Bendigo and Adelaide Bank Ltd v Howard [2018] NSWSC 383 | Case summary

Supreme Court of NSW|2018-03-01|Before: Davies J, Investments P

CLR 1 Westgold Resources NL v St George Bank Limited (1998) 29 ACSR 396 Westport Insurance Corporation v Gordian Runoff Limited (2011) 244 CLR 239; [2011] HCA 37 Texts Cited: Nil Category: Principal judgment Parties: Bendigo and Adelaide Bank Ltd (Plaintiff) Michael Richard Howard (Defendant) Representation: Counsel: N Cotman SC & R Kipps (Plaintiff) S Epstein SC & P Horobin (Defendant)

Solicitors: Results Legal (Plaintiff) Cordato Partners Lawyers (Defendant) File Number(s): 2017/284101 Publication restriction: Nil Decision under appeal Court or tribunal: Local Court of NSW Jurisdiction: Civil Citation: Nil Date of Decision: 23 August 2017 Before: Soars LCM File Number(s): 2016/192620

Judgment

The plaintiff, by an amended statement of claim filed in the Local Court on 22 September 2016, claimed judgment against the defendant in the sum of $66,569.32 said to be owing under a loan by a predecessor in title of the plaintiff to the defendant on or about 15 June 2006. The loan was alleged to have been made by ABL Nominees Pty Ltd (ABL) to enable the defendant to purchase three grovelots in an olive plantation as part of a managed investment scheme called the Great Southern 2006 Organic Olives Investment Project. The scheme was set up and operated by Great Southern Managers Australia Ltd (GSMAL). The scheme enabled investors to borrow for their investment from either Great Southern Finance Pty Ltd (GSF) or preferred financiers of GSMAL of whom ABL was one.
It was alleged in the proceedings that the defendant borrowed $24,490 from ABL. It was further alleged that the defendant defaulted in making repayments from 31 May 2009. That resulted in an acceleration event whereby the whole of the balance of the monies became due and payable.
It was further alleged that on or about 23 June 2006 ABL assigned all of its rights under the loan agreement and a loan deed to Adelaide Bank Ltd and that on 1 December 2008 all rights under the loan agreement and the loan deed were transferred from Adelaide Bank to the plaintiff when the plaintiff merged with Adelaide Bank.
By a judgment given on 23 August 2017, the plaintiff was unsuccessful in the proceedings in the Local Court and now appeals to this Court alleging errors of law identified in 23 grounds of appeal.

The investment

On 15 June 2006 the defendant completed an application form to purchase three grovelots at a cost of $8,000 each. At paragraph 5 of the application which was headed "FINANCE (IF APPLICABLE)" the following appeared: I/we hereby apply to Great Southern Finance Pty Ltd, or to a preferred financier of GSMAL, to borrow the amount of: $24,000 (Insert amount which should be the same as the Balance Due at section four under the terms of the finance section selected below) Please also complete the Direct Debit Request on page 115 and return your application. 12 month interest free loan (cross box) ☐ OR Principal and Interest Loan (minimum $16,000) ☒ If P&I loan, please insert details below: (a) Term of loan (a) 10 yrs (b) Term of interest only period (b) 3 yrs (The matters identified in bold were completed by the defendant.)
At the same time, the defendant completed an application for term finance (the Finance Application). Since the principal issue in the matter concerns the completion of part of this form, the relevant part of the Finance Application is annexed to the judgment as "A".
A third document completed by the defendant was a Direct Debit Request. It was addressed to GSF, and requested GSF debit the defendant's Commonwealth Bank (CBA) account identified on the form. The Request said this at the top: PLEASE ONLY COMPLETE THIS FORM IF USING GREAT SOUTHERN FINANCE (SECTION 5 OF THE APPLICATION FORM)
It can be seen from annexure "A" that the defendant identified that he wished to buy three grovelots at a cost of $24,000 which, with the loan fees of $490, totalled $24,490.
The Finance Application then provided three tables containing loan options. The applicant was asked to select one loan option from one table only. The first table was for GSF as lender with loan terms for woodlots, grovelots and combined loans. The options were five different periods of a principal and interest loan.
The second table was for GSF as lender with loan terms for woodlots only. There were four options for interest only loans for varying periods followed by principal and interest loans for varying periods. The defendant ticked the box in that table for a three year interest-only loan followed by seven years principal and interest.
The third table was for ABL as lender with loan terms for grovelots or combined loans. The options were identical with those in the second table for GSF as lender.
Clause 6 of the Finance Application relevantly provided: 6 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 Appointor (Attorney) on the terms specified herein and to exercise the powers as follows: (iii) to enter into and execute a loan deed 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; (iv) to date the Loan Deed and complete the blank spaces in the schedule thereto consistent with the provisions of this finance application; (v) to make and Initial any necessary alterations to the Loan Deed which are not prejudicial to the interests of the Appointor in the considered opinion of the Attorney; (vi) to do anything in relation to the property secured under the Loan Deed which the owner of that property would be entitled to do; (vii) to make, do and sign all acts, deeds and things as may be necessary to procure the stamping and registration of the Loan Deed with the power to instruct the Attorney's solicitors to assist the Attorney in this regard; and (viii) to enter into and execute on the Appointor's behalf, any documents connected with, or related to, the Loan Deed. (b) The Appointor agrees at all times to keep the Attorney indemnified against all claims, demands, costs, expenses, damages and losses of any type arising as a result of the exercise of the Power of Attorney granted. (c) The Appointor authorises the Attorney to exercise the powers under the Power of Attorney even if the exercise of that power involves a conflict of interest. (d) The Appointor undertakes to ratify all that the Attorney lawfully does or causes to be done under the Power of Attorney granted. (e) The Power of Attorney granted by way of the Appointor's signature on this finance application will remain in full force and effect until notice of the death of the Appointor or notice of the revocation of the Power of Attorney is received by the Attorney. (f) The Appointer declares that anything the Attorney does in exercising the powers under the Power of Attorney will be as binding as if the Appointor had done that act itself. (g) Any person dealing with the Attorney or a person purporting to be an Attorney under the Power of Attorney is entitled to rely on execution of any document by that person as conclusive evidence that: (i) the person holds the office set out In the Power of Attorney; (ii) the Power of Attorney has come Into effect; (iii) the Power of Attorney has not been revoked; (iv) the right or power being exercised or being purported to be exercised is property exercised and that the circumstances have arisen to authorise the exercise of that right and power; and (v) they are not required to make any enquiries in respect of any of the above matters. (h) The Power of Attorney is executed as a deed.
Purportedly, pursuant to clause 6 of the Finance Application, GSF completed and executed a loan deed dated 26 June 2007. The loan deed, as part of the standard form annexed to the Product Disclosure Statement, was said to be 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. The deed was executed by the defendant by his duly appointed attorney GSF, and by ABL as the lender.
The plaintiff alleges that ABL advanced the funds to the defendant and that the defendant was allocated the three grovelots for which he had applied. The plaintiff drew attention to the direct debit request that the defendant signed on 15 June 2006 as part of his application which authorised GSF to deduct monthly payments from his CBA account. Loan repayments were made from that account to GSF from 31 July 2006 until 2009.
The plaintiff claimed that, with effect from 23 June 2006, ABL assigned all its rights under the loan agreement and the loan deed to Adelaide Bank Ltd. The plaintiff further alleged that, on or about 1 December 2008, all those rights were transferred from Adelaide Bank to the plaintiff upon the plaintiff's merger with Adelaide Bank. Notice was given to the defendant of the assignments on or about 30 April 2009.
The whole investment and funding arrangement was complicated and intricate. The arrangement was governed by a Loan Sale and Servicing Deed executed by four parties to the arrangements on 25 June 2004. Those parties were GSF as the Seller, ABL as the Lender, Adelaide Bank as the Standby Servicer and Collections Agent, and GSMAL as the Originator. It is not necessary to set out the operative provisions of that Deed. It seems likely, however, that the ultimate funding for the project was to come from Adelaide Bank which would provide GSF and ABL with funds to meet the liability of the investors to GSMAL.
The present proceedings were not commenced until June 2016.

