Edmonds v Barrington Winstanley Group Pty Ltd

Court of Appeal (NSW)|2023-06-29|Before: Meagher JA, Leeming JA, Stern JA, Ms P, Darke J

Background

Prior to the execution of the Fee Agreement on 3 November 2017, there was email correspondence between Mrs Edmonds and Mr Hough (a director of the respondent). The substance of these communications was that the appellants wished to refinance existing loans and, as set out in an email from Mrs Edmonds of 1 November 2017, to "have some working capital." It appears from this correspondence that the appellants were in a situation of some financial distress.
At 6.06pm on 3 November 2017, Mr Hough sent an email to Mrs Edmonds attaching an amended version of the Fee Agreement for signing and informing Mrs Edmonds that he had just received an amended Letter of Offer.
At 6.23pm on 3 November 2017, Mrs Edmonds sent an email to Mr Hough attaching the signed Fee Agreement which she described as a "duly executed dated and witnessed Mandate document."
The Fee Agreement, in essence, provided for the respondent to arrange finance for DSJSE Pty Ltd as borrower in exchange for a service fee of 5% of the loan amount approved plus GST ("Service Fee"). Under clause 13 of the Fee Agreement, the appellants, as guarantors, were "liable for all the obligations of the Borrower [DSJSE Pty Ltd] under this agreement" and "unconditionally and irrevocably" guaranteed to the respondent "the due and punctual payment and satisfaction of the Service Fee and any other amount owing to BWG [the respondent] arising out of this agreement by the Borrower."

Adjournment application by the appellants

The adjournment application was made on the first day of the scheduled hearing of the proceedings before the primary judge on 19 April 2022. The appellants relied upon five pages of written submissions drafted by "David Edwards, Counsel for the defendants". Whilst the submissions refer to the hearing as commencing on 18 April 2022 and are dated 18 April 2021, as the primary judge observed, that should have read 19 April 2022 and 18 April 2022 respectively. Mr Edwards was unable to attend the hearing, but at the hearing Mrs Edmonds made further oral submissions in support of the adjournment application on behalf of both herself and Mr Edmonds. Mr Edwards set out that he had acted for Mrs Edmonds "on a largely pro bono basis" before her incarceration but with "hope of being paid from funds to which she advised she had access" but that after Mrs Edmonds' incarceration he had not received any word from her for some time and thus informed the respondent's solicitors that he would no longer be able to represent her. He also stated that Mrs Edmonds had then contacted him seeking urgent assistance on 5 April 2022 and that they had spoken since then "at least eight times" but only for about ten minutes on each occasion.
The matters relied upon in support of the application were, in essence, the unavailability of counsel, the difficulties Mrs Edmonds had had in accessing legal advice and preparing for the hearing by reason of her incarceration, Mr Edwards' limited access to material, and the appellants' prospects of successfully defending the claim. As to the last of these matters, Mr Edwards set out in the submissions that, from the materials that he was able to access, he was of the opinion that Mrs Edmonds had a reasonable chance of successfully defending the claim for reasons including: 1. her having been harassed and "tricked" into signing an array of differing documents; 2. her mental condition when signing documents which meant that the Fee Agreement and Deed were "in the circumstances and generally harsh, oppressive and unconscionable"; and 3. the application of s 8(1) of the FDM Act, which contains a prohibition on enforcement action in respect of a "farm mortgage".
The submissions concluded with the following: "I submit that in the circumstances it would be unfair and inappropriate for the matter to proceed to a hearing on Tuesday 19th April 2022. The submissions are based on my instructions and the limited materials to which I have had access and do not include the Defence filed by the defendants nor any affidavits of Sandra Edmonds. David Edwards Counsel for the defendants".
On 19 April 2022 Mrs Edmonds told the primary judge that she appeared for herself and intended to appear for her husband, albeit that they had legal representation "that couldn't make it today" by reason of other commitments.
During her oral submissions on the adjournment application, the primary judge put the following to Mrs Edmonds: "Ms Edmonds, the matters that are referred to in Mr Edwards' submission refer to various matters that might be raised by way of defence, but there's no explanation anywhere as to why these matters, to the extent they're not already raised in the proceedings, have not been raised by now. The fact of the matter is, Ms Edmonds, that the matter has been the subject of case management directions, pleadings have been filed, affidavits have been filed and served and the matter was set down for hearing in September 2021, including by reference to what was thought to be the availability of Mr Edwards, who it seems is not available."
Mrs Edmonds responded that she could not do this without legal representation. However, in response to a question from the primary judge, she confirmed that in the course of the proceedings she had acted both for herself and for Mr Edmonds and "considered that [she had] at least some ability to conduct a defence of the proceedings".
When the primary judge asked why it would be appropriate to order an adjournment the following exchange occurred as recorded in the transcript: First Defendant: "Because we are farmers. We are farmers, your Honour. We are farmers. That land is farmland. We need farm debt mediation." His Honour: "Why was this not put into the defence when the defence was ordered to be put on last year?" First Defendant: "Because we were relying - I got the advice from the barrister, David Edwards, farm debt mediation -" His Honour: "He advised you not to include that defence, did he?" First Defendant: "He did not - that wasn't pleaded. It wasn't put forward about the farm debt mediation, and he's -" His Honour: "It could have been put forward at that time, couldn't it?" First Defendant: "By whom?" His Honour: "By you?" First Defendant: "I've had limited conversations with David Edwards, the barrister, and he's picked up on these things..."
Whilst Mr Edwards' submissions also purported to rely upon Mrs Edmonds having only been served with limited material, it was apparent from affidavit evidence relied upon by the respondent that this was not the case.
The respondent opposed the adjournment application on the basis that the respondent "has done everything in its power, and the Court has done everything in its power to get this ready for hearing today, and there is no substance to any of the proposed new defences vaguely alluded to by Mr Edwards that are not already before your Honour". As to the proposed reliance upon the FDM Act, Senior Counsel for the respondent submitted: "The only thing new which is not pleaded is the reference to the Farm Debt Mediation Act. The difficulty with that is that the borrower DSJSE is not a farmer. So even if it was pleaded, it has no substance."
The primary judge refused the application for adjournment. The primary judge found that the appellants had had an adequate opportunity to formulate any defences to the respondent's claim and noted that there was no explanation as to why defences "that are not presently included in the defence and/or affidavits that have been filed and served were not brought forward at an earlier time." His Honour also had regard to the fact that the materials in relation to the hearing had been made available to Mrs Edmonds at the correctional facility where she was incarcerated.
The hearing proceeded and the primary judge upheld the respondent's claim under the Deed and gave judgment against the appellants in the amount of $240,520.00 plus interest and costs. The respondent's other claims were dismissed.

