Bendigo and Adelaide Bank Limited v Russo

Summary of Bendigo's claims

1. Because Bendigo was not the original lender, it was left to prove its case primarily by a historical reconstruction of the books and records of ABL Nominees and Adelaide Bank. The documents were put in evidence by Mr Flamer-Smith, a bank manager with Bendigo who, following the collapse of the Great Southern group of companies, has been charged with the responsibility of enforcing the many Great Southern loans acquired by Bendigo. Substantial portions of Mr Flamer-Smith's affidavits were objected to by Mr Russo on the basis that they amounted to submissions or purported to represent the effect of documents that speak for themselves. Those objections were resolved by orders pursuant to s 136 of the Evidence Act 1995 (NSW) limiting the use of that evidence accordingly.

The product disclosure statement

1. The olive project in which Mr Russo invested was promoted by a product disclosure statement issued by Great Southern Managers in April 2007 relating to the Great Southern 2007 Diversified Olives Income Project and the Great Southern 2008 Diversified Olives Income Project.
2. The product disclosure statement ran to over 100 pages. It stated that the projects had been established "to provide applicants ('growers') the opportunity to carry on the business of commercially growing olives in Australia on a large scale".
3. In the case of the 2008 olive project, applications closed on 15 June 2008. Payment of the application fee of $5,750 plus GST per grovelot was required on or before that date. As already noted, the option of applying for finance was offered for that purpose. The project contemplated that, upon acceptance of an application, Great Southern Management would enter into a "lease and management agreement" with the applicant under which it would agree to manage and supervise the services necessary for management and maintenance of the relevant olive grove for a period of 20 years. Growers were required to pay ongoing management fees and olive grove rental fees which were to be deducted from the upfront application fee and from income (if any) from the sale of olives. The fees were front-loaded over the first four years of the project and all income during that period was absorbed by rent and fees.
4. A key feature of the project promoted in the product disclosure statement was its tax deductibility. A grovelot investment was fully deductible over three years, the bulk of the deduction being able to be claimed in the first year. The tax benefit of investing in one grovelot for $5,750 was stated to be $4,600 for the first year and $575 for each of the second and third years.
5. The "lease and management agreement" referred to in the product disclosure statement was to be in the form provided as a schedule to the relevant company constitution lodged with the Australian Securities and Investments Commission in respect of the projects. The standard form agreement was not in evidence. The product disclosure statement contemplated that the lease and management agreement would be executed before the cut-off date for the relevant project (which in the case of the 2008 project was 15 June 2008) and that the agreement would be executed either by the applicant personally or under power of attorney granted in the grovelot application.

The grovelot application

1. At the back of the product disclosure statement was a tear-out application form for participation in the project. The form was brief. Apart from requiring personal contact details, it required the applicant to identify, in multiples of $6,325 per grovelot (including GST), the number of grovelots applied for (section 4) and to indicate whether finance was sought for the investment (section 5). By completing section 5, the applicant applied to Great Southern Finance or its "preferred financier" to borrow an amount up to the full cost of the grovelots applied for.
2. The project was structured so as to confer on the relevant entities the applicant's authority, by power of attorney, to execute the relevant transaction documents in the event that an application was accepted. Bendigo's case is that, by signing the grovelot application form, an applicant granted power of attorney to Great Southern Managers to execute the lease and management agreement on his or her behalf.
3. That was achieved by the inclusion of a clause at the conclusion of the application form under the heading "Declaration and Signatures" which stated: "By signing this application form I/we acknowledge and agree to be bound by the statements on the reverse side of this application."
4. The statements on the reverse side included 13 clauses under the heading "Applicant's Acknowledgement and Acceptance". By clause 3, the applicant was said to "agree to appoint Great Southern Managers Australia Limited as my/our attorney to the extent of, and with the powers as set out on page 95-97 of this PDS".
5. Page 95 of the product disclosure statement stated, under the heading "Power of Attorney": "By signing the application form on page 102 or 106 of this PDS, applicants are agreeing to appoint GSMAL and each director and company secretary of GSMAL jointly and severally to be attorney for the applicant, in the applicant's name, on the applicant's behalf and as the applicant's act and deed on the terms specified below, and to exercise the powers set out hereunder, and only those powers."
6. The powers listed on the following page included power to enter into and execute a lease and management agreement on the applicant's behalf.
7. If finance was sought, the application form required the applicant also to complete a direct debit request set out on the flipside of that form.
8. Mr Flamer-Smith produced a copy of a grovelot application form signed by Mr Russo seeking the allocation of 73 grovelots in the 2008 olive project. The direct debit request on the flipside had also been signed by Mr Russo nominating a bank account from which Great Southern Finance (not ABL Nominees) was authorised to debit any amount it may debit or charge the applicant subject to the terms and conditions of a "Direct Debit Request Service Agreement". The parties did not address any issue concerning the terms of that agreement.
9. The grovelot application form signed by Mr Russo was dated 13 June 2008, which was a Friday. The version in exhibit A appears to be a photocopy of a facsimile. It includes a signature presumably intended to be attributed to the "witness to signature" (actually appearing under "Applicant 2") but no name is printed next to that signature. Placed underneath the date is what appears to be a stamp with the Great Southern logo together with the name "Eddie Elias", who is identified as the authorised representative of Great Southern Securities Pty Ltd. The role (if any) of that company in the application process was not made clear. Mr Elias was a partner in the same accounting firm as Mr Russo's accountant, Mr Ralf Darwich. One possible interpretation of the appearance of the document is that the stamp had nothing to do with the witnessing of the applicant's signature and may simply have been placed on the application form for commission purposes.
10. Apart from Eddie Elias' Great Southern stamp, there is no indication on the face of Mr Russo's completed grovelot application form as to the identity of the person who has purportedly signed as witness to Mr Russo's signature.
11. Bendigo's case is that, by signing the grovelot application form and direct debit request, Mr Russo: 1. applied to Great Southern Managers to purchase 73 grovelots for a total price of $461,725 including GST; 2. applied to Great Southern Finance or its preferred financier to borrow that amount; 3. authorised the debit of loan repayments from the nominated account (as already noted, the authority was directed to Great Southern Finance); 4. granted power of attorney to Great Southern Managers to execute a lease and management agreement on his behalf.

The finance application

1. Mr Flamer-Smith also produced an application for term finance signed by Mr Russo and dated 13 June 2008 by which Mr Russo applied to borrow the sum of $464,033.63 in connection with the acquisition of the 73 grovelots. The finance application form contemplated that the lender would be either Great Southern Finance or ABL Nominees and was drawn up so as to accommodate either alternative. It attached a form of loan deed which similarly was drawn so as to accommodate either possibility as to the identity of the lender.
2. A checklist at the front of the form instructed applicants not to complete the loan deed, stating: "The applicants and guarantors are not required to sign the loan deed attached to this application (and other documents connected with, or related to, the loan deed) as the loan deed will be completed and signed by the lender (or the lender's attorney) as attorney for the applicants and guarantors pursuant to Section 7 of this application."
3. The power of attorney in section 7 of the finance application was again drawn in terms calculated to accommodate the two alternatives as to the identity of the lender. That clause relevantly provided: "7 POWER OF ATTORNEY (a) By signing this finance application, the Borrower and the Guarantor (if any) (Appointor) agree to appoint: (i) where Great Southern Finance Pty Ltd (GSF) is the lender under the proposed loan, GSF and each director, company secretary and attorney of GSF, jointly and severally; or (ii) where ABL Nominees Pty Ltd (ABL) is the lender under the proposed loan, each of ABL and GSF and each director, company secretary and attorney of ABL or GSF, jointly and severally, to be attorney for the Appointer (Attorney) on the terms specified herein and to exercise the powers as follows: (iii) to enter into and execute a loan deed or loan deeds in the form attached to this finance application (Loan Deed) on behalf of the Appointor. A loan deed will be in the same form as the loan deed attached to this finance application despite any formatting changes to the document;"
4. Section 7(h) provided "The power of Attorney is executed as a deed".
5. The last page of the application form (before the blank form of deed attached to the form) was headed "Application for Term Finance" and was required to be signed by the applicant in the presence of a witness. By signing, the applicant applied for term finance "from either Great Southern Finance Pty Ltd (GSF) or ABL Nominees Pty Ltd (ABL), with the lender to be determined in GSF's discretion."
6. The finance application form signed by Mr Russo bears a "witness signature" attributed to Eddie Elias (page 40 of exhibit A). Noting the limitations of assessing such matters by reference to photocopies, it appears to be a different signature from that attributed to the unidentified "witness" on the grovelot application (page 4 of exhibit A).
7. Mr Russo does not deny signing the grovelot application, the direct debit request or the finance application. He gave evidence concerning the circumstances in which he signed "some documents" at the request of his then accountant, Mr Darwich. He said that, in about June 2008, Mr Darwich told him he would have a substantial tax debt as a result of some directors' loans associated with his smash repair business. Mr Russo said that Mr Darwich recommended an investment for Mr Russo and his then wife to make in relation to "trees" and Great Southern. He said that Mr Darwich convinced him he had no choice but to proceed with this investment or face a significant tax liability and that he had to make the investment urgently before the end of the tax year.
8. Mr Russo said that, following those discussions, Mr Darwich attended his smash repair business and handed him documents which he told him to sign. Mr Russo did not suggest that Mr Elias attended his workshop at that time or indeed at any time. There is no evidence that Mr Elias was present when Mr Russo signed any documents.
9. Mr Russo said that he did not read the documents. Of course, having signed them, he is nonetheless bound in accordance with their terms. However, the circumstances in which Mr Russo signed the documents are relevant to the issue of the alleged powers of attorney. It will be necessary to return to that issue.
10. The documents produced by Mr Flamer-Smith also included documents signed by Mr Russo's then wife, Mrs Bernadetta Russo, who was also sued as a borrower in respect of a separate investment in the 2008 olive project. In his affidavit, Mr Russo said "I am not sure whether Bernadetta was present when I signed the documents or whether I got her to sign the documents once Ralf dropped them off". He said that he was "absolutely confident" that he did not sign the documents in the presence of both Mr Elias and Mr Darwich and that Bernadetta did not either.
11. It is difficult to know what to make of that evidence save to observe a contrast between the two finance applications. Whereas, on its face, Mrs Russo's finance application appears to bear a signature that was witnessed by Mr Darwich (and dated 13 June 2008), Mr Russo's finance application of the same date does not. The finance application signed by Mr Russo bears a signature apparently identified as that of Mr Elias (and no other signature). There is no suggestion that Mr Elias attended Mr Russo's workshop at any stage. The fact that Mr Russo's signature on the finance application appears to have been (purportedly) witnessed by a person other than Mr Darwich creates further doubt as to the supposed witnessing of his signature.
12. Mr Russo said that Mr Darwich did not sign the documents or write anything on them himself in Mr Russo's presence. He was "absolutely confident" that neither Mr Darwich nor Mr Elias witnessed the documents after he (or his wife) signed them.
13. Neither Mr Darwich nor Mr Elias was called to give evidence. No evidence was called to explain why not or to enable me to make a finding as to whether or not either of them is fairly regarded as being in Bendigo's camp. While it would have been helpful to have some evidence on that issue, if only to put the matter to rest, I think the safer course is to assume, in Bendigo's favour, that neither man was available to Bendigo in any practical sense.