The nature of the appeal

Section 39(1) of the Local Court Act 2007 (NSW) gives a right of appeal to this Court from a decision of a magistrate sitting in its General Division, but only on a question of law. Section 40(1) enables leave to be given by this Court if it is asserted that the ground of appeal involves a question of mixed law and fact. In the present case no leave is sought by the plaintiff, and each of the grounds of appeal asserts that the magistrate erred in law in the way described in the ground of appeal.
In written submissions, the defendant challenged the whole basis of the appeal, asserting that any errors identified were errors of fact not susceptible of review. It is necessary to set out some of the defendant's submissions in that regard. The submissions read as follows: 11. Three conclusions reached by Magistrate Soars on the evidence before her were (each independently) fatal to the plaintiff's claim. They were that: a) the defendant's Application for Finance made to GSF (and the incorporated power of attorney in particular) did not authorise entry into a loan agreement with ABL, with the result that the Loan Deed was not binding on the defendant; b) she was not satisfied that there was a provision of $24,000 in funds, by ABL, in favour of GSMAL; and c) the purported loan had not been validly assigned by ABL to Adelaide Bank Limited ("Adelaide Bank"), with the consequence that, even if a loan was recoverable from the defendant under the terms of the Loan Deed made in favour of ABL as Lender, recovery of that loan could not be enforced by the plaintiff. 12. Magistrate Soars' decision, on those questions of fact, is not susceptible to appellate review in the manner in which the plaintiff now seeks to argue its case in this Court. … 14. Notwithstanding these provisions [ss 39 and 40 of the Local Court Act 2007 (NSW)], the plaintiff has not sought a grant of leave to appeal (nor obtained one) on grounds that are plainly questions of mixed law and fact, and in truth, predominantly questions of fact. … 17. The plaintiff's Summons raises 23 grounds of appeal, the vast majority of which are expressed in terms that her Honour had erred in law by either making certain findings of fact or reaching certain conclusions on the evidence before her.
In the light of those and other similar submissions, specific to particular grounds of appeal, it is appropriate at this stage to set out the principles for identifying an error of law.
In R L & D Investments P/L v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479 Kirby J said: [12] In Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126, Jordan CJ considered the nature of an appeal on a question of law. He distilled from the authorities a number of propositions. Relevantly, he said this (omitting references): (at 138) "(3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences. (4) Such a finding can be disturbed only (a) if there is no evidence to support its inferences, or (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences, or, (c) if it has misdirected itself in law." [13] The issue has been considered in a number of cases since that time, including Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139; Mahoney v Industrial Registrar of NSW & Anor (1986) 8 NSWLR 1; Haines v Leves & Anor (1987) 8 NSWLR 442; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; Gangemi Holdings Pty Ltd v Salter & Ors [1999] NSWSC 1004; Carr v Neill [1999] NSWSC 1263; SRA v Smith [2000] NSWSC 334. Arising from these authorities, a number of broad propositions can be stated: • First, there is no error of law in simply making a wrong finding of fact (Australian Broadcasting Tribunal v Bond (supra) per Mason CJ at 341), unless there is no evidence to support that finding. • Secondly, it does not amount to an error of law if the finding of fact, or the inference (or the refusal to make a finding of fact or draw an inference) is perverse, in the sense that it is contrary to the overwhelming weight of evidence (Glass JA in Azzopardi v Tasman UEB Industries Ltd (supra) at 155). • Thirdly, it is not an error of law even if the reasoning process by which the Court reaches its conclusion of fact is demonstrably unsound or illogical (Menzies J in R v District Court: Ex Parte White (1966) 116 CLR 644, at 654). • Fourthly, there is limited exception (which has no application in this case) in relation to decisions of fact in the context of a statutory description. In such a case there may be an error of law if the decision on the facts is one which could not be reasonably entertained, or supported, if the tribunal had properly understood the true construction of the relevant enactment (Mahoney v Industrial Registrar of NSW & Anor (supra) per Hope JA at 1 and Samuels JA at 5).
In Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Kirby P, having considered a number of English and Australian authorities, said (at 151): What follows from this review concerning the test that should be applied in this Court to a challenge to the process of fact-finding by the compensation judge? The court is limited, relevantly, to points of law. The finding of what have been called the primary facts of a case does not, in itself; expose the trial judge to review on a point of law, unless it can be shown that there is no evidence of a primary fact and that, this being crucial to his decision, the judge's fact finding has involved an error of law. If there is evidence, or if there are available inferences which compete for the judge's acceptance, no error of law occurs simply because the judge prefers one version of the evidence to another or one set of inferences to another. This is his function. The evaluation of competing evidence and inferences is reserved in compensation cases to the judge of the Compensation Court. Even if the evidence is strongly one way, the appeal court may not intervene simply because it reaches a different conclusion and this even if it regards the conclusion of the trial judge as against the weight of the evidence. Where the evidence points only in one direction, and, as in Poricanin the trial judge nonetheless states that he disbelieves it, the onus being upon that person, the court, on appeal, may not intervene.
In the same case, Glass JA (with whom Samuels JA agreed) said (at 155-156): To say of a finding that it is perverse, that it is contrary to the overwhelming weight of the evidence, that it is against the evidence and the weight of the evidence, that it ignores the probative force of the evidence which is all one way or that no reasonable person could have made it, is to say the same thing in different ways. Upon proof that the finding of a jury is vitiated in this way, it will be set aside because it is wrong in fact. Since the Act does not allow this Court to correct errors of fact, any argument that the finding of a Workers' Compensation Commission judge is vitiated in the same way discloses no error of law and will not constitute a valid ground of appeal. It is also pointless to submit that the reasoning by which the court arrived at a finding of fact was demonstrably unsound as this would not amount to an error of law: R v District Court of the Metropolitan District Holden at Sydney; Ex parte White (1966) 116 CLR 644 at 654.
In similar vein, in Prieston v Warwick John Williams Pty Ltd [2017] NSWSC 1577 Bellew J said: [5] It should also be noted that in respect of some of the grounds, counsel for the appellant submitted that there was no evidence to support the factual conclusions that the Magistrate reached. Such a proposition involves a question of law: Azzopardi v Tasman UBE Industries Pty Limited (1985) 4 NSWLR 139. However, it is also necessary to bear in mind that want of logic is not synonymous with error of law. As long as there is some basis for an inference, or in other words as long as the particular inference is reasonably open there is no place for judicial review because no error of law has taken place. This is so, even if that inference appears to have been drawn as a result of illogical reasoning: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33 at 356 per Mason CJ. [6] Moreover, a finding of fact which is supported by at least some evidence does not reveal an error of law even if it was made by ignoring the probative force of the evidence which is all one way, or even if it could be described as perverse or one which no reasonable person could have made: Azzopardi at 155-156 per Glass JA. Where judgment is formed on the basis of conflicting indicators, it will be difficult if not impossible to establish a "no evidence" ground of review: L & B Linings Pty Limited v WorkCover Authority of NSW [2012] NSWCA 15 at [34] per Basten JA cited in Insurance Australia Limited v O'Shannessy [2015] NSWSC 1047; (2015) 72 MVR 1 at [61] per Beech-Jones J.
It is clear, however, that construction of a document is a question of law: Westport Insurance Corporation v Gordian Runoff Limited (2011) 244 CLR 239; [2011] HCA 37 at [82]; Jennings v Credit Corp Australia Pty Ltd (2000) 48 NSWLR 709; [2000] NSWSC 210 at [11].

Grounds of appeal

It is convenient to deal with the grounds of appeal in groups pertaining in each case to the subject matter or issue with which the grounds deal. In most cases, but not all, these are grouped as appear in the plaintiff's written submissions.

The Court erred in law by, in construing the Application for Term Finance dated 15 June 2006 as to what finance was applied for and from whom, in not having regard to the cognate document, the Application for Investment, signed by the Defendant dated 15 June 2006, which provided that the Defendant applied to Great Southern Finance Pty Ltd or a preferred financier of Great Southern Managers Australia Limited, to fund an acquisition of olive grovelots from Great Southern Managers Australia Limited.

The Court erred in law by finding that, on the construction of the documents submitted by the Defendant, the Application for Term Finance dated 15 June 2006 signed by the Defendant was directed only to Great Southern Finance Pty Ltd, and not to ABL Nominees Pty Ltd, it being a preferred financier of Great Southern Managers Australia Limited.

The Court erred in not holding, as it should have held, that the Application for Term Finance dated 15 June 2006 from the Defendant was an application for finance from either ABL Nominees Pty Ltd or Great Southern Finance Pty Ltd to fund an acquisition of grovelots from Great Southern Managers Australia Limited.

The magistrate's decision

In her judgment the magistrate asked herself this question: Did the power of attorney in the Finance Application authorise the entry into of a Loan Deed with ABL as lender (as opposed to with GSF)? - should the Court correct the alleged error in the Finance Application in the selection of the lender in box 2/alleged misnomer in the selection of the lender, as a matter of construction?
The Magistrate held that she was not satisfied that, objectively determined, the defendant chose ABL as the lender and merely made a misnomer or error by ticking box 2 which specified GSF as the lender. The Magistrate held further that she was not satisfied that the Court should rectify the finance application as a matter of construction so that it read as if the defendant had ticked box 3 and chosen ABL as the preferred lender.