Primary judgment

The primary judge formed an unfavourable impression of Mrs Edmonds as a witness and set out reasoning in this regard at [67]. His Honour concluded that Mrs Edmonds' evidence should be treated with great caution, holding that he "would not be prepared to accept her evidence on any contentious matter unless it were corroborated by other evidence that was itself reliable and likely to be accurate": at [68]. His Honour's conclusion in this regard was not based upon, but was reinforced by, the fact that Mrs Edmonds was then serving a prison sentence for offences involving fraud: at [68].
In addition to dismissing the respondent's claims arising out of the Fee Agreement, the primary judge held that the respondent was not entitled to a charge over Dumaresq or to possession. This was because the Letter of Offer from In Base Investments was for a loan for a period of 3 months rather than the 12 month period specified in Item 3 of Schedule A to the Fee Agreement: at [80]. The primary judge found that the appellants were not precluded by an estoppel by Deed from asserting that no monies were payable under the Fee Agreement within the meaning of clause 13.9 of the Fee Agreement (being the charge). An estoppel by deed could only operate in an action on the Deed and thus did not preclude an action on the Fee Agreement: at [84].
The core of the primary judge's reasoning as to the respondent's successful claim pursuant to the Deed is at [73]-[74]: "[73] By cl 2.1 of the Deed, the company and Mrs and Mr Edmonds jointly and severally undertook to repay the Debt to BWG on the earlier of various events. Debt is defined in cl 1.1 of the Deed to include the Service Fee plus all accruing interest. By Recital M, the Service Fee plus accrued interest calculated in accordance with the Agreement was stated to be $240,520 as at 12 April 2018. It is further stated in Recital M that interest continues to accrue on the Service Fee at the interest rate. The reference to the interest rate is plainly a reference to the interest rate that is specified in cl 7 of the Agreement (see Recital D). [74] There is no doubt that the obligation under cl 2.1 of the Deed to repay the Debt has arisen. There is evidence that sales of some of the Properties (as defined in the Deed) have completed (see cl 2.1.2) and in any event the service of the Statement of Claim would constitute a written demand by BWG (see cl 2.1.4)."

Was there a denial of procedural fairness?