Approval of the applications

1. Bendigo's pleaded case (par 1E of the amended statement of claim) is that Mr Russo's grovelot application and finance application were approved "on or before about 15 June 2008" (which was a Sunday). That contention is expressed in the passive voice with the result that it does not specify which entity is alleged to have approved the finance application. That has some significance in respect of an issue to which it will be necessary to return.
2. Bendigo further contends that Mr Russo "was loaned the sum of $464,033.63 by ABL Nominees…on the terms set out in the finance application, such funds being used to acquire 73 grovelots". It further contends that Mr Russo was in fact allocated 73 grovelots. Each of those assertions is contested by Mr Russo.
3. Bendigo's case is that, by reason of the approval and acceptance of the finance application, the advance of funds by ABL Nominees and Mr Russo's use of those funds to purchase the grovelots, ABL Nominees and Mr Russo entered into a binding loan agreement.

Execution of the lease and management agreement

1. Bendigo contends that a lease and management agreement was executed by Great Southern Managers on 15 June 2008 both in its own right (as "lessor, licensor and as responsible entity") and on behalf of Mr Russo in exercise of the power of attorney (tab 4 of exhibit B). There is no hand-writing anywhere on the executed document. The date of 15 June 2008 is typed. Its purported execution by Great Southern Managers is denoted in each case (that is, in its own right and in the capacity of the grower's attorney) by the placement of electronic signatures of two directors and invoking s 127 of the Corporations Act 2001 (Cth). The directors to whom those electronic signatures are attributed are John Carlton Young and Cameron Arthur Rhodes.
2. Mr Russo disputes the provenance of the executed lease and management agreement and disputes that the agreement was validly executed on his behalf by the cut-off date of 15 June 2008 or at all. The significance of that issue is its potential impact on the issue whether Mr Russo is bound by the settlement of the group proceedings.

No evidence of execution of a loan deed at that time

1. Bendigo contends that the loan agreement included a term that Mr Russo agreed to appoint "ABL Nominees and [Great Southern Finance] and each director, company secretary and attorney [of those companies] jointly and severally, to be his attorney" with powers including the power to execute the loan deed on his behalf (pars 1F and 1G of the further amended statement of claim). That assumes ABL Nominees was the "lender", a matter as to which there is a contest (if Great Southern Finance was the lender, the appointment as attorney did not extend to ABL Nominees or its officers). However, nothing turns on that so far as the extent of the power of attorney is concerned as no officer of ABL Nominees purports to have exercised a power of attorney on behalf of Mr Russo.
2. The standard form loan deed attached to the finance application provided that the "lender" would be the company that had approved the proposed loan, as follows: "This deed is made on the __ day of __200 between the following parties: [If the proposed loan has been approved by GSF, the Lender under this loan deed is GSF. If the proposed loan has been approved by ABL, the Lender under this loan deed is ABL.]"
3. Accordingly, the finance application having been approved "on or before about 15 June 2008" (as pleaded by Bendigo) by Great Southern Finance (not ABL Nominees), the logical course would have been for the loan deed to be executed by Great Southern Finance at that time (both as lender and as attorney for the borrower), just as the lease and management agreement was executed by Great Southern Managers at that time (both as lessor of the grovelots and as attorney for the grower). They should all have been part of the same suite of documents to give effect to the investment by the cut-off date. However, it is not contended that the standard form loan deed was in fact executed on Mr Russo's behalf at that time. It was purportedly executed almost a year later, on 26 April 2009, by Great Southern Finance as Mr Russo's attorney and, most curiously, by two people who appear to have been Great Southern officers purportedly as attorneys for ABL Nominees as lender. It will be necessary to return to that issue.

Assignment and transfer of the loan

1. Bendigo contends that, with effect from about 20 June 2008, ABL Nominees assigned all of its rights under the loan, the loan agreement and the (not yet executed) loan deed to Adelaide Bank. Bendigo further contends that, on or about 1 December 2008, all rights under the loan, the loan agreement and the (still not executed) loan deed were transferred from Adelaide Bank to Bendigo upon Bendigo's merger with Adelaide Bank.

Execution of the loan deed

1. As already noted, the loan deed was executed after all of those events. The executed loan deed relied upon by Bendigo bears the date "26th day of April 200_". Although this was initially disputed by senior counsel for Mr Russo, it was ultimately common ground that, as the loan was applied for in June 2008, the date should be understood to be 26 April 2009 and that is the case pleaded by Bendigo.
2. On 30 April 2009, Bendigo notified Mr Russo by letter that the loan granted to him pursuant to the loan agreement and the loan deed had been assigned or transferred to it and would be managed by it. Mr Russo denies receipt of that letter.
3. The bank contends that Mr Russo accepted the benefit of the loan of $464,033.63 by ABL Nominees in that he acquired the grovelots; that he caused loan repayments to be made between 31 July 2008 and 15 September 2009 and that, in breach of his obligations under the loan, the loan agreement and the loan deed, he has failed since 15 October 2009 to make the monthly repayments required in accordance with terms of those agreements.

The group proceedings

1. Following the collapse of the Great Southern group of companies, a large number of group proceedings were commenced in the Supreme Court of Victoria under Part 4A of the Supreme Court Act 1986 (Vic). In those proceedings, it was claimed that Great Southern Management had issued product disclosure statements relating to the offer of interests in its managed investment schemes which were "defective" by reason of the provisions contained in Part 7.9 of the Corporations Act: Clarke (as trustee of the Clarke Family Trust) & Ors v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) & Ors [2014] VSC 516 at [6] (Croft J).
2. As already noted, the proceedings were ultimately settled. The unfortunate circumstances in which Croft J received notification of that development were explained by his Honour at [2] of the judgment cited above as follows: "These proceedings were the subject of a trial which commenced on 29 October 2012 and which extended over 90 sitting days, concluding on 24 October 2013. Judgment was reserved and was listed for delivery on Friday 25 July 2014; the parties having been informed of this listing on 23 July 2014. Within hours of the parties being so informed, the Court was advised by M+K Lawyers, the solicitors for the plaintiffs in the Clarke Group proceeding, that the proceedings had settled."
3. Justice Croft was then required to consider whether to approve the settlement. For the purpose of explaining the approval decision, his Honour annexed the judgment spanning "2012 pages of detailed analysis and findings" that had been due for publication before notification of the settlement was given. The deed of settlement was approved on 11 December 2014.
4. Bendigo contends that Mr Russo was a group member of those proceedings and that he is accordingly bound by a clause of the deed of settlement by which the lead plaintiffs "for and on behalf of themselves and all group members" acknowledged and admitted the validity and enforceability of the loan deeds.

Alternative claims

1. Bendigo relies in the alternative on claims in restitution, unjust enrichment or moneys had and received.

Agreed issues

1. After the conclusion of the hearing I formulated a list of issues by reference to the closing submissions and invited the parties' comments in response to that document with a view to obtaining an agreed list of the issues to be determined. A merged copy incorporating the responses of both parties (the plaintiff's in blue and the defendant's in red) was created in chambers and marked MFI 1. This judgment proceeds primarily by reference to that document.

Is the loan deed valid and enforceable on its face?

1. The first issue concerns Bendigo's case, as initially pleaded, that the debt claimed is due under the loan deed dated 26 April 2009 between ABL Nominees as lender and Mr Russo as borrower. Mr Russo contended that the case based on the loan deed was flawed for a number of reasons, any one of which (if established) would require Bendigo's case on that basis to be rejected. The significance of that contest is that the case based on the loan deed is not statute-barred whereas there are substantial and complex limitation issues that arise if there was no loan deed. While the loan deed was purportedly executed by ABL Nominees as lender, there is a separate contest as to whether it was in fact the lender. However, for the purpose of the case based on the alleged loan deed, the document is to be construed in accordance with its terms. The issue of the identity of the lender is addressed below in the discussion of the group proceedings and the case based on a loan agreement other than a deed.

Was the loan deed validly executed by ABL Nominees as lender?

1. The first issue is whether the loan deed was validly executed by ABL Nominees. On its face, it purports to be executed under power of attorney. Curiously, however, the people named as the alleged attorneys appear to have been people associated with the Great Southern group, not ABL Nominees.
2. The two execution clauses appear on the same page under the words "executed as a deed". The clause for execution by the lender states: "Signed sealed and delivered by the Lender: ABL Nominees Pty Ltd [ACN included] by its duly appointed attorneys:…"
3. The two signatures that follow are attributed to Bruno Romeo and Graeme Perich, in each case as "Attorney". Other evidence establishes that Mr Romeo was variously described as a "finance manager" with "Great Southern" (annexure B to Mr Flamer-Smith's affidavit sworn 4 April 2018) and a manager of Great Southern Finance (exhibit C). Mr Russo submitted that the loan deed could not be taken to be validly executed because the status of the two signatories as ABL Nominees' "duly appointed attorneys" was not proved.
4. Bendigo conceded that no instrument conferring ABL's power of attorney on either of those men can be found but submitted that the Court could rely on the deed as a business record apparently validly executed; on the principle of regularity and on the statutory presumptions in s 129(3) of the Corporations Act.
5. Mr Russo submitted that any presumption of regularity should not apply having regard to the irregular circumstances of the execution of the deed. I agree. The deed was purportedly executed on behalf of ABL Nominees over ten months after the loan was approved and indeed after ABL Nominees had allegedly assigned the loan to Adelaide Bank. It was executed just days before the letter of 30 April 2009 informing Mr Russo that the loan had been transferred to Bendigo (by an entity other than ABL Nominees). It seems unlikely that ABL Nominees (a subsidiary of Adelaide Bank) would have granted power of attorney to the finance manager of one of the Great Southern companies at all, let alone a power that endured beyond the date when the loan had been assigned. The execution of the deed has all the hallmarks of a step taken to shore up the lender's position ex post facto. That is not to suggest any impropriety on Bendigo's part but only to note that the deed was not executed by ABL Nominees in the ordinary course of its business. It was executed well after the relevant business had been concluded and, evidently, in anticipation of the need for Bendigo to enforce an apparently delinquent loan it had purportedly acquired from ABL Nominees. In the circumstances, I am not inclined to proceed on the basis of any legal presumption of regularity.
6. The provisions of the Corporations Act do not assist. Section 129(3) provides: (3) A person may assume that anyone who is held out by the company to be an officer or agent of the company: (a) has been duly appointed; and (b) has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company.
7. On its ordinary construction, I would not understand that provision to extend to supporting the making of a finding of fact in legal proceedings that the two signatories had been duly appointed to exercise power of attorney on behalf of the company. I was not taken to any authority to suggest otherwise.
8. Mr Russo further submitted that any execution of the loan deed by ABL Nominees in April 2009 was meaningless as it had already assigned whatever interest it had under the loan agreement by that date. I am inclined to think that is right but in any event I am not persuaded, on the evidence before me, that the deed was validly executed on behalf of ABL Nominees.

