Bendigo and Adelaide Bank Limited v Zipevski

The plaintiffs' evidence

1. The plaintiffs read three affidavits of Stephen Flamer-Smith sworn 11 May 2017, 18 August 2017 and 15 February 2018, respectively. Mr Flamer-Smith is the Manager, Legal and Resolutions Great Southern Collections employed by the first plaintiff Bank. He was not required for cross-examination.
2. The plaintiffs tendered as Exhibit A in the proceedings, the exhibit to Mr Flamer-Smith's affidavit sworn 11 May 2017 which consisted of two volumes of relevant documents.
3. I will consider the documents exhibited to the affidavit in the factual background which I will shortly set out.

The defendant's affidavit

1. The defendant read an affidavit of his sworn 7 August 2017. I will consider the terms of the defendant's affidavit in due course when I consider his submissions in relation to the proceedings and the issues which have to be determined. The defendant was not cross-examined.

The factual background

1. The proceedings have a lengthy and complex factual background which it is necessary that I set out. Except where indicated, the following constitutes my factual findings in the matter.

The first investment

1. On 16 February 2007 a product disclosure statement ("PDS") was issued relating to the Great Southern 2007 High Value Timber Project and the Great Southern 2008 High Value Timber Project. The responsible entity for the purposes of the PDS was Great Southern Managers Australia Ltd. The relevant PDS is a lengthy and detailed document. The PDS: 1. States that participation in the projects is considered speculative and prospective growers should read the statement in its entirety and seek professional advice that an investment of the type set out was appropriate for their particular circumstances (Exhibit A page 3) (hereafter I will only refer to page numbers); 2. Provides an overview of key project stages of the proposed growing and harvesting of trees (4-5); 3. States that the projects have been established to provide growers the opportunity to carry on the business of growing African mahogany and teak plantations in various regions within Australia (6); 4. Notes that key features of the projects include that the 2007 project was fully tax-deductible and no ongoing out-of-pocket expenses were required from growers except for compulsory insurance and an insurance administration fee. The PDS estimates that the growth period for the trees was 17-19 years after planting (7); 5. Sets out the application fee which each grower must pay per wood lot and explains the taxation implications of the application fee (8); 6. Sets out in detail in various parts of the PDS the risks involved (9; 30-37): 7. Explains the project sites in some detail; 8. Provides great detail in relation to the tax implications of the project and the deductibility of interest and the application fee (23-24); 9. It is noted that participation in the project was intended to be of a long-term nature in commercial forestry and was therefore subject to attendant risks and should be considered as a speculative long-term venture (30); 10. Provides substantial detail in relation to other aspects of the project and the responsible entity and fees and remuneration to that entity; and 11. Included in the PDS, documents to apply to participate in the projects, noting the payment arrangements and that moneys could be borrowed for the application cost (90-107).
2. The defendant completed an application form ("the Application Form") which was dated 26 June 2007. The Application Form noted that "GSMAL" had issued a PDS dated 16 February 2007 offering wood lots in the Great Southern 2007 and 2008 High Value Timber Projects and that the PDS contains important information in respect of investing in the projects. Detail was provided in relation to obtaining access to the PDS. The defendant asserts that he was never given a copy of this PDS. I accept that evidence. However, I note that the PDS is referred to in the Application Form completed by the defendant on 26 June 2007.
3. In the Application Form, the defendant sought finance for $100,000 with an application fee of $400 as a principal and interest loan to acquire eight wood lots (109-110). Also on 26 June 2007, the defendant completed an Application for Term Finance. This noted the name of the second plaintiff on the cover page (111). The Application for Term Finance included a principal and interest loan for the Great Southern High Value Timber Project. The application included a checklist for applicants which made reference to the power of attorney in s 7 (112). The application referred to the number of wood lots sought, the amount of money sought, the defendant's personal details and the defendant's assets and salary.
4. In the application, the defendant was stated to be a Sales Consultant for Mercedes-Benz who had been employed fulltime for three years (114) and had apparent investment properties in Redfern and in Melbourne with a considerable holding in shares (115). The defendant's gross salary of $90,000 was referred to with expected substantial rental income (117). Under the application, the defendant certified, warranted and represented that he could comfortably afford all repayments resulting from the loan without incurring substantial financial hardship, had reviewed the application and confirmed its accuracy and noted that the persons to whom the application was addressed were relying on the statement in considering whether or not to approve the loan application (117). The Application for Term Finance gave permission for the lender to release information to a person named as "Bakous" who was an accountant at Makari & Co (119).
5. The Application for Term Finance noted that: 1. By signing the finance application, the borrower agreed to appoint where the second plaintiff was the lender under the proposed loan, each of the second plaintiff and GSF and each director, company secretary and attorney of both companies, jointly and severally to be the attorney for the borrower on the terms specified in the application (120); 2. If the finance application was accepted by the lender and the finance was provided, a Loan Deed and other documents connected with, or related to, that Loan Deed, would be executed on the borrower's behalf by attorneys whom the borrower had authorised to so act in Part 7 of the finance application; 3. The lender does not guarantee any returns from the projects and that participation in any agricultural activity involves inherent risks and the borrower was aware of the risks (120); 4. Acknowledges that the Application for Term Finance was for finance from either GSF or the second plaintiff with the lender to be determined in GSF's discretion; 5. Confirmed that all information provided in the finance application, including the declaration of financial position, was true and correct and not misleading; 6. Granted the power of attorney set out in Part 7 of the application; 7. Declared that the borrower had read and understood the finance application, including the risk disclosure statement and declaration; 8. Declared that the borrower has "had the opportunity to obtain independent legal, financial and taxation advice" (121).
6. A draft of the contemplated Loan Deed, in an uncompleted form, was attached to the Application for Term Finance (122-131). The proposed draft Loan Deed noted that either GSF or the second plaintiff would be the lender; noted the provision of a facility, noted that interest had to be paid in relation to the facility when it was advanced; referred to certain warranties from the borrower; noted acceleration events and the effect of acceleration (which events included the failure by the borrower to pay any moneys payable on the due date for payment); noted that an assignment by the lender was permitted; and noted that the proper law of the Loan Deed was the law of Western Australia. There was also a pro forma loan schedule which was attached to the draft of the Loan Deed which provided details which were to be completed, including in relation to interest rates.
7. On 28 June 2007, the first Application for Term Finance completed by the defendant was approved (134-135). On 1 July 2007, the second plaintiff lent the defendant the sum of $100,400. There was an irrevocable direction under the draft Loan Deed as to the advancing of moneys by the lender (Clause 2, 123).
8. On 1 July 2007, a Deed of Loan between the second plaintiff and the defendant (as borrower) was executed by GSF for and on behalf of the defendant pursuant to the power of attorney granted in the First Application for Term Finance (142-152). The terms of the Deed of Loan executed are consistent with the draft Deed annexed to the finance application completed by the defendant. The schedule was also completed, noting the defendant as borrower, noting the amount of funds advanced of $100,400, noting the interest start date of 1 July 2007, noting the repayment dates and also showing the execution of the Loan Deed by the second plaintiff (152). The First Loan Deed included a loan repayment schedule (154-156).
9. On 15 April 2008, a letter was sent from GSF to the defendant referring to the Application for Term Finance and enclosing a copy of the Loan Deed executed under power of attorney. It noted that the loan particulars were detailed in the schedule on the last page of the Loan Deed and referred to the attached loan repayment schedule (133). It would appear from my review, that the First Loan Deed was completed in accordance with the powers given by the defendant in the Application for Term Finance, including the granting of the power of attorney. The choice was obviously made to have the second plaintiff as the lender which was contemplated under the Application for Term Finance that was signed by the defendant.
10. The evidence establishes that the second plaintiff assigned all of its rights in respect of the First Loan and under the First Loan Deed to Adelaide Bank Limited on 5 July 2007: first affidavit of Mr Flamer-Smith at [20]-[23] and the documents referred to.
11. Between 31 July 2007 and 30 April 2009, the defendant made repayments pursuant to the First Loan Deed. Thereafter, there appears to have been a default by the defendant by the non-payment of interest (137).
12. On 1 December 2008, Adelaide Bank transferred its rights under the First Loan Deed to the first plaintiff, the Bank. By letter to the defendant dated 30 April 2009, the Bank noted that as at 30 April 2009 the management of the investment loan with the defendant was transferred to the Bank and that also all of the rights of the second plaintiff as the original lender under the loan agreement were transferred to the Bank. It was noted that all money owed by the defendant under the loan agreement relating to the investment loan was now payable to the Bank (481). It should be observed that the date of the letter from the Bank to the defendant notifying him of the transfer to the Bank, coincided with the failure by the defendant to make interest payments in relation to the First Loan and the First Loan Deed. The defendant said that he and his partner were both retrenched from their employment at about this time.
13. It is noted that the letter sent to the defendant notifying him of the assignment was sent by the first plaintiff as assignee rather than the second plaintiff as assignor. This does not affect the validity of the assignment: Anning v Anning (1907) 4 CLR 1049 at 1059.
14. On 20 October 2009, a Notice of Demand was sent by the first plaintiff to the defendant in relation to the First Loan stating that the outstanding loan balance was $106,135.01 and requiring the amount to be paid to it within seven days of the date of the letter (185-186). The letter noted that unless payment was received, legal proceedings were contemplated without further notice.
15. I will consider the Victorian Supreme Court proceedings in relation to the first investment project in which the defendant participated below.