In grounds 1, 5(j) and 11, the appellants contend that it was a denial of procedural fairness for the primary judge to have proceeded on 19-20 April 2022 and not to have granted the adjournment. It is somewhat unclear whether this ground was ultimately pressed by the appellants. At the hearing of the appeal the solicitor for the appellants submitted: "However, in dealing with the procedural fairness, it seems to me, your Honours, that there would be little merit in remitting the proceedings for a hearing, and my learned friend pointed out we didn't seek that relief, but that's indubitably so because, number one, most of the findings were made in favour of the appellants, but secondly, that if this Court finds that an error was made in the construction of the deed, then that's a matter this Court can deal with effectively without remitting the matter to the lower court, so I don't know that much purpose would be achieved in making that finding, albeit that I think a complaint is well‑made, but that it may not have a relevant consequence depending on how the Court treats the construction issue. If I may, I'll stop there. Perhaps I can answer some of the unanswered things."
To the extent this ground was ultimately pressed, in my judgment it should be dismissed. As is clear from the matters set out below, the appellants were given a reasonable opportunity to be heard in response to the claims made by the respondent. That is what procedural fairness requires: see e.g., Kiefel CJ, Bell and Keane JJ in HT v The Queen (2019) 269 CLR 403; [2019] HCA 40 at [17], see also Gordon J at [64].
The starting point in considering whether or not the appellants were given a reasonable opportunity to be heard is that Mrs Edmonds has a law degree from the Southern Cross University. She obtained this qualification in 2016. Further, as is apparent from the matters set out below, she was someone who had a reasonable working understanding of the issues in the proceedings and what was required of the appellants as litigants responding to claims such as those advanced by the respondent.
Proceedings were commenced on 22 April 2021. A Defence was filed on 18 June 2021. It appears on the face of that document that it was prepared by Mrs Edmonds. She signed it and her name is given as the contact name on the front page. The Defence by its terms suggests that it was prepared by someone with a general understanding of what is required of pleadings and of the matters of substance alleged in the Statement of Claim.
Mrs Edmonds was incarcerated, upon conviction, on 3 September 2021.
Mrs Edmonds filed two detailed affidavits in the proceedings below, dated 8 July 2021 and 14 March 2022 respectively. In her affidavit of 8 July 2021, she stated at [1] that she was "authorised to represent the Second Defendant", being Mr Edmonds. In her affidavit of 14 March 2022, she sought that the proceedings be dismissed both on her and Mr Edmonds' behalf. These affidavits provide a substantive factual response to the matters raised in the Statement of Claim and support the matters pleaded in the Defence. The affidavit of 14 March 2022 also includes further matters alleged by the appellants against the solicitors for the respondent and identified that Mrs Edmonds had lodged complaints with the Legal Services Commissioner and Law Cover.
It is apparent from Mrs Edmonds' affidavits that when these were prepared, including as at 14 March 2022 after she was incarcerated, she had access to documents underlying the respondent's claim. Both the Fee Agreement and the Deed were identified as being annexed to Mrs Edmonds' affidavit of 8 July 2021. In the 14 March 2022 affidavit Mrs Edmonds refers to "extensive investigation and examination of documents" which she had then referred to Law Cover: at [5]. The Fee Agreement is itself identified as an exhibit to the affidavit and there is express reference to the terms of the agreement: at [7]. The caveat is also identified as an exhibit: at [8]. Her affidavits are notable for their sophistication and detail, including as regards the circumstances of her interchanges with the respondent, the agreements themselves, as to her own circumstances and as to her assertions regarding the ways in which she alleged that the respondent had failed to comply with its obligations.
In a letter dated 16 March 2022 from Mrs Edmonds to the solicitors for the respondent, Mrs Edmonds asked that correspondence and communications be sent to her as she had "carriage of the matter at this stage." In that letter Mrs Edmonds stated that she had been provided with an earlier letter dated 24 February 2022 that had been sent to Mr Edmonds, and which clearly stated that the matter was listed for directions by telephone conference on 8 April 2022 and was listed for hearing on 19-20 April 2022. It is apparent from Mr Edwards' submissions on the adjournment application that Mrs Edmonds attended the directions hearing on 8 April 2022 by audio-visual link. There is nothing to suggest that Mrs Edmonds gave any indication at that hearing of wanting to rely upon grounds which were not included in the Defence or wished to put any further evidence before the Court.
It is clear from Mrs Edmonds' oral submissions before the primary judge on the adjournment application that she had received the Court Book on 5 April 2022. There was also an affidavit of Ms Suyu Dai affirmed on 14 April 2022 before the primary judge. It is clear from this affidavit that materials for the hearing, including the Court Book and submissions, were served on the appellants on various dates between 31 March and 12 April 2022.
I infer from this material that Mrs Edmonds was acting on behalf of both of the appellants in the proceedings, understood what was alleged by the respondent in the proceedings, was conscious of the directions of the Court and sought to comply with those directions by filing a Defence and affidavit evidence in response to the matters alleged in the statement of claim, attended at least one directions hearing and was well aware that the matter had been listed for hearing on 19-20 April 2022. She had access to documentation underlying the claim and in 2021 responded to the Statement of Claim, referencing the underlying documents, in both the Defence and in her affidavits. She was served with the Court Book on 5 April 2022. She had timely access to material enabling her to understand and respond to the claims made by the respondent.
It is also apparent that the appellants had the benefit of legal advice in 2021 and again from 5 April 2022. In a letter to the solicitors for the respondent dated 8 August 2021 Mr Edwards stated that he had agreed to act for the appellants, albeit that he had not yet been fully briefed. On 16 September 2021, after Mrs Edmonds was convicted and incarcerated, Mr Edwards wrote that he had "no reason to believe that" he was no longer instructed in the matter. The solicitors for the respondent then sent Mr Edwards an email enquiring as to his availability on 19-20 April 2022 for the purpose of the Court setting dates for trial. He responded by email on 16 September 2021 confirming that he was available on those dates but that he would have to investigate "whether or not [and] how she [Mrs Edmonds] will be able to instruct and give evidence." It was not until 8 February 2022 that he informed the solicitors for the respondent that he was no longer briefed in the matter.
The written submissions prepared by Mr Edwards in support of the application to adjourn the hearing on 19 April 2022 relied upon matters that were not pleaded by the appellants, including the FDM Act, but made no application to amend the Defence filed 18 June 2021. As set out above, Mr Edwards expressly identified in those submissions that he had spoken to Mrs Edmonds on at least eight occasions since 5 April 2022 and had prepared the submissions on the basis of instructions from Mrs Edmonds and other limited materials to which he had access (which did not include the Defence or Mrs Edmonds' affidavits). I would infer from this that Mrs Edmonds was well aware of the matters that Mr Edwards proposed to rely upon in support of the adjournment application and that instructions as regards those matters came from her. It is possible that she was, in any event, aware of these matters from earlier conversations with Mr Edwards in 2021 when he was first instructed in the proceedings or from her own legal knowledge.
In her affidavit of 14 March 2022 Mrs Edmonds identified that documents had been lodged with the Legal Aid grants division but that she had been informed that the processing of those documents could take up to six weeks. She did not identify when those documents were lodged. In Mr Edwards' written submissions in support of the appellants' adjournment application, he stated that Mrs Edmonds had applied for Legal Aid but was informed that her application would take six to ten weeks to be processed. It was, however, no part of the argument advanced on the adjournment application that the proceedings should be adjourned to enable an application to Legal Aid to be determined or that there was an extant or proposed appeal against a refusal or limited grant of Legal Aid so as to engage s 57 of the Legal Aid Commission Act 1979 (NSW). Nor was there any reliance upon such matters before this Court.
There is no other evidence as to efforts made by the appellants to secure legal representation for the purpose of the proceedings. Nor is there any explanation as to why Mr Edwards was not contacted as regards appearing at the 19-20 April 2022 hearing until 8 April 2022 when he says Mrs Edmonds got in contact with him again.
As set out at [66] above, during her oral submissions on the adjournment application Mrs Edmonds was specifically asked by the primary judge why there was no reliance upon the FDM Act in the Defence. It is apparent from her response to the primary judge, as set out at [66] above, that at some point prior to 19 April 2022 she had been advised by Mr Edwards in relation to the FDM Act. Notwithstanding this, there was no hint prior to the hearing that the appellants were in any way seeking to rely upon the FDM Act. This being the position falls to be considered in a context which includes that Mrs Edmonds had been aware of the right to mediation under the FDM Act since at least January 2018.
Having regard to the matters set out above, the appellants had a reasonable opportunity, over the course of the proceedings, to formulate such defences or counter claims as they wished to rely upon. Over that period, they had some legal advice and otherwise themselves, in particular through Mrs Edmonds, gave close attention to the matters alleged in the claim and how best to respond to them. They were sufficiently aware of the provisions of the FDM Act and its ambit of application to rely upon the FDM Act in other proceedings. They were appropriately served with the court documents and evidence relied upon by the respondent. They were advised as to further matters that they could potentially rely upon by Mr Edwards apparently between 5 and 18 April 2022 but did not seek to amend their Defence to rely upon such matters. Further, the hearing was fixed in September 2021 by reference to Mr Edwards' availability. There was no explanation as to why, in these circumstances, attempts were not made to secure the attendance of Mr Edwards, or another legal representative, at the hearing until 8 April 2022. There was no denial of procedural fairness.
To the extent pressed, grounds 1, 5(j) and 11 of the NOA should thus be dismissed.