Did the loan deed have to be executed as a deed by the lender?

1. Bendigo submitted alternatively that it does not matter if the loan deed was not validly executed by ABL Nominees as it is the borrower's execution that matters. Mr Russo contested that proposition. He submitted that, as there are bilateral obligations under the deed, it would become binding only when executed by ABL Nominees as the last party to the deed. Neither party cited any authority on that issue and it raises a difficult question. On the one hand, by the time the deed was executed, the lender's primary obligation had been performed (if in fact ABL Nominees was the lender, an issue to which it will be necessary to return). However, the deed certainly contemplates bilateral obligations extending beyond the point of advancing funds. On balance, I think the better view is that bilateral execution was required and, accordingly, the conclusion that the loan deed was not validly executed by ABL Nominees means that Bendigo's case based on the deed must fail.

Was the loan deed validly executed by Russo as borrower?

1. In case that is wrong, it is appropriate to consider the alternative arguments put by Mr Russo. Mr Russo contends that the loan deed was not validly executed by the purported attorneys on his behalf. The clause for execution by the borrower states: "Signed sealed and delivered by the borrower Sid Russo by his/hers/its duly appointed attorney Great Southern Finance Pty Ltd [ABN included] in accordance with section 127 of the Corporations Act 2001."
2. Two signatures follow that are attributed to Neil Hackett as "secretary" and Cameron Arthur Rhodes as "director". An enlarged photocopy was tendered by Mr Russo (exhibit 3) to establish that those signatures were electronic. I am satisfied from their appearance that that is the case.

Requirement that power to execute a deed be conferred by deed

1. Bendigo's case is that the loan deed was validly executed as a deed on behalf of Mr Russo under the power of attorney granted in the finance application. Mr Russo submitted that there was no valid power of attorney conferred by the finance application because a power of attorney to execute a deed on behalf of the principal must itself be created by way of deed. Mr Cook SC, who appeared for Mr Russo, provided extracts from the texts of Nicholas Seddon, Seddon on Deeds (2015, Federation Press) at 53 and G E Dal Pont, Powers of Attorney (2011, LexisNexis) at 86 to support that proposition, which I did not understand Bendigo to contest.
2. Mr Russo contended that his completion of the finance application was not effective to confer a valid power of attorney with power to execute the loan deed on his behalf because the finance application was not executed as a deed, for a number of reasons.

Did Mr Russo intend to execute the finance application as a deed?

1. First, Mr Russo invited the court to find that he did not intend to create a deed. It was not in dispute that that is an element for the execution of a valid deed. However, the parties noted that there is an unresolved legal question as to whether the principal's subjective intention is relevant or whether the test to be applied is purely objective. That issue arises from the decision of the Queensland Court of Appeal in 400 George Street (Qld) Pty Ltd v BG International Ltd [2012] 2 Qd R 302; [2010] QCA 245 at [30]-[32] where, despite referring to the proposition that extrinsic evidence is admissible in determining the parties' intention when executing the relevant document, the Court applied an objective test.
2. It is not necessary to resolve that difficult legal question because, for the reasons explained below, I am not satisfied that Mr Russo's signature of the finance application was witnessed by a person present at the time he signed it, which is an essential requirement for the creation of a deed.
3. Had it been necessary to decide this issue, I would have held that, if subjective intention is relevant, Mr Russo did not intend by signing the finance application to create a deed. If the test is purely objective, the question is more difficult. The terms of the finance application provide some support for the inference that a person signing that form intended to sign it as a deed. However, assuming it is relevant also to have regard to the circumstances in which it was signed, the evidence adduced by Bendigo does not permit me to be satisfied as to the element of intention even on an objective test. My reasons for those conclusions are as follows.
4. Bendigo submitted that, if subjective intention is relevant (which Bendigo disputed), the Court should find that Mr Russo intended by signing the finance application to ensure the effectiveness of the transactions contemplated by the application. Bendigo submitted that this would be sufficient to establish a subjective intention to create a deed.
5. I do not accept that submission. The finding contended for echoed the well-established proposition that parties to commercial contracts are taken to have intended to produce a commercial result: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]. However, I do not think that principle can logically assist Bendigo on the issue of intention to create a deed.
6. Even if Mr Russo turned his mind to that issue (which may be doubted), an intention to enter into an effective transaction does not necessarily or even logically comprehend an intention to carry out the solemn act of creating a deed. Indeed, with respect, there is a measure of circularity in Bendigo's argument on this issue. The question whether Mr Russo intended to create a deed conferring power of attorney cannot be answered by asking whether that was what was required in order to confer a power of attorney.
7. In any event, Mr Russo's evidence has persuaded me that he had no subjective intention to create a deed or to confer a power of attorney. Although he was in some respects a difficult witness, his evidence on this issue was compelling. It was put to him that, at the time he signed the grovelot application form, he had an opportunity (if he had wanted to) to read the document. His response was "I had no intentions to sign something very important like that" (Tcpt, 4 April 2018, pp 100(50) to 101(2)). He then explained that he was "blinded" by Mr Darwich. However, when the cross-examiner picked up on that answer as the basis for suggesting that he signed the documents without reading them because he felt under pressure, Mr Russo did not embrace that proposition, instead providing a cogent account of his subjective intention at the time. The cross-examination proceeded as follows (Tcpt, 4 April 2019, p 101(20)): "Q. Is what you're saying that you didn't read paragraph 3 on page 3 that I've shown you that deals with-- A. No. Q. --the appointment of an attorney and you say that's because you felt under pressure; is that a fair summary? A. Not the pressure. I just would never do that. Q. You'd never, what, read a document? A. No, I'd never give a power of attorney to anybody. Q. You accept that if you had read just those three lines or four lines-- A. I wouldn't have signed."
8. Mr Russo explained his position by reference to his previous experience of borrowing money from his father-in-law (Tcpt, 4 April 2019, p 102(1)): "A. My father‑in‑law borrowed me money (sic), I signed paperwork with the bank stating that they could take everything off him if I didn't do payments. I endeavoured in my life, sold my own house and everything I had to get him off that contract. Now, I wouldn't be stupid enough to do in my life sign other papers giving authority to, to these sorts of conditions. That's all I have to say."
9. I am satisfied that Mr Russo had no subjective intention, in signing the grovelot application and the finance application, to carry out the solemn act of executing those documents as deeds or to confer power of attorney on any party with authority to execute further deeds on his behalf. Accordingly, assuming (without deciding) that the test is subjective, Bendigo's case based on the deed would fail for the additional reason that no power of attorney to execute the loan deed was validly conferred by Mr Russo because the purported power of attorney in the finance application was not itself conferred by deed.
10. Mr Russo submitted that, even on an objective test, it could not be inferred that he had any intention to execute the finance application form as a deed having regard to its language and structure. Mr Cook relied on the heading of the document, which states in large print that it is an "application for term finance" with reference to two Great Southern projects, the "wine grape income project" and the "diversified olives income project". Mr Cook submitted that, with those features (including "pretty pictures" of grapes and olive trees) the document was "off to a shaky start as a solemn deed".
11. Mr Cook noted that the document contains many spaces for completion by the applicant and submitted that it has the appearance of "the sort of thing you'd sign if you were applying for a car loan". I accept that there are aspects of the appearance of the finance application that detract from its solemnity. However, the body of the document and the attached pro forma loan deed contain a large amount of typed print which suggested that it was an important document likely to have some legal effect.
12. Bendigo relied on the terms of the finance application form which, although Mr Russo did not read them, clearly state in clause 7 that a power of attorney was being conferred. As already noted, that clause is also referred to in the checklist for applicants.
13. Mr Cook acknowledged that clause 7(h) states "the power of attorney is executed as a deed" but submitted that that clause sits as an "orphan sentence". I accept, as submitted by Mr Cook, that clause 7(h) is the only indication that, by signing the application form, an applicant might be executing a document as a deed. Further, there is some confusion in the wording of clause 7. Clause 7(a) states that, by signing "this finance application", the borrower "agree[s] to" appoint the nominated people to be attorney for the appointor. It does not state that, by signing this finance application, the borrower appoints those attorneys here and now. The wording of clause 7(h) compounds the confusion. As submitted by Mr Cook, it is not tied back to the opening words of clause 7(a) or to the act of "signing this finance application". Instead it uses a description apt to refer to a separate document: "the power of attorney" (not "this power of attorney" or "the power of attorney in this finance application").
14. On the flipside of the part of the finance application form containing clause 7 relating to the power of attorney, the attestation clauses appear under two prominent warnings. Neither refers to the fact that, by signing this finance application, the borrower is appointing a power of attorney. One relates to the risk, by signing the declaration, that the borrower may lose his or her protection under the Consumer Credit Code. The second states "by signing here you make each of the 11 declarations, statements and acknowledgements set out above. This includes authorising GSF and/or ABL to complete and sign the loan deed on your behalf." Mr Cook acknowledged that it is not necessary to use formulaic words in order for a document to be executed as a deed but submitted that those were not the words or language of a deed. I agree. The wording of that clause is expressed as a warning concerning the asserted effect of signing rather than an indication of the characterisation of the document as a solemn deed.
15. I have proceeded on the basis that, even on an objective test, it is relevant in determining whether a person intended to execute a document as a deed to have regard to the circumstances in which it was signed. The difficulty for Bendigo is that there is no evidence on that issue. The evidence is that documents were brought to Mr Russo's workshop by Mr Darwich (and, in effect, shoved under the panel beater's nose for urgent signature). But the finance application purports to have been witnessed by Mr Elias. There is simply a want of evidence from which the serious intention required for the execution of a deed can be inferred.