The second investment

1. The defendant also made an application in relation to a second investment, being the investment under the 2008 Olives Scheme.
2. By a PDS dated 4 April 2007, participation was invited in relation to that project. The responsible entity was again Great Southern Managers Australia Ltd. The PDS was again detailed. For the purposes of these proceedings it is unnecessary that I set out the terms of this PDS in any detail. In many ways it is very similar to the PDS in relation to the High Value Timber project for which the defendant applied. I simply note in passing that the PDS dated 4 April 2007 related to an opportunity to growers to carry on the business of commercially growing olives in Australia on a large-scale (487), stated that the projects were fully tax-deductible (488-489), noted that the projects were of a long term duration (491) and referred in detail to the risks involved (492; 520-528). As with the High Value Timber project, applications to participate could only be made by completing the relevant Application Form attached to the PDS (577). A similar power of attorney arrangement existed (577-580). The relevant forms were attached to the PDS (584-590).
3. On 27 May 2008, the defendant made an application to purchase 14 grove lots in the 2008 Olives Scheme and for finance to fund that investment. The Application Form sought 14 grove lots with a finance amount of $80,902 with a principal and interest loan. It is noted that the adviser name on the form was "Bakous Makari" (594). The Application Form also had a reference to the PDS dated 4 April 2007. It was stated that the PDS "contains important information in respect of investing in the Projects". Details of how to get access to the PDS were included.
4. The defendant also completed an Application for Term Finance on 27 May 2008. The Application for Term Finance included a checklist for applicants, which referred to the power of attorney (597), the details of the application by the defendant (598), the defendant's work situation (599), the defendant's financial resources (600), and the defendant's gross income (602).
5. The Application for Term Finance noted that the defendant was a Sales Manager at Lamborghini Sydney and had been employed fulltime there for one year (599). In the statement of assets and liabilities for the defendant, it indicated that he had substantial investments in shares and deposits with financial institutions but did not refer to his investment properties referred to in his 2007 Application (600). A gross income of $88,000 per year with other investment income of $5,000 per year was referred to. This was said to total $170,000 per year but the details justifying that were not included (602). As with the first Application for Term Finance, the defendant requested GSF/the second plaintiff to release personal information to Bakous Makari at Makari & Co, said to be an accountant (605). The reference to a power of attorney (606) and a risk disclosure statement and declaration (also 606) was included. The Application noted that the defendant applied for term finance as detailed in the Finance Application; applied for the finance from either GSF or the second plaintiff with the lender to be determined in GSF's discretion; granted the power of attorney as set out in Part 7 and declared that the defendant had read and understood the Finance Application, including the risk disclosure statement and declaration (607).
6. The Application for Term Finance included, as in the first Application, the draft Loan Deed which was proposed (608-615). This is in very similar terms to the draft Loan Deed in relation to the first Application for Term Finance. The proper law of the proposed Loan Deed was the law of Western Australia, an assignment was permitted by the lender and the draft Loan Deed included a pro-forma loan schedule, having similar details to the first loan (616).
7. On 3 June 2008, the second finance application made by the defendant was approved (621). On 15 June 2008, the second plaintiff lent the defendant $88,992.75 (622). On 7 July 2008, a letter was sent to the defendant from GSF informing the defendant that his request for a loan to finance his application for 14 grove lots in the Great Southern 2008 Diversified Olives Income Project was approved and setting out details of the loan amount, the term of the loan, the relevant interest amounts and the payment frequency (619-620). Between 15 July 2008 and 30 April 2009, the defendant made repayments under the Second Loan.
8. On 27 April 2009, a Deed of Loan was entered into between the second plaintiff as lender and the defendant as borrower. This was executed by GSF for and on behalf of the defendant pursuant to the power of attorney granted to it in the second Application for Term Finance (627-638). The terms of the Deed of Loan are, in substance, the same as the draft Deed attached to the defendant's second Application for Term Finance. The lenders are noted as being either GSF or the second plaintiff. However, it is noted on the schedule that the lender was the second plaintiff (635). The terms of the Loan Deed are similar to the terms in the Loan Deed entered into in relation to the first loan. These include obligations as to repayment of the capital and interest, provisions dealing with the lender's costs, acceleration events if the borrower failed to pay any moneys payable on the due date for payment, a provision explaining the effect of the acceleration event, the allowance of an assignment of the lender's rights, the proper law of the Loan Deed being the law of Western Australia and the schedule setting out the terms of the loan and the interest rates and repayments applicable. The Loan Deed was executed on behalf of the defendant and the second plaintiff as lender by attorneys (635). The Second Loan Deed also included a repayment schedule (637-638).
9. As with the First Loan and the First Loan Deed, the rights of the second plaintiff were transferred to Adelaide Bank, which then transferred them to the Bank (639-646). I will discuss this arrangement below.
10. As stated above, on 30 April 2009 the defendant was notified by the Bank that the management of the Second Loan had been transferred from the second plaintiff to it (481). Again, this was the date when the defendant failed to make interest payments under the Second Loan and the Second Loan Deed (622).
11. By Notice of Demand dated 20 October 2009, the first plaintiff demanded the repayment of the amounts under the Second Loan Deed which were accelerated due to defaults by the defendant. The defendant was informed by the letter dated 20 October 2009 that the outstanding loan balance was $94,483.11 and unless that was paid by him within seven days, legal proceedings were contemplated (647).

