Bennell v Westlawn Finance Limited

GENERAL DIVISION NSD 1138 of 2009

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BRUCE GLEESON IN HIS CAPACITY AS THE TRUSTEE IN BANKRUPTCY OF THE BANKRUPT ESTATE OF SUSAN JANE BENNELL

1. The appeal be dismissed.
2. The appellant is to pay the first respondent's costs of the appeal. THE COURT DIRECTS THAT:
3. Within 14 days the first respondent file and serve a written undertaking executed under seal whereby it undertakes to the Court (the Undertaking) that it will not seek to enforce cl 9 of the Deed of Guarantee and Indemnity dated 16 February 1999 as against the appellant and second respondent without the prior leave of the Court.
4. Orders 1 and 2 are not to be entered until the Undertaking has been filed and a copy served upon the appellant and second respondent.
5. Each party to have liberty to apply on 3 days notice. Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

GENERAL DIVISION NSD 1138 of 2009

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BRUCE GLEESON IN HIS CAPACITY AS THE TRUSTEE IN BANKRUPTCY OF THE BANKRUPT ESTATE OF SUSAN JANE BENNELL

Introduction 1 This is an appeal from orders made by a federal magistrate (Lloyd-Jones FM) on 18 September 2009. His Honour made a sequestration order against the estate of the appellant, Mrs Susan Bennell. Mr Bruce Gleeson, the second respondent, was appointed trustee of Mrs Bennell's estate. Mrs Bennell has appealed against the federal magistrate's judgment. 2 There are three key issues which arise in the appeal which may be broadly stated as follows. The first is whether the federal magistrate should have dismissed the petition on the basis that the first respondent is not and was not, at the time Mrs Bennell committed an act of bankruptcy, a creditor of the appellant. The second is whether his Honour should have dismissed the petition on the basis that the first respondent was a secured creditor of the appellant. The third is whether there was "other sufficient cause" within the meaning of s 52(2)(b) of the Bankruptcy Act (Cth) 1966 (the Bankruptcy Act) which should have lead the federal magistrate to dismiss the petition. 3 There is no dispute that Mrs Bennell committed an act of bankruptcy on 31 August 2007 based upon her failure to comply with a bankruptcy notice served on behalf of American Express International Inc (American Express) which had obtained judgment against her for an amount of $57,712.40. American Express filed a creditor's petition on 19 September 2007. By order made on 27 August 2008 the period at the end of which the creditor's petition would lapse was extended to 19 September 2009. 4 On 24 October 2008 the Federal Magistrates Court was informed that American Express did not intend to proceed with its application for a sequestration order against Mrs Bennell. The creditor's petition was stood over to enable the first respondent to make an application under s 49 of the Bankruptcy Act substituting itself as a petitioning creditor in place of American Express. On 18 November 2008 an order was made substituting the first respondent as the petitioning creditor. 5 The hearing before the federal magistrate took place on 9, 10 and 11 September 2009. His Honour delivered judgment on 18 September 2009 which was the day before the creditor's petition was due to expire.

The decision of the federal magistrate 6 The present appeal is brought under s 24(1)(d) and s 25(1AA)(a) of the Federal Court of Australia Act 1976 (Cth). The appellant challenged the correctness of the learned federal magistrate's decision on many grounds. The notice of appeal raises 25 separate grounds of appeal. For its part, the first respondent has filed a lengthy notice of contention. 7 The learned federal magistrate had a very short time within which to reach a decision and give reasons for judgment in a case which was, as best I can tell, presented in a way that may have made his Honour's task more complex and difficult than it needed to be. The case was also complicated by the fact that Mrs Bennell's father died shortly before the hearing and, as a result, she was not available for cross-examination. This gave rise to what appears to me to have been a needlessly lengthy and complicated debate concerning the use that might be made of her affidavits. 8 The appellant argued that the federal magistrate failed to have regard to Mrs Bennell's affidavits even though he had concluded that they should be received "subject to weight". I think there is force in this argument. The federal magistrate's reasons for judgment make no reference to Mrs Bennell's affidavits in the context of a consideration of her claim that the guarantee relied upon by the first respondent was liable to be set aside or declared to be void or unenforceable. 9 The appellant also argued that the federal magistrate's reasons for judgment refer in great detail to the submissions of the parties (particularly the written submissions of the first respondent) but then neglect to record findings in relation to significant matters including the validity of various assignments relied upon by the first respondent upon which the success of the first respondent's case for a sequestration order hinged. Again, I think there is force in these submissions. 10 I do not propose to elaborate upon the appellant's criticisms of the federal magistrate's judgment beyond what I have already said. I am persuaded that the appellant has demonstrated error on his Honour's part in failing to make findings which ought to have been made if a sequestration order was to be made against Mrs Bennell. In these circumstances, I propose to look at the matter afresh with a view to determining whether the evidence before his Honour justified the making of the sequestration order. For reasons which I will state, I think such an order was appropriate in light of the evidence that was before his Honour.

The Creditor's Petition 11 An amended creditor's petition was filed on 28 November 2008 verified by an affidavit of Mark Dougherty, a director of the first respondent. A further amendment was made to the creditor's petition on 9 September 2009 which was also verified by an affidavit of Mr Dougherty sworn on the same date. 12 Relevantly, the creditor's petition was in the following form: 1. The respondent debtor owes the applicant creditor the amount of $7,511,733 in respect of a debt due pursuant to a personal guarantee given by the respondent to Westlawn Factors Pty Ltd dated 16 February 1999 and pursuant to a Deed of Assignment entered into between Westlawn Factors Pty Ltd and Westlawn Finance Limited (ACN 001 493 634) dated 31 May 2000 and a Deed of Assignment entered into between Westlawn Finance Limited (ACN 001 493 634) and the Applicant dated 30 October 2002. 2. The applicant creditor does not hold security over the property of the respondent debtor. In the affidavit verifying the creditor's petition, Mr Dougherty stated that the statements made in paragraphs 1 and 2 were within his own knowledge true. 13 There are three different corporate entities identified in the creditor's petition which are claimed to be party to various instruments of assignment, the cumulative effect of which was to constitute the appellant a debtor of the first respondent in the amount of $7,511,733 in respect of a debt due under a guarantee given by the appellant. The three companies which were party to the instruments relied upon by the first respondent are: · Westlawn Factors Pty Limited (ACN 081 493 263) (Westlawn 263); · Westlawn Finance Limited (ACN 001 493 634) which changed its name to Westlawn Holdings Limited (Westlawn 634); · Westlawn Finance Limited (ACN 096 725 218) (Westlawn 218) which is the first respondent. 14 There are two corporate entities of which Mrs Bennell was, at all relevant times, a director. The first is a company called Total Entity Pty Limited (Total Entity). When it was carrying on business, Total Entity acted as an advertising media consultant to a number of companies including BBC Hardware. In addition, Total Entity, through Mrs Bennell, acted as a business manager for at least one well known sporting personality, Kostya Tszyu. In November 2002 Total Entity was placed in voluntary administration. In June 2003, Total Entity was the subject of a creditor's voluntary winding up. 15 The second is a company called Janile Pty Limited (Janile) which was, at all relevant times, the trustee of the Janile Trust which appears to have been a trust established for the benefit of Mr and Mrs Bennell and their family. Mrs Bennell was also a director of Janile. At all relevant times Janile was the sole shareholder of Total Entity. In November 2002 Janile was also placed in voluntary administration. It also became the subject of a creditor's voluntary winding up.

The 15 February 1999 Facility Letter 16 There was a facility letter (the 15 February 1999 Facility Letter) written by Westlawn 263 to the directors of Total Entity dated 15 January 1999 signed by DG Artindale who was described as a consultant to Westlawn 263. It is common ground that the date is in error and that it should read 15 February 1999. The Facility Letter provided for the purchase by Westlawn 263 of debts owed to Total Entity at the rate of 80% of face value of invoices less the value of credit notes and any other adjustments which might be required. The limit specified was $170,000 or 80% of the face value of acceptable debtors purchased. Any amounts received by Total Entity in payment of the debts were to be banked to an account controlled by Westlawn 263 which would then (subject to some adjustments) form part of the funds available under the facility which could be drawn down by Total Entity. 17 There are a number of key provisions in the Facility Letter which described how it was to operate: Purchase of Debts

The purchase of debts on take up of the facility will be effected against a current aged debtors trial balance and subsequently against a debtors summary based upon weekly sales in invoice number order and including credit notes issued. Summaries are to be limited to 5 per month, after which an excess fee will apply. Purchase Rate

Debts will be purchased at the rate of 80% of face value of the invoices less the value of credit notes and any other adjustments which may be required. Payment

Payment for the debts purchased will be made on request and be limited by either: • The facility limit $170,000.00 or • 80% of the value of acceptable debtors purchased. Drawdowns

Funds available under the facility may be drawn down and will be remitted on the day of request, provided such request is received and confirmed, in writing, prior to 12.00 noon on that day. Faxed confirmations signed by an authorised officer of the company are acceptable. Drawdowns are limited to 6 per month, after which an excess fee will apply.