Failure to witness Mr Russo's signature on the finance application

1. Secondly, Mr Russo invited me to find that his signature on the finance application form was not witnessed by Mr Elias as it purports to be. Bendigo accepted that, if the finance application form had to be executed as a deed in order to confer a valid power of attorney, it would be problematic if the signature was not in fact witnessed by the purported witness. Authority for that proposition relied upon by Mr Russo was the decision of Edelman J in Netglory Pty Ltd v Caratti [2013] WASC 364 at [425]-[437]. However, Bendigo challenged Mr Russo's evidence that Mr Elias was not present when he signed the application form. Bendigo submitted that Mr Russo's evidence could not be accepted and accordingly that I should accept that the position was as disclosed on the face of the document.
2. I am not satisfied that Mr Elias did witness Mr Russo's signature on the finance application form. There was no evidence to suggest that Mr Elias attended Mr Russo's smash repair business at any stage or that Mr Russo attended upon Mr Elias for the purpose of execution of any document. There is no evidence to suggest that, contrary to Mr Russo's evidence, he went to the offices of his accountant to see a person other than his accountant on the same day that he also received a visit from his accountant at his workshop. It was Mr Darwich who was Mr Russo's accountant and, according to the evidence of Mr Russo, it was Mr Darwich who brought the documents to him at work. There would be no reason for two accountants to attend on that occasion; one would do. As already noted, Mr Darwich is recorded as having witnessed the signatures of Mrs Russo on her finance application and grovelot application but not that of Mr Russo on his finance application. The different appearance of the documents is curious and certainly does not give me the comfort to be satisfied that all is at it appears on the face of any document.
3. Mr Russo's account of his signature of the documents is not inherently implausible. On the contrary, it makes sense and accords with the objective circumstances. Mr Darwich wanted him to sign the documents in haste, so as to be able to obtain the benefit of the scheme. That was done on the last business day before the scheme closed. Mr Russo says the documents were signed at his workshop and there is no reason to doubt that. It is not inherently unlikely that Mr Elias completed the document by signing it as witness in Mr Russo's absence.
4. The simple difficulty for Bendigo is that there is no evidence that the signature purportedly placed as witness to Mr Russo's signature on the finance application was placed by Mr Elias, or anyone else; let alone that that occurred in Mr Russo's presence at the time he signed the document. Even if I disbelieved Mr Russo's evidence that he signed the form at his workshop and not in the presence of Mr Elias, in order to accept Bendigo's case I would have to go further and speculate as to the involvement of Mr Elias (or some other, unidentified person other than Mr Darwich). There is no evidence identifying the signature as that of Mr Elias.
5. The enforceability of the loan deed as a deed is an issue on which Bendigo bears the onus of proof. I am not satisfied that the loan deed was validly executed on behalf of Mr Russo because I am not satisfied that power of attorney was validly conferred by him. My reasons for that conclusion are, first, that Mr Russo had no subjective intention to execute the finance application as a deed. If that is not a requirement of the execution of a document as a deed, even on an objective test, I am not satisfied that there was any intention to create a deed. Further, I am not satisfied on the balance of probabilities that Mr Elias or any other person witnessed Mr Russo's signature.

Powers of Attorney Act

1. Leaving aside the common law, Bendigo submitted that the finance application should be taken to have been executed as a deed because clause 7 in the finance application form substantially complied with the form in Sch 2 to the Powers of Attorney Act 2003 (NSW). Mr Cook submitted that the finance application does not meet the requirements of that prescribed form. I agree. Bendigo did not attempt to demonstrate otherwise.

Loan deed not a document written on paper, parchment or vellum

1. The conclusion that the finance application form was not executed as a deed is enough to support the conclusion that Bendigo's case based on the loan deed must be rejected. However, in case that is wrong, it is appropriate to consider further arguments put by Mr Russo concerning the loan deed.
2. One of the requirements of a deed at common law identified by Seddon in the passages relied upon by Mr Russo is that, in Australia, it is still the case that a deed must be written on parchment or paper. Prepared animal skin (vellum) may also be used. Those requirements have been affirmed on many occasions: see for example Scook v Premier Building Solutions Pty Ltd [2003] WASCA 263 at [22] (Steytler J).
3. Mr Russo submitted that the purported loan deed in the present case is not a deed because it is not a paper document and because it was never signed on paper. He submitted that the placement of electronic signatures on his behalf does not suffice.
4. Bendigo does not accept that the signatures were affixed electronically. On the strength of the appearance of exhibit 3, I am satisfied that, while the signatures on behalf of ABL Nominees appear to have been placed on paper, the execution on behalf of Mr Russo was by signatures placed electronically.
5. Separately, Bendigo submits that that is a valid form of execution, relying Diccon Loxton, "Not Worth the Paper They're Not Written On? Executing Documents (Including Deeds) Under Electronic Documentation Platforms: Part A" (2017) 91 ALJ 133, Diccon Loxton, "Not Worth the Paper They're Not Written On? Executing Documents (Including Deeds) Under Electronic Documentation Platforms: Part B" (2017) 91 ALJ 205 and the decisions in Kavia Holdings Pty Ltd v Suntrack Holdings Pty Ltd [2011] NSWSC 716 and Islamic Council of South Australia Inc v Australian Federation of Islamic Councils Inc [2009] NSWSC 211. As to the articles, the highest they may be put is that, in Part B, Mr Loxton discusses whether a deed may be signed electronically and expresses appropriate caution as to any conclusion that it can. None of the authorities relied upon is authority for that proposition. Kavia was concerned with whether an email was "signed" as was the decision in Islamic Council.
6. Had it been necessary to decide this question, I would have concluded that it remains a common law requirement of a deed that it be written on paper.

Ambiguity as to the lender

1. Separately, Mr Russo contended that the loan deed is void for uncertainty because it does not identify the lender. It may be recalled that the finance application form left open the question of the entity that might become the lender. That form appears to have been prepared and printed as a standard application form bearing the Great Southern logo on the front page. However, ABL Nominees has also been added in small print on the front page.
2. That accords with clause 7 of the finance application (the purported power of attorney) which has been drafted so as to provide, in the alternative, for the appointment of either Great Southern Finance alone or Great Southern Finance together with ABL Nominees as attorney, depending upon which company is the lender under the proposed loan.
3. The pro forma loan has the same flexibility, providing for execution by either party in the alternative. Mr Russo's argument is based on the fact that the pro forma loan deed requires that one option be struck out. When the deed was purportedly executed, neither description of the lender was deleted, with the result that it is presented as a deed between either Great Southern Finance or ABL Nominees as lender.
4. I do not accept Mr Russo's argument on this issue. Had there been no other indication on the executed document as to the identity of the lender, it would have had some force. However, the simple fact is that the lender is identified in the execution clause.
5. Mr Russo submitted that the identification of ABL Nominees as the lender on that page was meaningless because there are other indications that it was not in fact the lender (in particular, the fact that Great Southern Finance approved the loan application, not ABL nominees). However, those external indications are not necessary to resolve any ambiguity on the face of the document. As I think may ultimately have been accepted by Mr Cook, they cannot be relied upon to establish that the deed itself was void for uncertainty.
6. Mr Cook nonetheless submitted that the provision for execution of the loan deed by ABL nominees as lender does not resolve the uncertainty that arises from the words on the first page, where the lender is defined as the company that approved the proposed loan. On that basis he maintained the submission that, if the loan was in fact approved by Great Southern Finance, the execution of the loan deed by ABL Nominees as lender was meaningless. In that context, he relied on the decision of Bendigo and Adelaide Bank Limited v Howard [2018] NSWSC 383.
7. Howard was an appeal to this Court from the decision of a magistrate in proceedings brought by Bendigo to recover a debt from a person who had invested in three grovelots in a different agribusiness scheme promoted by Great Southern. As in the present case, an issue in the proceedings was whether the lender was Great Southern Finance or ABL Nominees. However, unlike the present case, that issue arose as a result of the way in which Mr Howard had completed the finance application form, which Bendigo contended involved a mistake or misnomer (whereas the issue as to the identity of the lender in the present case turns on the factual question of which entity approved the loan).
8. Justice Davies summarised the relevant finding of the magistrate as follows at [55]: "The Magistrate found that, in ticking box 2 on the Finance Application, the defendant only authorised the execution of a loan deed in favour of GSF as lender and not ABL. Her Honour held that ABL was generally fixed with the knowledge of its agent GSF, and GSF knew that the defendant had ticked box 2 seeking finance from GSF. In those circumstances ABL was not entitled to rely on the loan deed executed by GSF under what was apparently a valid power of attorney, but rather was fixed with any knowledge of GSF as to the limitation of GSF's authority as attorney to execute the loan deed under the power of attorney. GSF as attorney was not authorised to sign the loan deed on 20 June 2007 in favour of ABL as a lender. Accordingly the loan deed was not binding on the defendant."
9. His Honour held at [69] that, as it was clear in that case that the finance application had been approved by Great Southern Finance on behalf of ABL Nominees, the magistrate's conclusion that ABL Nominees as principal was on notice of the lack of authority of its agent, Great Southern Finance, to execute a loan deed naming ABL Nominees as lender was correct as a matter of law.
10. Although the issue arises in a different way in the present case, the principle is the same. If Mr Russo's loan application was approved by Great Southern Finance, then Great Southern Finance was not authorised as attorney to sign the loan deed in favour of ABL as lender. For the reasons explained below, I am satisfied that the loan was approved by Great Southern Finance.
11. The way in which this argument was put by Mr Cook was as a question of ambiguity in the loan deed rather than as a matter of authority. However, upon analysis of the decision in Howard to which he referred, the correct conclusion in my view is not that the deed is void for uncertainty but that Great Southern Finance, having approved the loan, had no authority to execute the loan deed in favour of ABL Nominees as lender.

The moneys could not have been advanced under the loan deed

1. Mr Russo's final argument concerning the loan deed turned on a literal interpretation of the language of the deed (in particular, a question of timing). Mr Cook submitted that moneys could not have been advanced under the loan deed because, in terms, the obligation to repay under the loan deed is conditional upon funds first having been advanced under the loan deed. Clause 2 of the deed provides: "(a) The parties agree that the Lender will lend the Funds to the Borrower on the date on which the Fees are payable as specified in item 5 of the Schedule. The Funds may be advanced in more than one tranche on different dates to make the Borrower's payment obligations in respect of participation in the Project. (b) The Borrower irrevocably directs the Lender to advance the Funds by satisfying on the due date: (1) the loan establishment fee included in the Costs and Expenses; and (2) The Fees payable under the Agreement or a portion of them equal to the balance of the payment of the Costs and Expenses specified in subclause (1) above. (c) The Funds are provided on the terms and conditions of this Document."
2. Bendigo submitted that the fact that the moneys were advanced prior to April 2009 was consistent with the loan deed being effective from 15 June 2008, as stated in the schedule to the deed, which provided that the interest start date was 15 June 2008.
3. If the loan deed was enforceable as a deed, I do not think the infelicity of expression in the contemplation of a prospective obligation to advance funds would defeat its operation as an enforceable covenant by Mr Russo to repay moneys advanced prior to its execution. However, for the reasons already explained, I am not satisfied that the loan deed is enforceable as a deed.

Is the loan deed taken to be valid and enforceable by force of the deed of settlement in the group proceedings?

1. Bendigo contends that, in any event, it does not matter if the loan deed is not valid and enforceable on its face because it is taken to be valid and enforceable by force of the deed of settlement in the group proceedings in Victoria.

Is Mr Russo a group member?