The Victorian Supreme Court proceedings

1. In 2010-2011, various group proceedings were commenced in the Supreme Court of Victoria, being what are commonly known as class actions, by various plaintiffs who were investors in Great Southern agricultural projects.
2. It seems that the two plaintiffs in the present proceedings were defendants in many, if not all, of the actions. One of the proceedings (2011/04071) related to the 2007 and 2009 HVT projects. Another proceeding (2011/04001) related to the 2007 and 2008 Olive Schemes.
3. I will give some background to the proceedings and their resolution. There is an issue in the current proceedings as to whether the defendant "opted out" from the Victorian proceedings or remained as a Group Member in the proceedings. I am satisfied that unless the defendant opted out then he would be taken to be a Group Member of the two proceedings to which I have referred above. This is made clear by the pleadings in those proceedings which set out the Group Members to whom the proceedings related (see 649-650; 651; 656-657, paragraph 2; 732 at 737-738, paragraph 2; 819-832).
4. In paragraph 63 of his first affidavit, Mr Flamer-Smith refers to a spread sheet provided by the Victorian Supreme Court showing Group Members from whom Opt Out Notices had been received. The defendant's name does not appear on the spread sheet (833-902). Mr Flamer-Smith notes in paragraph 64 that the first plaintiff was a defendant in the various group proceedings.
5. In 2013-2014, the various group proceedings were heard before Justice Croft in the Victorian Supreme Court. The hearing took about a year. Shortly before his Honour was to hand down his reserved judgment, his Honour was notified that the various group proceedings had settled.
6. A Deed of Settlement was entered into apparently in May 2014 (903-1002). The parties to the Deed of Settlement included the Bank and the second plaintiff (931). The parties also included representative plaintiffs in the various group proceedings, including the two proceedings that appear to cover the defendant if he did not opt out.
7. The Deed of Settlement which had been entered into required the approval of the Supreme Court of Victoria (924). The terms of the Deed of Settlement are significant. The recitals include that the Bank provided certain loans directly to scheme members (Recital E) and that the parties have agreed to resolve the entirety of their disputes, subject to certain claims which are not relevant, on the terms and conditions set out in the Deed of Settlement (Recital P).
8. In the Deed the "BEN Parties" included Bendigo and Adelaide Bank Ltd and ABL Nominees Pty Ltd.
9. Paragraph 4 of the Deed of Settlement is significant and I set it out in full: 4. SETTLEMENT OF CLAIMS INVOLVING BEN PARTIES AND JAVELIN 4.1 On and from the Approval Date, all Claims against the BEN Parties and Javelin and any of their respective Related Bodies Corporate, Related Entities or Related Persons will be settled as follows. 4.1.1 The BEN Parties agree to waive Interest Relating to Overdue Amounts accrued and unpaid as at the Approval Date, in respect of the Loan Deeds of: 4.1.1.1 the Lead Plaintiffs; 4.1.1.2 Group Members; and 4.1.1.3 M+K Counterclaim Claimants, insofar as those loans are between those persons and the BEN Parties. 4.1.2 The BEN Parties agree not to commence or continue debt recovery proceedings against M+K Clients until at least 30 days after the Approval Date. 4.1.3 Javelin will agree to vary the terms of the Loan Deeds of the Lead Plaintiffs and Group Members whose Loan Deeds were assigned to Javelin (collectively, Javelin Borrowers) in accordance with clause 5, whether or not a Javelin Borrower has ceased making repayments. 4.1.4 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. 4.1.5 The M+K Counterclaim Claimants acknowledge and admit the validity and enforceability of their Loan Deeds. 4.1.6 Each of the Lead Plaintiffs acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed. 4.1.7 Subject to the operation of clauses 5.1 to 5.19, Raymond Drummond acknowledges and admits his liability to Javelin to pay the Money Payable under his Loan Deed. 4.1.8 Each of the M+K Counterclaim Claimants acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed. 4.1.9 Each of the plaintiffs by counterclaim to the Uplifted Proceedings acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed. 4.1.10 The Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members release the BEN Parties and their Related Entities and Javelin and its Related Entities from all Claims. 4.1.11 The M+K Counterclaim Claimants release the BEN Parties and their Related Entities from all Claims. 4.1.12 Each of the Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members and each of the M+K Counterclaim Claimants agree that they will not bring or pursue, or procure that a third party bring or pursue, a Claim against the BEN Parties or their Related Entities and Javelin and its Related Entities. 4.1.13 Each of the BEN Parties and their Related Entities and Javelin and its Related Entities may plead this Deed as a bar or defence to any claim or action (including a claim for costs) brought by any of the Lead Plaintiffs, the Group Members or the M+K Counterclaim Claimants relating to a Claim. 4.1.14 Subject to clause 4.1.15, each of GSMAL and its Related Entities and the BEN Parties and their Related Entities release each other respectively from all Claims. 4.1.15 The release in clause 4.1.14 does not operate to release GSMAL or any of its Related Entities from the debts or claims the subject of the BEN Parties' Proofs of Debt. 4.1.16 Each of GSMAL and its Related Entities and Javelin and its Related Entities release each other respectively from all Claims. 4.1.17 The release set forth in clause 4.1.16 above expressly excludes any release by Javelin of its entitlement to any sum or sums held by the Liquidators of GSMAL and/or GSF being monies payable to Javelin pursuant to the Loan Deeds but paid to and withheld by the Liquidators following their appointment in 2009. 4.1.18 Each of the Directors (on the one hand) and the BEN Parties and their Related Entities (on the other) release each other respectively from all Claims. 4.1.19 Each of the Directors (on the one hand) and Javelin and their Related Entities (on the other) release each other respectively from all Claims. 4.1.20 Upon Settlement Approval: 4.1.20.1 the Group Proceeding Debt Recovery Proceedings will be stayed; 4.1.20.2 the Group Proceedings will be dismissed with no order as to costs in so far as the Group Proceedings involve: (a) Claims by Lead Plaintiffs and Group Members against the BEN Parties; (b) Claims by Lead Plaintiffs and Group Members against Javelin; (c) Contribution Proceedings by GSMAL and or the Directors against the BEN Parties; (d) Contribution Proceedings by GSMAL and or the Directors against Javelin; (e) Contribution Proceedings by BEN Parties against GSMAL, its Related Entities and or the Directors; (f) Contribution Proceedings by Javelin against GSMAL, its Related Entities and or the Directors. 4.1.21 Upon Settlement Approval: 4.1.21.1 the M+K Counterclaim Proceedings will be dismissed with no order as to costs in so far as they involve: (a) Claims against the BEN Parties; (b) Claims against Javelin; (c) Contribution Proceedings by GSMAL and or the Directors against the BEN Parties; (d) Contribution Proceedings by GSMAL and or the Directors against Javelin; (e) Contribution Proceedings by BEN Parties against GSMAL, its Related Entities and or the Directors; (f) Contribution Proceedings by Javelin against GSMAL, its Related Entities and or the Directors; and 4.1.21.2 the M+K Counterclaim Proceedings will otherwise be stayed. 4.1.22 Upon Settlement Approval: 4.1.22.1 the counterclaims in the Uplifted Proceedings will be dismissed with no order as to costs in so far as these proceedings involve: (a) Claims against the BEN Parties; (b) Claims against Javelin; (c) Contribution Proceedings by GSMAL and or the Directors against the BEN Parties; (d) Contribution Proceedings by GSMAL and or the Directors against Javelin; (e) Contribution Proceedings by BEN Parties against GSMAL, its Related Entities and or the Directors; (f) Contribution Proceedings by Javelin against GSMAL, its Related Entities and or the Directors; and 4.1.22.2 the Uplifted Proceedings will otherwise be stayed. 4.1.23 For the avoidance of doubt, the BEN Parties will be at liberty to apply to lift any stay contemplated by clauses 4.1.20.1, 4.1.21.2 and 4.1.22.2 upon the expiry of the period specified in clause 4.1.2.
10. In exchange for the first plaintiff agreeing to waive default interest (Clause 4.1.1) and agreeing not to commence or continue debt recovery proceedings against certain borrowers until 30 days after the Approval Date (Clause 4.1.2), certain significant concessions were agreed to by the parties including: 1. The lead plaintiffs in the proceedings for and on behalf of themselves and all Group Members acknowledged and admitted the validity and enforceability of the Group Members' Loan Deeds (Clause 4.1.4); 2. Each of the lead plaintiffs acknowledged and admitted their liability to the BEN Parties to pay the loan balance under their Loan Deed (Clause 4.1.6); 3. The lead plaintiffs for and on behalf of themselves and on behalf of all Group Members released the BEN Parties and their related entities from all Claims (Clause 4.1.10); 4. Each of the BEN Parties and their related entities were entitled to plead the Deed as a bar or defence to any claim or action brought by any of the lead plaintiffs and the Group Members relating to a Claim (Clause 4.1.13); 5. Upon settlement approval, the Group Proceedings would be dismissed with no order as to costs as to certain claims (Clause 4.1.20).
11. The term "Claim" was widely defined in the Deed: Clause 1.1.
12. Clause 4 of the Deed has significant implications for the defendant if he was a Group Member to the proceedings, as the terms of the Deed of Settlement would, on their face, prevent the current proceedings by the defendant so as to prevent him disputing his liability to the plaintiffs.
13. Justice Croft in due course considered an application to approve the settlement set out in the Deed of Settlement. His Honour noted that the application was for the court approval of the Deed of Settlement whereby the proceedings, the subject of his Honour's judgment, were settled. For the detailed reasons which his Honour gave, his Honour granted approval of the settlement: [2014] VSC 516 (1003-1228). His Honour annexed to his reasons for decision his very extensive reasons which he had not handed down for his reserved judgment as justifying the settlement on behalf of the plaintiffs due to their poor prospects of success. Those reasons spanned 2012 pages of detailed analysis and findings (1008 paragraph 5). Under the reasons, the plaintiffs' (in those proceedings) claims "completely and comprehensively failed" in all proceedings and with respect to all managed investment schemes in question (1011 paragraph 6).