Receipts from Factored Debts, including those amounts relating to the indemnity period, are to be banked in the form they are received to an account nominated and controlled by Westlawn. Retentions

Retentions are reconciled monthly. The amount received of 20% of factored invoices, calculated on monthly receipts, is adjusted for fees and government charges and any indemnity adjustments. The balance forms part of the funds available under the account balance and may be drawn down upon request. Indemnity

Under the terms and conditions of the facility, Total agrees to indemnify Westlawn for all purchased debts outstanding at the end of 90 days. Such indemnity will be applied by deducting the amount(s) involved from funds available under the account balance. In the event the funds available are insufficient to cover the amount(s) involved, Total agrees to immediately pay the shortfall. Title to all factored debts will continue to remain with Westlawn irrespective of indemnity payments having been received from Total. Liability

Total acknowledges and agrees that the responsibility for determining the type, amount and suitability of the facility rests solely with Total and that Westlawn has not provided nor has it held itself out as providing any financial advice of any kind whatsoever. Total also acknowledges and agrees that Westlawn shall not be liable for any loss or damage of any nature whatsoever sustained by Total owing to any refusal, delay, error or omission on the part of Westlawn in providing funds to Total. … 18 A section in the Facility Letter entitled "Securities" stated:

• Personal Guarantees from the Directors/Shareholders. • Guarantee from Janile Pty Limited in its own right and as trustee for the Janile Trust. • Such other securities as maybe required to perfect and/or complete our arrangements. In this respect you hereby irrevocably undertake to execute all security documents as and when submitted. Please note the terms and conditions of the security documents shall prevail in the event of any uncertainty between the terms and conditions in this letter and the terms and conditions in the security documents. 19 The final paragraph stated that the offer was valid to 26 February 1999. It was accepted on behalf of Total Entity by Mrs Bennell who signed the copy on 15 or 16 February 1999. Her acceptance is dated 15 February 1999 but she believes that she signed on 16 February 1999 about the time various other documents were signed.

The Facility Agreement 20 On 16 February 1999 Westlawn 263 and Total Entity entered into the Factoring Facility Deed (the Facility Agreement). It was executed by Total Entity under seal and signed by Mr and Mrs Bennell in their capacity as directors. Under the Facility Agreement, Westlawn 263 agreed, subject to terms thereof, to make funds in the amount of $170,000 available to Total Entity. The Facility Agreement also made provision for the assignment of debts owed to Total Entity to Westlawn 263. 21 There are a number of provisions of the Facility Agreement relevant to the issues in the appeal including numerous definitions contained in cl 3. Relevantly, these definitions were: 3.1.10 "Availability Account" means the account so named and maintained by Westlawn under clause 7 of this Deed. 3.1.15 "Debtor" means the customers from time to time of the Customer and any person liable to the Customer in respect of Debts, and every one of them. 3.1.16 "Debts" means the book debts from time to time of the Customer and every one of them, and includes all right title and interest of the Customer in:- (a) all choses in action of the Customer; (b) all agreements, contracts, deeds, instruments and arrangements between the Customer and the Debtors as a result of which the debts arise; and (c) all agreements, contracts, debts, instruments and arrangements between the Customer and the Debtors or any other person by way of security, guarantee, indemnity or guarantee and indemnity which secures the due performance by the Debtor to the Customer of the Debtor's obligations to pay the debts. 3.1.17 "Drawdowns" means payments made by Westlawn to the Debtor from the Availability Account. 3.1.30 "Net Invoice Value" means in respect of each Debt, the gross amount charged to the Debtor less any allowances made or allowable or which may on the terms of that invoice become allowable to the Debtor in respect of the Debt. 3.1.32 "Purchase Price" means the Net Invoice Value of a Debt multiplied by the Purchase Rate. 3.1.33 "Purchase Rate" means 80.0% or any other rate Westlawn may from time to time apply either generally or in respect of any of the Debts under this Deed. 22 Clause 5 relevantly provided: 5. OFFER OF DEBTS BY THE CUSTOMER

5.1 The Customer must offer for sale to Westlawn all the Debts in accordance with this Deed, unless Westlawn agrees otherwise. 5.2 The Debts must be included in the next offer made after the date that the Debt arose. 5.3 The Customer must submit offers to sell Debts to Westlawn no less than once each calendar month and no more than 5 times each calendar month. If the Customer submits offers more than 5 times in any calendar month then the Customer must pay the Excess Debtor Summary Batch Fee for each offer over 5 times in that calendar month. 5.4 Every offer by the Customer to sell Debts to Westlawn must be made by the Customer submitting to Westlawn the following documents and information ("Documentation"):- (a) copies of all invoices evidencing the Debts; and/or (b) a written Debtors Summary Statement (containing all such particulars as Westlawn requires); and (c) a written statement identifying the Debts offered for sale by the Customer; and (d) other documents and information in the form Westlawn requires to enable it to properly consider the offer. This may include facsimile copies, computer tapes, diskettes or other media. 5.5 If the Documentation contains errors or omissions, it does not prevent the delivery of the Documentation constituting an offer under this Clause as if the full and correct particulars relating to each Debt were contained in the relevant Documentation. 23 Clause 6 relevantly provided: 6. ACCEPTANCE OF OFFERS BY WESTLAWN

6.1 Westlawn will consider each offer made to it by the Customer unless there are reasonable grounds for refusing to do so. Westlawn may accept or refuse any offer in respect of all or any Debts included in that offer in its absolute discretion. 6.2 Subject to Westlawn's right to vary the Purchase Rate under this Deed, the Purchase Price for each of the Debts offered under this Deed will be calculated and payable at the Purchase Rate. 6.3 In addition to Westlawn's right to vary the Purchase Rate under clause 11 Westlawn may at its absolute discretion vary the Purchase Rate for any particular Debt, or all Debts of a particular Debtor by notice in writing to the Customer. All offers made in relation to Debts or classes of Debts referred to in the notice after the date of the notice are made at the Purchase Rate set out in the notice. 6.4 Acceptance by Westlawn of each offer will be made only as follows: (a) by Westlawn making an entry in the Availability Account of the Customer, or (b) by Westlawn notifying the Customer orally of the fact of its acceptance. The oral notification may be given by telephone and may be given to any employee of the Customer or any person answering any telephone of the Customer and may also be given by leaving a message on any answering service maintained by the Customer. Any file note or other notification in the files of Westlawn that the oral acceptance has been notified to the Customer will be conclusive evidence of the fact. 6.5 If Westlawn does not accept an offer to purchase the Debts or any of them within five (5) Business Days of the receipt by it of the offer, the offer is declined in respect of those Debts not accepted. 6.6 No officer employee or agent of Westlawn has the authority of Westlawn to accept any offers of Debts otherwise than as provided by this clause unless the authority is conferred on him by deed by Westlawn. 6.7 Westlawn will pay for the Debts accepted by it by crediting the Availability Account with the amount of the Purchase Price for each of the Debts purchased. 6.8 Title to each Assigned Debt will pass to Westlawn upon acceptance of the offer as provided notwithstanding the fact in respect of any Assigned Debt that the Customer's right to demand payment of the Purchase Price has not arisen, or has ceased. 6.9 Without limiting Westlawn's discretion under subclause 6.1, Westlawn may refuse any offer in relation to any Debt where:- (a) any credit note has been issued in respect of the Debt; (b) the Debtor or the transaction resulting in the Debt is not at arms length with the Customer; (c) the Debt or more than 15% of its face value is in excess of 90 days; or (d) the Debtor's total debts to the Customer exceed 15% of all Debts of the Customer. 24 Clause 7 relevantly provided: 7. ACCOUNTS MAINTAINED BY WESTLAWN

7.1 Westlawn will maintain in its books an Availability Account for the Customer. The Availability Account will show amounts available to the Customer for drawing under this Deed. 7.2 Amounts credited properly in the Availability Account will subject to the terms of this Deed, be payable to the Customer upon demand and when paid are referred to as Drawdowns. Drawdowns will be recorded as reductions in the Availability Account. 7.3 The Customer is not entitled to make Drawdowns from the Availability Account in respect of:- (a) any amounts in excess of the lesser of the Facility Limit and the gross Purchase Price of Assigned Debts from time to time; (b) any Assigned Debt of which 15% or more of its face value is in excess of 90 days; (c) any Assigned Debt for a Debtor where the total Debts of the Debtor to the Customer exceed 15% of the Debts of the Customer; … 25 Clause 13 relevantly provided: 13. Termination

13.1 This Deed will operate for a minimum period of twelve (12) months or until it is terminated in accordance with its terms. 13.2 This Deed may be terminated in respect of future transactions by either party by giving to the other party one calendar month prior notice in writing after expiry of 12 months from the date of this Deed. A notice by the Customer under Clause 11.2 rejecting a variation to this Deed, constitutes one month notice by the Customer of termination but if given before the expiry of 12 months from the date of this Deed, such notice constitutes early termination of this Deed as referred to in clause 13.5. 13.3 This Deed may be terminated in respect of future transactions by Westlawn at its option without the need to give any notice upon the occurrence of an Event of Default. 13.4 Any termination of this Deed terminates the Customer's rights to make Drawdowns of funds in the Availability Account. Termination does not affect Westlawn's rights powers and remedies under this Deed. … 26 Clause 24 of the Facility Agreement provided: 24. ASSIGNMENT 24.1 The Customer will not assign or purport to assign its obligations under this Deed without the prior consent in writing of Westlawn. Westlawn's consent may be given or refused absolutely or subject to the conditions which Westlawn may determine in its absolute discretion. 25.2 Westlawn may at any time assign transfer or encumber all of its rights and obligations under this Deed, without restriction including without the approval or consent of the Customer. 27 Clause 27 of the Facility Agreement provided: 27. No Advice

27.1 Westlawn has not, will not and has not held itself out as providing at any time financial legal or other advice of any kind. The responsibility for determining the type and amount of any facilities from time to time required by the Customer rests solely with the Customer.