Did the primary judge err as to construction?

There was no dispute before this Court as to the principles applicable to the construction of a commercial contract such as the Deed. Thus, as set out by Kiefel, Bell and Gordon JJ in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at 551, this Court should approach that task on the basis that the terms of the Deed are to be understood objectively, by what a reasonable businessperson in the position of the parties would understand them to mean having regard to the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.
The appellants submit that the proper construction of the Deed is that the debt which the appellants undertook to repay in clause 2.1 is the same as the liability that exists under the Fee Agreement. They submit that as the primary judge found that no money was owing under the Fee Agreement, the primary judge should also have found that there was no money owing under the Deed. In this regard they submit that clause 1.1 of the Deed, which states that "Debt means the Service Fee, plus all accruing interest and amounts payable pursuant to the Agreement" is inconsistent with, and would override, Recital M, which provides that: "As at 12 April 2018, the Service Fee plus accrued interest calculated in accordance with the Agreement totals $240,520.00 (the Debt), which continues to accrue at the interest rate."
They submit that Recital M should be read as referring to the definition of Debt in clause 1.1. Further, they submit that the acknowledgement of "the Debt" and undertaking to repay "the Debt" in clause 2.1 should be read as a reference to whatever debt existed at that time, and not as connoting a new or fresh debt under the Deed. Thus, clause 2.1 has "no operation or effect" if there was, at the relevant time, no liability under the Fee Agreement.
In my judgment the primary judge did not err in construing the Deed. Recital M and clause 1.1 should be read together and harmoniously. Clause 1.1 relevantly provides that "Debt means the Service Fee…". Read together with Recital M, the reference to Service Fee in the definition of Debt in clause 1.1 is plainly a reference to the sum of "$240,520.00", which is there set out to be the "Service Fee plus accrued interest calculated in accordance with the Agreement" as at 12 April 2018. That conclusion is further supported by the inclusion in Recital M in bold type of the words "the Debt" in parenthesis after the reference to the Service Fee plus accrued interest being $240,520.00. This indicates that this was the sum which was identified in the Deed as the Debt as at 12 April 2018.
On this construction there is no inconsistency between Recital M and clause 1.1 of the Deed. However, even if there were, the opening words of clause 1.1 provide that the "following words have their corresponding meanings unless the context requires otherwise". The context would include Recital M, and the identification therein that the Debt means the Service Fee plus interest in the sum of $240,520.00 as at 12 April 2018.
Thus, the Debt which is acknowledged and undertaken to be paid in clause 2.1 of the Deed, is at least the sum of $240,520.00 irrespective of what sums are actually found to have been owing under the Fee Agreement as at the date when the Deed was entered into or from time to time. In this regard, it was not contended before the primary judge or before this Court that the Debt in clause 1.1 also includes further sums by way of "accruing interest and amounts payable pursuant to the Agreement" (as stated in clause 1.1 of the Deed). It is thus unnecessary to consider whether the Debt, as defined in the Deed, is in fact a sum in excess of $240,520.00.
This construction of the Deed also best serves the object and purpose of the Deed, objectively construed. It achieves a measure of commercial certainty and obviates the scope for later dispute as to what was or was not payable under the Fee Agreement. That gives the acknowledgement in clause 2.1 of the Deed real work to do. On the construction advanced by the appellant, there would be little commercial purpose in the appellants acknowledging amounts as debt that were themselves contingent upon the proper operation of the Fee Agreement.
It follows that grounds 4 and 5(a)-(b) should be dismissed.