14. In approving the Settlement Deed, Justice Croft made the following comments in relation to the Bank parties which included the two plaintiffs in these present proceedings: "76 In relation to the provisions of the settlement deed, the Bank Parties note that the terms of settlement vary insofar as they concern group members who have loans with the Bank Parties and group members who have loans with Javelin, and are summarised in the notice to group members approved by the Court on 14 August 2014. The settlement deed includes provisions concerning the Loan Deeds relating to the loans taken by group members to fund their investments in Great Southern managed investment schemes, which loans are now held by the Bank Parties. In summary, these provisions include the following: (a) an acknowledgment and admission by the Plaintiffs (on their own behalf and on behalf of all group members) that the Loan Deeds are valid and enforceable; (b) an acknowledgment and admission by the Plaintiffs that they are liable to pay the Loan Balance under the Loan Deeds; and (c) broad releases by the Plaintiffs (on their own behalf and on behalf of all group members) in favour of the Bank Parties of all claims in relation to the PDSs, the Loan Deeds and/or any of the allegations made in or the facts giving rise to the proceedings. As the Bank Parties readily acknowledge, if approved, the settlement deed will bind all group members and the Bank Parties will be entitled to enforce the Loan Deeds. For convenience, the provisions of the settlement deed which produce this outcome and which have just been summarised are also referred to in these reasons for judgment as "the enforceability clauses". … 78 More particularly, the Bank Parties submit that the settlement is fair and reasonable for the following reasons: (a) the terms of the settlement deed reflect the commercial agreement reached by the parties after a long running trial. The acknowledgments, admissions and releases given by the group members in the enforceability clauses are part of an overall compromise that reflects the parties' assessment of the plaintiffs' prospects of success had the matter proceeded to judgment. Moreover, under the settlement, the group proceedings, the M+K Counterclaim Proceedings and the counterclaim in the Uplifted Proceedings, will be dismissed with no order as to costs. As such, the Bank Parties submit that they are giving up a probable entitlement to significant costs orders. In addition, under the settlement, the Bank Parties are waiving interest on overdue amounts for group members, where such an amount has accrued and remains unpaid. I accept that, as the Bank Parties contend, these features of the settlement must also be seen in the context of the settlement as a whole and the plaintiffs' prospects of success; (b) the enforceability clauses bring finality to the dispute. It is submitted that they provide certainty as to the group members' rights and ensure the Bank Parties are not left in a position where they continue to be faced with extensive litigation concerning the Loan Deeds. It is, the Bank Parties contend, in the interests of all parties that their positions be made absolutely clear; (c) group members who wished to bring claims or defences that extended beyond the issues as pleaded in the group proceedings should, the Bank Parties contend, have opted out. Moreover, it is submitted that by electing not to opt out, group members have proceeded on the basis that the pleaded facts and issues for determination (by judgment or settlement) are applicable to them; and (d) finally, the Bank Parties submit that it is likely that group members would be precluded from bringing subsequent claims in any event under the principles of estoppel or abuse of process. These matters are addressed further in these reasons for judgment following consideration and discussion of the issues raised by the objectors with respect to these matters. 79 In conclusion, the Bank Parties submit that the enforceability clauses are part of the commercial compromise reached by the parties. The acknowledgments and admissions relating to the validity and enforceability of the Loan Deeds and the release in favour of the Bank Parties were made by the Plaintiffs for and on behalf of themselves and all group members. This, it is contended, is the reality of the deal which has been struck. Moreover, it is observed that all group members receive the same treatment under the terms of the settlement deed. Further, it is said that the Bank Parties should not be left in an uncertain position, facing ongoing litigation relating to the Loan Deeds. The Bank Parties say they see benefit for all parties and group members in terms of settlement which make it abundantly clear what the position will be going forward. … 132. For the preceding reasons, any group members with purported claims or defences different to those pleaded in the group proceedings, and who wished to pursue those claims or defences, could have and should have opted out. By not opting out, as submitted by the Bank Parties, group members must be taken to have accepted that the claims as pleaded in the group proceedings represent all of the claims reasonably available to them. This is the reality of the way the class action regime operates. That being so, it follows that the Bank Parties are entitled to assume that the only challenges to the enforceability of the Loan Deeds group members wished to pursue were those made in the group proceedings. It would not be reasonable for group members to raise different claims or defences in subsequent proceedings. Further, the Bank Parties should be entitled to seek and achieve a complete settlement of the matters in dispute between them and the group members regarding the Loan Deeds. It would be an abuse of the Court's process, especially having regard to the opt-out procedure, for any group members to frustrate this entitlement by bringing subsequent claims or defences regarding the Loan Deeds." [emphasis added].
15. As stated above, Croft J approved the Deed of Settlement (1090 paragraph 154).
16. The defendant in these proceedings, Mr Zipevski, is referred to as a client of the solicitors who acted in the Group Proceedings in the Deed of Settlement schedules: 967.
17. The evidence establishes that pursuant to the Deed of Settlement, the Bank waived interest on the defendant's two loans which constituted default interest: 1229 and paragraph 71 of Mr Flamer-Smith's first affidavit.
18. In his first affidavit sworn 11 May 2017, Mr Flamer-Smith exhibits the documents which I have referred to earlier in this background. Mr Flamer-Smith notes in paragraph 4 of his first affidavit, that since the collapse of the Great Southern Group of companies, he has been responsible in his duties for the first plaintiff for the management of many loans made by the second plaintiff to people who invested in managed investment schemes promoted by Great Southern Managers Australia Ltd which loans were subsequently signed or transferred to the first plaintiff.
19. Mr Flamer-Smith provides details in relation to the terms of the two loans entered into by the defendant. Substantial detail is given by Mr Flamer-Smith in relation to the assignment and transfer of the loans to the first plaintiff: see paragraphs 19-27.
20. The conclusion in paragraph 27 of Mr Flamer-Smith's first affidavit, that the effect of the assignment and transfer is that the defendant is obliged to, amongst other things, pay all moneys owed under the First Loan and the Second Loan to the first plaintiff, would appear to be correct: see also paragraph 50 of Mr Flamer-Smith's first affidavit. I will consider this further below in relation to the Second Loan assignment.
21. As indicated above, an issue was raised in the present proceedings in relation to whether the defendant "opted out" of the various Group Proceedings before the Supreme Court of Victoria which I have outlined. I have already referred to paragraph 63 of Mr Flamer-Smith's first affidavit in which he states that he has examined a spread sheet provided by the Victorian Supreme Court showing Group Members from whom Opt Out Notices had been received, which did not include the name of the first defendant: 833-902.
22. In his second affidavit sworn 18 August 2017, Mr Flamer-Smith annexes relevant documents concerning the opt out issue.
23. Annexure A to Mr Flamer-Smith's second affidavit is an email from the defendant to "Great Southern Legal". The email refers to two Notices of Demand served on the defendant. In the email Mr Zipevski states: "… I joined a Class Action for a period of time hoping that it would be successful and the loans would be nullified… As we both know, the Class Actions have failed…".
24. Another issue in the proceedings is whether Mr Makari was an agent of the plaintiffs or the accountant of the defendant. In the email dated 13 October 2015 from Mr Zipevski he states: "I would like to see the original application for credit that my accountant Bakous Makari of Makari & Co submitted on my behalf". This establishes that Mr Makari was the accountant acting on behalf of the defendant. This is consistent with references which I have set out above in the applications signed by the defendant. It is also confirmed by the references to Mr Makari in various tax returns lodged by the defendant which are part of documents produced by the defendant which became Exhibit D.
25. Mr Flamer-Smith in his second affidavit has also included Supreme Court of Victoria documents in relation to the opt out procedure. The documents establish that the Opt Out Notice was forwarded to the defendant at his 22 Lagoon Street Narrabeen address (page 24 of the affidavit).
26. Also annexed to Mr Flamer-Smith's second affidavit is correspondence with the Supreme Court of Victoria which gave rise to certificates sealed by the Deputy Registrar (Legal) of the Commercial Court which provided, upon a review of the Victorian Supreme Court records, that the Deputy Registrar could confirm that the records did not show that the defendant filed an Opt Out Notice in either proceedings 2011/04071 or proceedings 2011/04001 (pages 71 and 72 of the affidavit).
27. Also annexed to Mr Flamer-Smith's second affidavit are emails dated 11 November 2009 and 7 May 2010 from the defendant. In the email dated 11 November 2009, the defendant states: "After much deliberation, I have requested representation from M + K Lawyers in the proposed class action against Great Southern … Furthermore, I've decided that the best path to pursue personally is in joining the class action".
28. In the second email dated 7 May 2010, Mr Zipevski states to "Great Southern Recoveries": "May I please request an extra week to make a decision on whether I will be joining a class action through M & K Lawyers or if I will enter into a payment plan with you".
29. In Mr Flamer-Smith's second affidavit is a statement by Mr Flamer-Smith that he is not aware of any evidence that the defendant's accountant, Mr Makari acted as the agent of Great Southern Finance or the second plaintiff in respect of the loans, the subject of the proceedings: paragraph 8.
30. In his third affidavit sworn 15 February 2018, Mr Flamer-Smith updates the amounts alleged to be owing by the defendant to the first plaintiff under the First Loan Deed and the Second Loan Deed.

