Bowesco Pty Ltd (Receiver and Manager Appointed) v Zohar

21 At the hearing the trial judge recognised that it was unusual to embark on a determination of substantive property rights, in the course of a proceeding for the variation of existing orders made under s 1323 of the Corporations Act, and that it may not be possible to make the determination in the absence of discovery being given and subpoenas being issued. However, in the end the trial judge concluded that the circumstances were such that, he was able to decide the issue, without it being necessary to make orders for the giving of discovery or the issue of subpoenas. 22 On 15 September 2006, the trial judge made the following orders: '1. The orders made on 30 June 2006 in respect of the seventh defendant be varied to include the following paragraph 4A: "Shall not prevent Mark Korda, Oren Zohar and David Winterbottom (the 'Option Receivers') from exercising all rights, powers, privileges, benefits, discretions and authorities conferred upon them (either jointly or severally) by: (a) a Deed of Charge granted by Westpoint Corporation Pty Ltd (Receivers and Managers Appointed) (In Liquidation) in favour of Perpetual Nominees Limited as Custodian of The ING Mortgage Pool for ING Funds Management Limited ABN 21 003 002 800 as the Responsible Entity of The ING Mortgage Pool ("ING"), dated 28 September 2005, registered with the Plaintiff and having charge number 1298375; (b) a Deed of Appointment of Receiver made 19 July 2006 between ING and the Option Receivers; and (c) section 420 of the Corporations Act 2001." 2. IT IS HEREBY DECLARED THAT the seventh defendant holds the subject matter assigned by the Deed of Assignment of Option dated 7 October 2005 subject to a fixed charge in favour of Perpetual Nominees Ltd as custodian of The ING Mortgage Pool for ING Funds Management Ltd as the Responsible Entity of The ING Mortgage Pool granted by Westpoint Corporation Pty Ltd (Receivers and Managers Appointed) (In Liquidation) and dated 28 September 2005. …' 23 The substituted notice of appeal referred to seven grounds of appeal but at the hearing the applicant abandoned two grounds of appeal. Ground 1 - apparent bias 24 The first ground in the proposed notice of appeal is that the judge below erred in: '1.1 failing to grant the appellant an adjournment to allow the appellant to formulate an application to have the Learned Hearing Judge disqualify himself on the grounds of apprehended bias. 1.2 having granted the application for an adjournment referred to in ground 1.1, in then not granting the said application.' 25 The background to this ground of appeal is as follows. 26 During the hearing of this matter, on 14 September 2006, before the trial judge, counsel for the applicant referred to Mr Carey's qualifications and experience as a property developer, in support of a submission that Mr Carey was capable of giving evidence that the applicant would be able to undertake the commercial development of the Stage 2 land; with the consequence that the Option would be worth substantially more to the applicant than the amount that could be obtained by the option receivers transferring the Option to a third party. The following exchange took place between counsel for the applicant and the trial judge: 'HIS HONOUR: Well, what I'm concerned about is he's saying: X and Y will happen if I don't have this opportunity. There is an opportunity that I can do these things with Bowesco. I'm just wondering what evidence I have about his actual relationship with Bowesco that gives [him] authority to indicate that these things will or will not be done. The formal duty and the legal duty to make such decisions and take such risks or assume such opportunities resides in the director. Now, is the director someone who will act at his direction or is there some indication that the director goes along with this? MR DILLON: I think all I can say, your Honour, is there is no evidence to suggest anything else but that the director Ms Karen Carey‑Hazel would act as she should as a director and make independent decisions if she found that she didn't agree with Mr Carey's proposals for the ‑ ‑ ‑ HIS HONOUR: But she's not on evidence before me as saying anything about the merits of his position. MR DILLON: His position, no, your Honour, but once again I'm not sure of the relevance - if he's providing assistance to the company, and you've seen his qualifications and his experience, he would be somebody who would be amply qualified to provide assistance in relation to a potential property development. Your Honour knows who are the beneficiaries. It's their interests that need to be protected. Ms Karen Carey‑Hazelwill have her duties ‑ ‑ ‑ HIS HONOUR: Well, I can't overlook the fact that there's a huge question mark over Mr Carey at the moment in terms of his capacity and his probity and that are matters - that arises from matters to which I referred in the judgment of 20 April, to cite his qualifications is not necessarily a matter which is going to be particularly persuasive. I mean, he can point to factual issues and ways of doing things perhaps but I'm not - it's not clear to me that I should be relying upon Mr Carey's evidence as some kind of expert in property development. He's done a lot of it but at the moment there are a lot of people lamenting. MR DILLON: That's right. If I can then approach it this way if your Honour is concerned about those things. We cannot, as you say, on the factual issues - sorry; the precollapse factual issues, it's going to have to be Mr Carey who gives that evidence because he was the ‑ ‑ ‑ HIS HONOUR: He was the director. MR DILLON: ‑ ‑ ‑ moving party at the time, so we're desperately going to need his assistance in relation to those issues. In respect of the opportunity that this development presents for the beneficiaries of the trust, all I can say on that, your Honour, is we've put forward the evidence from Mr Carey, I have explained that I have asked - I will ask for expert evidence to be provided. I haven't had that opportunity yet and that's the point I'm making ‑ ‑ ‑ HIS HONOUR: Yes, no, I understand.' 