Submissions

The plaintiff submitted that it was indisputable that there was a mistake inherent in the box ticked for the Finance Application. The plaintiff submitted that the magistrate's implicit holding that the tick against the GSF box was effective to the extent that it precluded ABL as the lender, failed to have regard to the fact that the lending was sought for grovelots on 10/3 terms. Accordingly, GSF could not have been the desired lender because it did not fund grovelots on that basis.
Although ground 4 of the grounds of appeal asserted that the Magistrate erred in law in holding that the Finance Application should not be rectified in that way, the plaintiff now abandons that ground.
In written submissions, the defendant submitted that these grounds of appeal sought new findings on the facts and that no error of law was identified. The defendant submitted that the plaintiff did not challenge the test employed by the magistrate in considering when a court may correct errors in a document as a matter of construction.
However, Senior Counsel for the defendant acknowledged in oral submissions that, inasmuch as these grounds concerned the proper construction of documents, they involved questions of law. The defendant submitted, nevertheless, that no error was demonstrated in the construction of the documents identified by the Magistrate.

Determination

Whether the issues raised by these grounds of appeal are questions of law is not easy to answer. In the first place, the issue here is not what is the proper construction of a contract; the question is whether a contract has come into existence with ABL as the plaintiff maintains. That question involves an examination of a number of documents to determine if a contract exists and, if so, with what entity. To decide that matter it is necessary to determine objectively the defendant's intention in completing the documents. Inferences may be drawn from the way the documents have been completed. That is a determination of fact: Holloway v McFeeters (1956) 94 CLR 470 at 480; Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155 at 168; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356.
One consideration in that process is whether there has been a mistake or misnomer. The learned magistrate considered she was bound by the decision of Kunc J in New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Limited [2015] NSWSC 176. In that case his Honour said: [46] A "misnomer" is an error in naming something or someone. The Corporation based its misnomer case on the analysis of the Full Court of the Supreme Court of Western Australia in Kingstream Steel Ltd v Stemcor UK Ltd [2001] WASCA 138 ("Kingstream"). In that case a commercial transaction was secured by a letter of credit which was payable on the sighting of various documents. One of those was a guarantee to be issued by "An Feng Kingstream Steel Limited". One guarantee was issued on a letter headed "An Feng Kingstream Steel Co Ltd" and another guarantee was issued by a letter headed "An Feng Kingstream Ltd". It was accepted that there was no company with either of those names. [47] In its judgment in Kingstream the Full Court resolved the problem in this way (emphasis added): [16] In our view the misdescription of the guarantor in the first two documents is simply that, and an error of that kind is not fatal to the validity of the guarantee. Counsel for the applicant argued that because of the misdescription in the first and second guarantees, those guarantees were executed by a non-existent company. He relied primarily on Black v Smallwood [1966] HCA 2; (1966) 117 CLR 52. That case concerned a proposed company that had not been incorporated at the date of execution of a document for the sale of land. The document was executed by the signatories in the belief that the company had been incorporated and that they were directors of it. The question that arose in that case was whether the signatories were personally liable in those circumstances. The court held that, because the company on whose behalf the signatories had purported to sign did not exist, the signatories were not parties to the contract. Their signatures had been made as part of the company's signature. They were not parties to the contract as agents or otherwise and there was no basis upon which they could be held liable upon it. [17] That case can be readily distinguished from the present where the respondent sought and obtained a guarantee from an existing company but that company was misdescribed in the guarantee. The company referred to in subcl 4 of the contract did exist. All that happened was that when the first guarantee came to be prepared the word "Co." was mistakenly inserted into its name and, when the second guarantee came to be prepared, the word "Steel" was mistakenly omitted from its name. That was, in each case, simply a misnomer made in circumstances in which it must have been plain to all who were concerned with the document that it was the applicant which was the guarantor there referred to. Even if there had been any doubt at all about that fact then this must have been laid to rest by the fact that the applicant was identified by its address, fax number and telephone number. In those circumstances it seems to us plainly to be arguable that the Court is, as a matter of construction, at liberty to correct the misnomer. (See Whittam v W J Daniel & Co Ltd [1962] 1 QB 271 at 277; F Goldsmith (Sicklesmere) Ltd v Baxter [1970] Ch 85 and Nittan (UK) Ltd v Solent Steel Fabrication Ltd (1981) 1 Lloyd's Rep 633.) [48] It is important to note that the judgment in Kingstream was not dealing with a final determination of the issues. It was an interlocutory appeal against the decision of a Master on a summary judgment application. The Master had concluded that there was a very strong case that the misdescription in the guarantees could be corrected either as a misnomer or by rectification. Similarly, because of the nature of the appeal the Full Court confined its decision to the conclusion that correction by misnomer was plainly arguable. [49] Despite the nature of the appeal in Kingstream, the Full Court's approach is instructive. Applying the language in paragraph [17] of the judgment in Kingstream, I respectfully express the test for misnomer which will be corrected by construction as whether the misnomer was the product of a mistake made in circumstances in which it would have been plain to all who are concerned with the relevant document as to who the party was that was referred to in the document. Stating the principle in that way is supported by the authorities referred to by the Full Court and in the leading contract texts.
The learned Magistrate applied the principles in that case to the facts before her to conclude that there was no misnomer or mistake. Whether or not there was a mistake which needed to be corrected was part of the interpretation or construction of the document which, in that way, involved a question of law: New South Wales Land and Housing Corporation at [61]. The test from that case is, whether the misnomer was the product of a mistake made in circumstances in which it would have been plain to all who are concerned with the relevant document as to who the party was that was referred to in the document.
In fact, by the time of the hearing before the Magistrate, the Court of Appeal had delivered its judgment on an appeal from Kunc J's decision: Simic v Land and Housing Corporation (NSW) [2015] NSWCA 413. Although the decision at first instance was upheld, Emmett AJA (with whom Bathurst CJ and Ward JA agreed) suggested a somewhat different test. His Honour said at [113]: It is axiomatic that any instrument having a legal effect, or intended to have a legal effect, should be construed ut magis valeat quam pereat. That is to say, if there are two ways of reading or construing the Undertakings, one of which means that the Undertakings are quite ineffective because they are addressed to a non-existent entity, and one of which gives them the effect that, on their face, they are clearly intended to have, namely, as a facility for the "Favouree" to demand payment of a sum of money from ANZ, the latter construction must be adopted.
On a further appeal to the High Court, the decision in respect of which had not been given by the time the Magistrate heard or decided the present case, the Court of Appeal's decision was overturned. The significant matter for present purposes is that, although both Kunc J and the Court of Appeal had construed a reference in a contractual document by reading "Corporation" for "Principal", the High Court held that such a construction was not available. However, the Court held that Kunc J had been correct in holding that, if it had been necessary to rectify the contract, the pre-requisites were present to apply that remedy. In doing so, the majority judgment approved at [108] Kunc J's view that: if someone had pointed out at the time to Mr Simic and Ms Hanna that the name of the counterparty was wrong, that would have been plain and obvious to both of them. There can be no doubt that their actions were the result of a common mistake.
The High Court reaffirmed the proper approach to construction of a document by citing at [78] the passage from Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]: "[T]he objective approach [is] to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. … [I]t will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd [[2009] EWCA Civ 636 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties … intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'." (footnotes omitted)
The defendant gave evidence, apparently without objection, that he intended to choose GSF. He said so in his affidavit which was marked as an exhibit without any objections to it. He gave oral evidence to the same effect both in chief and in cross-examination without objection. Such evidence was inadmissible: Westport at [82]. The Magistrate appears to have disregarded that evidence and correctly considered the matter objectively - see at paragraphs [41], [43] and [44] of her Honour's judgment.
There was evidence to suggest that the lender was GSF and was objectively intended by the defendant to be the lender. Not only did the defendant indicate on the Finance Application that he selected GSF, he also completed the Direct Debit request which was addressed to GSF and was also expressed to be used "ONLY…IF USING" GSF. The plaintiff submitted that the direct debit request was not of assistance in determining the identity of the lender because the same request was used irrespective of the lender. The plaintiff submitted that the pro-forma request application attached to the Product Disclosure Statement contemplated GSF or a "preferred financier".
However, an examination of the part of the Product Disclosure Statement dealing with the direct debit request shows that under the heading, "Direct Debit request service Agreement", the name "Great Southern Finance Pty Ltd" appears together with its ACN and address. The agreement defines "direct debit request" as meaning "the Direct Debit Request between us and you". The definition of "us or we" is said to "mean… Great Southern Finance Pty Ltd who (sic) you have authorised by signing a direct debit request". In the same way the pro forma request provides for the borrower to, [r]equest and authorise Great Southern Finance Pty Ltd… to arrange for any amount Great Southern Finance Pty Ltd may debit or charge you to be debited… . There is no mention in that section of the Product Disclosure Statement nor in the pro forma request of other than GSF, and no mention of another "preferred financier".
Neither the Product Disclosure Statement nor the pro-forma request assists the plaintiff. Further, there was no evidence, despite clause 8.3 of the Loan Sale and Servicing Deed (to which reference will be made) that the direct debit request form was used irrespective of the lender.
On the other hand, it seems clear from the investment application that the defendant was interested only in investing in grovelots because that application was only for grovelots, and the defendant further identified that he wanted grovelots on the Finance Application. Moreoever, the amount of finance he sought was $24,000 made up of 3 grovelots at $8,000 per lot as he stipulated on both application forms.
From an objective standpoint, what the defendant sought in completing the documents was impossible to achieve. GSF did not fund for grovelots alone where the investment was to be funded by an interest-only loan for any period of time. The only funding for grovelots by GSF was by a principal and interest loan.
When considering whether there was a mistake or misnomer, the Magistrate identified a number of possibilities which meant that it could not be said that it was plain to all concerned that the defendant intended to nominate ABL in the third box. Those possibilities were that the defendant might have intended a principal and interest loan or, if told of the impossibility of his choice, might have decided not to go ahead with the matter.
Of those, the most likely alternative possibility was that the defendant would, if asked, have opted for a principal and interest loan with GFS from the outset, because it seems reasonably clear that he wanted an investment in grovelots. The plaintiff's submissions, by implication, suggest that the defendant almost certainly desired an interest-only loan for 3 years followed by principal and interest for 7 years, with the result that he must have intended ABL as the lender. The execution of the Direct Debit to GSF together with the indication on the Finance Application of GSF as the lender makes it much more likely that the variable was the nature of the loan and not the identity of the lender. In any event, that likelihood points strongly against the contractual arrangement being able to be construed in the way for which the plaintiff contends.
In my opinion, the Magistrate correctly applied the test as expressed by Kunc J, and now approved by the High Court, to the facts of this case. It cannot be said to be plain to all that the defendant intended to select ABL as the financier in the light of the choice of GSF on the Finance Application and the completion of the Direct Debit which was only to be completed if GSF was the chosen financier.
To the extent that the question is one of law alone, no error is shown.
In Bonette v Woolworths Limited (1937) SR (NSW) 142 Jordan CJ (Halse Rogers and Bavin JJ agreeing) said (at 149-150): The authority of an agent may be particular - to do a specified act or acts, or general - to do acts of one or more classes. An authority expressly given, whether it be particular or general, gives implied authority to do anything which is incidental to what is expressly authorised. Whether any authority has been given, and if so what is the scope of the authority, are questions of fact to be determined by evidence. Evidence that a person is purporting to so acts on behalf of a principal in some capacity in such circumstances that the knowledge and approval of the principal may fairly be inferred is evidence that the principal has authorised him to act in a particular capacity.
The extent of GSF's authority was, therefore one of fact to be determined on the evidence. At best, the question concerning these grounds is a mixed question of fact and law. No leave has been sought, and the grounds must be rejected. If leave had been sought, I would have been of the opinion that no error of fact was demonstrated, the Magistrate's conclusion being open on the evidence.
The plaintiff drew attention to the decision of Slattery J in ABL Custodian Services Pty Ltd v Kunz [2016] SADC 145. In that case the investor applied to purchase woodlots in a similar scheme but ticked the box on the Finance Application for finance from ABL when it was only GSF that provided finance for woodlots. ABL provided finance only for grovelots or combined loans. Slattery J held that the ticked box was "a minor clerical error" where the "true intention was to obtain an investment in 65 woodlots". The plaintiff submitted the error in the present case, the reverse of the one in Kunz, should be similarly treated.
In my opinion Kunz is entirely distinguishable. There was no issue in that case about whether the lender was GSF or ABL. GSF made the loan and subsequently assigned it to ABL. That was not disputed. The issue was whether the loan, admitted to have been made, was made to the defendant or to a company, Total Hoarding Supplies Pty Ltd, associated with the defendant. The other issue was whether the defendant was liable because he was a member of a class action brought against GSF in the Supreme Court of Victoria which settled. Kunz is no authority for any principle that an error like the one in the present case is a minor clerical error.
Grounds 1 to 3 should be rejected.