1. In order to establish that Mr Russo is bound by the settlement deed, Bendigo must establish that he is a group member. The class action group proceedings heard by Croft J included proceedings commenced by Prasad and Micallef concerning the 2007 and 2008 olive projects. Bendigo contends that Mr Russo falls within the group of persons on whose behalf those proceedings were commenced, as defined in paragraph 2 of the further amended statement of claim (exhibit A page 547). That paragraph relevantly provided: "This proceeding is commenced by the plaintiffs on their behalf and on behalf of all persons who: (a) at any time during the period between: … (ii) 16 June 2007 and 15 June 2008 inclusive acquired and or held an interest as a member in the 2008 diversified olives scheme; (b) entered into entered into a lease and management agreement with [Great Southern Management] for grovelots in the 2007 diversified olives scheme and/or the 2008 diversified olives scheme; (c) entered into a loan with ABL Nominees to fund payment of the application fees in respect of the 2007 diversified olives scheme and/or the 2008 diversified olives scheme; (d) suffered loss or damage by reason of the conduct of the defendant's alleged herein."
2. There is a measure of overlap between the first two requirements. The first is that Mr Russo must have acquired an interest as a member in the scheme by 15 June 2008. The second is that he entered into a lease and management agreement. Unlike the first requirement, the second requirement did not have a time limit. In that context, Mr Cook conceded (in reference to the second requirement alone) that it would not matter if the lease and management agreement was entered into after the cut-off (Tcpt, 5 April 2018, p 137(30)). However, Bendigo relied on the lease and management agreement as the basis for the contention that Mr Russo acquired an interest in the scheme, which had to occur on or before 15 June 2008.
3. The only evidence as to the timing of the lease and management agreement was an electronic record which, as appears to have been common ground, indicates that the version of the agreement in evidence was generated as a PDF that was "modified" at 3:16am on 16 June 2008 (together with nine other PDF files in the same screenshot all modified at around the same time; eight at 3:16am, one at 3:17am and one at 3:19am). That of course was after the cut-off date (albeit by a matter of hours).

Requirement that the member must have acquired an interest in the scheme on or before 15 June 2008?

1. Mr Russo submitted that there is no evidence that he ever acquired or held an interest as a member in the 2008 diversified olives scheme, by 15 June 2008 or at all. The evidence is that he signed the grovelot application on 13 June 2008 and that it was sent to Great Southern by facsimile that day. The facsimile transmission indicates that the direct debit request was sent at 19:25 as the third page of some document otherwise not in evidence (perhaps Mrs Russo's application) and that Mr Russo's application was sent at 19:37. The application was acknowledged by Great Southern in a letter to Mr Russo bearing the same date (tab 5 of exhibit B). Whether that letter in fact came into existence on that date (after 7:37pm on a Friday) may be doubted but it is convenient to assume that it did. The letter allocated an "investor number" and "allotment number" for Mr Russo and those numbers appear in the name of the PDF file containing the lease and management agreement. Mr Russo relied on the fact that the paper copy of his application was not received by Great Southern until 17 June 2008 but I do not think anything turns on that.
2. Mr Russo submitted that the mere faxing of a signed application form (and direct debit request) could not devolve or evidence the granting of an interest as a member in the scheme. I agree.
3. However, it is necessary to consider other steps that may have occurred on or before 15 June 2008. There is no evidence from any relevant witness as to the processing of the application. Bendigo's case rests on what can be inferred from the documents. As already noted, 13 June 2008 was a Friday. So far as the documents reveal, it appears the immediate steps taken by Great Southern after the application was received were: 1. the application was acknowledged by the letter bearing the date 13 June 2008. The terms of that letter confirmed that the application had been received but the letter says nothing to suggest that the application had been accepted or that Mr Russo had acquired any interest in the scheme at that time, by merely submitting an application. That is hardly surprising, given that the application for finance for the purpose of the investment had not been processed (and perhaps not even received) at that point. I do not think the allocation of an investor number and an allotment number can be construed as anything more than a preliminary, administrative step; 2. the finance application appears to have been approved by Great Southern on Sunday 15 June 2008, as indicated in an internal document bearing that date (exhibit A page 1250). It makes sense that Great Southern would have considered that application at that time as it would have wanted to be sure of finance approval before the execution of the lease and management agreement; 3. the PDF file containing the lease and management agreement was created at some point. The precise time when the electronic signatures were placed on the document is not proved. It was "modified" at 3:16am on Monday 16 June 2008.

Did Mr Russo enter into a lease and management agreement?

1. As already noted, it is Bendigo's case that the relevant interest was created by the lease and management agreement. There is a contest, to which it will be necessary to return, as to whether the acquisition of an interest in a lease and management agreement is sufficient to establish an interest in the scheme. However, Mr Russo raises a preliminary question as to whether it is proved that he did enter into a lease and management agreement. If, as Bendigo contends, his interest as a member in the scheme was acquired by reason of the entry into that agreement, Bendigo must establish that occurred on or before 15 June 2008.

Was the lease and management agreement validly executed by Russo as grower?

1. The first issue raised in respect of those contentions is whether Mr Russo conferred power of attorney to Great Southern Management to execute a lease and management agreement as a deed. For the reasons explained in respect of the finance application (alleged to have conferred power of attorney on Great Southern Finance to execute the loan deed), I accept that, in order to confer power of attorney to execute a lease and management agreement as a deed, the power of attorney itself must have been conferred by deed. Mr Russo submitted that the grovelot application was not executed as a deed as a matter of construction and because his signature was not witnessed.

Intention to execute the grovelot application as a deed

1. My conclusions in respect of this issue are based on substantially the same reasons as in respect of the finance application. Mr Russo's construction argument is stronger in respect of the grovelot application than in respect of the finance application. As already noted, the form was a brief tear-out form at the back of the lengthy product disclosure statement. It has the appearance of an application form, not the kind of formal document that would be required to authorise the finalisation of an accepted application. Further, as with the finance application, the circumstances in which it was executed are not proved.

Failure to witness Mr Russo's signature on the grovelot application

1. Further, I am not satisfied that Mr Darwich witnessed Mr Russo's signature on the grovelot application form. As already stated, there is no indication on the face of the completed application as to the identity of the person who has purportedly signed as witness to Mr Russo's signature. Mr Russo gave evidence, which I accept, that Mr Darwich did not sign the document in his presence. Again, the problem is an absence of evidence. Even if I rejected Mr Russo's evidence in its entirety, there is scant evidence that the signature on the form is that of Mr Darwich (that inference requires a comparison with Mrs Russo's finance application and a presumption of regularity). More significantly, there is no evidence that Mr Darwich placed his signature on the document in the presence of Mr Russo having witnessed Mr Russo's signature.

Was the lease and management agreement executed by the attorney?

1. Separately, Mr Russo contends that, even if power of attorney was conferred, there is no evidence that the lease and management agreement was in fact executed by the attorney. As already noted, Mr Russo questions the provenance and timing of the form of executed deed in evidence.
2. There are certainly some curious features of the process. As already noted, the persons to whom the electronic signatures are attributed are Mr Young and Mr Rhodes. Neither of those men gave evidence. Mr Cook submitted that, in order to accept that the document was executed as a deed, I would have to be satisfied that they in fact placed their signatures on the document intending by doing so to enter into a formal deed on the terms set out. He submitted that I should infer that the PDF containing the electronic signatures is a system-generated document created at 3.16am rather than the result of Mr Rhodes and Mr Young sitting up in the early hours of the morning entering into deeds. Mr Cook submitted that a document created in that way would not meet the requirements of creation of a deed.
3. That is certainly what the screenshot of the folder of "Olives LMAs" (exhibit 1) suggests and I suspect that is what occurred. If the two directors were attending to the electronic execution of the documents in person, it seems unlikely that they could have modified and saved eight PDFs within a minute at 3:16am. Bearing in mind the urgency with which the documents had to be executed, the fact that many other deeds appear to have been created at around the same time and in the absence of evidence from anyone from Great Southern, I am not prepared to give Bendigo the benefit of any presumption of regularity in this context. However, the scant evidence on this issue does not permit me to make a positive finding as to the manner in which the signatures were affixed.
4. As this is an issue on which Bendigo bears the onus of proof, it follows that, assuming it is a requirement that signatures on a deed be placed by the signatory with the intention of executing the document as a deed, Bendigo has failed to discharge its onus of proof on this issue.

Did the lease and management agreement have to be executed as a deed?

1. Mr Russo's argument on this issue assumed that the lease and management agreement had to be executed as a deed. He noted that that is what the product disclosure statement contemplates and, further, that the subject matter is such as to require the solemnity of a deed. The form of agreement (exhibit 4) was certainly drawn up to be executed as a deed.
2. In my view, this issue is to be determined by reference to what was contemplated by the product disclosure statement. It was clearly contemplated that the lease and management agreement would be executed as a deed. The form of deed was drawn up in that way and, so it appears, lodged with ASIC in that form as a schedule to the constitution of the relevant company (presumably Great Southern Managers). As already noted, the form of deed lodged with ASIC was not in evidence but I would assume, in Bendigo's favour, that it was in the form of the deed in fact (purportedly) executed. On the strength of the contents of the product disclosure statement, I am satisfied that, in order to acquire an interest in the scheme, the applicant had (at least) to enter into a lease and management agreement executed as a deed. I am not satisfied that the agreement was validly executed as a deed. Further, I am not satisfied that it was executed by the cut-off date.

Conclusion as to the first two requirements to be a group member

1. Even if that is wrong and the lease and management agreement was validly executed by Great Southern Managers on behalf of Mr Russo, he submitted that in any event that is not enough to establish the acquisition of an interest as a member of the scheme. He submitted that Bendigo must establish an interest in the whole scheme, not just an interest in a lease and management agreement. As noted in the supplementary submissions, the acquisition of an interest in the scheme was intended to be evidenced by certificate. It may be assumed that a certificate would not be issued to a grower before he or she had paid for the grovelots applied for.
2. Mr Russo submitted that there is no evidence that any entity received payment from Mr Russo for an interest in the scheme. The only evidence on this issue concerns the funds transferred in respect of an originating notice and sale notice for the loans when they were purportedly assigned by ABL Nominees to Adelaide Bank on 20 June 2008 (addressed below). There was no evidence of Mr Russo paying the responsible entity and no evidence of his having received a certificate confirming his allotment as contemplated by the product disclosure statement. Mr Cook also noted that the grovelot application form contemplated the issue of a tax invoice for the grower's unfinanced portion of the cost of the grovelots which was payable within two weeks.
3. Those are further indications that Mr Russo did not acquire an interest as a member in the 2008 diversified olives scheme on or before 15 June 2008. The mechanics of the scheme were simply not designed to accommodate receipt of a grovelot application form on the last business day before applications closed.
4. For those reasons, I am not satisfied that Mr Russo entered into a lease and management agreement (at all); I am not satisfied that, if he did, that occurred on or before 15 June 2008 (that is, by midnight that day) and I am not satisfied that he acquired an interest in the scheme on or before 15 June 2008. It follows that he was not a member of the group.