27 As is evident from the transcript, counsel for the applicant made no objection to the comments made by the trial judge as to the question mark over Mr Carey's probity. 28 After the hearing, the trial judge reserved his decision until the afternoon of the next day. On 15 September 2006, as the trial judge was about to deliver his reasons, and before he had done so, counsel for the applicant applied for an adjournment so that he could consider whether to make an application that the judge disqualify himself on the basis of his remarks referred to above. The trial judge refused the application for the adjournment and proceeded to deliver his reasons for decision. 29 Before us, the applicant submitted that the apprehension of bias was confirmed by certain passages in the trial judge's reasons for decision. It was contended that the perception was that the trial judge had allowed conclusions he had reached in his judgment of 20 April 2006, adversely to affect his assessment of Mr Carey's credibility and, therefore, to reject his evidence. Firstly, counsel referred to the trial judge's finding at [25] of the judgment, to the following effect: 'Mr Carey's evidence on this point reflected a somewhat speculative and optimistic view of what Bowesco could do if it exercised the Option. Given the current travails of the Westpoint Group generally and of Mr Carey in particular, common sense suggests that the prospects of finding major finance for a development in which Bowesco would have any role to play would not be great.' 30 Secondly, he referred to the following passage in the trial judge's judgment at [52] and [53]: 'Mr Carey also said in his affidavit that he was informed by the director of Bowesco, Ms Carey‑Hazell, who is his sister, that Bowesco wishes to exercise the Warnbro Option and purchase the Warnbro Fair Shopping Centre and the stage 2 land. To the extent that this suggests that Ms Carey‑Hazell exercised some independent judgment in her capacity as the director of Bowesco, I would not accept it on the basis of Mr Carey's evidence. It is quite apparent that Mr Carey has operated as the effective controller of companies within the Westpoint Group. The suggestion, implicit in paragraph 44 of his affidavit, that his sister has informed him of Bowesco's wish to proceed with the development, as though that were some independent judgment, is inherently implausible and not accepted. I do not accept that Mr Carey had decided as early as 2004 that Bowesco would be the vehicle for the Warnbro Fair Option. I do not accept that it would have made any difference if he had. In paragraph 52 of his affidavit Mr Carey stated his belief that there would be documents in the books and records of Westpoint Group which would evidence, inter alia: "whether it had been agreed or understood that Bowesco was to be the special purpose vehicle for undertaking the Warnbro Shopping Centre and Stage 2 development and when that agreement and understanding had been concluded or reached." I do not believe that that issue, which goes to intra‑group dealings and as to which I do not accept Mr Carey's evidence in any event, has any bearing on the construction of the ING Charge.' 31 Thirdly, counsel pointed to the following passage at [73] of the judgment: '…It follows, in my opinion, that the creation of a fixed charge over the Option was not inconsistent with the ordinary course of Westpoint's business. I do not accept Mr Carey's description that the procedure of finding a special purpose vehicle for land development in particular cases negatives that construction. That was not a necessary aspect of the conduct of its business. …' 32 Counsel for the applicant relied upon the following passage from The Queen v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 264: 'As the cases show, there are some matters on which a judge may have preconceived opinions, and yet be qualified to sit, but speaking generally the credit of an essential witness, where the case may turn on credibility, is not one of them.' 33 The principles to be applied in relation to apprehended bias were considered by the High Court in the case of Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 ('Ebner'). Gleeson CJ, McHugh, Gummow and Hayne JJ observed at 344: 'Where in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge…, the governing principle is that, subject to qualifications relating to waiver…or necessity…a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.' 34 Their Honours went on to observe, at 345, referring to the apprehension of bias principle: 'Its application requires two steps. First, it requires the identification of what it is said might lead a judge...to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge…has an "interest" in litigation; or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.' 35 In Johnson v Johnson (2000) 201 CLR 488 at 493, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ observed: 'Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice.' 36 Recently, in the case of Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55, Callinan J at [177] observed: 'It is axiomatic that the perception of a lay observer will not be as informed as the perception of a lawyer, particularly, a litigation lawyer. But the notional lay person should not be taken to be completely unaware of the way in which cases are brought to trial and tried. In any event, it would have been apparent to any observer from the trial judge's remarks here that his Honour was already well acquainted with the issues, and many of the details of the respective cases of the parties.' 