The Court erred in law by failing to have regard to the scope of the authority conferred by the Defendant under the power of attorney within the Application for Term Finance dated 15 June 2006 and Application for Investment, and whether the execution of the Loan Deed by Great Southern Finance Pty Ltd as attorney for the Defendant fell within the scope of that authority and its adoption and ratification provisions.

The Court erred in law in finding that on the construction of the Application for Term Finance, the power of attorney conferred by the Defendant did not either actually or apparently authorise his Attorney to enter into the Loan Deed with ABL Nominees Pty Ltd as the lender to fund the acquisition of grovelots described in the Application for investment.

The Court erred in law by holding that Great Southern Finance Pty Ltd did not have authority to execute the Loan Deed on behalf of the Defendant pursuant to the Application for Term Finance given by the Defendant dated 15 June 2006.

The Court erred in law in holding that ABL Nominees Pty Ltd or Great Southern Finance Pty Ltd was on actual notice of any want of authority of Great Southern Finance Pty Ltd to borrow from ABL Nominees Pty Ltd to fund the acquisition of grovelots, such as to vitiate that execution.

The Court ought to have held that the authority conferred by the Application for Term Finance and the Application for Investment was authority on the attorney to execute the deed and procure finance for the acquisition of the nominated number of grovelots from Great Southern Managers Australia Limited.

The Court erred in law by not holding, and should have held, that the Loan Deed was validly executed by Great Southern Finance Pty Ltd on behalf of the Defendant pursuant to the power of attorney conferred within the Application for Term Finance.

These grounds concern the authority of GSF and the validity of the power of attorney which led to the execution of the deed of loan.

The magistrate's findings

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.
The Magistrate also held: Whoever approved the Finance Application (it was said to be GSF on behalf of ABL Nominees) did not check the completion of the form thoroughly enough and did not notice the discrepancy.

Submissions

The plaintiff submitted that this finding implies that woodlots was the discrepancy, whereas, if grovelots on 10/3 terms was the starting point, then GSF is the discrepancy. The plaintiff submitted that another explanation is that the discrepancy was noted but treated as a slip as to what was desired to be accomplished by the Defendant. That led to the conclusion that there was a manifest error in the documents, and the matter could be resolved by regarding the lender to whom the defendant applied to as GSF or a preferred lender, as the application form to purchase made clear.
The plaintiff submitted that the fundamental authority to GSF was to execute documents to finance the investment with a preferred lender on the required 10/3 terms. There were instructions that a preferred lender could be borrowed from and no express instructions that only GSF could be the lender. The only alternatives were that the reference to GSF was a mistake for ABL, or that the proposed investment was meaningless since lending by GSF for grovelots on a 10/3 basis was not available.
The plaintiff submitted that if the agent's mandate is conferred in such ambiguous terms or is so uncertain as to be fairly capable of more than one construction, every act done by the agent in good faith which is justified by any of those constructions is deemed to have been duly authorised even though the construction adopted and acted upon by the agent is not the one intended by the principal. Reference was made to Jones v Canavan [1972] 2 NSLWR 236 at 247-248. In those circumstances the onus is on the principal to prove the agent has failed in his duty.
The plaintiff submitted further that the finding by the Magistrate that ABL is fixed with GSF's knowledge does not sit comfortably with clause 5.1(c) and 5.2 of the Loan Sale and Servicing Deed made between, inter alia, ABL and GSF.
The defendant submitted that the plaintiff's case concerning this issue changed during the course of the case. Mr Flamer-Smith, the relevant officer of the plaintiff, said in his affidavit that ABL accepted and approved the Finance Application. However, in cross-examination he conceded that in fact GSF approved the Finance Application on behalf of ABL. In that way the alleged agency of GSF and whether or not ABL was fixed with GSF's knowledge only arose because the plaintiff's case changed during the course of the hearing.
The defendant submitted that the plaintiff's submission about the selection of GSF as a manifest error ignores the deliberate direction of the defendant that GSF was to be the recipient of the direct loan repayments from his CBA account. The defendant submitted that it was not sensible to interpret the power of attorney as conferring power on GSF to execute a loan deed with ABL as the lender in circumstances where the power of attorney was part of the finance application addressed to GSF. The defendant submitted that the plaintiff was asking this Court to find new and different facts from those the Magistrate found.
In reply the plaintiff drew attention to clause 8.3 of the Loan Sale and Servicing Deed where the Servicer (defined relevantly as the Seller, GSF) undertook to collect all moneys under the Purchased Loans and the Originated Loans, and to arrange for persons in the position of the defendant to make payments by direct debit to the GSF Collections Account.