Did Mr Russo enter a loan agreement with ABL Nominees?

1. In case that is wrong, it is appropriate to consider the third requirement of the definition of group member in the Prasad pleading which is that the person must have entered into a loan with ABL Nominees to fund payment of the application fees in respect of the relevant scheme. As noted by Mr Cook, Bendigo bears the onus of proof on this issue.
2. Mr Russo contends that I would not be satisfied that he entered into a loan with ABL Nominees. For the purpose of determining this issue, it is necessary to determine the terms on which any loan agreement was reached. In a different context, for the purpose of his limitation defence, Mr Russo contended that any loan made was not a term loan but a loan repayable on demand. However, while not conceding the point, Mr Cook acknowledged that it would be open to me to find that, if there was no deed, a loan agreement was entered into on the terms of the pro forma deed. I am satisfied that is the case, as contended by Bendigo.
3. As already noted, the loan deed contemplated that the lender would be the entity that approved the loan. I am satisfied that Great Southern Finance approved the loan, as recorded in the handwritten document dated 15 June 2008. Having regard to the timing of Mr Russo's application after close of business on a Friday, there was no occasion for ABL Nominees to consider the application before its approval on the Sunday. Further, internal arrangements aside, there is simply no evidence whatsoever of any involvement on the part of ABL Nominees in the decision to approve the application.
4. Bendigo contends that ABL Nominees was the lender. It submitted that, by signing the grovelot application and the finance application, Mr Russo left the following matters to the three entities in question: 1. he left it to Great Southern Management to determine whether to accept his application to acquire an interest in 73 grovelots and to execute a lease and management agreement on his behalf; 2. he left it to Great Southern Finance to determine whether to lend him the money or to determine whether ABL Nominees would lend him the money or some other preferred financier; 3. he left it to ABL Nominees to determine whether it would be the lender.
5. Mr Dick SC, who appeared for Bendigo, submitted that those were matters that Mr Russo, by signing the application forms, had agreed could be the subject of assessment and determination by each of those three entities without regard to him but with regard to his application.
6. There are two difficulties with that submission. First, it ignores the acute timing of this particular application. The matters Bendigo contends were, as a matter of agreement, left to those three entities all had to be completed, as a matter of practicality, by the Sunday after the application forms were signed in order for Mr Russo to be entitled to participate as a member of the scheme.
7. Secondly, the submission ignores the provision of the pro forma loan deed, the terms of which Bendigo embraces as being the terms of any loan agreement even if it was not executed as a deed. The loan deed identified the lender as the entity that approved the loan.
8. Bendigo did not plead a case that the finance application was approved by Great Southern Finance as agent for ABL Nominees. As already noted, the pleading was conspicuously silent as to the identity of the entity that approved the finance application.
9. However, Bendigo did argue at the hearing that Great Southern Finance was authorised to approve the finance application as agent for ABL Nominees. The argument relied on the internal arrangements between Great Southern Finance and ABL Nominees read together with the terms of Mr Russo's finance application, which contemplated that the lender would be selected at Great Southern Finance's discretion.
10. Bendigo's case was that the relevant loans, including Mr Russo's, were originated by Great Southern Finance but then became loans in which ABL Nominees "was to become" the lender. The relevant arrangements were put in evidence by an affidavit sworn by Mr Flamer-Smith during the hearing, on 4 April 2018.
11. A loan sale and servicing deed (LSSD) was entered into between Great Southern Managers, Great Southern Finance, ABL Nominees and Adelaide Bank. Under that agreement, Great Southern Managers was the "originator" and Great Southern Finance was the "servicer". Mr Dick submitted that, in addition to having the role of being the "responsible entity" for the purpose of the lease and management agreements, Great Southern Managers was in that way appointed by ABL Nominees as the agent of ABL Nominees as lender.
12. By letter dated 15 June 2008 (evidently a very busy Sunday for the people at Great Southern), Bruno Romeo on behalf of Great Southern Finance informed the directors of Great Southern Managers that, pursuant to the LSSD, the loans listed in a schedule to the letter (totalling almost $34 million) "have been approved by Great Southern Finance Pty Ltd as eligible loans under the LSSD". The list included Mr Russo's loan. It will be recalled that it was Mr Romeo who purported to execute Mr Russo's loan deed some ten months later as attorney for ABL Nominees.
13. Mr Flamer-Smith's affidavit attached as Annexure E a document which showed the flow of funds provided in due course by Adelaide Bank to fund the loans listed in the schedule to the origination notice. As noted by Mr Cook, the affidavit established that an amount of $31 million paid by Adelaide Bank on behalf of ABL Nominees should, according to the arrangements between the parties, have been paid to Great Southern Managers (as originator) but was in fact paid to an account in the name of Great Southern Finance. The evidence establishes that Adelaide Bank on behalf of ABL Nominees provided funds at the request of Great Southern Managers in respect of a number of loans including Mr Russo's but that does not inform the question of who, in the contractual arrangements with Mr Russo, was "the lender" for the purpose of his loan as approved as at 15 June 2008.
14. I accept that the finance application form contemplated the possibility that an applicant would find himself a party to a loan agreement with ABL Nominees as lender. The nomination of ABL Nominees as lender would be made plain, and the complexities of timing resolved, upon the execution of a loan deed (executed as a deed) prior to the assignment of the loans by ABL Nominees. However, that is not what occurred in the present case.
15. If there was a loan agreement, it was on the terms of the draft loan deed attached to the finance application form. A term of that agreement was that "the lender" was the entity that approved the application, which was Great Southern Finance. That the ex post facto execution of the loan deed (apparently by two Great Southern officers) nominated ABL Nominees as the lender after Great Southern had obtained the benefit of the funds does not militate the conclusion that ABL was the lender.
16. Separately in respect of the third requirement of membership of the group, Mr Russo contended that, even if ABL Nominees was the lender, no funds were advanced by ABL Nominees to him or at his direction. Mr Cook submitted that payment to Great Southern Management by Adelaide Bank (said to be on behalf of ABL Nominees) to accept an offer to originate loans under the origination notice was not payment at his direction for his interest in the scheme.
17. However, as submitted by Bendigo, even if the loan funds were not advanced by ABL Nominees to Mr Russo or at his direction, it would not follow from that fact alone that there was no loan by ABL Nominees to Mr Russo. Mr Russo's investment would result in a liability whether or not the funds were advanced directly to him.
18. Bendigo relied on the following documents as indicating that Mr Russo's loan was accepted by ABL Nominees: 1. the letter dated 13 June 2008 confirming receipt of the application. That was sent by Great Southern Managers which Bendigo argued was because that was the entity offering an interest in the grovelots and also the entity to which Mr Russo applied for a loan, noting that if a loan was made it would be either by Great Southern Finance or ABL Nominees or some other preferred financier; and 2. a letter dated 8 July 2008 sent to Mr Russo by Great Southern Finance stating that his request for a loan to finance his application had been approved. Mr Dick submitted that, although that letter was sent by Great Southern Finance, it did not identify that company as the lender.
19. Separately, Mr Dick referred to the fact that, during cross-examination on an application to set aside a default judgment, Mr Russo accepted that he knew loan repayments were being made to Adelaide Bank. It is not clear to me whether it was intended to rely on that as a matter informing the question of the identity of the lender or only the question of notice of the assignment to Adelaide Bank. If it was the former, I do not think it can inform that question. There was a suggestion that Bendigo relied on Mr Russo's repayments as a course of dealing he admitted he had with Adelaide Bank. I would not construe the evidence as anything more than Mr Russo's correction as to the entity to which his repayments were in fact made. It was certainly not an admission that the loan was approved by Great Southern Finance as agent for ABL Nominees as lender.
20. Mr Dick submitted that the reason Mr Russo had no dealings with ABL Nominees was that it was only his lender "instantaneously on 20 June, having then transferred Mr Russo's loan together with many other loans to Adelaide Bank".
21. I do not think any of those considerations overcomes the difficulty that, on the face of the loan agreement relied upon by Bendigo (the pro forma loan deed), the "lender" was identified as the entity that had approved the loan. Mr Dick accepted that the commencement date of the loan as identified in the schedule to the loan deed (when later executed) was 15 June 2008 as that was the date when interest began accruing. He also accepted that it followed that the loan agreement had been made effective five days before it was entered into. He submitted that happens "all the time to have an effective date in an agreement". However, it does not follow that it is what happened in this case. There was, with respect, a measure of hindsight reasoning and indeed question-begging in Bendigo's case on this issue. The argument began with the assumption that ABL Nominees was the lender and answered the question by reference to that assumption. The alternative analysis, which makes more sense, is that this was a loan approved by Great Southern Finance and in which it was accordingly the lender in accordance with the terms agreed to by the borrower and otherwise relied upon by Bendigo.
22. Bendigo further contended that the payment to Great Southern Management by Adelaide Bank for ABL Nominees was a payment at the direction of Mr Russo as contemplated in his application form.
23. Again, however, that assumes the correctness of Bendigo's starting position (that ABL Nominees was the lender). As submitted by Mr Cook, the payment to Great Southern Managers by Adelaide Bank on behalf of ABL Nominees was made by reference to an intention on the part of Great Southern Managers (not Great Southern Finance) to originate loans to be advanced by ABL Nominees as lender (which, on the same day, ABL Nominees sold to its parent).
24. Mr Cook submitted that no loan was ever in fact advanced by ABL Nominees to Mr Russo and so, in order to enforce repayment, it was necessary for Great Southern personnel to execute the loan deed in April 2009. He submitted that the structure sought to be implemented to give effect to loans by ABL Nominees as lender failed because ABL Nominees could not, on the same day that it accepted an offer to originate loans that were going to be originated in the future, sell those very loans before they had been executed.
25. As already indicated, in my view this issue must be resolved by reference to the timing of the events necessary to acquire an interest in the scheme on or before 15 June 2008. Someone had to approve the finance application by that date. If it was Great Southern Finance in its own right, it was the lender and so Mr Russo is not a member of the group. If Great Southern Finance approved the loan as agent for ABL Nominees in accordance with the provisions of the LSSD and in anticipation that ABL Nominees would accept the loan in response to the origination notice, the evidence does not establish that occurred on or before 15 June 2008 and so Mr Russo is not a member of the group. It does not ultimately matter which analysis is correct; on either basis, Mr Russo is not a member of the group.