Further consideration of the affidavit of Mr Zipevski

1. As stated above, Mr Zipevski has relied on an affidavit sworn 7 August 2017.
2. In his affidavit he states in paragraph 2 that in about 2007, he was "introduced" to Bakous Makari of Makari & Co. Mr Zipevski does not say who introduced him to Mr Makari. Mr Zipevski then says in paragraph 2 the following: "I understood Mr Makari to be an agent for ABL Nominees Pty Ltd and GSF". Mr Zipevski does not indicate the basis for this understanding.
3. Mr Zipevski then sets out conversations in which he told Mr Makari that he had never considered any investments of the nature involved before because he did not know anything about them and was relying on Mr Makari's advice. He states that Mr Makari said that the investments were his "best option to minimise tax" (paragraphs 3).
4. Mr Zipevski notes that Mr Makari never provided any other alternative or advice even though he made him aware that he was not seeking to enter into any such investments (paragraph 4).
5. Mr Zipevski gives evidence that he did not sign the 1 July 2007 Loan Deed or the 27 April 2009 Loan Deed. He also states that he did not nominate certain persons or GSF or ABL Nominees Pty Ltd or any other person or entity as his attorney and to enter into those Deeds. This statement appears to be contrary to the granting of the powers of attorney by Mr Zipevski in the Applications for Term Finance which I have referred to above.
6. Mr Zipevski gives evidence that he first saw the two Loan Deeds on 30 June 2016 when he was provided with a copy by his solicitors (paragraphs 8 and 10). This seems to be contrary to the 15 April 2008 letter to Mr Zipevski which states that a copy of the First Loan Deed was enclosed with the letter (133).
7. In paragraphs 12 and 13 of his affidavit, Mr Zipevski states that prior to the Loan Deed dates he was not provided with or shown the relevant PDS.
8. In paragraph 14, Mr Zipevski notes that in 2007 and in 2009 he was not provided with any independent legal advice, or any financial advice, about any risks associated with the timber project, including the risk of it failing, or about any ongoing liability under the Deeds in the event that the projects failed. He also states that he was never asked about his ability to meet payment obligations under the Deeds (paragraphs 14-15).
9. Mr Zipevski refers in his affidavit to correspondence he received by way of email from the law firm Macpherson & Kelley who was acting for the plaintiffs in class actions in Melbourne, where he was told that if he did not sign on to the class action he would be removed from its client list, although he could still choose to join the class action at a later date. Mr Zipevski gives evidence that he understood from the correspondence that if he failed to take any further action, he would not be a participant in the class action. He says that as he did not wish to be involved in the class action, he did not take any further steps and did not sign on, as suggested in the correspondence from the solicitors (paragraphs 17-18).
10. Mr Zipevski notes that on 29 January 2010 he received further correspondence from that law firm in which they advised that he would be removed from their client list at the close of business on that day. Mr Zipevski states that on the basis of the correspondence from the law firm, he understood that he had opted out of becoming a Group Member of the group proceedings in the Supreme Court of Victoria which are referred to in the plaintiffs' Statement of Claim.