The Guarantee 28 A Deed of Guarantee and Indemnity (the Guarantee) between Westlawn 263, Total Entity, Mrs Bennell, Mr Bennell and Janile was also executed on 16 February 1999. In the Guarantee, Total Entity was nominated as the customer and each of Mrs Bennell, Mr Bennell and Janile was nominated as a guarantor. Relevantly, cl 6 and 7 of the Guarantee provides as follows: 6. Guarantee

6.1 The Guarantor guarantees to Westlawn the Secured Money, and guarantees to Westlawn the due performance by the Customer of the Customer's obligations to Westlawn however arising. 7. Payments 7.1 The Guarantor will pay to Westlawn upon demand by Westlawn all the Secured Money notwithstanding that no request has been made by Westlawn to the Customer to pay all or any part of the Secured Money. 7.2 All moneys required to be paid under this Deed to Westlawn must be paid to Westlawn at its registered office for the time being in the State of New South Wales or at any other address as Westlawn may from time to time notify to the Guarantor and must be paid in Australian dollars. 29 Clause 3.1.6 of the Guarantee defined "Secured Money" by reference to a number of sub-paragraphs which relevantly provided: 3.1.6 "Secured Money" means: (a) all advances, credit, guarantees or other financial or credit accommodation now or in the future made or provided by or on behalf of Westlawn or a Related Corporation of Westlawn to or on behalf of or at the request of the Customer or in respect to which the Customer has any actual or contingent obligation or liability; … (e) all money which the Customer may now or in the future actually or contingently be indebted or liable to Westlawn or to a Related Corporation of Westlawn on any account whatsoever, including, without limitation by guarantee, indemnity or otherwise; and … 30 The expression "Related Corporation" which is used in clause 3.1.6 is not expressly defined in the Guarantee but cl 3.1.34 of the Facility Agreement defined this to mean "a corporation related to another within the meaning of the Corporations Law". Since the Facility Agreement is a "Collateral Security" as defined in clause 3.1.2 of the Guarantee, the meaning given to the expression "Related Corporation" in the Facility Agreement applied also to the Guarantee: see cl 4.2 of the Guarantee. 31 Clause 9 of the Guarantee provided: 9. Charge

9.1 The covenants in this clause are made unconditionally, and without limitation to the generality validity or enforceability of this Deed or any Collateral Securities in order to better and more fully secure the performance and satisfaction of all the Guarantor's obligations and liabilities under this Deed. 9.2 The Guarantor as beneficial owner charges in favour of Westlawn by way of fixed charge upon the same terms and conditions, mutatis mutandis as are contained in the charge referred to in the Schedule which accords with the type of property concerned, any and all property whether real or personal now or in the future held by the Guarantor with the payment of the Secured Money. 9.3 The Guarantor will not without the prior written consent of Westlawn transfer or otherwise dispose of or create any encumbrance over or in respect of any of the properties charged under this Deed or any Collateral Securities 9.4 The Guarantor will at the request of Westlawn and the expense of the Guarantor execute all further deeds, documents or assurances required by Westlawn in its absolute discretion to enable registration of this charge under any statute or regulation. 9.5 The provisions of the Conveyancing Act 1919 shall (subject to this Clause) apply to the provisions of this Deed as if it were a mortgage by deed. 9.6 Westlawn has the right to discharge the whole or any part of the property charged under this Clause without releasing the Customer or the Guarantor or any other person or corporation who has provided any Collateral Security from any of their other respective obligations and liabilities to Westlawn under this Deed. 32 Clause 28 of the Guarantee provided (inter alia) that Westlawn 263 could assign its rights or obligations under the Guarantee.

The 13 April 1999 Facility Letter 33 On 13 April 1999 Westlawn 263 issued another facility letter to Total Entity increasing the facility limit to the lesser of $500,000 or 80% of the value of debts purchased. The provisions concerned with the term of the facility were as follows: Term of Facility

The minimum term of the facility is to be 12 months subject to the right of Westlawn to terminate the facility immediately in the event of default or the breach of any terms and conditions by Total Entity. Termination of the Facility

Subsequent to the minimum term the facility may be terminated by either party giving one (1) months written notice providing the facility is not terminated on the grounds of default or any breach of the terms and conditions by Total Entity. 34 The second facility letter contained a section entitled "Securities" which referred to various securities: Securities

Security Documentation is to include: • 1st Registered Charge over the assets and undertakings of Total Entity Pty Limited • Existing Factoring Agreement • Existing Personal Guarantees from the Directors/Shareholders. • Existing Guarantee from Janile Pty Limited in its own right and as trustee for the Janile Trust. • Such other securities as maybe required to perfect and/or complete our arrangements. In this respect you hereby irrevocably undertake to execute all security documents as and when submitted. Please note the terms and conditions of the security documents shall prevail in the event of any uncertainty between the terms and conditions in this letter and the terms and conditions in the security documents. … [Emphasis added] 35 Apart from those provisions, the two facility letters were in virtually identical terms. The 13 April 1999 Facility Letter was signed by Mr and Mrs Bennell on 14 April 1999.

The 18 June 1999 Facility Letter 36 On 18 June 1999 Westlawn 263 wrote to Total Entity agreeing to Total Entity's request for a temporary increase of $300,000 in the facility limit. This letter (the 18 June 1999 Facility Letter) was signed by Mrs Bennell on behalf of Total Entity. Relevantly, the 18 June 1999 letter stated: We refer to our various conversations and are pleased to advise that your request for a temporary increase of $300,000 has been approved and is in addition to the above facility.

This temporary increase is to be repaid in full by the 15th July 1999.

All other terms and conditions remain unchanged and we will be relying upon existing securities, including guarantees, to secure the increased amount.

The 1 March 2001 Facility Letter 37 On 1 March 2001, Messrs Artindale and Lockhart wrote on behalf of Westlawn 634 to Total Entity agreeing: … to continue to provide facilities in line with your requirements subject to the constraint imposed by the Deed or [sic] Priority with National Australia Bank Limited. As you are aware the Deed of Priority limits Westlawn's exposure to $5,000,000.00 plus Interest and Charges.

38 The letter went on to advise the interest rates, fees and charges applicable from 1 March 2001. It also stated: All other terms and conditions of our arrangements remain unchanged.

In consideration of the foregoing it is noted that Total Entity will continue to utilise the facilities provided by Westlawn.

Please confirm the arrangements by signing the attached copy of this letter returning the same to us by return mail.

39 A copy of the 1 March 2001 Facility Letter was signed by Mrs Bennell on 2 March 2001.

The 11 January 2002 Facility Letter 40 On 10 January 2002 Mrs Bennell wrote to Mr Artindale on behalf of Total Entity seeking permission to draw an extra $700,000 pursuant to the Facility Agreement. The letter is important to a number of issues raised by Mrs Bennell in the appeal. It stated: Dear Don

Thank you for the time you shared with me on the telephone yesterday.

As you know we are moving house and I have been out of the office for the past two weeks.

Without question the BBC/Hardware House debacle has been gravely embarrassing to both Ian and myself - notwithstanding the frustration Chris has had to endure.

I am proud of the relationship Total Entity has had these past three years with Westlawn - we have always honoured our commitment and never let you down. We are truly grateful for the support you and your company have given us when we have had the odd glitch.

As we discussed we again require your support. Our pressing requirement drawdown for 15 January for $700,000.00. You will obviously have noted from previous years that January is notoriously a difficult month for collections, with many companies closed for lengthy periods.

Ian and I have often offered you additional support with our real estate.

I enclose a description of the property, which was prepared in 1999 for letting purposes.

The value has obviously gone up and the house is currently leased (corporate guaranteed) for $4,750.00 per week.

We are happy for you to put an unregistered second mortgage over this property. I can't get the specific details you asked for as our solicitor's practice is closed.

We are taking your advice and moving from the NAB by 31 January. Needless to say they aren't particularly happy and I don't think they would be very helpful at this stage as we have put them on notice.

We are also selling 28 Redan Street Mosman on 16 February and will put the full proceeds of approximately $2-2.5 million into the company to alleviate these issues from occurring again.