Admission

1. Finally in relation to the group proceedings, Bendigo relies on the fact that Mr Russo requested and accepted a benefit (which included the benefit payable to Mrs Russo) under the settlement deed as an admission that he is a group member. In particular, an amount of $79,816.50 was waived in accordance with Bendigo's obligation under the deed to waive the relevant interest relating to overdue amounts that had accrued and remained unpaid as at the approval date.
2. Further, on 2 May 2016, Mr Russo signed a request for distribution in relation to the group proceedings stating that he was entitled to receive a portion of the settlement proceeds. The amount of $88,660 was credited into his bank account. Bendigo relies on those circumstances as an admission on Mr Russo's part that he was a group member. Bendigo argued that Mr Russo could not have sought a distribution and received it if that was not the case.
3. Mr Cook submitted that Mr Russo's acquiescence in the drawing of a benefit in accordance with the deed could not go so high as to amount to an admission, as contended by Bendigo. The evidence was that Mr Russo had signed a direct debit at the request of his lawyer and on the strength of advice that he was not otherwise going to recover his investment and that he owed his lawyer legal fees. Perhaps mixing metaphors, Mr Cook submitted that Mr Russo didn't know "what's going on behind the curtains in the sausage factory". He submitted that Mr Russo's conduct in taking the benefit of the deed could not go so high as to amount to an admission as to the legal effect of his arrangements with Bendigo (Tcpt, 5 April 2018, p 157).
4. Separately, Bendigo relied on the fact that Mr Russo made claims for tax deductions as amounting to an admission as to the existence of the loan or else extrinsic evidence to show that a contract exists.
5. Bendigo submitted that, each time Mr Russo claimed a deduction in the three relevant tax returns, he was making a representation that he was entitled to claim the deductions which amounted to a representation as to the validity of the relevant loan arrangements.
6. Mr Cook submitted that a representation by Mr Russo in his tax returns could not amount to an admission because it is not a statement against interest. He accepted that an admission might be construed if any such statement had been made to Adelaide Bank but submitted that a claim to an entitlement to a tax deduction made through Mr Russo's accountants could not amount to an admission by Mr Russo. He further submitted that the admission would be meaningless since it calls for an opinion as to a legal question. It could not amount to an admission that Mr Russo had a management agreement with Great Southern Management or a loan agreement with ABL Nominees.
7. I accept, as submitted by Mr Cook, that the steps taken by Mr Russo could not amount to an admission of a matter that is, in substance, a legal conclusion. Mr Dick indicated at the hearing that Bendigo did not rely on those steps in any other way. There may be other consequences for Mr Russo as a result of his previous representations but that is not a matter that falls for my determination.
8. For those reasons I am satisfied that Mr Russo is not bound by the deed of settlement.

Effect of the Settlement Deed

1. In case that is wrong, it is appropriate to consider the effect of the settlement deed.
2. Clause 4.1.4 of the Deed provides: "The Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs' Loan Deeds and the Group Members' Loan Deeds."
3. A threshold question concerns the proper construction of the term "Loan Deeds" in that clause. Bendigo contends that it includes the alleged loan agreement between ABL Nominees and Mr Russo whether or not it was executed as a deed. Mr Russo contends that it refers only to loan deeds, that is, documents that were created as deeds, and accordingly that it does not include any agreement between Mr Russo and ABL Nominees (for the reasons already considered). Mr Russo further submitted that clause 4.1.4 could not "resurrect the loan deed" (if it is not otherwise a deed). It is at most an admission of the validity and enforceability of whatever the relevant loan agreement is. It is not an admission that the loan agreement is a deed. As I understood the latter submission, its significance is that, even if the term "Loan Deeds" in clause 4.1.4 includes a loan agreement not executed as a deed, the settlement deed cannot rise above the source. In other words, an acknowledgement in a deed that a (non-deed) loan agreement was valid and enforceable would not overcome Mr Russo's limitation arguments in respect of the loan agreement (a separate issue concerning the effect of s 54 of the Limitation Act 1969 (NSW) is addressed below).
4. In my view, this issue is to be determined by reference to my conclusion that the project as outlined in the product disclosure statement clearly contemplated that both the loan deed and the lease and management agreement would be executed as deeds. In my view, the term "Loan Deeds" in clause 4.1.4 did not include loan agreements that were not validly executed as deeds, nor could it elevate such agreements to the status of deeds.
5. A separate but related issue is the effect of the acknowledgment and admission as to "the validity and enforceability" of the Loan Deed. Mr Russo submitted that it amounts to no more than the withdrawal of the contention that the loan deed was invalid and unenforceable for the reasons pressed in the proceedings (as indicated by recital L of the settlement deed) and does not amount to an admission that a non-existent loan deed exists or an admission as to any loan balance owing under the loan deed.
6. Bendigo submitted that, upon examination of the relevant pleading in the group proceedings and the deed of settlement, it may be seen that the relief claimed in the group proceedings and the settlement of those proceedings was directly concerned with the issue of the enforceability of the loan deeds, which is the matter Mr Russo seeks to put in issue in these proceedings. In my view, the similarity is superficial at best. In the group proceedings, people who had invested in various Great Southern agribusiness projects sought declaratory relief that the loan deeds were void or otherwise unenforceable and orders that Bendigo repay all moneys paid by group members under those deeds. The basis for seeking that relief was the common contention that the product disclosure statement was misleading. No issue was litigated in those proceedings concerning the circumstances of execution of any individual alleged deed.
7. For those reasons, uninformed by authority, had it been necessary for me to decide this issue I would have concluded that, even if Mr Russo was a member of the group and there is a loan agreement that falls within the meaning of "Loan Deed" in clause 4.1.4 of settlement deed, it does not have the effect that Mr Russo is taken to be bound as if by a loan deed or is precluded from taking the points he has taken in these proceedings.

The decision in Pekell

1. The parties addressed the issue of whether I am bound by the decision in Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd [2017] VSCA 51; 118 ACSR 592 to hold otherwise and, if so, whether that decision is plainly wrong. Those are questions that arise only on the assumption that my findings on the foregoing matters are wrong (that is, in case of appeal). Having regard to the fact that they are legal questions concerning the correctness of an intermediate appellate court, they do not fall within the principle that the trial judge should determine all issues so as to avoid the risk of having to remit the matter in the case of error. On the contrary, they are issues more appropriately addressed at the appellate level.

Leaving aside the loan deed, is there an enforceable loan agreement?

1. Bendigo contends that, even if the loan deed is not enforceable as a deed, the debt is due under a loan agreement between ABL Nominees and Mr Russo reached as a result of ABL Nominees' acceptance of Mr Russo's application for term finance and the advancement of funds by ABL Nominees.
2. This issue is considered above in the context of the determination as to whether Mr Russo was a member of the group for the purpose of the group proceedings. For the reasons explained in that part of the judgment, I am not satisfied that there was a loan agreement between ABL Nominees as lender and Mr Russo as borrower.

Was there an effective assignment by ABL Nominees to Adelaide Bank?

1. I understood it to be common ground that, if Great Southern Finance was the lender, there was nothing for ABL Nominees to assign to Adelaide Bank and that Bendigo's claim must accordingly fail. As that is the conclusion I have reached, it is not necessary to determine the issues raised concerning the effectiveness of the assignment by ABL Nominees to Adelaide Bank and, in turn, the transfer of the loan by Adelaide Bank to Bendigo. However, in case the determination regarding the identity of the lender is wrong, it is appropriate to make findings on the factual issues raised. I do not think it is necessary, in the circumstances, to decide the legal issues raised.
2. The first factual issue was whether Mr Russo was given notice of the assignment. Bendigo contends that he was given notice in a letter dated 30 April 2009. Mr Russo denies receipt of that letter. However, there is no reason to doubt that the letter was sent. As at April 2009, Mr Russo would have had little reason to pay heed to the letter or attach any significance to it. I am satisfied that the letter was sent and received by Mr Russo.
3. Mr Russo raised a question as to whether the letter constitutes notice under s 12 of the Conveyancing Act 1919 (NSW). Bendigo submitted that it does not matter because the relevant letter agreement dated 14 June 2006 between Great Southern and ABL Nominees effected an assignment in equity only which does not depend upon giving notice to the debtor. Mr Russo submitted that an assignment in equity requires the assignor (ABL Nominees) to be a party to the proceedings. However, I was not addressed as to the consequences of its not being a party.
4. A separate issue is whether ABL Nominees had anything to assign as at 20 June 2008. It is common ground that the loan deed came into existence later than that but Bendigo contends that the agreement later recorded in the loan deed was capable of being assigned as at 20 June 2008. Mr Russo contends that, as at 20 June 2008, all that ABL Nominees had done was to consent to Great Southern Management originating a loan to Mr Russo. No loan agreement as between Mr Russo and ABL Nominees had in fact been originated and accordingly no loan agreement existed to assign on that date.

Whether the loan was transferred from Adelaide Bank to Bendigo with effect from 1 December 2008

1. Mr Russo submitted that an equitable assignment would not be caught by the 1 December 2008 transfer by Adelaide Bank to Bendigo. This issue appeared, with respect, to be raised somewhat as an afterthought on behalf of Mr Russo. It was addressed in brief written submissions provided after the conclusion of the hearing. For the reasons stated in Bendigo's supplementary submissions, there does not appear to be any substance in the contention that the transfer by Adelaide Bank to Bendigo was ineffective.

Statute of limitations

1. It was common ground that, if the loan deed was enforceable as a deed, no limitation issue arises because the limitation period for enforcement of a deed is 12 years. However, in light of my conclusion that the loan deed is not enforceable as a deed, and in case my conclusion that ABL Nominees was not the lender is wrong, it is necessary to determine (on the assumption that ABL Nominees was the lender) when its cause of action accrued.
2. It is not entirely clear what Bendigo's case is as to when a loan advanced by it commenced. According to the loan deed executed on its behalf in April 2009, the commencement date was 15 June 2008 but on any view of the evidence (and on any construction of the legal arrangements) the funds were advanced after that date. It is convenient to proceed on the assumption (the need to make which is rather Mr Russo's point) that, if Bendigo was the lender, the loan must have commenced before 20 June 2008. Any cause of action that accrued on that date is statute-barred.
3. The chronology of the key events after that and the limitation issues that arise are as follows: 1. assuming the loan was made on the terms set out in the loan deed, repayments were due on the 15th of each month from July 2008. The earliest failure to make a monthly repayment was on 15 October 2009. The statement of claim was filed more than six years after that date. Any cause of action that accrued on that date is statute-barred; 2. the first demand accelerating the loan was made on 10 May 2010. Bendigo accepts that time ran from at least that date. The statement of claim was filed within six years of that date but did not include a claim in debt. Any limitation period of six years expired between the filing of the statement of claim and the filing of an amendment pleading the case in debt. Accordingly, it is necessary to determine an issue as to the date from which the amendment should operate; 3. the approval of the group proceedings occurred on 11 December 2014. Bendigo contends that the effect of the settlement was to confirm the cause of action on which its claim is based, in effect starting the clock running again; 4. a further demand again purporting to accelerate the loan was made on 31 July 2015 but in light of Bendigo's concession concerning the earlier demand nothing turns on that; 5. the proceedings were commenced on 16 November 2015. Contrary to a submission put by Bendigo, I am satisfied that, at that time, the only cause of action pleaded was the case seeking to enforce the loan deed as a deed; 6. on 15 April 2016 default judgment was entered against Mr Russo; 7. on 18 November 2016 the default judgment was set aside; 8. on 12 May 2017 Bendigo was granted leave to amend its claim to include the other causes of action. It is common ground that the question as to whether the Court should make an order as to the commencement of the amendments otherwise than on the date on which the proceedings were commenced was reserved to the trial judge; 9. on 23 May 2017 the amended statement of claim was filed pleading the case in debt (and other claims).