Issues to be determined

1. The issues to be determined in the proceedings would appear to be as follows: 1. Did the defendant opt out of the group proceedings? 2. If he did not, what is the effect of failing to opt out? 3. Was Mr Makari the agent of either of the plaintiffs? 4. If not, what is the effect of Mr Makari not being an agent? 5. Does the defendant have a valid cause of action under the Contracts Review Act 1980? 6. Was there a valid assignment of the second plaintiff's rights under the Second Loan Deed?

Submissions

1. The plaintiffs relied on oral and written submissions. They submitted, in general summary, as follows: 1. Mr Zipevski is bound by the First Loan Deed and the Second Loan Deed entered into on his behalf by his appointed attorneys; 2. Mr Zipevski failed to opt out of the Victorian Supreme Court proceedings in which he was a Group Member; 3. Mr Zipevski is bound by the terms of the May 2014 Deed of Settlement, especially Clause 4; 4. That Deed prevents Mr Zipevski bringing the present proceedings; 5. In the alternative, Mr Makari was not the agent of GSF or the second plaintiff; 6. Mr Zipevski is not a "consumer" under the relevant sections of the ASIC Act and those sections do not apply; 7. The Contracts Review Act 1980 does not apply to the two Loan Deeds as the law of Western Australia applies. In any case, the Deeds of Loan were not unjust within that Act; 8. The Second Loan Deed was assigned to the first plaintiff; 9. The first plaintiff was entitled to the relief claimed.
2. Mr Zipevski submitted, in summary, as follows: 1. He thought he had opted out of the relevant Victorian Supreme Court proceedings; 2. He thought Mr Makari was the agent of GSF and the second plaintiff; 3. He relied completely on the advice of Mr Makari; 4. He believed the two Loan Deeds were unjust; 5. The proceedings had had a very profound effect on his marriage, career, financial position, health and future.
3. In relation to this last matter, Mr Zipevski has the sympathy of the Court. However, in the end I must determine the proceedings according to the law.

The opt out issue

1. The defendant submits that on the basis of the evidence he should be found to have opted out of the Victorian Supreme Court proceedings. The plaintiffs submit that the defendant, despite his belief, did not opt out of the Victorian Supreme Court proceedings.
2. In my view, based on all of the evidence, there was no opting out of the relevant Victorian Supreme Court group proceedings by the defendant for the following reasons: 1. The evidence shows that the defendant was a person who was a party to the 2007 HVT Scheme and the 2008 Olives Scheme; 2. The evidence shows that the defendant acquired lots in each of those two schemes; 3. I am satisfied from my review of the terms of the pleadings in the Victorian Supreme Court in evidence that the defendant fell within the persons on behalf of whom the proceeding numbers 2011/04001 and 2011/04071 were commenced (656-657 and 737-738); 4. The evidence shows that Mr Zipevski was sent out an Opt Out Notice as approved by the Victorian Supreme Court: page 24 of Mr Flamer-Smith's second affidavit; paragraph 12 of Mr Flamer-Smith's second affidavit and paragraph 8 of the affidavit of Mr Walter which is annexed to Mr Flamer-Smith's second affidavit; 5. The evidence clearly establishes that the defendant, despite his belief, did not opt out of the relevant two Victorian Supreme Court proceedings: see paragraphs 11-16 of Mr Flamer-Smith's second affidavit and the annexures referred to in those paragraphs, particularly Annexure E of the second affidavit, being the sealed documents in the relevant two proceedings from the Deputy Registrar (Legal) of the Commercial Court of the Supreme Court of Victoria; 6. Mr Zipevski is referred to as a client of Macpherson & Kelley Lawyers in their list of clients which is Schedule 4 to the Deed of Settlement; 7. The various correspondence referred to in the affidavits assists this conclusion. Annexures F and G to Mr Flamer-Smith's second affidavit, being the emails dated 10 November 2009 and 7 May 2010, show that Mr Zipevski requested representation from Macpherson & Kelley Lawyers. Although the correspondence annexed to his affidavit suggests that he did not proceed with that representation, that is not to the point. There is a distinction between Group Members who retained MacPherson & Kelley as their solicitors on the one hand and persons who fell within the concept of Group Members in each proceedings on the other. A person may or may not fall into both groups; 8. The fact that Mr Zipevski may not have received the Opt Out Notice is not relevant to whether he is bound by any court order: see s 33Y(7) of the Supreme Court Act 1986 (Vic).
3. I am satisfied from all of this evidence that Mr Zipevski did not opt out of the Victorian Supreme Court proceedings relating to the two schemes in question.

If the defendant did not opt out, what is the effect of failing to opt out?

1. The failure by the defendant to opt out of the two Victorian Supreme Court proceedings has significant consequences for him.
2. I am satisfied from the evidence that the Deed of Settlement dated May 2014 (905), which was approved by Croft J in his judgment in Clark (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (receivers and managers appointed) (in liquidation) [2014] VSC 516 (1003), was entered into by persons, who included: 1. The group plaintiffs, in the two proceedings relevant to the defendant in the current matter; and 2. The two plaintiffs in the current matter.
3. A review of the Deed of Settlement dated May 2014 as a whole shows that it was intended to resolve all of the various claims in the various Group Proceedings.
4. Clause 4 of the Deed of Settlement is crucial. I am satisfied from the evidence that the plaintiffs have waived the default interest relating to the two loans of the defendant as referred to in Clause 4.1.1 of the Deed of Settlement. The combined effect of Clauses 4.1.4; 4.1.6; 4.1.10 and 4.1.13 is that the Group Members (which is defined widely in Clause 1.1 of the Deed of Settlement and includes each person falling within the definition of a Group Member in any one or more of the Group Proceedings and who has not opted out of the Group Proceedings) admit the validity and enforceability of the Loan Deeds with the plaintiffs and release the plaintiffs from all Claims. It is also accepted in the Deed that the plaintiffs may plead the Deed of Settlement as a bar or defence to any claim or action brought by the Group Members relating to a Claim (which is extremely widely defined in Clause 1.1).
5. In paragraphs 40-45 of their Amended Statement of Claim filed on 18 September 2017, the plaintiffs have pleaded the Deed of Settlement, as approved by the Victorian Supreme Court, as preventing the defendant raising any Defence or Cross-Claim in the proceedings. The Defence of the defendant appears to be based on the fact that he opted out.
6. As I have found that the defendant did not in fact opt out, in my view the defendant is bound by the Deed of Settlement and he is estopped from defending the claims in these proceedings as he has done.
7. Further, the Victorian Court of Appeal in Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592; [2017] VSCA 51 held that the order made by Croft J approving the Deed of Settlement should not be read down. Similarly, it was held the Deed of Settlement dated May 2014 applies in accordance with its terms. It was held it was effective to prevent a defendant from advancing claims and disputes: [49]-[59], especially at [57] and [59].
8. In my view, I should follow that decision as it appears to me, with respect, to be clearly right.