All the required documentation is enclosed. You will note that Total Direct has a gross figure and is not yet broken down by client. This can only be done once all the bookings become financed as we have already explained to you.

Total Direct is wholly owned by Total Entity so you automatically have a charge over it.

I would also like to draw your attention to the security documents you required us to sign. You have guarantees and indemnification from Ian and myself - the directors of Total Entity plus the Janile Trust as Trustee for Janile Pty Ltd - so I think you will see from the A&L your position is well and truly covered.

May I take this opportunity to thank you for helping us grow our business into what it has become from our very humble beginnings, and understanding cash flow issues do occur from time to time.

[Emphasis added] 41 While the letter refers to a "pressing requirement" for an additional $700,000, it does not indicate to what extent the existing facility had been utilized. But there is evidence from Mr Dougherty showing that as at January 2002, and immediately before the $700,000 was drawn down, the facility had been utilized to the extent of $6,062,090.00. 42 Enclosed with Total Entity's letter of 13 January 2002 was a document signed by Mr and Mrs Bennell entitled "Statement of Position of Ian and Susan Bennell As at 10 January 2002". It identified various assets including, relevantly: Assets

Antique Collectables (Insurance value in storage) 2,830,000

Shares - Total Entity (Valued at 20% turnover) 7,100,000

43 Messrs Artindale and Lockhart wrote to Total Entity on 11 January 2002 on the letterhead of Westlawn 218. The letter was addressed to the directors of Total Entity and marked to the attention of Mrs Bennell. It stated: Dear Sirs

Re: Non-Notification (Confidential) Factoring Facility Total Entity Pty Limited ("Total Entity")

With reference to our existing arrangements and our various discussions we note your request for additional funding and confirm our advice that Westlawn is prepared to provide a temporary increase in limit to assist Total Entity Pty. Ltd. with its immediate requirements subject to the following terms and conditions.

The limit is to increase to $7,750,000 and is to be held at this level until reductions can be made from the surplus proceeds of sale from the property at 28 Redan Street, Mosman, NSW and the further receipts of proceeds from debtors.

In consideration of Westlawn providing a further advance of $700,000.00 to Total Entity Pty. Ltd., it is hereby agreed that additional security will be provided details being as follows:

Additional security is to comprise second registered mortgages over the properties held in the name of Janile Pty. Limited in its own right and as trustee, situated at:

In addition it is hereby agreed that Janile Pty. Limited will direct that at settlement of the sale of the property known as 28 Redan Street, Mosman, NSW, 2088, all amounts in excess of those required to discharge any mortgage, agents commission, legal costs and other third party adjustments will be made to Westlawn.

As well, additional security is to be provided by way of first ranking fixed and floating charges over the assets and undertakings of:

These charges are required to perfect our arrangements.

As agreed our existing fees, interest and charges will be amended as follows:

Administration Fee presently 0.15% flat on the gross face value of invoices purchased is to be increased by 0.10% to 0.25% flat effective 01 January 2002. All other terms and conditions of our existing arrangements are to remain unchanged and we will be relying upon the securities including existing securities and guarantees to secure the total amount provided including the increase of $700,000.00. Any additional legal costs incurred in this respect including GST, Stamp Duty and Disbursements are for the account of Total Entity Pty Limited. Please confirm acceptance of the increase in limit and the terms and conditions applicable by having authorised signatures and guarantors sign the attached copy of this letter returning same to us by express return mail. 44 Later that month the amount of $700,000 was drawn down by Total Entity.

The 31 May 2000 Assignment 45 On 31 May 2000 Westlawn 263 and Westlawn 634 entered into a Deed of Assignment (the 31 May 2000 Assignment) whereby Westlawn 263 assigned it rights under various securities to Westlawn 634. Clause 1 of the 31 May 2000 Assignment provided: The Assignor assigns to the Assignee the benefit of and all of the Assignor's rights powers and remedies under the Securities including, but without limiting the generality of the foregoing:

(a) All monies now or which might hereafter become owing or payable under the Securities; and (b) All obligations now or which might hereafter become due for performance under the Securities. 46 "Securities" was a defined term and included the Facility Agreement and the Guarantee. 47 On or about 31 May 2000 Mrs Bennell was given written notice of the 31 May 2000 Assignment insofar as it related to the Facility Agreement and the Guarantee. On 1 June 2000 Mrs Bennell signed various acknowledgments indicating that she had received written notice that Westlawn 263 had assigned to Westlawn 634 "the benefit and burden of all of its rights, power, remedies and obligations" under the Facility Agreement and the Guarantee.

The 30 October 2002 Assignment 48 By Deed dated 30 October 2002 (the 30 October 2002 Assignment) Westlawn 634 assigned to Westlawn 218 all rights and remedies under both the Facility Agreement and the Guarantee. Clause 1 of the 30 October 2002 Assignment was in precisely the same terms as cl 1 of the 31 May 2000 Assignment. The "Securities" referred to in cl 1 were again defined to include the Facility Agreement and the Guarantee. 49 On 5 July 2007 the solicitors for Westlawn 218 sent a letter (the 5 July 2007 Letter) to Mrs Bennell by email. Relevantly, it stated: Dear Mrs. Bennell,

Re: Westlawn Finance Limited (ACN 096 725 218) - Facility to total entity Pty. Limited (ACN 082 192 041) (in liquidation) Default and Recovery

We confirm that we act for Westlawn Finance Limited (ACN 096 725 218), ("Westlawn").

We note that Westlawn Factors Pty. Limited (ACN 081 493 263), ("Westlawn Factors") provided cash flow finance to Total Entity Pty Limited (ACN 082 1982 041) ("Total Entity") pursuant to a Factoring Facility Deed dated 16 February 1999, ("the Facility").

In support of the Facility you entered into a Deed of Guarantee and Indemnity of the obligations and liabilities of Total Entity to Westlawn Factors dated 16 February 1999, ("the Guarantee").

Westlawn Factors entered into a Deed of Assignment of Securities with Westlawn Finance Limited (ACN 001 493 634) dated 31 May 2000, which included the assignment relating to the liability due and owing by you in respect of the above Guarantee, which was subsequently assigned to our client.

We note that Total Entity was placed into liquidation by way of creditor's voluntary winding up on 21 June 2004.

Our client requires the immediate payment of all amounts due and owing in connection with the Facility which, as at 22 June 2007, amounts to $8,308,953.34 …

If our client does not receive the payment of $8,308,953.34 by 4pm, on Friday 20 July 2007, we are instructed that our client will commence, without further notice, legal proceedings against you to recover the outstanding debt of $8,308,953.34, together with all continuing interest and costs.

50 Westlawn 218 did not commence proceedings against Mrs Bennell as it foreshadowed it would in the 5 July 2007 Letter. Mrs Bennell sought to make something of this in submissions but I do not attach any significance to it. Mrs Bennell was served with a bankruptcy notice issued at the request of American Express in July or August 2007. American Express filed its creditor's petition in September 2007.