Determination

In my opinion, these grounds largely allege mixed errors of fact and law. To the extent that they concern the authority of GFS to execute the loan deed in the form it was executed, questions of fact are involved, as I have held in relation to grounds 1 to 3. To the extent that they concern the proper construction of the Finance Application they may involve questions of law. However, in case I am wrong in considering that at least mixed questions of fact and law are involved, I will consider the grounds on the assumption that they involve questions of law alone.
As to the defendant's complaint about the plaintiff changing its case to assert that GSF approved the finance application as agent for ABL, it is difficult to see how the defendant is disadvantaged by that change. The result that the Magistrate reached was that ABL was bound by its deemed knowledge of the limitations on GSF's authority. That was a finding in the defendant's favour. The question is still, however, whether such a determination was correct, particularly in the light of clauses 5.1(c) and 5.2 of the Loan Sale and Servicing Deed.
It follows, however, from my determination that the Magistrate's decision in relation to Grounds 1 to 3 was correct; that the authority to GSF was only to execute a loan deed where GSF was the lender. If GSF considered that it would not lend for grovelots on the basis sought in the Finance Application (a 3 year interest-only loan followed by a principal-and-interest loan for 7 years), then no loan deed would have been executed.
The plaintiff seeks to rely on cases that suggest an agent is protected if it acts in good faith on unclear instructions. In Thornley v Tilley (1925) 36 CLR 1, Isaacs J said (at 12): Where a principal gives to an agent instructions so ambiguous that they can reasonably be understood in more than one sense, he is bound by whichever of those senses the agent bona fide acts upon. Similarly, in Jones v Canavan (1972) 2 NSWLR 236 Asprey JA said (at 247-248): [W]here the terms of a mandate are not definite or do not contain complete instructions as to the mode by which the agent is to effect his principal's purpose, to that extent the agent may exercise his discretion as to the manner of performance of the mandate guided by his own judgment exercised honestly and with due care and skill in what reasonably seems to him in the circumstances to be in the best interests of his principal: Halsbury 3rd ed. vol. 1 par. 428; cf. Morten v. Hilton Gibbes and Smith [(1908) [1937] 2 K.B. 176n]; and where the agent purports to act in that way in the exercise of a discretion the onus is on the principal to prove that the agent has failed in his duty and that as a result the principal has suffered damage: Gokal Chand-Jagan Nath v. Nand Ram Das-Atma Ram [[1939] AC 106 at 113] per Lord Wright. Further, if the agent's mandate is conferred in such ambiguous terms or is so uncertain as to be fairly capable of more than one construction, every act done by him in good faith which is justified by any one of those constructions is deemed to have been duly authorized although the construction adopted and acted upon by the agent was not the one intended by the principal: …
I do not consider that the three documents forwarded to GSF (the investment application, the Finance Application and the direct debit request) which formed the basis of the instructions to GSF, fall within the principles outlined in those cases. The instructions were such that no investment was possible within the terms of what was offered unless GSF was prepared to be the financier, contrary to what the documents stipulated. There was no ambiguity. The defendant sought what was not available. If recourse to the defendant was not possible because of the time limits (the cut-off date for the investment was the date the defendant lodged the application), then the application should have been rejected. It was no more allowable for GSF to select ABL as the financier than it would have been for it to allocate woodlots instead of grovelots to the defendant.
Mr Flamer-Smith's evidence was ultimately clear: the Finance Application here was approved by GSF on behalf of ABL. Her Honour's conclusion that ABL as principal was on notice of the lack of authority of its agent, GSF, to execute a loan deed naming ABL as lender, is correct as a matter of law.
Clauses 5.1(c) and 5.2 of the Loan Sale and Service Deed relevantly provide: 5.1 …[T]he Seller represents and warrants to the Purchaser and GSF represents and warrants to the Lender in respect of that Loan that: (c) (Enforceability): the Loan Agreement and each related Security relating to that Loan is valid, binding and enforceable against the relevant Debtor in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, reorganisation, moratorium or trust or general principles of equity or other similar laws affecting creditors' right generally; 5.2 (b) GSF and the Originator acknowledge that the Lender has entered into this Deed, and that if the Lender funds Loans in accordance with an Origination Notice it will do so, in reliance upon the representations and warranties contained in this Deed.
In my opinion, ABL cannot rely, as against the defendant, on provisions in the Loan Sale and Servicing Deed, which it is entitled to rely on against GSF. GSF may well warrant to ABL under clause 5.1(c) that the loan it approved to the defendant is enforceable, but the defendant is not a party to that Deed. If GSF did not have the authority from the defendant to execute the loan deed naming ABL as the lender, ABL can be in no better position as against the defendant, who had only given authority for a power of attorney to GSF as the lender. ABL may well have a claim against GSF pursuant to clause 5.1(c) and possibly 5.2 where, as here, GSF acted beyond its authority from the defendant, but it does not thereby acquire rights against the defendant.
In my opinion, the Magistrate's determination on the authority given by the Power of Attorney was correct. The loan deed was not validly executed. These grounds should be rejected.
The result must be that, even if the plaintiff establishes that ABL advanced the loan funds, the plaintiff's claim will be statute-barred. The proceedings were not instituted until 2016 for a loan made in 2006, which went into default in 2009.

In the alternative, the Court erred in law by not holding, and should have held, that the Defendant ratified and adopted the execution of the Loan Deed by Great Southern Finance Pty Ltd as the Defendant's attorney pursuant to the Application for Term Finance or was estopped by his deed from denying that authority.

The plaintiff submitted that even if GSF did not have authority to execute the loan deed on behalf of the defendant, the defendant could ratify and adopt the loan deed. The plaintiff relied on paragraph 6(f) of the Finance Application which provided that the defendant ratified all that had been done by GSF as appointor under the power of attorney. The plaintiff submitted that ratification was only necessary to adopt conduct that was outside the actual or ostensible authority of the attorney to procure, and perfect a loan to the defendant notwithstanding any lack of, or excess of, authority.
The defendant submitted that it was logically unsound to suggest that the defendant, by making the Finance Application, ratified what was done by the attorney when it was outside the powers otherwise conferred by that instrument.
Clause 6(f) of the Finance Application provides: The Appointer declares that anything the Attorney does in exercising the powers under the Power of Attorney will be as binding as if the Appointor had done that act itself.
This clause cannot be used to ratify any act done by GSF, because appointing ABL as lender was not a power given to GSF under the Power of Attorney. The ratification cannot effectively authorise the doing of an act inconsistent with the authority given. This is emphasised by clause 6(d) of the finance application which provides: The Appointor undertakes to ratify all that the attorney lawfully does or causes to be done under the Power of Attorney granted. "Lawfully" must mean acting within the bounds of the appointment made so far as the law accords recognition to the appointment.
There is no obligation on the defendant to show that the act done without authority had an adverse impact on the defendant before it can be held that no ratification is demonstrated.
This ground should be rejected.

The Court erred in law by finding that the loan was not approved by ABL Nominees Pty Ltd because that approval was granted by Great Southern Finance Pty Ltd in its capacity as agent for ABL Nominees Pty Ltd.

The Magistrate's findings

The Magistrate referred to the evidence of Mr Flamer-Smith for the plaintiff who said that it was GSF that accepted and approved the defendant's loan on behalf of ABL rather than ABL doing it itself.

Submissions

The plaintiff submitted that it was not relevant that the loan was approved by GSF on behalf of ABL. The plaintiff submitted that, in any event, ABL ratified any conduct by GSF as its agent by subsequently advancing the loan following its approval.
The defendant submitted that the Magistrate made no such finding.

Determination

The difficulty for the plaintiff in relation to this ground is that any finding about who approved the loan can only be a question of fact. No question of law is involved. In any event, Mr Flamer-Smith's oral evidence was very clear that GSF approved the application. This ground must fail.

The Court erred in law by not holding, and should have held, that the Plaintiff had established, on the balance of probabilities, that on or about 15 June 2006 funds totalling $24,490 were advanced on the terms of the deed by ABL Nominees Pty Ltd, for the Defendant's purchase of three grovelots in the Great Southern 2006 Organic Olives Income Project.

The Court erred in law by failing to consider the business records of Great Southern Finance Pty Ltd, and the Defendant's taxation returns, in holding that there was no evidence of an advance by ABL Nominees Pty Ltd for the Defendant's loan.

These grounds concern the evidence of the advance of the loan funds by ABL. The defendant submits, and I accept, that this issue of the payment of funds is the threshold issue. If the plaintiff fails to show that ABL advanced the funds to the defendant, the plaintiff cannot succeed. If the matter raised by these grounds is not a question of law, the plaintiff cannot succeed because the Magistrate found that the plaintiff failed to prove that ABL advanced the funds.
The allegation in the statement of claim that ABL advanced the loan funds was met by a plea of non-admission by the defendant. The plaintiff, therefore, had to prove the advance and the assignment. The defendant made no positive case that the advance was not made nor that it was made by some other party. However, the plaintiff's overall claim is based on an assignment from ABL and no-one else.

