the general absence of care in its drafting, for the provision in cl 19.2 to apply to a drawdown notice. I do not rely so much upon the absence of capitalisation of the term "authorised representative", but on the fact that cl 19.2 is directed to notices applicable after the facility has been drawn down, as is seen most clearly from the fact that cl 19.2(a)(iii) mandates physical delivery at the Financier's address or sent by pre-paid security post, while cl 19.2(c) makes elaborate provision for when the communication is taken to have been received, all of which sits ill with the condition precedent of delivery of a drawdown notice imposed by cl 3.2.
13. The matter may be tested this way. Mrs Bega had received advice on the transaction from a solicitor, to the knowledge of all other parties. Suppose her solicitor had supplied a drawdown notice. I do not think that it could be said that that notice was ineffective, by reason of the fact that no written confirmation from Mrs Bega that her solicitor was acting for her had been supplied to the lenders. There is nothing in cl 1.1 or elsewhere in the facility agreement to sustain Mrs Bega's submission underlying these grounds, which in my view would require very clear language.
14. This ground is not made out.

Ground 5A - no direction from Mr Mullins

1. This ground is: "His Honour erred in holding that Mr Mullins directed the respondents to advance $1 million to the appellant under the facility agreement."
2. This was developed in Mrs Bega's written submissions in chief (at paragraphs 28-35) although it did not appear in her original notice of appeal. The attack was on the findings in the paragraphs concerning what Mr Mullins did at settlement on 2 April 2015, which in turn were based on an inference stated at [232], namely, that: "The sale of the units from STD to AB Veritas could not settle without the loan of $1 million from the plaintiffs to Mrs Bega, which funds were to be provided by her to Aidan Bega."
3. That statement was undoubtedly true. The transaction at settlement turned upon a bank cheque in the amount of $1,395,000 being provided by AB Veritas (in addition to the bank cheque provided by the incoming mortgagee, Arch Capital).
4. However, Mrs Bega submitted in writing that the evidence suggested that the lenders and Mr Mullins operated on the (mistaken) understanding that "nothing further was required of Ms Bega" following the execution of the documents by her. It was said that Mr Mullins believed that Mrs Bega had to execute the transaction documents on the morning of 2 April 2015, but "gave no evidence to suggest that he was aware that any further direction to pay needed to be given by or on behalf of Mrs Bega, that he, in fact, gave any such direction or, indeed, that he played any active role after the transaction documents had been signed other than to accompany Mr Danesi and Mr Stathakis to the bank and the airport".
5. Mrs Bega also relied on some documentary evidence, to the effect that the lenders reduced the indebtedness on the construction loan by $1,450,000, not $2,450,000. She said: "It will be appreciated that this accounting is only consistent with no monies having been drawn down under the facility agreement. It means that the whole of the value of the $1,395,000.00 bank cheque which was used in the 'round robin' for the AB Veritas transaction was treated in the same way as the bank cheques in the two subsequent 'refinance' transactions were treated; namely, none of the $1,395,000.00 was deducted from the construction loan."
6. I did not understand this ground to be developed orally. Nor did I understand it to have been a submission which was made to the primary judge.
7. The first answer to this ground is that it was not suggested to Mr Danesi, nor Mr Mullins, in cross-examination that either was subject to a mistaken belief, perhaps because this ground was not sought to be advanced at first instance. For that reason alone, it is not to be entertained on appeal.
8. The second is that there is no challenge to the findings of primary fact, reproduced above, to the effect that Mrs Bega entrusted her husband with legal and business matters, that she knew that Mr Mullins was dealing with lenders on her behalf, including by assisting her in an urgent transaction advancing $1,000,000 for the purpose stated in the facility agreement. There is no reason to doubt that Mr Mullins did not by his conduct request the drawdown to be made.
9. The internal accounting was deployed for a different reason at trial, namely, that no funds were advanced, rather than the absence of a direction. The primary judge addressed the document upon which Mrs Bega now relies at [108]-[109], concluding: "Mr Danesi deposed that following the completion of the sales to AB Veritas, the construction loan to STD was reduced by $2,845,000. However, that did not happen immediately. Mr Cook was responsible for maintaining the ledger in relation to the construction loan. Mr Cook accepted in cross-examination that he did not immediately update his loan schedule to record a reduction in the construction loan of $1 million for the round-robin cheque advance by the plaintiffs to Mrs Bega. That did not occur until later in May 2015, after a dispute had arisen between Mrs Bega and the plaintiffs concerning the alleged advance to her of $1 million."
10. The same reasoning leads to the rejection of the submission which is now made based on the document. The fact that the internal accounting, maintained by a person not directly involved, did not immediately reflect the drawdown of the facility does not stand in the way of the inference drawn by the primary judge that Mr Mullins caused it to be drawn down.
11. This ground is not made out.

Orders

1. It follows that the appeal should be dismissed. There is no reason for costs not to follow the event.
2. WHITE JA: I agree with Leeming JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 February 2019