Supreme Court Proceedings 51 As I have already mentioned, Westlawn 218 was substituted as petitioning creditor on 18 November 2008. On 13 February 2009 Mrs Bennell commenced proceedings (the Supreme Court proceedings) in the Equity Division of the Supreme Court of New South Wales by way of summons supported by an affidavit made by Mrs Bennell. They remain on foot. Westlawn 263, Westlawn 634 and Westlawn 218 are the first to third defendants respectively in the Supreme Court proceedings. The Supreme Court proceedings have been adjourned periodically to enable the creditor's petition (and this appeal) to be heard and determined. 52 The summons seeks the following substantive relief: 1. A declaration that the document described as a Deed of Indemnity and Guarantee dated 16 February 1999 ("Deed") between the plaintiff, the first defendant and others is void from its inception and of no effect. 2. An order that the said Deed be set aside ab initio. 3. A declaration and order that the Deed is unenforceable by any of the defendants against the plaintiff. 4. A declaration that the first defendant engaged in misleading or deceptive conduct in trade and commerce in breach of Section 52 of the Trade Practices Act 1974 in the negotiations ahead of the Deed execution, representing the effect of the Deed before its execution and procuring the execution of the Deed. 5. A declaration that in the circumstances of the entry into the Deed, the first defendant engaged in conduct which was unconscionable in trade or commerce in breach of Section 51AC of the Trade Practices Act 1974. 6. A declaration that in the circumstances of the entry into the Deed, the first defendant engaged in conduct which was unconscionable. 7. Further, in the alternative, a declaration that in the circumstances of the entry into the Deed, the first defendant engaged in conduct which was unconscionable in trade or commerce in breach of section 12AC of the Australian Securities and Investments Commission Act 1989. 8. Further, in the alternative, orders pursuant to Section 87 of the Trade Practices Act 1974 (Cth): (a) Declaring the Deed to have been void ab initio. (b) That the Deed is unenforceable by any of the defendants against the plaintiff. 9. Further, in the alternative, orders pursuant to the Australian Securities and Investments Commission Act 1989: (a) Declaring the Deed to have been void ab initio. (b) That the Deed is unenforceable by any of the defendants against the plaintiff. 10. A declaration that the plaintiff is not indebted to the defendants or any of them. 53 The affidavits of Mrs Bennell filed in the Supreme Court proceedings were largely replicated in the affidavit which was relied upon by her before the federal magistrate. There are a number of key points which emerge from her affidavit evidence which are relevant to the relief claimed by her in the Supreme Court proceedings. 54 First, Mrs Bennell described in considerable detail her husband's serious illness which she said was first diagnosed in early January 1999. She said that her husband underwent major surgery shortly thereafter and that during the period of his hospitalisation in January and February 1999 she was left to run the business of Total Entity. This was an extremely difficult time for Mrs Bennell who, in addition to running the business, had to visit her husband in hospital on a regular basis. 55 Secondly, during this period the business of Total Entity experienced cash flow difficulties. Mrs Bennell needed to raise $150,000 in order for Total Entity to continue in business. St George Bank, which was Total Entity's usual banker, was unable to make the necessary funds available or, at least not in the time available. Mrs Bennell contacted Mr Warwick Dougherty, a friend of Mr Bennell, and Mr Dougherty put her in touch with Mr Artindale who was, as I have mentioned, a consultant to Westlawn 263. 56 Thirdly, Mr Artindale, on behalf of Westlawn 263, agreed to make $170,000 available to Total Entity. I have already described the 15 February 1999 Facility Letter, the Facility Agreement and the Guarantee all of which were signed on 16 February 1999. Mrs Bennell's arguments in support of her claim to have the Guarantee set aside or declared void or unenforceable focus on the events of that day when she and Mr Bennell met with Mr Artindale at Total Entity's office. Mrs Bennell's affidavit indicates that she made it known to Mr Artindale at the time of this meeting that she was in a state of distress as a result of her husband's medical condition and the pressures of running the business while he was away from work. 57 Fourthly, Mrs Bennell stated that during the course of the meeting with Mr Artindale, during which the Facility Agreement and the Guarantee were signed, Mr Artindale failed to provide any explanation to Mr and Mrs Bennell of the Guarantee. Mrs Bennell stated that she did not realise at the time that she was signing a guarantee either on her own behalf or on behalf of Janile. 58 In order to put Mrs Bennell's points into their broader context I shall set out what appears in the key parts of her affidavits. Mrs Bennell states in paras [71]-[78] of her affidavit sworn 9 July 2009: 71. … Don Artindale came in and sat to my side and I sat directly behind the desk in front of Ian Bennell. Ian Bennell was supporting himself on the desk. Ian Bennell could not talk without slurring. Don Artindale had a cup of tea. There was water at the desk. Ian Bennell's tongue was very swollen and he kept apologising to Don Artindale. He weighed 63 kilos. Ian Bennell kept apologizing with words to the effect: "I am sorry I have just come out of hospital." Don Artindale said words to the effect: "This type of finance will be fantastic for your business. We will help you to grow your business. This is a much better facility than any bank can provide you - better than a bank. This is the perfect type of business finance to give your business. Our type of financing allows you to grow your business and we take the headache away. This funding will not impede the business. By these arrangements, we pay you 80% and we keep 20% of the debt." 72. Neither Ian Bennell nor I said anything in response. I have set out as best I can Ian Bennell's mental and physical condition. I was physically and emotionally exhausted. I was at breaking point. I was in a situation where Ian Bennell was still extremely ill, where I was caring for him and my son, Tristan, trying to keep Total Entity's business going and to learn about it on the run and knowing that if there was not money in the bank account of Total Entity to meet the cheques it had drawn the previous day, 15 February 1999, to meet the December 1998 Media Invoices, the business would be finished. 73. Don Artindale did not explain the nature of the facility Westlawn was offering in any greater detail than this in the presence of Ian Bennell and myself. 74. As in my first meeting with Don Artindale on 10 or 11 February 1999, Don Artindale did not provide any explanation of how, what I understood to be the loan, would work. There was no discussion of interest rates or other terms. Based upon what I had been told by Don Artindale in the meeting which had occurred a few days earlier and what I was told in this meeting on 16 February 1999, I understood that Total Entity was getting a loan. 75. In this meeting on 16 February 1999 at which Ian Bennell was present, Don Artindale did not use the words or words to the effect of: "factor," "factoring", "factor debts", "debt factoring" or "buying debts". 76. Also, Don Artindale made no reference in this meeting to the words "guarantee" and did not say words to the effect: "You and Ian Bennell (or "you and your husband") will have to provide a guarantee." 77. At the time I was signing the documents and when the meeting finished, I understood that by this arrangement, Westlawn would act as the Total Entity business banker. I thought Total Entity would be obtaining finance in a way better than a bank overdraft. This understanding was based upon what Don Artindale had said to me in: (a) our first meeting on Thursday 11 February 1999 or Friday 12 February 1999; (b) our telephone conversation on 15 February 1999; (c) in this second meeting on 16 February 1999, and what I was not told. I relied upon these matters in signing those documents. 78. Don Artindale then put a pile of documents, which were about an inch thick and had a bulldog clip around them, on the table near me. He did not show me or Ian Bennell what they were, or explain them to us. He flicked to various pages of the bundle which had clear stickers for signatures to be made. He pointed each time to where I was to sign and said words to the effect: "Sign here." Don Artindale turned the pages and I signed where he indicated. 59 Mrs Bennell also stated that the meeting with Mr Artindale took about 10 minutes in total. At paras [84]-[86] of her affidavit she states: 84. I was not aware at, or immediately after that meeting, that either I or Ian Bennell had signed any personal guarantee document. I thought the documents were for loan arrangements with Total Entity. 85. Ian Bennell and I did not obtain any legal or financial advice about the documents before executing them. We were not offered an opportunity to do so. 86. We were not offered an opportunity to read the documents and did not read them. We saw then [sic] for the first time in the bundle at the above meeting. I trusted in what Don Artindale said as set out above in deciding to execute them. 60 She stated that the $170,000 was deposited into Total Entity's account with St George the same day. Elsewhere in her affidavit Mrs Bennell stated that she first received a copy of the Guarantee sometime after 27 January 2008. However, she apparently accepts that she was aware that she had signed the Guarantee long before then. In the course of referring to the letter written by her to Mr Artindale dated 10 January 2002, and in particular, the second last paragraph of that letter which refers to the Guarantee, Mrs Bennell stated at paras [122]-[123] of her affidavit: 122. At the time I wrote the January 2002 Letter I had become aware that Ian Bennell and I had executed a guarantee of Total Entity's liability to Westlawn and also that Janile as trustee had provided a guarantee for this indebtedness. 123. When I wrote the January 2002 Letter I did not have a copy of the Guarantee and had not read or sighted it. However, I had become aware that Ian Bennell, Janile as trustee for the Janile Trust and I had provided Westlawn a guarantee for Total Entity's liability to it in the course of Total Entity and Janile obtaining finance facilities from National Australia Bank Limited ("NAB") in around the middle of 2000. At least for a month, possibly more, prior to writing the January 2002 Letter, Don Artindale, and possibly Mark Dougherty, of Westlawn, had told me: "Janile, Ian and you have guaranteed Total Entity's facility with Westlawn. Some of the properties will need to be sold to bring the facility into line." 61 Mrs Bennell also stated in her affidavit that the first time she obtained legal advice in relation to the Guarantee was on or about 3 December 2008. 62 It will be necessary for me to return to Mrs Bennell's evidence on these matters when I come to consider whether she has raised any triable issue in relation to the validity or enforceability of the Guarantee.

Issues in the appeal 63 There are seven issues which the appellant submits arise on the appeal: 1. Whether there was a valid and effective legal assignment of the alleged debt due by Total Entity to Westlawn Finance via: (a) the 31 May 2000 Assignment; and (b) the 30 October 2002 Assignment. 2. Whether there was a valid and effective legal assignment of Mrs Bennell's alleged guarantee obligations to Westlawn Finance via: (a) the 31 May 2000 Assignment; and (b) the 30 October 2002 Assignment. 3. Whether moneys advanced to Total Entity initially by Westlawn 263, and then Westlawn 634, were not pursuant to the terms of the Facility Agreement, but on some other terms which have not been determined and the impact of this upon the alleged assignments in paragraphs 1 and 2 above. 4. Whether the terms upon which Total Entity and any of Westlawn 218, Westlawn 263 or Westlawn 634 conducted the factoring and/or loan transactions in the relevant period affected the validity of the alleged assignments in 1 and 2 above. 5. Whether the Guarantee ought be avoided, set aside or rendered unenforceable, by reason of the causes of action propounded in the Supreme Court Proceeding. 6. Whether, in the circumstances of the above matters, there was an "other sufficient cause" within the meaning of s 52(2)(b) of the Bankruptcy Act sufficient to dismiss the creditor's petition. 7. Whether Westlawn 218 was a secured creditor of Mrs Bennell, or a creditor at all, such that Westlawn Finance was unable to proceed on the creditor's petition. 64 The appellant's submissions emphasised that the appeal should be allowed if she was able to identify a triable issue in relation to any of the issues which were said to arise in the appeal. I accept that this approach is appropriate in relation to some issues. However, there are some issues which I do not propose to deal with in this way. For example, there are a number of issues raised by the appellant concerning the meaning and effect of the Facility Agreement and the validity of the 31 May 2000 Assignment and the 30 October 2002 Assignment which this Court is as well placed to decide as the Supreme Court. So far as the claim that the Guarantee should be avoided or set aside is concerned, I accept that this issue is best approached by asking whether Mrs Bennell has a "real claim" for the relief sought in the Supreme Court proceedings in the sense that she needs to satisfy me that there is a triable issue as to her entitlement to that relief. This approach was also taken by Hely J in Prestia, in the matter of Australia and New Zealand Banking Group Limited v Prestia [2001] FCA 792 at [18]-[19].