The Magistrate's findings

The Magistrate found that the plaintiff had not established on the balance of probabilities that ABL advanced the $24,490 to GSMAL for the purchase of the grovelots by way of loan on behalf of the defendant. Her Honour found that the documents showed that ABL would only advance if it accepted an offer by GSMAL to originate loans. The only evidence of an offer was one made on 22 June 2006 in a letter called the Origination Notice. There was no direct evidence that ABL accepted that offer or paid the purchase price for the originated loans.
The Origination Notice addressed to ABL provided: Origination Notice We refer to the Loan Sale and Servicing Deed (the Loan Sale and Servicing Deed") dated 9 June 2006 between ourselves, Adelaide Bank Limited and the Lender, as amended from time to time. Terms defined in the Loan Sale and Servicing Deed (including by way of incorporation by reference) have the same meaning in this Origination Notice. This is an Origination Notice given pursuant to clause 2.1 of the Loan Sale and Servicing Deed. The Originator intends to originate in the name of the Lender as agent for the Lender in accordance with the Loan Sale and Servicing Deed on 23 Jane 2006 (the "Closing Date") each Loan identified in the Settlement Report accompanying this Origination Notice. If the Lender agrees to make such Loans it may do so by paying the Origination Amount in relation to this Origination Notice of $21,182,262.23 to the Originator on the Closing Date, as set out in clause 2.6A. The Originator and GSF confirm that: (a) the Loan Documents (other than any documents which are deposited with a solicitor (acting on behalf of the Seller), a stamp duties office, a land titles office or other Government Agency) in respect of the Loans specified in the accompanying Settlement Report will be held by the Servicer at its premises at 16 Parliament Place, West Perth and those Loan Documents are or will be, as at the Closing Date, identifiable as being property of the Lender; and (b) subject to paragraph (c), the representations and warranties made by the Seller and the Originator in clauses 4.1, 5.1 and 5.2 of the Loan Sale and Servicing Deed are correct as at the CIosing Date; and (c) each Loan identified in the Settlement Report accompanying this Origination Notice which is a Large Loan has been approved by Adelaide Bank in accordance with the Loan Sale and Servicing Deed and does not comply with the Eligibility Criteria due to the quantum of the loan. The Orginator in the Loan Sale and Servicing Deed was GSMAL and the Lender was ABL.

Submissions

Senior Counsel for the plaintiff put the matter in this way. He said that the documents show that Adelaide Bank put ABL in funds to satisfy the Origination Notice (the letter from Adelaide Bank to Great Southern Plantations of 23 June 2006) and then immediately became the equitable assignee of those debts under the terms of the undated letter (likely to be 22 or 23 June 2006) from ABL to Adelaide Bank. The letter of 23 June identifies a payment that will be made by that day to ABL Custodian Services Pty Ltd (almost certainly an error for ABL) of $4,615,073.00. Once that happened, Senior Counsel submitted, the Loan Sale and Servicing Deed operated to require the allocation of those moneys to the individual loans. He submitted that other documents pointed fairly clearly to that payment having been made to GSF, apparently at the direction of ABL. It can be fairly confidently accepted that the money was never intended for ABL Custodian Services Pty Ltd.
Senior Counsel pointed to a number of documents from the records of Adelaide Bank, GSF and GSMAL to show how those funds were applied, in particular, in respect of the loan to the defendant. He submitted that there can be little doubt from those documents that the grovelots were allocated to the defendant and that the loan he obtained for those lots was included in the $4,615,073.00 that passed through various entities' hands. There were, however, no documents from ABL, as counsel accepted both at the hearing before the Magistrate and at the hearing of the appeal, to show that it paid the funds for the defendant's purchase to GSMAL or any other entity.
The plaintiff submitted that an examination of the documents demonstrated as a matter of construction that ABL did advance those funds in respect of the defendant's purchase. In that way, the question was one of law, and the Magistrate's conclusion to the contrary was an error of law.
At the hearing before the Magistrate, the plaintiff relied on the acknowledgment in the loan deed of the loan advance having been made by ABL, but accepted that it could only rely on that acknowledgment if the loan deed was validly executed by the defendant's attorney. Since the Magistrate found that the loan deed was not validly executed, the acknowledgment could not assist the plaintiff.
In this Court, the plaintiff submitted that all the evidence was consistent with an advance having been made. Those matters were these: (a) The Finance Application was approved; (b) Mr Flamer-Smith gave evidence that he had access to ABL's books and that the loan was made by ABL; (c) It wasn't put to Mr Flamer-Smith that ABL did not make the advance; (d) The defendant conceded that if there was a loan it was made by ABL; (e) The defendants made payments in respect of the loan until August 2009; (f) The terms of loan deed were that there was an agreement to lend on 15 June 2006 and the lender was ABL; (g) GSF's books and records included the defendant's loan (h) The defendant was listed as an investor in a scheme register maintained by GSMAL's liquidators; (i) The defendant claimed tax deductions on the investment which necessarily meant he had procured the funds; (j) The only source of funds identified is ABL's agreement to lend those funds, and GSMAL's record of the issue of the investment is evidence that it was paid.
The defendant submitted that whether ABL advanced the funds was a question of fact not susceptible of review in an appeal as of right to this Court. The defendant submitted that, in any event, the Magistrate's decision was undoubtedly correct on the evidence. There was no evidence from the books and financial records which ABL was obliged under s 286 of the Corporations Act 2001 (Cth) to keep and maintain. The defendant submitted that Mr Flamer-Smith, who commenced working for the plaintiff in 2009, had no direct knowledge of the advance of the funds.