Whether the loan was repayable on demand

1. Mr Russo contended that the loan was repayable on demand from its inception. He submitted that it was not a term loan because, in order for Bendigo to obtain the benefit of the terms set out in the pro forma loan deed attached to the finance application form, it would be necessary for the Court to discern an intention on the part of Mr Russo to become immediately bound to those terms upon signature of the application form (presumably subject to communication of approval of the loan). He submitted that, on the contrary, it is clear that the application contemplated that the terms would only become binding when the loan deed was executed. Accordingly, if ABL Nominees advanced funds to or at the direction of Mr Russo, the loan was a loan repayable on demand from the date on which that occurred. As already noted, a different submission was put in the context of the question whether ABL Nominees was the lender (as to which Mr Russo embraced the terms of the loan deed as the terms of any loan).
2. I do not accept that the loan was repayable on demand. Although it did not say so expressly, the finance application form clearly contemplated a loan agreement on the terms set out in the attached pro forma loan deed. Further, it clearly contemplated a term loan. That proposition may be tested by considering a bystander's likely response if ABL had made demand for repayment of the full amount of the loan on 20 June 2008. By signing the application, in my view, Mr Russo indicated his assent to those terms (notwithstanding the fact that he had not read them). On that analysis, the earliest the loan might have become repayable on demand was from the date of the first default, which was 15 October 2009.

Whether the loan became repayable on demand at the time of the first default

1. The next issue is whether, without more, the loan became repayable on the date of the first event of default. If so, the cause of action accrued on that date and the claim is statute-barred. Bendigo contends that the cause of action did not accrue at the time of the first default but only upon acceleration of the loan by demand (10 May 2010).
2. In order to determine that question, it is necessary to construe the default provisions in the loan agreement. It is clear enough that the failure to make a loan repayment in October 2009 was an acceleration event within the meaning of the loan deed. Clause 12 relevantly provided: "An acceleration event occurs if: (a) the borrower, as principal debtor or otherwise, fails to pay any moneys payable on the due date for payment;"
3. I did not understand Bendigo to dispute that the failure to make a payment in October 2009 was an acceleration event. The critical question is whether the loan became payable immediately upon the happening of that event. Mr Russo relied upon clause 13.1 of the loan deed, which provided: "Demand payment of moneys payable If an acceleration event occurs, the lender may demand immediate payment of the moneys payable."
4. Mr Cook submitted that, on the proper construction of clause 13.1, the loan was repayable upon the event of default in repayment and that the obligation to repay was not predicated upon a decision by the bank to issue a demand. He submitted that, as at 20 October 2009, there was nothing to prevent the bank from issuing a statement of claim for the full balance without prior demand.
5. Mr Cook relied in that context on the decision of the Court of Appeal in Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [93]-[100] (which, in turn, considers Ogilvie v Adams [1981] VR 1041). Those authorities make plain that this issue must be determined by reference to the language of the relevant covenant or term (the decision in Fischer was concerned with a deed).
6. I accept, as submitted by Mr Cook, that the effect of clause 13.1 was that, upon the happening of an acceleration event, and without more, the loan became repayable on demand and Bendigo could have commenced proceedings at that point without the need to make prior demand. Nothing in the terms of the loan deed reveals an intention that the cause of action was not to arise until some form of demand was made.
7. Bendigo's supplementary submissions contended in the alternative that the agreement is in any event governed by the law of Western Australia, as provided in clause 24 of the loan deed, and that therefore the cause of action accrued only upon failure to comply with the demand of 11 May 2010 (Limitation Act 2005 (WA), s 59). As submitted by Mr Russo, that was not the case pleaded. I do not think it is necessary to determine it. It would result in prejudice to Mr Russo if allowed to be raised at the time it was.

Effective date of the amendment

1. If time ran from the date of failure to comply with the first demand dated 10 May 2010, it is necessary to determine whether the amendment to the pleading should have retrospective effect as contemplated by s 65 of the Civil Procedure Act 2005 (NSW) or whether it is appropriate to order otherwise. If the amendment has effect from the date on which the proceedings were commenced (16 November 2015), a cause of action accruing on 10 May 2010 (or within a short period thereafter) is within time. If the amendment has effect from the date of the amendment (12 May 2017), that claim is statute-barred.
2. Mr Cook submitted, in effect, that the court should make an order that the amendment have effect only from the date of the amendment by reason of Bendigo's conduct of the proceedings. Rehearsing the submissions put to Bellew J when the application for leave to amend was made by Bendigo, he submitted that the original statement of claim was misleading in that it suggested Mr Russo had signed a deed personally in 2009 and that there was a demand for repayment in 2015, creating the impression that the bank had a 12 years limitation period because it sued on a deed. He further submitted that, upon the setting aside of the default judgment, the bank ought to have amended its claim immediately but instead there was further delay until March 2017. He noted that there had been no explanation as to why the bank had pleaded its case as it did in the first instance.
3. Mr Cook submitted that the failure to provide an explanation of those matters must weigh heavily against the exercising of the discretion in favour of Bendigo, particularly where the inference is open on the evidence that the bank framed its claim in such a manner so as to conceal potential limitation problems that might otherwise arise from a claim based on an informal agreement entered into in 2008. Mr Cook sought to cross-examine Mr Flamer-Smith on that issue but he claimed client legal privilege and so did not provide an explanation even when invited to do so in the witness box.
4. In summary, the burden of the submission was that the statement of claim did not accurately present the real cause of action that the bank ultimately pursued in the hearing before me. He submitted it was a calculated decision by the bank to obscure its vulnerability in relation to limitation issues. Mr Cook submitted that that caused prejudice to the recipient of the pleading because that person would not have thought to raise a limitation issue. He submitted that the bank should not receive the benefit of a 15 month backdating of a new cause of action which could have been pleaded from the outset but which, so I understood the submission to be, was avoided so as to obviate the risk of the very arguments that are now raised.
5. As to the question of prejudice, Mr Cook relied on the judgment of McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25 where his Honour observed that one aspect of the prejudice of delay is that it is impossible for a witness to identify what he or she may have forgotten. Prejudice of that kind manifested itself in the present case where the bank's submissions rested on Mr Russo's poor recollection of the circumstances in which he signed the grovelot application and the finance application.
6. Mr Dick, who appeared with Mr Zahra for Bendigo, submitted that the Court would not be satisfied that there was any relevant delinquency on the part of Bendigo in pleading the claim in the limited way it did in the first instance. My difficulty with that submission is that, when given the opportunity to explain, Mr Flamer-Smith claimed privilege.
7. Separately, Mr Dick submitted, and I accept, that the fact that a limitation period expired between the filing of the original statement of claim and the amended statement of claim is not in itself a relevant prejudice. The fact that a claim sought to be brought by the amendment is statute-barred is a relevant consideration but s 65 of the Civil Procedure Act contemplates that such amendments may take effect from the date of the commencement of the proceedings. Ultimately, the test should be to consider what the dictates of justice require.
8. I have not found this issue easy to determine. The more closely I have analysed this unusual transaction, the more unfortunate it seems that the bank initially pleaded and obtained default judgement on the strength of the curious loan deed, apparently executed on behalf of ABL Nominees by the very Great Southern officers who pitched them the loan in the first place. While there is no onus on the party seeking the amendment, and the section contemplates that a statute-barred cause of action can be pleaded with effect from a time when it was not statute-barred, this is a case in which the bank's exclusive reliance on the loan deed at the outset of the proceedings did call for some explanation. When it was invited during cross-examination, it was not forthcoming. In the circumstances, had it been necessary to decide this issue, I would have ordered that the amendment have effect from the date of the amendment, with the result that, subject to the issue considered next, the claims other than that based on the deed are barred.

Confirmation of the cause of action under s 54 of the Limitation Act?

1. Bendigo submits however that the cause of action was confirmed by the deed of settlement because the effect of the order of Croft J is that the lead plaintiff had authority to execute the deed on Mr Russo's behalf. So much is established by the decision in Pekell at [51]. It was proved that the lead plaintiffs did execute the settlement deed. However, as I have found that Mr Russo was not a member of the group, he is not bound by that deed.
2. In case that is wrong, it is appropriate to indicate that, contrary to a preliminary view I expressed during the hearing, I would have rejected Mr Russo's argument on this issue.
3. Section 54 of the Limitation Act relevantly provides: (1) Where, after a limitation period fixed by or under this Act for a cause of action commences to run but before the expiration of the limitation period, a person against whom (either solely or with other persons) the cause of action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation. (2) For the purposes of this section: (a) a person confirms a cause of action if, but only if, the person: (i) acknowledges, to a person having (either solely or with other persons) the cause of action, the right or title of the person to whom the acknowledgment is made, or (ii) makes, to a person having (either solely or with other persons) the cause of action, a payment in respect of the right or title of the person to whom the payment is made
4. Mr Russo submitted that the deed could not have the effect of confirming ABL's claim against Mr Russo because, even if executed by the lead plaintiffs with the authority conferred by the order of Croft J, it was not executed under his hand as required by s 54. In my opinion, the better view is that, had Mr Russo been a group member, the execution of the deed of settlement by the lead plaintiffs would have had the effect of confirmation of Bendigo's cause of action against him. Nothing in the express words of s 54 requires the confirmation to be under the hand of the relevant defendant. The effect of the order of Croft J (as analysed in Pekell) is that the execution of the deed of settlement by the lead plaintiffs is taken to be the act of Mr Russo of executing the deed.

Restitution

1. For the reasons already indicated, the restitution claims are statute-barred.
2. In any event I am not persuaded that, if Bendigo's claims in debt are rejected, Mr Russo will have been unjustly enriched if he is not required to repay the debt. Bendigo did not address this issue in any great detail.
3. As submitted by Mr Russo, the alleged benefits are not relevant benefits. By the time the proceedings were commenced, Mr Russo no longer had any benefit at the expense of Bendigo. He did not have the benefit of the funds advanced and he had no investment. To the extent that he may have claimed tax deductions to which he was not entitled, that is a matter to be addressed outside these proceedings.

Conclusion

1. For those reasons, the proceedings are dismissed with costs.

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: 14 June 2019