Issue 1: Was there a valid legal assignment of the alleged debt due by Total Entity to Westlawn 218? 65 This issue, as defined by the appellant, refers to "the alleged debt". Apart from the challenge to the validity of the relevant assignments there were other arguments advanced by the appellant as to why Total Entity was not indebted to Westlawn 218. I will return to these arguments presently. The question that I am now addressing concerns the validity of the 31 May 2000 Assignment and the 30 October 2002 Assignment and the notices given to Mrs Bennell which are relied upon by Westlawn 218 for the purposes of s 12 of the Conveyancing Act 1919 (NSW) (the Conveyancing Act). 66 Section 12 of the Conveyancing Act relevantly provides: Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor …

67 Section 12 of the Conveyancing Act requires that express notice in writing be given to the debtor of the assignment. The section does not require that the notice be given by the assignor. It is equally open to the assignee to give a notice under s 12 in order to acquire legal ownership of the debts or choses in action the subject of an absolute assignment. 68 Clause 24.2 of the Facility Agreement provided that Westlawn 263 could at any time assign all of its rights and obligations under the Facility Agreement. I have previously referred to cl 1 of the 31 May 2000 Assignment which is expressed in broad terms and unconditional language. I am satisfied that the 31 May 2000 Assignment was an absolute assignment of (inter alia) the debts and obligations owed by Total Entity to Westlawn 263 and the debts and obligations owed by Mrs Bennell to Westlawn 263 under the Guarantee as at that date. I am also satisfied that Total Entity was given express notice in writing of the 31 May 2000 Assignment which satisfied the requirements of s 12. 69 The 30 October 2002 Assignment is also expressed in the same broad and unconditional language as appears in the 31 May 2000 Assignment. But there is no evidence that Total Entity was given written notice of the 30 October 2002 Assignment. So I am not satisfied that there was a valid legal assignment of the debt due by Total Entity to Westlawn 634. The 30 October 2002 Assignment was in the form of a deed. There is no consideration for the assignment specified in it. Nor is there any extrinsic evidence from which it could be concluded that the assignment was for valuable consideration. In these circumstances I must proceed on the basis that the 30 October 2002 Assignment was without consideration. This raises the question whether the 30 October 2002 Assignment resulted in an equitable assignment of the relevant debts and choses in action in favour of Westlawn 218. In my opinion it did. I rely upon the well known statement of Turner LJ in Milroy v Lord (1862) 4 De GF & J 264; (1862) 45 ER 1185 as interpreted by Griffiths CJ in Anning v Anning (1907) 4 CLR 1049 and the majority in Corin v Patton (1990) 169 CLR 540. 70 In Milroy v Lord Turner LJ said (at 274-5, 1189-90): [I]n order to render a voluntary settlement valid and effectual, the [settlor] must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him.

His Lordship's words were interpreted by Griffiths J in Anning (at 1057) to mean the settlor under a voluntary settlement must have done all that the settlor is required to do in order to transfer legal title. Issacs J took a stricter approach. He held (at 1069) that "[i]f the legal title is assignable at law it must be so assigned or equity will not enforce the gift." In Corin, a case involving a gift of land, Mason CJ and McHugh J expressed their preference for the view of Griffith CJ. Their Honours said (at 559):

Accordingly, we conclude it is desirable to state that the principle is that, if an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of legal title, then equity will recognize the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. "Necessary" used in this sense means necessary to effect a transfer. From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part.

Deane J said at (582-583): [The relevant] test is a twofold one. It is whether the donor has done all that is necessary to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor. Once that stage is reached and the gift is complete and effective in equity, the equitable interest in the land vests in the donee and, that being so, the donor is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title. In that regard, it is not a matter of equity ignoring the provisions of s 41 of the Act and treating the unregistered transfer as effective of itself to assign the beneficial interest in the land. It is simply that equity, acting upon the "fact or circumstance" that the donor has placed the vesting of the legal title within the control of the donee and beyond the donor's recall or intervention, looks at the substantial effect of what has been done and regards the gift as complete …

71 These statements of principle were not necessary to the decision in Corin but they have been applied in subsequent cases: see Meagher, Gummow & Lehane, Equity, Doctrines & Remedies 4th Edition at para [6-155] where it is said that authority now overwhelmingly favours the view of Griffith CJ. 72 I do not think the fact that Westlawn 218 did not have legal title to the debts and obligations of Total Entity arising under the Facility Agreement is of any significance to the outcome of the appeal. I would accept that if the 30 October 2002 Assignment did not operate as an equitable assignment of Total Entity's debts and obligations in favour of Westlawn 218 a question might arise as to whether the Guarantee continued to operate as a guarantee: see International Leasing Corporation (Vic) Ltd v Aiken [1967] 2 NSWR 427 at 438-439 per Jacobs JA. But where the debts and obligations of Total Entity have been the subject of a valid equitable assignment to Westlawn 218 I do not think it can matter that Westlawn 218 is yet to acquire legal title to them. It can acquire legal title at any time by giving Total Entity notice of the assignment pursuant to s 12 of the Conveyancing Act.

Issue 2: Was there a valid legal assignment of Mrs Bennell's alleged guarantee obligation to Westlawn 218? 73 I will come to some of the authorities concerned with the requirements of s 12 of the Conveyancing Act. However, it is clear that Mrs Bennell was given express notice in writing of the 31 May 2000 Assignment by a Notice of Assignment dated 31 May 2000. Mrs Bennell acknowledged having received the Notice of Assignment on 1 June 2000. 74 I am satisfied that the 30 October 2002 Assignment was an absolute assignment to Westlawn 218 of (inter alia) the debts and obligations owed by Mrs Bennell to Westlawn 634 under the Guarantee. However, there was no formal Notice of Assignment upon which Westlawn 218 can rely in the case of the 30 October 2002 Assignment. Westlawn 218 instead relied upon the 5 July 2007 Letter as notice to Mrs Bennell of the 30 October 2002 Assignment. Mrs Bennell contends that that 5 July 2007 Letter was not a valid notice for the purposes of s 12 of the Conveyancing Act. 75 I have already set out the relevant parts of the 5 July 2007 Letter. It is a letter written by the solicitors for Westlawn 218. The first paragraph of the letter identifies their client as Westlawn 218. The letter refers to the Facility Agreement between Westlawn 263 and Total Entity. It then refers to the Guarantee given by Mrs Bennell in support of the Facility Agreement. The key paragraph of the letter refers to the 31 May 2000 Assignment to Westlawn 634 "which included the assignment relating to the liability due and owing by you in respect of the … Guarantee, which was subsequently assigned to our client." That paragraph is followed by a demand for payment of the amount of $8,308,953.34 which was said to be due and owing under the Facility Agreement as at 22 June 2007. 76 It may be accepted that there was no money due and owing by Mrs Bennell under the Guarantee at the time of the 31 May 2000 Assignment or the 30 October 2002 Assignment. Clause 7.1 of the Guarantee provides that the "guarantor will pay to Westlawn upon demand by Westlawn …". There is nothing to suggest that there had been any previous demand made on Mrs Bennell pursuant to the Guarantee. Had the 5 July 2007 Letter purported to give notice of an assignment of a debt owed by Mrs Bennell under the Guarantee then it would be open to her to say that there was no such debt owed by her with the consequence that there was no debt capable of being assigned to Westlawn 218. But the words "the liability due and owing by you in respect of the … Guarantee" in the 5 July 2002 Letter are wider than that. They cover her obligations under the Guarantee generally. Further, the reference to the 31 May 2000 Assignment makes it clear that those obligations, which had earlier been assigned to Westlawn 634, were subsequently assigned to Westlawn 218. 77 The requirements of s 12 of the Conveyancing Act were considered by the High Court in Consolidated Trust Company Limited v Naylor (1936) 55 CLR 423. In that case a notice in writing had been given to the respondent under the Moratorium Act 1932 (NSW) and the question was whether that notice satisfied the requirements of s 12 of the Conveyancing Act. The majority (Dixon and Evatt JJ) said (at 438-439): The object of the requirement made by the words "of which express notice in writing shall have been given" is, we think, correctly stated in Warren's Choses in Action (1899), at pp. 177, 178. "The term 'express notice' is doubtless employed by way of opposition to notice arising by implication or operation of law, and to what was known in equity as constructive notice. It means a notice which indicates an express intention - a direct and definite statement of a thing, as distinguished from supplying materials from which the existence of such a thing may be inferred." The purpose is to make essential actual notice that the debt has been assigned. "One of the objects of the giving of notice to the debtor is that he shall 'know with certainty' in whom the legal right to sue him is vested" (McIntosh v Shashoua (1931) 46 CLR 494 at p. 515, per Evatt J.). The purpose does not extend to giving the debtor particulars of the assignment. The assignment must be by writing, but, if it is in writing, then notice to the debtor is necessary only to acquaint him with the fact that the debt is payable to the assignee and the statute requires that he shall be expressly notified. But, neither in its exact terms, nor according to its general intent, does the provision appear to make it essential that the notice should contain an express statement that the assignment is a written one.