Was Mr Makari the agent of either of the plaintiffs?

1. In his Defence filed 27 September 2017, the defendant pleads that Mr Makari was the agent of the plaintiffs, breached a duty of care which he owed to the defendant and breached provisions of the ASIC Act which I have referred to above.
2. In my view, the evidence does not establish that Mr Makari was the agent of either of the plaintiffs or of GSF.
3. There is no evidence before me that any of those corporations gave express authority to Mr Makari to act on behalf of them in relation to any dealings with the defendant or with potential investors in the schemes generally. Mr Makari was the defendant's accountant and tax agent: returns in Exhibit D.
4. The question therefore arises whether there was usual or apparent authority given to Mr Makari to act as the agent of GSF or the second plaintiff.
5. There is no evidence before me to suggest that usual authority arose out of the position which Mr Makari held, apparently as an accountant.
6. In relation to ostensible authority, in order for there to be ostensible authority there must have been a holding out by one or more of the corporate entities involved of Mr Makari as their agent: Crabtree Vickers Pty Ltd v Australian Direct Mail & Addressing Co Pty Ltd (1975) 133 CLR 72 at 80; Williams Group Australia Pty Ltd v Crocker [2016] NSWCA 265 at [64]. There is no evidence before me that any of the corporations involved, including the plaintiffs, ever held out, in any relevant way, Mr Makari as their agent.
7. Accordingly, I reject the defendant's argument that Mr Makari was the agent of either of the plaintiffs or GSF.
8. As he was not the agent of any of those entities, the defendant's arguments relying on a breach of duty of care by Mr Makari for whom the defendants were said to be responsible fail (even assuming that the defendant had opted out of the Victorian Supreme Court group proceedings which I have found that he did not).
9. In any case, it appears that ss 12ED and 12GH of the ASIC Act do not apply in the present case for the following reasons: 1. Mr Zipevski was not a "consumer" for the purposes of either section: see s 12BC of the ASIC Act. The price of the services in each case was above $40,000 and the services were not of a kind ordinarily acquired for personal, domestic or household use or consumption. Here they were loans for substantial agricultural investment purposes; 2. Also there is no suggestion that any financial services supplied by the second plaintiff were not rendered with due care and skill or that materials supplied were not fit for the purpose for which they were provided. The loan services were provided, loans resulted, the moneys were advanced, and the defendant acquired his rights as applied for in each project.