37 In Galea v Galea (1990) 19 NSWLR 263 at 279, Kirby ACJ (as he then was) observed that: 'In judging the suggestion of a supervening apprehension of bias, it is reasonable to assume that the hypothetical lay observer would base the opinion on a fair assessment of the judge's conduct in the context of the whole of the trial.' 38 In our view, the comments made by the trial judge must be viewed in the context in which they were made. 39 Firstly, the comments were made in the course of a proceeding, namely, WAD 83 of 2006, which was originally commenced by ASIC, and in which ASIC had presented a substantial amount of evidence in support of its allegations of suspected serious misconduct by Mr Carey and others associated with the Westpoint group of companies, which evidence had not been substantially challenged by Mr Carey. 40 Secondly, the trial judge's comments as to 'a huge question mark' existing over Mr Carey's probity, were confined to expressing his doubt as to the weight that he could place on any evidence which Mr Carey might seek to give in the capacity as 'some kind of expert in property development'. The trial judge's comments show that he did not regard the matters as referred to in his judgment of 20 April 2006 as adversely impacting upon the capacity of Mr Carey to give evidence as to 'factual issues and ways of doing things' or upon the weight to be accorded to that evidence. 41 The transcript shows that counsel for the applicant was aware and appreciated that the trial judge's comments were confined in this way. 42 Thirdly, the debate between the trial judge and counsel took place in the context of counsel for the applicant making submissions as to the scope of the development opportunity that the exercise of the Option would present to the applicant; and why it was, therefore, important for the matter to be determined on an expedited basis. The comments by the trial judge were not made in respect of evidence which went to the proper construction of the charge. 43 A fair‑minded lay observer would be expected to have some familiarity with the background to ASIC's application for the freezing orders, and that, at the hearing of the application, ASIC had produced evidence in support of its allegations of misconduct by Mr Carey and others associated with the Westpoint group, which had not been substantially challenged. Also, a fair‑minded lay observer would know that it was public knowledge that external administrators were in control of a number of the Westpoint group of companies following the inability of the Westpoint companies to repay many millions of dollars, including monies advanced by members of the public. Further, a fair‑minded lay observer would be taken to have some knowledge that the trial judge would, by reason of having heard a number of applications involving the Wesptpoint group of companies, have a degree of familiarity with the operations of those companies. 44 In our view, a fair‑minded lay observer would regard the comments made by the trial judge, in his exchange with counsel, as reflecting no more than a realistic assessment of the difficulty that would be faced by any person in Mr Carey's position, in persuading a court to place weight on evidence, he or she might seek to give as an expert witness in property development. A fair‑minded lay observer would not have regarded the trial judge as expressing concluded views as to Mr Carey's credibility in general, and would not have come to the view that the trial judge might not bring an impartial mind to the resolution of the matters before him. 45 We now deal with the three passages in the reasons of the trial judge which the applicant submitted, confirmed the apprehended bias. As to the first passage referred to in [29] above, there was no evidence from any other potential participant in the proposed Stage 2 development project or from any financier prepared to finance the participation of the applicant in the development of the Stage 2 land. In our view, having regard to the absence of any such evidence, and the fact that it was public knowledge that Mr Carey was the subject of the ASIC investigation in respect of serious misconduct, and that several of the Westpoint group of companies were under the control of external administrators following the inability of those companies to repay many millions of dollars borrowed from members of the public, a fair‑minded lay observer, would regard the comments which the trial judge made at that passage, when viewed in the context of the exchange between counsel and the trial judge, as being open to the trial judge to make, as a matter of commonsense. Such an observer would not have concluded that the trial judge might not bring, or might not have brought, an impartial mind to the resolution of the issue before him. 46 As to the second impugned passage in the judgment referred to at [30] above, the trial judge gave reasons for rejecting the evidence of Mr Carey in relation to, what the trial judge referred to, as 'inter group dealings'. The trial judge said that it was 'inherently implausible' that Mr Carey's sister would exercise an independent judgment in relation to the applicant's affairs, when it was quite apparent that Mr Carey had acted as the effective controller of the companies within the Westpoint group of companies. In our view, a fair‑minded lay observer, aware of the nature of the evidence given by ASIC in support of its application, and the trial judge's familiarity with the affairs of the Westpoint group of companies, through having presided at a number of applications relating to the group, as docket judge, would have found that those comments were open to the trial judge, and would not have concluded, by reason of those comments, seen in the context of the exchange with counsel, that the trial judge might not bring, or might not have brought, an impartial mind to the resolution of the issue. 