The appellants' grounds of appeal relying upon the Farm Debt Mediation Act 1994 (NSW)

In grounds 5(i) and 13 of the NOA, and in their written and oral submissions, the appellants contend that the primary judge erred "by allowing the hearing to proceed without taking into account any evidence of compliance with the conditions precedent required to be fulfilled under s 9 of the FDM Act which applied respectively to existing credit contracts, the Agreement, the Deed and each proposed Loan." Given that the primary judge dismissed the respondent's claims, save the claim for judgment under the Deed, and there is no cross-appeal against those findings, it is unnecessary to address the potential application of the FDM Act to any agreement or interest other than the Deed.
In support of these grounds of appeal, the appellants submit, in summary, that entry into the Deed was "enforcement action", taken by the respondent in respect of a farm mortgage, within the meaning of s 8(1) of the FDM Act. They submit that this is so because it was action taken to resolve the question of the respondent's entitlement under the Fee Agreement to lodge a caveat, which itself arose under the charge in clause 13.9 of the Fee Agreement. Thus, they submit, by reason of s 8(2) of the FDM Act, the Deed is void. The appellants also submit that these proceedings as a whole are void by reason of s 8(2) of the FDM Act because the respondent's money claim is "piggy backed" on the claims under the Fee Agreement and the respondent's claim for debt under the Deed is inextricably linked with the claims under the Fee Agreement. In this regard, they rely upon [66]-[68] of the judgment of Heydon J (French CJ, Kiefel and Crennan JJ and Hayne J agreeing) in Waller v Hargraves Secured Investments Ltd (2012) 245 CLR 311; [2012] HCA 4 ("Waller"). They submit that the same conclusion reached by Heydon J on the facts of that case, namely that the claim for a monetary order fell within the definition of "enforcement action" in the FDM Act, should be reached here. Finally, they rely upon the fact that the charge under the Fee Agreement would remain "alive and operative" to the extent that, notwithstanding the judgment of the primary judge, it would secure certain costs payable under the Fee Agreement. It is not, however, clear what "enforcement action" the appellants say has been taken by the respondent in this respect.
These contentions were not advanced before the primary judge. Rather, as set out above, the appellants did not rely upon the FDM Act in the substantive proceedings (as opposed to the adjournment application) before the primary judge. The appellants, in effect, seek leave to amend their underlying Defence so as to rely upon arguments raised for the first time on appeal. It is in support of these arguments and grounds of appeal that the appellants seek to tender further evidence.
In my judgment the appellants should not be permitted to advance these grounds of appeal in circumstances in which they could have, but did not, rely upon the FDM Act in the substantive proceedings before the primary judge. This is not a pure legal point which can properly be run for the first time on appeal: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35. The appellants' proposed contentions relying upon the FDM Act require detailed factual analysis by reference to the definitions in the FDM Act. That factual analysis necessarily requires that both sides have a reasonable opportunity to investigate, adduce evidence and cross-examine as to relevant matters. That did not happen as the claims were not substantively advanced before the primary judge.
Analysis of the provisions of the FDM Act (noting that relevant provisions were amended with effect from 3 September 2018) reveals why this is so.
Section 5(1) of the FDM Act provides that: This Act applies in respect of creditors only in so far as they are creditors under a farm debt.
"Creditor" is defined in s 4 of the FDM Act to mean: a person to whom a farm debt is for the time being owed by a farmer.
"Farm debt" is defined in s 4 of the FDM Act to mean: a debt incurred by a farmer for the purposes of the conduct of a farming operation that is secured wholly or partly by a farm mortgage.
The appellants seek to rely upon ss 8(1) and 8(2) of the FDM Act. Since 3 September 2018 these sections have provided: 8 Exemption certificate required for enforcement action (1) A creditor must not take enforcement action in respect of a farm mortgage unless an exemption certificate granted to the creditor is in force in respect of the farm debt concerned. Maximum penalty: (a) for a corporation - 2,500 penalty units, or (b) for an individual - 500 penalty units. (2) Enforcement action taken by a creditor in respect of a farm debt in contravention of this Act is void.
The definition in s 4(1) of "enforcement action" includes in relation to a farm mortgage "taking possession of property under the mortgage or any other action to enforce the mortgage". The question whether either the entry into the Deed or the commencement of the underlying proceedings constituted "enforcement action in respect of a farm mortgage" within s 8(1), or "enforcement action taken by a creditor in respect of a farm debt" within s 8(2), as alleged by the appellants, directs attention to the definition of "farm mortgage".
The term "farm mortgage" is defined in s 4 of the FDM Act (and was in this form at all relevant times): farm mortgage includes any interest in, or power over, any farm property securing obligations of the farmer whether as a debtor or guarantor, including any interest in, or power arising from, a hire purchase agreement relating to farm machinery, but does not include: (a) any stock mortgage or any crop or wool lien, or (b) the interest of the lessor of any farm machinery that is leased.
That in turn directs attention to the definitions in s 4 of the FDM Act of "farm property" and "farmer". Starting with "farm property": farm property means: (a) a farm or part of a farm, or (b) farm machinery used by a farmer in connection with a farming operation, or (c) an access licence (within the meaning of the Water Management Act 2000) held by a farmer in connection with a farming operation.
"Farm", in turn, is defined to mean: land on which a farmer engages in a farming operation.
The word "engages" in that definition is in the present tense. Thus, whether a property is farm property, such that s 8(1) applies, requires evidence that at the relevant time a farmer is engaging in a farming operation on that property. What the "relevant time" is, for these purposes, is discussed below.
"Farmer" is defined in s 4 of the FDM Act to mean: a person (whether an individual person or a corporation) who is solely or principally engaged in a farming operation and includes a person who owns land cultivated under a share-farming agreement and the personal representatives of a deceased farmer.
Again, Parliament has used the present tense in this definition.
Section 4AB, which was inserted into the FDM Act on 3 September 2018, provides that: 4AB Farming operation (1) A farming operation is a business undertaking that primarily involves one or more of the following activities: (a) agriculture (for example, crop growing and livestock or grain farming), (b) aquaculture, (c) the cultivation or harvesting of timber or native vegetation, (d) any activity involving primary production carried out in connection with an activity referred to in paragraphs (a)-(c).
Prior to 3 September 2018, "farming operation" was defined to mean: (a) a farming (including dairy farming, poultry farming and bee farming), pastoral, horticultural or grazing operations, or (b) any other operation prescribed by the regulations for the purposes of this definition.
In the application of each of ss 8(1) and 8(2), the question of timing which arises is as to the time at which the relevant definitions need to be satisfied. That question arose in Waller. At the relevant time, s 8(1) was in a different form, providing: "A creditor to whom money under a farm mortgage is owed by a farmer must not take enforcement action against the farmer in respect of the farm mortgage until at least 21 days have elapsed after the creditor has given a notice to the farmer under this section."