Claim under the Contracts Review Act

1. In paragraph 49 of his Defence filed 27 September 2017, Mr Zipevski pleads, as an alternative claim, that each of the 2007 and 2009 Loan Deeds was unjust in the circumstances relating to the Deeds at the time it was made within the meaning of that term in s 7 of the Contracts Review Act 1980 (NSW).
2. In s 4 of the Contracts Review Act "unjust" is defined as meaning unconscionable, harsh or oppressive. Sections 7 and 9 of the Contracts Review Act provide as follows: "7 Principal relief (1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract, (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that: (i) varies, or has the effect of varying, the provisions of the land instrument, or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument. (2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order. (3) The operation of this section is subject to the provisions of section 19." "9 Matters to be considered by Court (1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract. (2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following: (a) whether or not there was any material inequality in bargaining power between the parties to the contract, (b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation, (c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract, (d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract, (e) whether or not: (i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or (ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented, because of his or her age or the state of his or her physical or mental capacity, (f) the relative economic circumstances, educational background and literacy of: (i) the parties to the contract (other than a corporation), and (ii) any person who represented any of the parties to the contract, (g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed, (h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act, (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect, (j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act: (i) by any other party to the contract, (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or (iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract, (k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and (l) the commercial or other setting, purpose and effect of the contract. (3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made. (4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made. (5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made."
3. In Calvo v Ellimark Pty Ltd [2016] NSWCA 136 Leeming JA (with whom Ward and Gleeson JJA agreed) stated as follows at paragraph [101]: "[101] I am prepared to accept that there may be circumstances where significant procedural unfairness leads to the conclusion that a transaction which is substantively fair is nevertheless unjust in the circumstances so as to engage s 7 of the Contracts Review Act. McHugh JA recognised as much in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620, as did Gleeson JA in Canty v PaperlinX Australia Pty Ltd [2014] NSWCA 309 at [119]. But I do not accept that this appeal is an example of such a case. I am of that view because the 2009 Deed (coupled with the additional loan) was not on the borderline of what was substantively fair. It was indeed in many respects a generous transaction, from the point of view of the Calvos, so much so that I cannot readily contemplate realistic circumstances in which it would have been bettered. Thus even if Ms Johnson had taken the steps which it was submitted should have been taken, it has not been shown that the Calvos had any viable alternative which would produce any materially better result for them. In those circumstances, even if there were some measure of procedural injustice, the transaction which eventuated is not one which can be regarded as unjust."
4. In Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 at [7], Allsop P stated as follows: "[7] The broad evaluation of unjustness under the Contracts Review Act 1980, s 4, s 7 and s 9 involves the normative evaluation of the totality of relevant circumstances. Inevitably minds may differ as to conclusions about such questions. Also, it is often not fruitful to compare other cases with the particular circumstances at hand, lest one be deflected from an appropriate overall assessment by focus on particular aspects relevant to any such comparison. Central to the normative evaluation is the recognition that there is a need for the protection of some people in some circumstances, who are not able fully to protect their own interests against factors that may cause injustice. That vulnerability may come from one or more of many circumstances, such as lack of education or of intelligence, from gullibility, from the predation of fraud and greed, and also sometimes from loyalty and love. The characterisation of a contract as unjust and the sheeting home to the other contracting party of the consequences of its unjustness may be a difficult evaluative exercise. At its heart, however, is the recognition of the inadequacy of one party to protect her or his interests in the circumstances. Here, there was no predation. There was no behaviour in which Provident Capital Ltd sought to take advantage of Mrs Papa. Her son may have sought to do so, but his exchanges with his mother can be seen as blandishments born of his own optimism. Mrs Papa had a solicitor whose advice was inadequate. It would, in my view, be unjust to visit the blandishments of the son and the inadequacy of fulfilment of retainer by the solicitor on the lender. That conclusion involves a consideration of all the matters referred to by Macfarlan JA, including the fact that Mrs Papa was a capable and intelligent woman, who was in no way misled by the lender in entering into the transaction."
5. This was approved in Maha Pty Ltd v Coplin [2007] NSWCA 318.
6. In Re Elsmore Resources Ltd [2016] NSWSC 856 Black J stated as follows at paragraphs [65]-[67]: "[65] I turn now to the application of the relevant provisions of the Contracts Review Act in the relevant circumstances. Section 7(1) of the Contracts Review Act relevantly provides that: "(1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract …" It seems to me that the reference to "the circumstances relating to the contract at the time it was made" in s 7(1) of the Contracts Review Act is not limited, in its terms, to those circumstances which were known to the party that seeks to rely on the contract at the relevant time, although a lack of knowledge of relevant matters may well be relevant to the exercise of the court's discretion. That will have some significance below, since one significant matter, the amount of the shortfall in the monies raised by Elsmore, was not known to it at the date of the Handwritten Terms. [66] In West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620 ("West v AGC (Advances)"), McHugh JA observed that a contract may be unjust, for the purposes of s 7(1) of the Contracts Review Act, in the circumstances existing when it was made because of the way it operates in relation to the claimant or because of the way in which it was made or both. In Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; (2008) 77 NSWLR 205, Campbell JA (with whom Hodgson and McColl JJA agreed) similarly observed, by reference to authority, that a contract could be unjust by reason of substantive injustice, because its terms, consequences or effects were unjust, or because of procedural injustice, by reason of the unfairness of the methods used to make it. His Honour noted that two distinct steps are involved in applying the Contracts Review Act, the first being to determine whether the contract was unjust in the circumstances in which it was made, having regard to the factors referred to in s 9 of the Contracts Review Act, and involving a broadly based value judgment, and the second being whether any relief should be granted, and what that relief should be. [67] In Provident Capital Ltd v Papa [2013] NSWCA 36; (2013) 84 NSWLR 231 at [7], Allsop P (as his Honour then was) in turn summarised the evaluation involved in determining whether relief should be allowed under the Contracts Review Act as follows: "The broad evaluation of unjustness under the Contracts Review Act 1980, ss 4, 7 and 9 involves the normative evaluation of the totality of relevant circumstances. Inevitably minds may differ as to conclusions about such questions. Also, it is often not fruitful to compare other cases with the particular circumstances at hand, lest one be deflected from an appropriate overall assessment by focus on particular aspects relevant to any such comparison. Central to the normative evaluation is the recognition that there is a need for the protection of some people in some circumstances, who are not able fully to protect their own interests against factors that may cause injustice. That vulnerability may come from one or more of many circumstances, such as lack of education or of intelligence, from gullibility, from the predation of fraud and greed, and also sometimes from loyalty and love. The characterisation of a contract as unjust and the sheeting home to the other contracting party of the consequences of its unjustness may be a difficult evaluative exercise. At its heart, however, is the recognition of the inadequacy of one party to protect her or his interests in the circumstances." The applicable principles in respect of an application under s 7 of the Contracts Review Act were also summarised by Sackar J in White v Wills [2014] NSWSC 1160 at [107]ff in similar terms, in a passage approved by Kunc J in Crane Distribution Ltd v Yang (2016) NSWSC 620."
7. The defendant submits that the Loan Deeds should be set aside on the basis that they are unjust in all the circumstances at the time they were entered into within s 7 of the Contracts Review Act 1980.
8. The plaintiffs submit: 1. The Loan Deeds were not unjust; and 2. Section 17 of the Contracts Review Act 1980 excludes the operation of the Act to the defendant.
9. I will deal with the second argument first.
10. The proper law of each Loan Deed was the law of Western Australia, not New South Wales (129, Clause 27; 614, Clause 24). Therefore, s 17(3)(a) of the Contracts Review Act 1980 does not apply.
11. Secondly, s 17(3)(b) of the Contracts Review Act 1980 does not apply. There was an express choice by the parties of the law of Western Australia to apply. This therefore should be the law applicable: Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418 at 441. That choice was not colourable or lacking in good faith: Vita Food Products Inc v Unus Shipping Co Ltd [1939] AC 277. The majority of factors pointed to places other than New South Wales: 1. The defendant was located in New South Wales; 2. The applications were made in New South Wales; 3. The second plaintiff was located in South Australia; 4. GSF was located in Western Australia; 5. The responsible entity under both schemes was located in Western Australia; 6. The projects were to be located at various places, particularly Western Australia.
12. Accordingly, the law of Western Australia applies and under s 17 of the Contracts Review Act 1980, that Act does not apply. The contract does not have its closest and most real connection with New South Wales: Bonython v Commonwealth (1950) 81 CLR 486 at 498 approved in Akai, above at 434.
13. In my view, the factors in the present case also do not suggest that the two Loan Deeds in question were unconscionable, harsh or oppressive at the time they were entered into.
14. I note the following matters in relation to the defendant: 1. At the relevant time he was not a person of either young years or advanced years; 2. He appeared in his presentation in court to be an intelligent man with a good command of English; 3. His jobs at the relevant times were as a Sales Manager selling luxury motor vehicles which clearly would have required a high level of communication skills; 4. At the time of the First Loan Application the defendant had investment properties and a substantial holding of shares. At the time of the Second Loan Application, whilst the properties appear to have been sold, the defendant still had the share investments; 5. The defendant had considerable earnings at both relevant times; 6. Although the positions of the defendant and the plaintiffs could not be compared in terms of financial sophistication or power, I do not believe that there was a material inequality. The defendant could have decided not to go ahead with the investments; 7. The defendant appears to have been advised by his accountant Mr Makari. He was clearly able to seek advice from Mr Makari and may have a potential cause of action against him in relation to the advice which he gave; 8. I accept that the provisions were not the subject of apparent negotiation but this does not mean that they are necessarily unfair in the circumstances; 9. The projects in question were heavily tax driven and that would seem to have been one reason for the defendant taking the projects on according to the advice provided to him by Mr Makari as set out in the defendant's affidavit. Clearly the defendant was not pressured into the transaction and had an option whether to go into it. He obtained the tax benefits of the transactions: Exhibit D; 10. There is no suggestion that the defendant had any physical or mental incapacity; 11. There is no suggestion that the defendant's economic circumstances were such that he felt forced to go into the transactions; 12. While the contractual documents are not straightforward, in my view they are not unduly confusing or unintelligible; 13. It seems that accounting advice was obtained from Mr Makari by the defendant, although no independent legal advice was obtained; 14. There is no suggestion any undue influence, unfair pressure or unfair tactics were exerted on, or used against, the defendant by either one of the plaintiffs, a person who was the agent of the plaintiffs or by Mr Makari with the knowledge of one of the plaintiffs.
15. Taking into account all of the circumstances, in my view the defendant has failed to establish that either of the Loan Deeds or any of the other documents entered into on his behalf pursuant to the powers of attorney were unjust in the circumstances relating to the Loan Deeds at the time they were made.

Was there a valid assignment of the Second Loan Deed?

1. One issue which arose was the validity of the assignment to the first plaintiff of the rights under the Deed of Loan dated 27 April 2009 (627).
2. In my view, the assignment provisions applied to this Deed when it was entered into pursuant to the powers of attorney. See the documents at 454, 456 (paragraph 11), 251 (Clause 2.10) and 456-6. The assignment included an assignment of future loan rights arising from Deeds of Loan entered into in the future such as the 27 April 2009 Deed of Loan.
3. Thus the second plaintiff assigned those rights in equity to the first plaintiff which assignment became an assignment in law on 30 April 2009 when notification was given to the defendant: 481; s 20 of the Property Law Act 1969 (Western Australia).

Disposition

1. For these reasons, I find that the first plaintiff has established its cause of action in debt under the two Loan Deeds and is entitled to the relief which it seeks. In my view, none of the defences put forward by the defendant have been established or can be maintained in the light of the May 2014 Deed of Settlement as approved by Croft J in the Victorian Supreme Court.
2. I accordingly make the following orders: 1. Judgment for the first plaintiff against the defendant; 2. The claim of the second plaintiff in the Amended Statement of Claim is dismissed; 3. The parties are to bring in Short Minutes of Order within seven days reflecting these reasons including any claim for interest by the first plaintiff; 4. The defendant is to pay the plaintiffs' costs of the proceedings as agreed or assessed; 5. Liberty to the parties to apply within 14 days for a different costs order to that referred to in Order 4 above; 6. Exhibits to be returned after 28 days.

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: 21 March 2018