47 Further, in our view, a fair‑minded lay observer, would come to the same view in relation to the trial judge's rejection of Mr Carey's evidence that in 2004 he made a decision to assign the Option to the applicant. A fair‑minded lay observer would have concluded that the evidence, referred to at [58] below, afforded a basis on which to reject the evidence, and would not have concluded that on the basis of the rejection of that evidence, seen in the context of the exchange with counsel, that the trial judge, might not bring, or might not have brought, an impartial mind to the resolution of the issues. 48 In relation to the third passage in the trial judge's reasons, which is referred to at [31] above, in our view, the applicant has misapprehended the trial judge's finding in this respect. The trial judge did not reject Mr Carey's evidence in relation to the use of separate project development companies in the conduct of Westpoint's business. What the trial judge did was to accept that evidence, but find that the evidence did not negative the construction of the charge called for by the language of the charge. 49 Counsel for the respondent submitted that the applicant had not complained of apprehended bias by the trial judge during the proceedings, but had only applied for an adjournment to consider whether to make an application founded on apprehended bias. In Vakauta v Kelly (1989) 167 CLR 568 at 573, Deane and Gaudron JJ observed: 'The statements which the learned trial judge had made about his preconceived views of Dr. Lawson were, however, effectively revived by what his Honour said in his reserved judgment. The appellant's failure to object to the comments made in the course of the trial cannot, in our view, properly be seen as a waiver of any right to complain if comments made about Dr. Lawson in the judgment itself would, in the context of those earlier comments, have the effect of conveying an appearance of impermissible bias in the actual decision to a reasonable and intelligent lay observer.' 50 Accordingly, in light of the complaints made by the applicant as to the passages in the trial judge's reasons, the failure of the applicant to object during the trial cannot constitute an independent bar to the claim of apprehended bias made by the applicant before this Court. However, for the reasons we have stated, a fair‑minded lay observer would not have come to the view, that the trial judge in making the impugned statements in the judgment, seen in the context of the exchange with counsel at the hearing, might not bring, or might not have brought, an impartial mind to the resolution of the issues before him. Grounds 2 and 3 ‑ Failure to accord due process 51 Grounds two and three of the appeal complain that the trial judge determined substantive property rights, without observing, what the applicant called, 'due process'. More specifically, the applicant complained that the trial judge failed to order discovery and the issue of subpoenas, and that had he done so, the applicant may have been able to establish that the Option had been assigned prior to the execution by Westpoint Corporation of the charge on 28 September 2005. Counsel for the applicant relied upon the same argument in support of both grounds of appeal. 52 In early 2004, Mr Carey was a director of each of the applicant, Westpoint Management and Westpoint Corporation. In his evidence before the trial judge, Mr Carey said: 'I made the decision on behalf of Westpoint Corporation that Warnbro Fair option should be assigned to Bowesco. That is, I identified Bowesco as a development vehicle, and, accordingly, the vehicle to whom the option should be assigned in readiness for undertaking the business plan identified herein. This decision was made at a time I commenced negotiations with Big W: my recollection is that it was at the beginning of the year 2004.' 53 Mr Carey also deposed that with access to documents he might have been able to give a precise date on which the decision was made. He said that he believed that it was more likely than not that the decision would have been recorded, or at least referred to in documents created about that time by Westpoint Corporation, Westpoint Management, Westpoint Realty and or the applicant. 54 The trial judge, as is evident from [30] above, did not accept Mr Carey's evidence that in 2004 he had decided that the Option was to be assigned to the applicant. The trial judge went on to say that it would not matter even if Mr Carey had so decided. The trial judge refused to order discovery or the issue of subpoenas. 55 Counsel for the applicant submitted that, as Mr Carey was in 2004 a director of each of Westpoint Management, Westpoint Corporation and the applicant, his 'decision' was sufficient to comprise an agreement for an assignment. He also submitted that discovery may have yielded a document which could comprise a 'note or memorandum' signed by Mr Carey or some other person lawfully authorised to act on behalf of the applicant. He went on to submit that if such a document were to be found then, it would be sufficient compliance with s 4 of the Statute of Frauds, and the assignment would have been complete. 56 In our view, it cannot be said that the trial judge erred in his assessment of Mr Carey's evidence, or in his refusal to order discovery and to give leave for the issue of subpoenas.