As to this section, Heydon J at [55] (French CJ, Crennan and Kiefel JJ agreeing) held that the critical date for determining whether there was a farm mortgage (as defined) was "the day when the respondent took enforcement action against the appellant by instituting the Supreme Court proceedings." That analysis, in so far as it directs attention to whether or not the definition of a farm mortgage is met at the time of the relevant enforcement action being taken, would also apply to s 8(1) of the FDM Act as amended. Thus, in order to succeed in their grounds of appeal relying upon the FDM Act, the appellants would need to satisfy the Court that enforcement action is being taken in respect of an interest or power arising under a "farm mortgage" as at the date when the Deed was entered into, being April 2018 (as regards the contention that this was enforcement action under s 8(1)) or as at the date when proceedings were commenced, being April 2021.
In the circumstances of this case, it is unnecessary to consider whether, as suggested by Meagher JA in Harker-Mortlock v Commonwealth Bank of Australia [2019] NSWCA 56 ("Harker-Mortlock") at [66], there may be a difference in the interpretation of these provisions adopted by Heydon J in Waller at [48]-[49] and Barrett J in Constantinidis v Equititrust [2010] NSWSC 299 and in other authorities identified by Meagher JA in Harker-Mortlock at [65]. This is because, on either view, enforcement action will be prohibited by s 8(1) only if: 1. the relevant debt is a farm debt, which requires that attention be given both to whether it was incurred for the purpose of the conduct of a farming operation and to whether the debt is, at the time of the enforcement action, secured wholly or partly by a farm mortgage. That in turn requires that at the time the enforcement action is taken the creditor has an interest in or power over property, meeting the definition of farm property, where that interest or power secures obligations of a person meeting the definition of a farmer; 2. the action is being taken by a creditor, being a person to whom a debt meeting the definition of a farm debt is owed by a person meeting the definition of a farmer at the time that the enforcement action is taken; and 3. action is being taken to enforce an interest or power meeting the definition of a farm mortgage at the time that the enforcement action is taken.
For s 8(2) of the FDM Act to operate and render void enforcement action taken by a creditor in respect of a farm debt, each of those definitions must be met at the time the relevant enforcement action is taken.
The resolution of the appellants' grounds of appeal relying upon the FDM Act requires at least that this Court be satisfied as to multiple matters of fact as at November 2017 (when the Fee Agreement was entered into) and as at either April 2018 (when the Deed was entered into) or April 2021 (when these proceedings were commenced). The respondent disputes that the evidence the appellants seek to rely upon suffices to establish that the FDM Act applies at all. However, and importantly, the respondent submits that as these matters were not in issue before the primary judge, there was no reason for it to explore those facts or to lead or challenge evidence that went to such matters. The respondent says that if the potential application of the FDM Act had been in issue before the primary judge, it would have investigated these matters. It submits that it would not have taken evidence from Mrs Edmonds "on faith" and would have cross-examined Mrs Edmonds as to these matters.
There would be significant unfairness to the respondent if the appellants were permitted to rely upon contentions as to the application of the FDM Act on appeal. The proper resolution of those contentions raises numerous factual issues, the resolution of which is materially hindered by the circumstance that these matters were not the subject of evidence and cross-examination before the primary judge. In these circumstances, the arguments pressed by these grounds cannot be made on appeal.
For completeness I would add that these grounds do not in any event have reasonable prospects of success. In the circumstances, I will limit my analysis to a summary of key difficulties faced by the appellants in this regard.
First, entry into the Deed was a consensual act which could not properly be characterised as enforcement action falling within s 8(1) of the FDM Act. It was not action "taken" by the respondent in respect of any security it may have had over Dumaresq by virtue of clause 13.9 of the Fee Agreement. This is so irrespective of the fact that the appellants acknowledged, in clause 2.4 of the Deed, that they would not take any steps in relation to the lapsing of the caveat the respondent had lodged. This conclusion is reinforced by the object of the FDM Act as set out in s 3, being "to provide for the efficient and equitable resolution of farm debt disputes. Mediation is required before a creditor can take possession of property or other enforcement action under a farm mortgage". That object does not support a construction of "enforcement action" that includes entry into a consensual agreement such as the Deed.
Second, there is a dearth of evidence before the Court as to the factual position as at April 2021 when these proceedings were commenced, and that lacuna would not have been filled even if the application for further evidence had been successful. Thus, the contention that these proceedings were precluded by ss 8(1) and 8(2) of the FDM Act would not have been established on the facts.
Third, the appellants' contention that the facts in Waller were analogous to those in the present case was misconceived. In Waller, at [66], Heydon J observed that the Amended Statement of Claim in the proceedings alleged that it was a term of the mortgage that interest be paid monthly and that the appellant was obliged under the mortgage to pay the principal sum with interest owing. At [32] Heydon J held that the mortgage was a farm mortgage. Thus, the monetary claim in that case was expressly made under a farm mortgage. In that context, at [66] Heydon J held that the better view was that the definition of enforcement action in s 8 of the FDM Act (before it was amended in 2018) was "wide enough to extend beyond enforcement of the security by taking possession to include reliance on any of the rights in the farm mortgage". Further, at [66] his Honour also held that "since the claim to the order for possession was solely based on the breach of the money obligations arising under" the farm mortgage and the loan agreement, the possession claim was "inextricably interlinked" with the monetary claim.
In the present case, by contrast, the debt claim on which the respondent succeeded before the primary judge was not itself based upon anything which could answer the description of a farm mortgage. It was based upon the Deed. It was not action to "enforce" a farm mortgage. Rather, as submitted by the respondent, the debt claim under the Deed is more akin to the money claim made pursuant to facility agreements, but not under a mortgage, considered by this Court in Charlton v National Australia Bank Limited [2021] NSWCA 111 ("Charlton"). As held by Macfarlan JA at [64] (with whom Basten JA agreed) and Emmett AJA at [91], the FDM Act does not apply as regards a claim for debt that is made under an instrument other than a farm mortgage. Moreover, in Charlton the proceedings included both a possession and a debt claim. In that context, Macfarlan JA held that the bank could "claim in a personal debt action against Ms Charlton amounts that became due under the finance facilities, irrespective of the occurrence of a farm debt mediation": at [65]. To similar effect, Emmett AJA observed that Ms Charlton's contention that the proceedings for possession were void (on account of the alleged defects in the certificate under the FDM Act) "ignores the fact that the claim for debt against the first appellant was made under the facility agreements with the NAB and not under the farm mortgage": at [91].
Fourth, having regard to Charlton, and in light of the fact that the debt claim under the Deed was not itself a claim under a farm mortgage, it is difficult to see how the appellant could have succeeded in their contention that the proceedings as a whole before the primary judge, including the debt claim under the Deed, were void.
In the circumstances, grounds 5(i) and 13, which rely upon the FDM Act, should be dismissed.