Determination

I accept the defendant's submissions that these grounds raise only a question of fact. Whether a company makes an advance pursuant to a loan agreement cannot be a question of law. Its determination may require inferences to be drawn (or not as the case may be) from an examination of a number of documents, but that does not convert the exercise into one of construction. No document is being examined to ascertain its meaning (cf. the exercise in relation to grounds 1 to 3). Rather, the various documents are being examined to see what inferences can be drawn from the factual matrix they present. I have earlier referred (at [33]) to the authorities which make it clear that the drawing of inferences involves a question of fact.
The plaintiff drew attention to what Mason CJ said in Bond at 355: The question whether there is any evidence of a particular fact is a question of law. … Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law. … This is because, before the inference is drawn, there is the preliminary question whether the evidence reasonably admits of different conclusions.
However, when the passage from which those remarks are extracted is set out in full, it may be seen that the point being made is that it is a question of law whether there is any evidence at all to justify a finding of fact or the drawing of an inference. Beginning from the preceding paragraph at 355, Mason CJ said (Brennan J agreeing): As I have explained, findings of fact and inferences of fact are not reviewable under the A.D.(J.R.) Act unless jurisdiction is enlivened by the review of a "decision" or "conduct". Findings of fact, including inferences, may be reviewed under the A.D.(J.R.) Act for error of law (s. 5(1)(f)) and on the ground "that there was no evidence or other material to justify the making of the decision" (s. 5(1)(h)). It is not necessary to consider the content of the ground in s. 5(1)(j), "that the decision was otherwise contrary to law". The question whether there is any evidence of a particular fact is a question of law: McPhee v. S. Bennett Ltd.; Australian Gas Light Co. v. Valuer-General. Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law: Australian Gas Light; Hope v. Bathurst City Council. This is because, before the inference is drawn, there is the preliminary question whether the evidence reasonably admits of different conclusions: Federal Commissioner of Taxation v. Broken Hill South Ltd.. So, in the context of judicial review, it has been accepted that the making of findings and the drawing of inferences in the absence of evidence is an error of law: Sinclair v. Maryborough Mining Warden. But it is said that "[t]here is no error of law simply in making a wrong finding of fact": Waterford v. The Commonwealth, per Brennan J. Similarly, Menzies J. observed in Reg. v. District Court; Ex parte White: Even if the reasoning whereby the Court reached its conclusion of fact were demonstrably unsound, this would not amount to an error of law on the face of the record. To establish some faulty (e.g. illogical) inference of fact would not disclose an error of law. Thus, at common law, according to the Australian authorities, want of logic is not synonymous with error of law. So long as there is some basis for an inference - in other words, the particular inference is reasonably open - even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place.
A reading of the two principal authorities referred to by Mason CJ (Australian Gas Light Co v The Valuer-General (1940) 40 SR (NSW) 126 and Hope v Bathurst City Council (1980) 144 CLR 1) emphasises the point. For example, in Australian Gaslight Jordan CJ said (at 137-138): Before proceeding to the questions which have been submitted, it is necessary to keep in mind that this Court has jurisdiction to determine only questions of law and only such questions of law as are submitted to it. In cases in which an appellate tribunal has jurisdiction to determine only questions of law, the following rules appear to be established by the authorities: (1) The question what is the meaning of an ordinary English word or phrase as used in the Statute is one of fact not of law. This question is to be resolved by the relevant tribunal itself, by considering the word in its context with the assistance of dictionaries and other books, and not by expert evidence, although evidence is receivable as to the meaning of technical terms, and the meaning of a technical legal term is a question of law. (2) The question whether a particular set of facts comes within the description of such a word or phrase is one of fact. (3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences. (4) Such a finding can be disturbed only (a) if there is no evidence to support its inferences, or (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences, or (c) if it has misdirected itself in law. Thus, if the facts inferred by the tribunal from the evidence before it are necessarily within the description of a word or phrase in a statute or necessarily outside that description, a contrary decision is wrong in law. If, however, the facts so inferred are capable of being regarded as either within or without the description, according to the relative significance attached to them, a decision either way by a tribunal of fact cannot be disturbed by a superior Court which can determine only questions of law. (Citations omitted)
What Mason J (as his Honour then was) earlier said in Girlock at p 168 is entirely consistent with a reading of Bond that leads to the conclusion I have expressed at [94] above. His Honour there said: But there are settled principles which, though difficult in their application, allow inferences to be drawn from proven facts in certain circumstances. "Inferences from actual facts that are proved are just as much part of the evidence as those facts themselves" (Holloway v McFetters)
The Magistrate's conclusion in this regard is amply supported by the evidence or lack of it with regard to what the plaintiff was required to prove.
As far as the assertion at 92 is concerned, the defendant pleaded no positive case that ABL did not advance the funds. Rather, the defendant put the plaintiff to proof. It is difficult to see what proper basis counsel acting for the defendant would have had to put affirmatively that ABL did not advance the funds. In relation to the assertion at 92, the Magistrate expressly found that no such concession was made. That is a finding of fact not susceptible to review in this Court.
None of the other matters put forward by the plaintiff at [92] above, with the possible exception of (b), proves anything other than that there was an agreement by ABL to make a loan and the defendant received loan funds in the sense that three grovelots were allocated to him. None of those matters proves from whence the funds came, and that is significant in the light of the controversy that arose from the choice by the defendant of GSF as the lender.
As to paragraph (b), Mr Flamer-Smith was not in a position to give direct evidence of an advance from ABL. That could only be proved by financial records, ordinarily records of ABL. Anything else would be either hearsay or second-hand evidence. During submissions before the Magistrate, the following exchange occurred between the Magistrate and counsel for the plaintiff as follows: Her Honour: You don't advance any documents from ABL to show the advance. Is that right? Gacion: No. Her Honour: No documents originating from ABL? Gacion: Well there's the loan deed, your Honour, but that's executed in June 07. Her Honour: It doesn't prove the advance though, does it? Gacion: And the documents that have been advanced show an application was made for finance; an application was made for grovelots; grovelots were issued; and in my submission Mr Flamor-Smith (sic) then shows the documents that record the making of the loan, and my submission is that the natural and only inference to be drawn from that is that an advance was made in accordance with those documents to finance the grovelots that were issued and the defendant did not say otherwise in his evidence. Her Honour: But you're relying on GSF's documents to show a loan made by ABL to GSMAL. Is that what you're saying? Gacion: Yes. …
The business records of GSF, which was not a party to the intended arrangement that ABL would provide the funds to GSMAL by way of a loan to the defendant, were not proof that ABL had advanced the funds. Further, the evidence from the defendant's records was that the monthly instalments were paid to GSF.
Clause 8.3 of the Loan Sale and Servicing Deed relevantly provides: The Servicer [GSF] undertakes that it will: (a) (Collections): collect all moneys due under the Purchased Loans, the Originated Loans and the corresponding Loan Rights in accordance with the Servicing Standards and arrange for Debtors who have agreed to make any payments due under the Purchased loans and the Originated Loans by way of direct debit to make those payments directly to the GSF Collections Account; Although payment to GSF might have come about by reason of clause 8.3 of that Deed, the evidence that GSF was the recipient of those payments clouds rather than clarifies the issue of who advanced the funds in the first place.
The defendant's taxation returns showed only that deductions were claimed by reason of the arrangement. They did not prove that the loan was made by ABL. The defendant's registration as an investor in GSMAL's records did not show where the funds derived to bring that about. The plaintiff's submissions appear to elide the matter of an advance of funds being made with an advance of funds by ABL. The latter is a crucial matter. In ordinary circumstances it might be possible to infer that the advance came from ABL where the defendant applied for a loan, funds were advanced and the defendant is shown to be the registered holder of three grovelots. However, where the defendant actually selected another lender on the Finance Application, the need to prove who advanced the funds, when that allegation was not admitted, is essential. It was the central issue in the proceedings.
I would reject these grounds of appeal. The Magistrate's finding, which I have held was correct, that the plaintiff did not prove that ABL advanced the funds, is determinative of the whole claim because the loan to the defendant cannot form part of what was purportedly assigned first to Adelaide Bank and then to the plaintiff.

The Court erred in law by finding that the Plaintiff as a successor in title to the lender, needed to establish that the Defendant's loan was an "Originated Loan" within the meaning of the Loan Sale and Servicing Deed in order for there to be an enforceable contract with the Defendant.

The Court erred in law by not finding that ABL Nominees Pty Ltd had assigned its right, title and interest in the Defendant's loan to Adelaide Bank Limited.

The Court erred in law by holding that direct evidence was necessary to prove on the balance of probabilities that Adelaide Bank Limited had paid for the assignment of the Defendant's loan from ABL Nominees Pty Ltd.

The Court erred in law by not acting on the evidence of business records of the Plaintiff, and the absence of any evidence in contradiction of the fact, in considering whether it was established on the balance of probabilities that Adelaide Bank Limited had paid for the assignment of the Defendant's loan from ABL Nominees Pty Ltd.

The Court erred in law by not finding that all right, title, and interest in the Defendant's loan had been assigned to the Plaintiff.

These grounds concern the assignment to Adelaide Bank. There is no issue that, if the loan was assigned to Adelaide Bank, it was transferred statutorily to the plaintiff as a result of the merger of the two banks.
Mr Flamer-Smith, in his affidavit of 6 January 2017, said that the assignment of ABL's rights under the defendant's loan and the loan deed to Adelaide Bank took place pursuant to the terms of a letter from ABL to Adelaide Bank dated 14 June 2006 and a collateral Sale Notice dated on 22 or 23 June 2006. The letter of 14 June commences by saying this: This letter sets out the terms on which ABL Nominees Pty Limited ABN 86 106 756 521, in its capacity as trustee of the Relevant Trusts ("trustee") may offer to assign its interest in Loans (as defined in this letter) to Adelaide Bank Limited ABN 54 061 461 550 ("Adelaide Bank").
The letter defined "loan" as meaning: A Purchased Loan (as defined in the Loan Sale and Servicing Deed) in which the trustee has acquired an interest in accordance with the Loan Sale and Servicing Deed or an originated loan, but does not include any Queensland loan rights.
The plaintiff maintained before the Magistrate, and on the appeal, that the loan was an originated loan and not a purchased loan.
Originated Loan was defined in the Loan Sale and Servicing Deed as meaning: At any time, a loan which, in accordance with clause 2, has been originated by the Originator as agent of the Lender pursuant to an origination notice and funder by the Lender, but does include (unless specifically provided otherwise) a loan which has since become an Extinguished Loan. GSMAL was the originator under that deed.
The undated Sale Notice from ABL to Adelaide Bank, which must have been signed on either 22 or 23 June 2006 (by deduction from dates within it), relevantly provided: We refer to our letter to Adelaide Bank dated 14 June 06, setting out the terms on which we may offer to assign loans to Adelaide Bank… . This is a Sale Notice given pursuant to clause 2 of the Letter. The Trustee hereby offers to assign to Adelaide Bank free of set-off… and with effect from 30 June 06… the trustee's entire right, title and interest in, to and under the following: (a) each Loan identified in the Settlement Report accompanying this Sale Notice; (b) the Loan Rights in relation to each Loan referred to in paragraph (a). Subject to paragraphs 3 and 5 of the Letter, this offer may be accepted by Adelaide Bank only by paying the purchase price in relation to this Sale Notice of $4,615,073.00 to the Trustee on 23 June 2006… .