57 Firstly, Mr Carey's evidence goes no further than that he made a 'decision'. There is no evidence that the terms upon which any such assignment was to be made, were ever identified, and in particular, what, if any, the consideration was to be in respect of the assignment. In the absence of such evidence, the trial judge was correct to conclude that, even if Mr Carey had made the decision he said he did, it made no difference to his claim that there was a completed assignment. 58 Secondly, Mr Carey's evidence fell to be assessed by reference to other objective evidence. Such evidence did not support the contention that in 2004 there had been an assignment or, an agreement to assign, the Option by Westpoint Corporation to the applicant. On each of 10 March 2005 and 1 October 2005, Mr Carey, in his capacity as a director of Westpoint Management and Westpoint Corporation, executed a deed of amendment of the Option. Each of these dates, post‑dates the date on which Mr Carey said that he made the decision to assign the Option to the applicant, yet the applicant was not a party to either of the deeds which made amendments to the terms of the Option. Further, each of the deeds contained recitals which recorded the history of dealings associated with the Option, and there was no reference in the recitals to either of the deeds, to any assignment, or agreement to assign, the Option to the applicant in 2004. 59 In our view, it was open to the trial judge on the basis of this evidence to reject the evidence of Mr Carey that he had decided to assign the Option to the applicant in 2004. 60 Accordingly, in our view, the trial judge did not err in concluding that there was no basis to justify exercising his discretion to order discovery and the issuing of subpoenas. Grounds 6 and 7 ‑ Error in construing the charge 61 We now turn to grounds 6 and 7 of the appeal. Grounds 6 and 7 are to the following effect: '6. The [trial judge] erred in law and in fact in rejecting Mr Carey's evidence on behalf of the appellant that for a property development company, such as Westpoint Corporation, to deal in the tenure to land by way of the assignment of the right or option to purchase land was a dealing in the ordinary course of the property development company's business in circumstances where: 6.1 Mr Carey's evidence was not challenged by any evidence produced by the respondents; 6.2 the appellant was not given the opportunity to call evidence to establish the correctness of Mr Carey's evidence in circumstances where the [trial judge] had not given notice he intended to inform himself on these issues and reject Mr Carey's evidence. 7. The [trial judge] erred in law and in fact in finding that the Warnbro Option was not included in the floating component of the security given by the appellant for the financial facilities advanced by the respondents' appointor under: 7.1 the letter of offer of finance dated 8 September 2005; 7.2 the loan agreement dated 28 September 2005; 7.3 the charge dated 28 September 2005 granted by Westpoint Corporation to the respondents' appointor, further, the [trial judge] erred in law and in fact in finding the dealing in the Warnbro Option in terms of the agreements referred to in paragraphs 8.1 to 8.3 [sic] above was not a dealing in the ordinary course of Westpoint Corporation's business.' 62 Mr Carey gave evidence that before January 2006 the typical way in which a property development was undertaken within the Westpoint group, was for a potential property site to be identified, and, 'through a dedicated special purpose corporate vehicle, which was to be used to own the site and undertake the project, to negotiate and acquire an option to purchase the site'. Due diligence was then undertaken to determine whether the site could be successfully developed, and, if the due diligence established that a successful property development could be undertaken, the special purpose corporate vehicle would exercise the option and purchase the site. Thereafter, Westpoint Corporation would arrange for the special purpose corporate vehicle to enter into contracts for the purpose of undertaking the development of the site, and this would include contracting with Westpoint Corporation to undertake the management of the project development, Westpoint Constructions to undertake the construction work, and Westpoint Realty to provide real estate services. 63 Further, Mr Carey gave evidence as to the course of conduct between Westpoint Corporation, ING and Perpetual under the loan agreement, and the charge. 64 The trial judge found that the conduct between Westpoint Corporation, ING and Perpetual after the entry into the loan agreement and the charge was not relevant to the construction of the charge. 65 The trial judge found that on the proper construction of the charge, the interest that Westpoint Corporation had in the Option fell within the fixed element of the fixed and floating charge. Firstly, the trial judge found that the charge expressly included within the fixed element of the charge, any interest of Westpoint Corporation in 'land'. The interest that Westpoint Corporation had under the Option was an interest in land and the Option was, therefore, on the face of it, subject to the fixed charge. Secondly, the trial judge noted that 'Charged Debts' were also among the interests expressly stated to be subject to the 'fixed charge'. The trial judge referred to cl 4.2 of the charge, which is a specific provision dealing with the collection of charged book debts, and said at [72]: 'The lender is required to permit the charge or to collect the Charge Debts. This is a matter of some significance as indicative of an intention to provide specifically for that class of Westpoint Corporation's property which it was necessarily had to be able to deal with on an ongoing basis.' 