78 In the present case Mrs Bennell was given express written notice that her obligation under the Guarantee had been assigned by Westlawn 634 to Westlawn 218. The 5 July 2007 Letter clearly acquaints Mrs Bennell with the fact that she now owes her obligations under the Guarantee to Westlawn 218. 79 Mrs Bennell argued that the requirements of s 12 were not satisfied because the 5 July 2007 Letter purported to give notice of assignment and also demand payment from her. I do not think this argument has substance. If the first part of the 5 July 2007 Letter otherwise satisfied the notice requirements of s 12, it is difficult to see why the fact that the latter part of the letter made demand for payment should lead to any different conclusion. The letter fulfilled two distinct purposes: first, to give notice of the assignment and second, to make the demand for payment. 80 Mrs Bennell also argued that the 5 July 2007 Letter overstated the amount due and owing by Total Entity under the Facility Agreement and that the demand made upon Mrs Bennell was therefore excessive. It was argued that this also should lead to the conclusion that the 5 July 2007 letter did not satisfy the requirements of s 12. I do not think this argument has any substance either. The fact that the demand may have been excessive could only make a difference if it cast doubt upon that which had been assigned: see Bunbury Foods Pty Ltd v National Bank of Australasia Limited (1984) 153 CLR 491 per Mason, Murphy, Wilson, Brennan and Dawson JJ at 503-504, Luxer Holdings Pty Ltd v Glentham Pty Ltd (2007) 35 WAR 254 per Buss JA at [87]-[90]. If, for example, a specific debt was the subject of an absolute assignment and the letter sent to the debtor which sought to give notice of it overstated the amount of the debt, there would be an argument for saying that the notice was incorrect in an essential respect and that it did not comply with the requirements of s 12. There is support for such an approach in the authorities: WF Harrison & Co Ltd v Burke [1956] 1 WLR 419 (CA). Whether that approach should be applied in circumstances where the error is not reasonably capable of misleading the debtor may be a different matter. In the present case, however, the situation is quite different. The first part of the 5 July 2007 Letter gives notice of the assignment in terms that are sufficiently clear. The demand for payment made in the second part of the 5 July 2007 Letter does not withdraw or qualify anything said about the assignment to Westlawn 218. 81 I am therefore satisfied that the 5 July 2007 Letter complied with the requirements of s 12 of the Conveyancing Act. I am also satisfied that the demand made in the 5 July 2007 Letter was a demand made upon Mrs Bennell pursuant to cl 7.1 of the Guarantee.

Issue 3: Were the monies advanced by Westlawn 263 and Westlawn 634 to Total Entity advanced pursuant to the Facility Agreement on some other terms which have not been determined? 82 This issue, as defined by Mrs Bennell, reflects the way in which her case was argued before me. While it was argued that the monies admittedly advanced by Westlawn 263 and Westlawn 634 might have been advanced by them pursuant to some other arrangement apart from the Facility Agreement, there was no attempt made to specify what the terms of that other arrangement were if they were different to those contained in the Facility Agreement. Mrs Bennell's evidence does not provide any evidentiary support for the proposition that the monies advanced to Total Entity were advanced otherwise than pursuant to the Facility Agreement. On the contrary, her evidence, and the various facility letters signed by her on behalf of Total Entity after it entered into the Facility Agreement (13 April 1999 Facility Letter, 18 June 1999 Facility Letter, 1 March 2001 Facility Letter, 11 January 2002 Facility Letter) all indicate in the clearest of terms that the monies advanced to Total Entity were advanced pursuant to the Facility Agreement. 83 In support of the submission that the monies advanced to Total Entity were not advanced pursuant to the Facility Agreement, Mrs Bennell argued that monies were not always drawn down by Total Entity against invoices assigned to Westlawn 263 or, subsequently, Westlawn 634. This seems to be so. However, her argument is based upon a misconception. Clause 5.1 required Total Entity to "offer for sale to Westlawn all the Debts in accordance with this Deed, unless Westlawn agrees otherwise" (my emphasis). The latter words are significant because they clearly indicate that Total Entity was not obliged to offer "the Debts" for sale to Westlawn 263 if not required by Westlawn 263 to do so. The consequence of Westlawn 263 not requiring Total Entity to offer for sale the Debts as a pre-condition to making advances is that its security was not what it might otherwise have been. But it does not provide any basis from which Mrs Bennell can successfully argue that monies were not advanced to Total Entity pursuant to the Facility Agreement.

Issue 4: Did the terms upon which Total Entity and any of Westlawn 218, Westlawn 263 or Westlawn 634 conducted the factoring and/or loan transactions in the relevant period affect the validity of the alleged assignments in 1 and 2 above. 84 I am satisfied that the monies advanced to Total Entity by Westlawn 263 and Westlawn 264 were advanced pursuant to the terms of the Facility Agreement. Accordingly, this issue does not arise. I would add that, in my view, there was nothing about the terms on which Total Entity, Westlawn 263 and Westlawn 264 dealt with each other which affected the validity of the 31 May 2000 Assignment or the 30 October 2002 Assignment.

Issue 5: Whether the Guarantee ought to be avoided, set aside or rendered unenforceable, by reason of the causes of action propounded in the Supreme Court Proceeding. 85 Mrs Bennell contended that she had an arguable claim to have the Guarantee set aside or declared void or unenforceable pursuant to either s 87 of the Trade Practices Act 1974 (Cth) (the TPA) or the Australian Securities and Investments Commission Act 1989 (Cth) (the 1989 ASIC Act). The summons filed by Mrs Bennell indicates that, so far as the TPA is concerned, she contends that she is entitled to the s 87 orders sought by reason of the defendants' contraventions of s 51AC and s 52 of the TPA. As to the 1989 ASIC Act, the summons does not refer to any particular provisions of that Act. More to the point, the summons overlooks the fact that this Act was repealed in 2001 and replaced by the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act). Counsel for Mrs Bennell did not make any written or oral submission based upon the provisions of the ASIC Act which I assume Mrs Bennell relies upon on the basis that its provisions apply in place of s 51AC and s 52: see s 51AAB and s 51AF of the TPA. For present purposes it is sufficient for me to consider the strength of the claims made by Mrs Bennell in the Supreme Court proceedings on the basis of Westlawn 263's alleged contraventions of s 51AC and s 52 of the TPA which provisions are, in all relevant respects, mirrored in the ASIC Act. 86 Sections 51AC(1) and (2) of the TPA came into effect on 1 July 1998. They provide: (1) A corporation must not, in trade or commerce, in connection with:

(a) the supply or possible supply of goods or services to a person (other than a listed public company); or (b) the acquisition or possible acquisition of goods or services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. (2) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a corporation (other than a listed public company); or (b) the acquisition or possible acquisition of goods or services from a corporation (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. 87 Subsections (3), (4), (5) and (6) identify various matters which a court may and may not have regard to for the purpose of determining whether a corporation has engaged in conduct that is, in all the circumstances, unconscionable. 88 In Australian Competition and Consumer Commission v Allphones Retail Pty Ltd (No 2) (2009) 253 ALR 324 at [113] Foster J noted that there is authority in this Court which establishes the following propositions concerning the operation of s 51AC: (a) The scope of s 51AC is wider than that of s 51AA. The meaning of unconscionable for the purposes of s 51AC is not limited to the meaning of the word according to established principles of common law and equity: per French J in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491; 169 ALR 324; [2000] FCA 2 at [24] and [25], per Sundberg J in Australian Competition and Consumer Commissioner v Simply No-Knead Franchising Pty Ltd (2000) 104 FCR 253; 178 ALR 304; [2000] FCA 1365 at [31], per Selway J in Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491; 59 IPR 435; [2003] FCA 850 at [183] and per Jacobson J in Pacific National (ACT) Ltd v Queensland Rail (2006) 28 ATPR (Digest) 46-268; [2006] FCA 91 at [918] and [931]. (b) The ordinary or dictionary meaning of unconscionable, which involves notions of serious misconduct or something which is clearly unfair or unreasonable, is picked up by the use of the word in s 51AC. When used in that section, the expression requires that the actions of the alleged contravenor show no regard for conscience, and be irreconcilable with what is right or reasonable. Inevitably the expression imports a pejorative moral judgment: per Heerey, Drummond and Emmett JJ in Hurley v McDonalds Australia Ltd (2000) ATPR 41-741; [1999] FCA 1728 at [22] and 29. This helpful articulation of the meaning of the word when used in s 51AC was followed by Selway J in Australian Competition & Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491; 59 IPR 435; [2003] FCA 850 at [183]-[185] (4WD Systems) and by Sundberg J in Australian Competition and Consumer Commission v Simply No-Knead Franchising Pty Ltd (2000) 104 FCR 253; 178 ALR 304; [2000] FCA 1365 at [30]; and (c) Normally, some moral fault or moral responsibility would be involved. This would not ordinarily be present if the critical actions are merely negligent. There would ordinarily need to be a deliberate (in the sense of intentional) act or at least a reckless act: per Selway J in 4WD Systems at [185]. 89 I have outlined events relevant to the claims made by Mrs Bennell in the Supreme Court proceedings and I have set out key aspects of Mrs Bennell's affidavit evidence. There are aspects of Mrs Bennell's affidavit evidence which I find quite implausible. Central to these is her evidence that she did not know that she had given the guarantee until the middle of 2000. Assuming, however, that she was not aware that she had given the guarantee from the moment she signed it, her evidence does not explain how the existence of the guarantee escaped her notice until mid 2000. 90 The evidence includes file copies of a letter apparently written by the solicitors for Westlawn 263 on 15 February 1999 addressed to Total Entity enclosing (unexecuted) copies of both the Facility Agreement and the Guarantee. In April 1999, the facility limit was increased from $150,000 to $500,000. The 13 April 1999 Facility Letter was, as I have previously recorded, signed by both Mr and Mrs Bennell and referred explicitly to the "[e]xisting personal Guarantees from the "Directors/Shareholders" and the "[e]xisting Guarantee from Janile Pty Limited in its own right and as trustee for the Janile Trust." That was followed by the 18 June 1999 Facility Letter which agreed to Total Entity's request for a temporary increase of $300,000 in the facility limit and which also included a statement that Westlawn 263 "will be relying upon existing securities, including guarantees, to secure the increased amount." The evidence also shows that, around this time, the same solicitors sent Total Entity another copy of the Facility Agreement and the Guarantee. On the same day they also wrote to Mrs Bennell at her home address enclosing another copy of the Guarantee. 91 In early March 2001 Total Entity sought, and was granted, an increase in the facility limit to $5,000,000 plus interest and charges. The 1 March 2001 Facility Letter confirming this increase was signed by Mrs Bennell. By that time, on her own admission, she knew of the Guarantee and was aware that it was being relied on by Westlawn 634 as security for what were by then large amounts being advanced to Total Entity. In January 2002 Total Entity sought to increase the facility limit by a further $700,000. In her attempts to persuade Mr Artindale to agree to this increase, Mrs Bennell wrote to him on 10 January 2002 in the terms I have previously set out. Her letter draws the existence of the Guarantee and the attached statement of her and her husband's financial position to Mr Artindale's attention which, according to Mrs Bennell, showed that Mr Artindale's position was "well and truly covered". 92 I do not consider that there is any evidence to suggest that Westlawn 263 engaged in any conduct in its dealings with Mrs Bennell in February 1999 that could be characterised as "unconscionable" or "misleading or deceptive" which could entitle her to any of the relief she has claimed. In early 1999 Mrs Bennell's company, Total Entity, was in urgent need of $150,000 which it could not source from the St George Bank. Mrs Bennell was required to give a guarantee to Westlawn 218 as a condition of those funds being made available to Total Entity. This was clearly apparent from the 15 February 1999 Facility Letter which she signed. There is no suggestion that Mr Artindale sought to conceal from her that such a guarantee was required. 93 The Guarantee was proffered for Mrs Bennell's signature not only on her own behalf but also on behalf of Janile of which she was a director and shareholder. Again, there is no suggestion that Mr Artindale sought to conceal from her that she was signing a guarantee or that he otherwise engaged in any sharp or unfair conduct in his dealings with her at the time. 94 It was not suggested in Mrs Bennell's submissions that there was anything unusual or unfair about the provisions of the Guarantee. While Mrs Bennell says she did not read the Guarantee and did not appreciate that she was giving a guarantee, there is no suggestion in the evidence that she would not have executed the Guarantee if she had read it. Nor is there any suggestion in the evidence that legal advice would have made the slightest difference to her. 95 I do not regard the fact that Mrs Bennell did not obtain legal advice before signing the Guarantee as significant. She could have obtained legal advice if she chose to prior to signing the Guarantee or at any time thereafter. The fact that she procured substantial increases in the facility limit on Total Entity's behalf between 1999 and 2002 is telling. Her own evidence indicates that she did not seek legal advice on any of these occasions. Indeed, she states in her affidavit that she did not receive legal advice in relation to the Guarantee until about 3 December 2008 which is some weeks after the order was made substituting Westlawn 218 in place of American Express.

Issue 6: Whether, in the circumstances of the above matters, there was an "other sufficient cause" within the meaning of section 52(2)(b) of the Bankruptcy Act sufficient to dismiss the amended creditors petition of Westlawn Finance filed in the Bankruptcy Proceeding on 9 September 2009 (the "Westlawn Petition"). 96 Section 52(1) and (2) of the Bankruptcy Act relevantly provide: (1) At the hearing of a creditor's petition, the Court shall require proof of:

(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient); (b) service of the petition; and (c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing; and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor. (2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made; it may dismiss the petition. 97 Westlawn 263 has not obtained a judgment against Mrs Bennell. However, I am not satisfied that this of itself was sufficient reason for not making a sequestration order against Mrs Bennell. There was evidence from Mr Dougherty which shows that as at 31 August 2007 (which is the date upon which Mrs Bennell committed her act of bankruptcy) the amount of $7,843,222 was owed by Total Entity under the Facility Agreement and that this amount was in turn owed by Mrs Bennell as at that date under the Guarantee. By 7 September 2009 (being the date of the filing of the amended creditor's petition) the relevant amount stood at $7,511,733 (inclusive of interest calculated to 31 August 2007). By virtue of the 31 May 2000 Assignment and the 30 October 2002 Assignment the relevant amounts were owed by Mrs Bennell under the Guarantee to Westlawn 218. 98 I am not satisfied that the existence of the Supreme Court proceedings was sufficient reason why a sequestration order should not have been made against Mrs Bennell. For reasons I have previously explained, I am not satisfied that Mrs Bennell has demonstrated any triable issue in relation to the claims made by her in those proceedings. I am satisfied that she is, and was, at all relevant times, indebted to Westlawn 218 in the amount of $7,511,733 and that she has no real prospect of having the Guarantee upon which that indebtedness hinges being set aside or declared void or unenforceable.

Issue 7: Whether Westlawn Finance was a secured creditor of Mrs Bennell, or a creditor at all, such that Westlawn Finance was unable to proceed on the Westlawn Petition. 99 As to the suggestion that Westlawn 218 was not a creditor of Mrs Bennell at all, I have dealt with that matter previously. She also argued that the creditor's petition should have been dismissed because if Westlawn 218 was a creditor at all, it was a secured creditor. In support of this submission she pointed to cl 9.2 of the Guarantee which I have previously set out. 100 There is an issue as to whether cl 9.2 could give rise to a valid and enforceable equitable charge over Mrs Bennell's property in that it provides that the charge is upon: … the same terms and conditions, mutatis mutandis as are contained in the charge referred to in the Schedule which accords with the type of property concerned, any and all property whether real or personal now or in the future held by the Guarantor with the payment of the Secured Money.

101 The Schedule to the Guarantee does not refer to any charge. It was argued by Westlawn 218 that in those circumstances cl 9 is void for uncertainty. 102 It is not necessary for me to decide whether cl 9.2 is void for uncertainty. The state of the evidence is such that I am not satisfied that Mrs Bennell was the beneficial owner of any property upon which the charge could fix even if cl 9.2 is valid and enforceable. Mr Dougherty gave evidence that Westlawn 218 does not have any security. Mrs Bennell did not lead any evidence to the contrary. She of all people was best placed to give evidence that she was the owner of some property to which the charge could attach. I infer from her failure to give such evidence that she could not have said anything on this issue that would have assisted her case.

CONCLUSION 103 While I am satisfied on the basis of Mr Dougherty's evidence and the absence of evidence from Mrs Bennell on this issue that Westlawn 218 is not a secured creditor, I propose to require that Westlawn 218 give an undertaking to the Court that it will not seek to enforce cl 9 of the Guarantee without the prior leave of the Court. That undertaking should be reduced to writing and executed by Westlawn 218 under seal. It should be filed with the Court within 14 days. 104 I propose to dismiss the appeal with costs. I shall direct that my orders not be entered until such time as the undertaking has been filed and served. I shall also grant liberty to apply on 3 days notice in case the undertaking is not filed within the time allowed. I certify that the preceding one hundred and four (104) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.