Magistrate's findings

The Magistrate was not satisfied that the plaintiff had established that the defendant's loan was an originated loan in accordance with the Loan Sale and Servicing Deed. Nor was her Honour satisfied that the plaintiff had discharged its onus of establishing that ABL accepted the offer in the Origination notice or paid the purchase price for the loans to be originated of $21,182,262.23 to GSMAL. Accordingly, her Honour was not satisfied that ABL held the right to the defendant's loan to be able to assign it to Adelaide Bank.

Submissions

The plaintiff submitted that the evidence of Mr Flamer-Smith established that ABL sold its interest in the loan to Adelaide Bank. The plaintiff also submitted that the Magistrate erred in finding that evidence of books and records were not relevant to determining the onus, and that, accordingly, the onus was not met.
The defendant submitted that the Magistrate was correct in finding that the plaintiff failed to establish that the loan was an Originated Loan under that deed. The defendant submitted that this was a question of fact or, at best for the plaintiff, a mixed question of fact and law not susceptible of review.
The defendant submitted that the assignment suffered from further fatal flaws. To operate as a legal assignment there must be compliance with s 12 of the Conveyancing Act 1912 (NSW). There was no writing under the hand of the assignor, merely offers to assign. The notice requirements under s 12 were not complied with because the notice must be accurate in its material particulars. The notice given wrongly stated the assignee as the plaintiff rather than Adelaide Bank, and wrongly stated the date of the assignment. Accordingly, the assignment was one in equity only. However, ABL was not a party to the present proceedings so no claim could be made against the defendant.

Determination

I have found that the plaintiff's grounds asserting that ABL advanced the funds to the defendant are not made out. I have also found that no loan deed was validly executed, with the result that any claim by the plaintiff is statute-barred. Accordingly, the issue of any assignment of the loan to Adelaide Bank does not really arise. However, in case I am wrong in relation to the earlier issues, I will deal with the question of assignment.
At best for the plaintiff, the Magistrate's finding is a mixed question of fact and law but I am inclined to think that it was a finding of fact on the evidence led by the plaintiff. This is because the finding of an assignment depended on a finding, first, that ABL paid the amount of $21,182,262.23 to GSMAL (referred to in the Origination Notice), and then on a finding (from the Sale Notice) that Adelaide Bank had paid the purchase price of $4,615,073.00 for the assignment.
It cannot be said that the Magistrate's finding, that there was no evidence that ABL accepted the offer in the Origination Notice and paid $21,182,262.23, was not properly open to her given that the plaintiff bore the onus on these matters. What the documents show is that Adelaide Bank paid $4,615,073.00 to ABL for ABL's (purported) assignment of that portion of its loans, but there is no evidence of the payment in the first instance by ABL to Adelaide Bank of $21,182,262.23 by way of acceptance of the offer in the Origination Notice.
Although Senior Counsel for the plaintiff explained the transactions in the way set out at [88] and [89] above, the documents (including the letter from Adelaide Bank to the Chief Financial Officer of Great Southern Plantations Ltd dated 23 June 2006, and the Adelaide Bank ledger at p 413 of the Court Book) do not disclose the payment by ABL of $21,182,262.23. Even accepting in that letter of 23 June 2006 that the reference to ABL Custodians is a mistaken reference to ABL and, thereby, that the payments totalling $4,615,073.00 were directed by ABL to be paid to GSF, there is no evidence why the balance of the funds apparently payable to Adelaide Bank Ltd are directed to GSF also. That letter and the ledger do not appear, without other evidence, to be consistent with payment of the whole of the amount in the Origination notice to Adelaide Bank by ABL.
Whilst these are all matters of fact, the Magistrate's finding cannot be said not to be open to her on the state of the evidence when the plaintiff bore the onus. In Russo v Aiello (2003) 215 CLR 643; [2003] HCA 53 Gleeson CJ said at [11]: Lord Mansfield said that "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted". This is a fundamental precept of the adversarial system of justice, and is treated as axiomatic in the day to day operations of courts. When a court comes to consider the issue raised by s 43A(7), by hypothesis, the claimant will already have provided information to the insurer pursuant to a statutory requirement to provide a full explanation of the delay. Sometimes that may be the whole of the information before the court. Sometimes a claimant may seek to add to it. Either way, since it is the claimant's explanation of his or her own conduct that is the subject of judicial evaluation, and since the claimant is at risk of having the proceedings dismissed, common sense will ordinarily justify the inference that a claimant does not possess undisclosed information that might assist his or her case, especially where, as here, the claimant is professionally represented.
The absence of further evidence, whether from the books and records of ABL or otherwise, which (in the absence of explanation) it must have been within the power of the plaintiff to produce, means that the plaintiff did not discharge the onus.
In those circumstances, the argument raised by the defendant for the first time on appeal concerning an invalid notice under s 12 of the Conveyancing Act 1912 (NSW) can be dealt with briefly.
The defendant submitted that the notice of assignment constituted by a letter of 30 April 2009 was not valid because it was not accurate in its material particulars. The date of the assignment was mis-stated and the assignee was wrongly described. In that way, the assignment was not properly completed under section 12.
The letter of 30 April 2009 from Bendigo and Adelaide Bank to the defendant relevantly said: As of 30 April 2009 the management of your investment loan will transfer to Bendigo and Adelaide Bank Limited. In addition, on 30 April 2009 all of the rights of your original Lender under the loan agreement were transferred to Bendigo and Adelaide Bank Limited. This means that all money owed under the loan agreement relating to your investment loan is now payable to Bendigo and Adelaide Bank Limited and not to your original lender.
It can be observed that the defendant's complaints about the letter are well-founded; the date the plaintiff acquired the rights was 1 December 2008, not 30 April 2009; the assignment to Adelaide Bank took place on 23 June 2006, and that assignment is not mentioned in the letter. There is strong authority that for the notice to be valid under the section, the date of the assignment must be correctly stated: International Leasing Corporation Ltd v Aiken [1967] 2 NSWR 427 at 450; Westgold Resources NL v St George Bank Limited (1998) 29 ACSR 396 at 436.
However, even if the present assignment is not valid at law, it is effective in equity. Strictly speaking, the assignor (ABL and possibly Adelaide Bank) ought to be joined as parties to the proceedings, but the defendant has not sought that the proceedings be stayed until that was done. In any event, the rule is one of procedure which can be dispensed with: Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512 at 11,517-11,518; see also Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [78]. It is not suggested in the present case that the defendant is at any risk of separate proceedings being brought by ABL or Adelaide Bank, and I am entitled to take notice of the relationship between the plaintiff and those entities in any event.
The defendant did not raise this argument before the Magistrate. He now seeks to raise it by way of a Notice of Contention. The Notice of Contention was handed up in court without consideration of the time limitation for such in r 50.11(3) Uniform Civil Procedure Rules 2005 (NSW). Under the rule the Court has the power to extend time. The plaintiff has provided detailed submissions in answer to the point. I do not consider, therefore, that the plaintiff is prejudiced by the late filing. Leave to file the Notice of Contention is granted.
However, for the reasons I have given, I do not consider that the defendant demonstrates that no assignment has occurred by reason of a failure to comply with s 12 or by reason of want of parties. The ground in the Notice of Contention is rejected.
Nevertheless, for reasons earlier given, I consider that these grounds of appeal concerning the assignment by ABL to Adelaide Bank are not made out.

The Court erred in law by holding that the Defendant's payments in respect of the loan, for which credit was admitted by the Plaintiff, were not received by, or on behalf of, ABL Nominees Pty Ltd.

The Court erred in law by finding that the Plaintiff's claims are not founded upon a deed.

The Court erred in law by finding that there was no enforceable Loan Deed to which the Defendant is a party.

The Court erred in law by finding that the Plaintiff's claims pursuant to the Loan Deed are statute barred.

These grounds are described in the plaintiff's submissions as consequential findings. No particular submissions are made about them by the plaintiff. Rather, it is simply asserted that the Magistrate erred in not finding: (a) That the defendant's loan had been assigned to the plaintiff; (b) That the payments in respect of the loan were not (sic) received by or on behalf of the plaintiff; (c) That the defendant was bound by an enforceable loan deed; and (d) That the plaintiff's claim was not statute-barred.
The defendant submitted that grounds 20 to 22 were simply a restatement of earlier alleged errors which were only questions of fact. As to ground 23, the defendant submitted that this does not arise because her Honour held the opposite, namely, that the claim on the deed was not statute-barred.

Determination

The matters in these grounds are raised in earlier grounds of appeal. I have determined that the issues raised by those grounds were correctly found against the plaintiff or that they did not involve question of law alone.

Conclusion

I make the following orders: 1. Summons dismissed. 2. The plaintiff is to pay the defendant's costs.

Annexure A (71.0 KB, pdf) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 March 2018

Conveyancing Act 1912(NSW)s 12

Local Court Act 2007(NSW)ss 39, 40

Bendigo and Adelaide Bank Ltd v Howard

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