66 The trial judge went on to say at [73]: 'The express provision in the charge for Charge Debts indicates an alertness on the part of the drafter to the difficulties associated with creating fixed charges over book debts. It indicates an intention, by way of contrast, that the charge in respect of interests in land was to be fixed.' 67 The trial judge also rejected the submission by the applicant that because the Westpoint group was engaged in property development, the Option should be treated as being subject to the floating element of the charge. The trial judge found that the terms of the charge did not prevent Westpoint Corporation from exercising the Option, nor developing the land itself. It followed, said the trial judge, that the imposition of a fixed charge over the Option was not inconsistent with the ordinary course of Westpoint's business. The trial judge said that Mr Carey's evidence in relation to the use, in certain circumstances, of special purpose development companies in the conduct of the Westpoint group's business did not negative that construction.

68 The trial judge also referred to the fact that Westpoint Corporation had received an offer from a third party to buy the Option for $1 million; and that to the extent that external circumstances were relevant, he did not accept that the parties to the charge would be taken to have contemplated that property worth $1 million could be disposed of in the ordinary course of business 'for what appears to have been a mere bagatelle'. 69 The applicant submitted that the business of the Westpoint group was property development, and there was a need as part of its ordinary course of business to deal with land, and the trial judge erred in not accepting the evidence of Mr Carey as to the use made by the Westpoint group of companies of special purpose corporate vehicles in carrying out property developments. The applicant went on to submit that the trial judge also erred in failing to take into account, the evidence of the conduct between Westpoint Corporation, ING and Perpetual after the execution of the loan agreement and the charge, and, in not concluding that the charge was to be construed so as to recognise that the assignment of the Option to the applicant, occurred in the ordinary course of business of Westpoint Corporation. 70 The applicant submitted that the Court was not bound by the designation given by the parties to a charge as either fixed or floating. Counsel for the applicant referred to the following observations made by their Lordships in Agnew v Commissioner of Inland Revenue [2001] 2 AC 710 at 725 ('Agnew'): 'The question is not merely one of construction. In deciding whether a charge is a fixed charge or a floating charge, the court is engaged in a two‑stage process. At the first stage it must construe the instrument of charge and seek to gather the intentions of the parties from the language they have used. But the object at this stage of the process is not to discover whether the parties intended to create a fixed or floating charge. It is to ascertain the nature of the rights and obligations which the parties intended to grant each other in respect of the charged assets. …It does not depend on the intention of the parties. If their intention, properly gathered from the language of the, instrument, is to grant the company rights in respect of the charged assets which are inconsistent with the nature of a fixed charge, then the charge cannot be a fixed charge however they may have chosen to describe it.' 71 Counsel for the applicant went on to submit that, whether the charge was properly a fixed or floating charge, depended on the contractual intention of the parties. In determining the contractual intention, the Court should take into account the surrounding circumstances and the context in which the charge was executed. Counsel for the applicant relied particularly on the following observations of Campbell J in Hanson Construction Materials Pty Ltd v Vimwise Civil Engineering Pty Ltd [2005] NSWSC 880 at [22] ('Hanson'): 'The fundamental exercise which the Court is engaged in in deciding whether a charge is a fixed charge or a floating charge is a matter of the ascertainment of the intention of the parties. That intention can be ascertained both from the words which they used, and from surrounding circumstances known to both parties. In substance, what Mahoney JA decided in Boambee Bay Pty Ltd v Equus Financial Services Ltd…was that, even though the words creating the charge were ones which were well able to refer to a fixed charge, so far as concerned property already owned by the chargor at the date of grant, the surrounding circumstances were such that that could not have been what the parties intended.' (footnote excluded) 72 Further, counsel