Equuscorp Pty Ltd & Anor v Glengallan Investments Pty Ltd & Ors [2006] QCA 194

HIGH COURT AND FEDERAL COURT - APPELLATE JURISDICTION OF THE HIGH COURT - REMISSION TO AND SUBSEQUENT PROCEEDINGS IN SUPREME COURT - where High Court set aside orders of learned primary judge and remitted proceedings to the Supreme Court for consideration of issues not decided at trial - whether the findings of the learned primary judge correct in fact or law and whether the learned primary judge carried out the function committed to the Supreme Court under the order of remitter - appeal to Court of Appeal

CONTRACT - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - OTHER MATTERS - where appellants entered into a loan agreement with the second respondent for the purpose of acquiring units in a limited partnership in an aquaculture investment scheme with purported taxation and self-funding benefits - where venture failed and there was no profit from which to pay the balance of the loan monies - where a representation was made on behalf of the second plaintiff that the defendants' liability to repay the loans would be limited - whether the representation concerning limited recourse was withdrawn by the loan agreement - whether the representation constituted misleading or deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth)

ESTOPPEL - GENERAL PRINCIPLES - where appellants entered loan agreement with second respondent - where representation made in pre-contractual negotiations that loan agreement would be "limited recourse" - whether defendants entered loan agreement in reliance upon that representation - whether there was a common assumption that the loan was "limited recourse" - whether defendants could rely on an estoppel by convention or promissory estoppel - whether assignment to the first plaintiff was subject to the equity created by any estoppel

Property Law Act 1974 (Qld), s 54(1)(a) s 56(1), s 199 (1)

Trade Practices Act 1974 (Cth), s 51A, s 52

Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267; [1999] NSWSC 274, 31 March 1999, considered

Bank of Australasia v Adams (1889) 8 NZLR 119, cited

Bank of New South Wales v Flack (1984) ASC 55-323, cited

Bowler v Hilda Pty Ltd (1998) 80 FCR 191, cited

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226, considered

Curtis v Chemical Cleaning Co [1951] 1 KB 805, cited

Edginton v Fitzmaurice (1885) 29 Ch D 459, cited

Equuscorp Pty Ltd & Anor v Glengallan Investments Pty Ltd

& Ors [2005] QSC 172; File Nos 1688 of 1991, 1689 of 1991, 1690 of 1991, 1691 of 1991, 1692 of 1991, 9485 of 1998, 28 July 2005, considered

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55, 10 February 2005, considered

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2002] QCA 380; Appeal Nos 11475 of 2001, 11476 of 2001, 11477 of 2001, 11478 of 2001, 11479 of 2001, 11480 of 2001, 27 September 2002, considered

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2001] QSC 464; File Nos1688 of 1991, 1689 of 1991, 1690 of 1991, 1691 of 1991, 1692 of 1991, 9485 of 1998, 30 November 2001, considered

Equus Financial Services Limited v Glengallan Investments Pty Ltd [1994] QCA 157, considered

Foakes v Beer [1884] UKHL 1; (1884) 9 App Cas 605, cited

Ford v Beech [1848] EngR 10; (1848) 11 QB 852, cited

Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, cited

Holmes v Jones [1907] HCA 35; (1907) 4 CLR 1692, cited

Johnson Matthey Ltd v A C Rochester Overseas Corp (1990) 23 NSWLR 190, considered

MacKenzie v Royal Bank of Canada [1934] AC 468, cited

Mancorp P/L v Baulderstone P/L (1991) 57 SASR 87, cited

McDermott v Black [1940] HCA 4; (1940) 63 CLR 161, cited

MGICA (1992) Ltd v Kenny & Good Pty Ltd (1996) 61 FCR 236, cited

Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3, 5 February 2004, cited

O'Neil v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455; [2002] FCAFC 188, 17 June 2002, cited

Pinnel's Case [1572] EngR 290; (1588) Cro Eliz 126; 77 ER 237, cited

Re H Simpson & Co (1963) 81 WN (Pt 1) (NSW) 207, cited

Redgrave v Hurd (1881) 20 Ch D 1, cited

Skywest Aviation Pty Ltd v Commonwealth of Australia (1995) 126 FLR 61, cited

State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170, cited

Walton Stores (Interstate) Limited v Maher (1988) 164 CLR 387, cited

West London Commercial Bank Ltd v Kitson (1883-84) 13 QBD 360, cited

Whittet v State Bank of New South Wales (1991) 24 NSWLR 146, cited

Wright & Anor v Hamilton Island Enterprises Ltd [2003] QCA 36; CA No 11236 of 2001, 14 February 2003, cited

D F Jackson QC with him D R Cooper SC and C L Francis for the appellants

[1] McPHERSON JA: In June 1989, the defendant Barry Thornton, who is a qualified accountant described in evidence as "a businessman of considerable experience", began to interest himself in investing in ventures being conducted by the Johnson group of companies for producing agricultural products, of which one, involving the production on land in New South Wales of blueberries, had recently been carried out with some success. That particular project had by or in June 1989 ceased to be available to further investors, but a new scheme was being organised, this time for "aquaculture" by breeding, "harvesting" and marketing crayfish in North Queensland. The land on which production would take place was or would be owned by Farmer Johnson Aquaculture Limited, which was one of the Johnson group of companies, while another of those companies Johnson Farm Management Pty Limited would be responsible for managing the enterprise. A series of numbered limited partnerships were to be formed, each bearing the name "Red Claw", of which investors were invited to become members or limited partners by purchasing "units" in those partnerships. It was held out to them that their investments would provide them with profits from the venture, as well as the benefit of tax advantages to offset against income.