Conclusion

During the hearing it was submitted by Senior Counsel for the respondent that this Court should reserve the question of costs to enable further submissions. In these circumstances, the question of costs should be dealt with on the papers, following the receipt of written submissions.
For the reasons set out above the following orders should be made: 1. Pursuant to UCPR r 51.16(1)(c), time for filing the notice of appeal is extended to 13 October 2022. 2. Grant leave to the first appellant under s 5 of the Felons (Civil Proceedings) Act 1981 (NSW) to institute this appeal to the extent such leave is necessary. 3. The notice of motion filed 19 June 2023, seeking to rely upon further evidence, should be refused. 4. The appeal is dismissed. 5. The respondent file and serve written submissions on costs, limited to two pages, within seven days of the date of these orders. The appellants then to file and serve written submissions in response, again limited to two pages, within fourteen days of the date of these orders.

Amendments 24 July 2023 - Added quotation mark at [25]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 July 2023

cision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Citation: Barrington Winstanley Group Pty Ltd v Edmonds [2022] NSWSC 531 Date of Decision: 04 May 2022 Before: Darke J File Number(s): 2021/112414

HEADNOTE [This headnote is not to be read as part of the judgment] The appellants engaged the services of the respondent, a finance broker, in order to refinance existing loans. On 3 November 2017, the parties entered into an Exclusive Mandate and Fee Agreement (Fee Agreement), and on 27 April 2017, they entered into a Deed of Acknowledgement of Debt (Deed), pursuant to which the appellants acknowledged the existence of a debt in the sum of $240,520 owing under the Fee Agreement. The respondent sought a monetary judgment in that amount under the Deed, or in the alternative under the Fee Agreement, as well as a declaration that the debt was secured by a charge over a property of the appellants (known as Dumaresq). It also sought an order for possession. On the first day of the hearing, the appellants made an adjournment application, including on the basis that they sought to rely on the operation of the Farm Debt Mediation Act 1994 (NSW), which had not been pleaded. That application was rejected. The primary judge upheld the respondent's claim for a monetary judgment under the Deed and dismissed the other claims. The appellants appeal against that monetary judgment and on that appeal seek to adduce further evidence in support of arguments (and grounds of appeal) relying on the Farm Debt Mediation Act. The principal issues in the appeal are: (i) whether in relation to the application to adduce further evidence there are "special grounds" within s 75A(8) of the Supreme Court Act 1970 (NSW); (ii) whether in relation to the application to adduce further evidence the appellants should be permitted to advance arguments and grounds of appeal relying on the Farm Debt Mediation Act 1994 (NSW); (iii) whether there was a denial of procedural fairness in the rejection of the appellants' adjournment application; (iv) whether as a matter of construction the debt acknowledged by the Deed was the sum owing under the Fee Agreement (in circumstances where the appellants contend there was no sum owing) or the amount acknowledged to be owing by the Deed and irrespective of whether it was owing under the Fee Agreement. The Court (Stern JA, Meagher and Leeming JJA agreeing) dismissed the appeal, holding: As to issue (i): (1) The appellants did not demonstrate any special grounds to justify the admission of further evidence. Accordingly, that application was dismissed: Meagher JA at [1]; Leeming JA at [2]; Stern JA at [22]. As to issue (ii): (2) The proposed arguments and grounds require a detailed factual analysis by reference to various definitions in the Farm Debt Mediation Act. Much of that factual analysis was controversial and not the subject of evidence below. Accordingly, the arguments and grounds could not be advanced for the first time on appeal. In any case, the arguments sought to be made under the Act did not have reasonable prospects of success: Meagher JA at [1]; Leeming JA at [2]; Stern JA at [99]-[123]. Suttor v Gundowda Pty Ltd (1950) CLR 418; [1950] HCA 35, applied. As to issue (iii): (3) There was no denial of procedural fairness by the primary judge dismissing the adjournment application. The first appellant (acting on behalf of both appellants) has a law degree and reasonable working understanding of the issues in the proceedings and what was required to respond to the claims made. Although the first appellant was in prison, she had access to the relevant documents and to intermittent legal advice. She was well aware before the hearing that her intended counsel proposed to rely on the Farm Debt Mediation Act and made no application to amend the appellants' Defence. In the circumstances, the appellants had a reasonable opportunity to formulate such defences or counterclaims as they wished to rely on, and were given a reasonable opportunity to be heard in response to the claims made by the respondent: Meagher JA at [1]; Leeming JA at [2]; Stern JA at [74]-[90]. HT v The Queen (2019) 269 CLR 403; [2019] HCA 40, referred to. As to issue (iv): (4) The debt which is acknowledged and undertaken to be paid by cl 2.1 of the Deed is in the amount of $240,520, irrespective of what sums may actually be found to be owing under the Fee Agreement. This construction arises on an objective reading of the Deed, having regard to its object and purpose: Meagher JA at [1]; Leeming JA at [2]; Stern JA at [91]-[98].