submitted that evidence of the conduct of the parties subsequent to the execution of the charge, was admissible and relevant as to the proper construction of the charge. Counsel relied upon the following observations of Nicholson J in the case of Waters v Widdows [1984] VR 503 at 516 ('Waters'): 'In my view this clause, and indeed the whole of the intention of the arrangement between the company and General Credits as exemplified both in the documents and in what in fact occurred, is entirely inconsistent with the provisions of the clause in relation to book debts.' (emphasis added) 73 Counsel submitted that the 'special rule' of evidence existed in relation to charges, because the creation of a charge, and the way that the charge was construed, had the potential to affect third party property rights and, therefore, gave rise to public interest considerations. 74 Further, counsel for the applicant submitted that the fact that a charge is given over interests in land is not conclusive of whether the charge is fixed. He submitted that a floating charge may arise where the charger was not a 'passive holder of land' but conducted a business, associated with land, where characterisation of the charge as a fixed charge would make the conduct of that business difficult or impossible. Counsel referred, specifically, to the case of Boambee Bay Resort Pty Ltd (in liq) v Equus Financial Services Ltd (1991) 26 NSWLR 284 ('Boambee Bay') in which a company engaged in the development of land for timeshare accommodation, had given a charge in support of a guarantee to a financier. The New South Wales Court of Appeal held that, on the evidence, and the terms of the guarantee and the charge, the inference to be drawn, in that case, was that the parties intended the charge to be a floating charge. 75 Further, counsel submitted that the trial judge should have found that there was an inconsistency between the terms of the charge and the terms of the loan agreement and on that basis, the trial judge should have had regard to Mr Carey's evidence of the use of special purpose corporate vehicles as part of Westpoint's usual course of business. 76 In our view, the cases relied upon by the applicant do not support the existence of any different approach to the construction of the terms of a charge, as opposed to the construction of the terms of other kinds of commercial contracts. 77 Firstly, the observations of their Lordships in Agnew in relation to the proper means of characterising a charge as fixed or floating, are equally applicable to the proper characterisation of other contractual relationships which are apt to be mischaracterised by parties in describing their contractual relationship. One such instance, which was recognised by their Lordships themselves, at 725, is the distinction between a lease and a licence. Another such instance would be the distinction between a partnership and a joint venture. 78 Secondly, other than in relation to the relevance of 'subsequent conduct', the cases referred to by the applicant in relation to taking into account surrounding circumstances, in construing charges, are consistent with the ordinary principles of the construction of contracts. In the case of Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451, the High Court stated the position in the following terms, at 462, at [22]: 'The construction of the letters of indemnity is to be determined by what a reasonable person in the position of Pacific would have understood them to mean. That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to Pacific and BNP, and the purpose and object of the transaction. In Codelfa Construction Pty Ltd v State Rail Authority of NSW, Mason J set out with evident approval the statement by Lord Wilberforce in Reardon Smith Line Ltd v Hansen‑Tangen: "In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating." ' (footnotes excluded) 79 Further, we are of the view, that there is no special rule that evidence of the conduct of the parties after the execution of the charge, is admissible for the purpose of construing the charge. The governing law of the charge was the law of Victoria. The weight of the authority, particularly in Victoria (Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 and FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343) is that subsequent conduct is not admissible for the purpose of construing a commercial contract (see also, Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 163‑164 and Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd (1999) 21 WAR 350). 80 In our view, the words relied upon in the observations of Nicholson J in Waters, do not have the effect of displacing the established authority on this point. Further, the basis advanced by the applicant for the existence of the special rule, namely, that charges have a propensity to affect the property rights of third parties, is not, in our view, a sufficient justification for such a departure. Many other kinds of contracts, such as the contract for the sale of land, hire‑purchase contracts, contracts for the sale of goods, particularly, those which include retention of title clauses, also, have the propensity to affect the property rights of third parties. 81 We are of the view, therefore, that the trial judge did not err in failing to regard evidence of the subsequent conduct of the parties to the charge, as being relevant for the purpose of construing the charge. 82 We are also of the view, that the trial judge did not err in concluding that the Option was included within the fixed element of the charge. The trial judge, had regard to the evidence of Mr Carey as to the practice in the Westpoint group of using special purpose companies to acquire an option over the land identified as the site of a proposed development. The trial judge took this evidence into account, together with the express words of the charge, to determine the true contractual intent of the parties. In our view, contrary to ground 6 of the grounds of appeal, it is not the case that the trial judge rejected Mr Carey's evidence that the use of options held by special corporate vehicles, was part of the ordinary course of the Westpoint group's business, notwithstanding that the evidence was uncontradicted. Rather, it is the case that the trial judge accepted that evidence, but found that it did not negative a construction of the charge, which was based on a strong indication from the express language of the charge that the parties intended Westpoint Corporation's interest in the Option to fall within the fixed element of the charge, and the fact that the terms of the fixed charge did not inhibit the carrying on of business, because it permitted the exercise by Westpoint Corporation of the Option, and the development of the land. 83 The Boambee Bay case does not establish that where a company, engaged in property development, grants a charge, the charge is to be construed as a floating charge. The Boambee Bay case does no more than demonstrate that, in seeking to discern the contractual intention of the parties to a charge, each case is to be dealt with according to its own facts. Unlike the charge in this case, the charge in Boambee Bay did not expressly provide that specified items of property would be the subject to a fixed charge, whereas other items of property would be subject to a floating charge. The charge was a general charge expressed to cover all the property of the guarantor. Further, the charge in Boambee Bay was only to take effect on the principal debtor making default, whereas, in this case, the fixed charge was to operate with immediate effect on the property identified as being the subject of the fixed charge. Also, in Boambee Bay, Mahoney JA recognised that there may be circumstances when a charge given by a property developer over its land, would be construed as a fixed charge, with the developer being able to carry on its business, with the co‑operation of the chargee granting releases from the charge. This is also recognised by Lord Walker in In re Spectrum Plus Ltd (in liquidation) [2005] 2 AC 680 at 729. In addition, on the evidence in Hanson, Campbell J construed the charge, which was in that case given by a property developer over its land, as a fixed charge. 84 Further, we are of the view that the trial judge did not err in determining that there was no inconsistency between the provisions of the charge and the loan agreement. In our view, the reference in cl 9.4(c)(i) of the loan agreement is a reference to the consent that Westpoint Corporation would need to obtain in relation to disposing of any items of property that were the subject of the fixed element of the charge, whereas, the reference to disposing of property for market value in the ordinary course of trading business in cl 9.4(c)(ii), is a reference to disposals of property that is the subject of the floating charge. In any event, the trial judge did, as we have already said, have regard to the evidence of Mr Carey on the practice of using options held by special purpose corporate vehicles within the Westpoint group. 85 Insofar as ground 7 of the grounds of appeal challenges the trial judge's finding that the assignment of the Option would not have been in the ordinary course of business of Westpoint Corporation, we are of the view that the trial judge did not err. The trial judge was entitled to come to that view on the basis that Westpoint Corporation assigned the Option, which on the evidence was worth at least $1 million, to the applicant, a trustee of a trust of which Mr Carey's children were the beneficiaries, for $100. Further, it could not be said that the applicant is properly to be characterised as a Westpoint 'special purpose corporate vehicle' because of its status as a trustee company administering a private trust for the benefit of Mr Carey's children. 86 In our view, an extension of time for the filing and service of the notice of appeal should be granted. The evidence shows that an attempt was made to file the appeal on 6 October 2006, which would have been in time, but that the Registry refused to accept the notice of appeal for filing because the view was taken that leave was required and had not been obtained. Further, there is no prejudice to the respondent in extending the time. To the extent that leave is required to bring this appeal, which we doubt, we would also grant that leave. However, we would dismiss the appeal with costs. I certify that the preceding eighty‑six (86) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Mansfield, Jacobson & Siopis.

Solicitor for the Respondent: Corrs Chambers Westgarth