Leave under the Felons (Civil Proceedings) Act 1981 (NSW)

When this appeal was initiated by the filing of the NOA on 13 October 2022, Mrs Edmonds was in custody having been convicted of a serious indictable offence on 3 September 2021. In light of this, Mrs Edmonds sought leave, if required, under s 4 of the Felons (Civil Proceedings) Act 1981 (NSW) ("the Act"). Sections 4-5 of the Act provide: 4 Leave to sue required for persons convicted of serious indictable offences A person who is in custody as a result of having been convicted of, or found to have committed, a serious indictable offence may not institute any civil proceedings in any court except by the leave of that court granted on application. 5 Grant of leave A court shall not, under section 4, grant leave to a person to institute proceedings unless the court is satisfied that the proceedings are not an abuse of process and that there is prima facie ground for the proceedings.
These provisions were considered by Bell P (as his Honour then was) in Mr D v Ms P [2020] NSWCA 174 at [17]-[26]. His Honour observed that, whilst a number of decisions of this Court had proceeded on the basis that the bringing of an appeal amounts to the institution of civil proceedings within the meaning of s 4 of the Act (e.g., Chen v Zhang [2009] NSWCA 202; Ford v Simes [2009] NSWCA 351; and Clark v State of New South Wales [2018] NSWCA 13), that was an open question which did not need to be resolved on the facts of that case: at [17]-[18].
His Honour also held that the "prima facie" requirement in s 5 of the Act represents "a relatively low threshold to be satisfied on an application for leave" under s 4: at [26]. In so holding his Honour relied upon the judgment of Allsop ACJ and Basten JA in Application of Malcolm Huntley Potier [2012] NSWCA 222 at [17], where their Honours noted that: "Taken in its statutory context, it is properly understood as referring to a ground which on its face is not hopeless or unarguable. That test requires reference to the legal principles invoked by the cause of action upon which the claim is based and reference to the factual allegations contained in the proposed pleading…As with a summary dismissal application, the court is not required to embark upon a detailed analysis of the claims and the evidence which might support them, but rather is to form a broad impression as to whether a claim enjoys a realistic prospect of success and is thus not 'hopeless' or 'unarguable'. Different expressions used from time-to-time do not indicate any difference in the standard to be applied."
Having regard to the relatively low threshold for the "prima facie" requirement, and the absence of any suggestion of abuse of process in this appeal, I am satisfied that leave should be granted to the extent that it is required.

Further grounds

Some further grounds in the NOA were relied upon in the appellants' written, but not oral, submissions. These were characterised in the appellants' submissions in reply as "defences, counterclaims and appeal grounds" that would have been advanced by the appellants "but for said setbacks, systemic access unavailability of Mrs Edmonds, and failures to accord due process". These included grounds based upon claims of breach of fiduciary duty, breaches of the National Consumer Credit Protection Act 2009 (Cth), misleading or deceptive and unconscionable conduct both at common law and under statute, claims of common law fraud and reliance upon the second limb of Barnes v Addy (grounds 5(f)-(g), 6, 9, 10, 14-16) ("Further Grounds"). I also include within this category of "Further Grounds" the submissions advanced by the appellants in writing that the Deed was liable to be set aside for unilateral or common mistake and that there was a defence available to the appellants under s 12DMA of the Australian Securities and Investments Commission Act 2001 (Cth).
These were not matters that were raised before the primary judge. They were not pleaded, either by way of defence or cross-claim, nor were they relied upon in submissions before the primary judge. As set out by the High Court in University of Wollongong v Metwally [1985] HCA 28; (1985) 59 ALJR 481 at 483: "It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had [an] opportunity to do so."
This is not a case in which there are any exceptional circumstances.
As submitted by the respondent, each of the Further Grounds would give rise to questions of fact upon which the respondent would have been entitled to lead evidence and cross-examine Mrs Edmonds. This Court does not have before it the evidence bearing on these claims as would have been the case had they been raised in the court below: see, e.g., the analysis of Latham CJ, Williams and Fullagar JJ in Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35 at 438. In my judgment there would be significant unfairness to the respondent if this Court were to allow these claims to be agitated on appeal. Further, contrary to the appellants' submission, and for the reasons set out below, I do not accept that the failure to advance these claims below was due to any "failures to accord due process", which I take to mean a denial of procedural fairness.
In those circumstances, the appellants should be bound by the conduct of their case below and should not be permitted to rely upon the Further Grounds.

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