[2] Further details of the scheme are set out in the judgment at first instance of Helman J on 30 November 2001 in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd & Ors [2001] QSC 464; in the judgment of this Court ([2002] QCA 380) on appeal from that decision, delivered on 27 September 2002; and in the reasons for the decision of the High Court of Australia ([2004] HCA 55) given on 16 November 2004 and reported at [2004] HCA 55; 218 CLR 471. In allowing that appeal, the High Court, set aside the orders of the primary judge made on 30 November 2001, but remitted the proceedings to the Supreme Court for consideration of issues not decided at the trial, in which judgment had been given for the defendants. The issues so remitted came before Helman J in the Supreme Court by whom they were heard on 3, 4 and 5 May 2005. No further evidence was adduced at the hearing and the pleadings were not amended. Judgment was delivered in favour of the plaintiffs on 28 July 2005 ([2005] QSC 172). This is an appeal against that decision.

[3] It is necessary now to descend to further detail about the litigation in suit and the events which gave rise to it. In June 1989 Mr Thornton was acting for several prospective investors, including himself and their companies, who were interested in investing in the Red Claw project by acquiring units in a partnership. They are the defendants before the Court in a series of actions for money owing that were instituted against them separately, but heard together, by the second plaintiff Rural Finance Pty Ltd and the first plaintiff Equuscorp Pty Ltd. It claims to have taken an assignment of the rights of Rural Finance in 1991. In July 2005, Helman J after a hearing of the remitted issues gave judgment against each of the defendants for what are, in all the actions, very large sums of money, including interest from the date of judgment at the agreed rate of 20 per cent. There is no dispute about quantification of the amounts due under those judgments, which are set out in material supplied to the Court. The question on this appeal turns on the correctness in fact or law of his Honour's findings and incidentally whether, in arriving at his conclusions, he correctly carried out the function committed to the Supreme Court under the High Court's order of remitter.

[4] The circumstances in which the defendants are said to have become indebted to the second plaintiff Rural Finance may now be stated. By agreeing to take units and becoming members of a Red Claw partnership as each of them did on 30 June 1989, the defendants became liable to pay certain specified sums to acquire those partnership units. The amounts varied with the number of units purchased. In the case of the defendant Glengallan Investments Pty Ltd, which for all purposes may be treated here as the exemplar, the number of units was 500 at a price of $868 each producing a total of $434,000. Part of the indebtedness was payable, and in fact duly paid by Glengallan on 30 June 1989, in the sum of $70,000 designated as "prepaid" interest, and a further sum of $35,500 was also paid on the same date by way of repayment of principal. An additional $35,500 as another principal repayment was due on 31 December 1989. The expectation of the promoters of the project was that the balance payable by investors would be "self-funding", in the sense that their share of future distributions of partnership income derived from the cultivation and sale of crayfish would equal or exceed the investors' liability to contribute capital and interest due to the partnership or its assets. This hope was, in the event, not fulfilled. The ponds in which the crayfish were cultivated were not well constructed, and there may have been other problems. The project ended in failure and the Red Claw partnerships were dissolved.

[5] None of this explains how the defendants could have become indebted to the second plaintiff Rural Finance Pty Ltd, which was itself another member of the Johnson group of companies. Their alleged indebtedness to it arose because certain selected investors, among whom were the defendants, were permitted to and borrowed from Rural Finance the amounts payable for the acquisition of the units in the Red Claw partnership in return for executing loan agreements undertaking to repay the loans. In the case, for example, of Glengallan the total amount agreed to be borrowed and lent was $434,000 with interest at 20 per cent, which produces the sum, with interest, sued for in the actions brought by Rural Finance and its assignee Equuscorp against each defendant. In each instance, the amount is set out in the schedule to the loan agreement executed by each such defendant, or is capable of being calculated by using information from that source. If, in some instances, the amounts have not been filled in the schedules, those sums were and are nevertheless readily calculable.

[6] The loan agreements (ex 2) on which the plaintiffs base their claims are in printed form and are expressed to be made between Rural Finance and each of the defendants by whom they are signed or sealed. Each is dated 30 June 1989, which was when the documents were executed by Mr Thornton in the defendants' names. They recite the borrower's intention to borrow, and Rural Finance's intention as lender to lend, the amounts at the interest rate specified in the schedule, for the purpose of applying for the issue to the borrower of the units in the partnership. Subject to acceptance of the application, which took place on the same date, Rural Finance agrees to lend and the defendant to borrow what is designated in the schedule as the principal sum (cl 2). By cl 11, the borrower is to pay to the lender the instalments set out in the schedule. By cl 12 (but without reducing the borrower's obligation under cl 11), the borrower authorises and directs the Representative and the General Partner of the partnership to pay to the lender Rural Finance any partnership income to which the borrower becomes entitled, first in reduction of unpaid interest, and then in reduction of the principal sum.

[7] The execution of the loan agreements, which is not disputed by any of the defendants, followed conversations in June 1989 in which Mr Thornton had, on behalf of himself and the other defendants, been discussing with a Mr Alistair Hasell the prospect of investing in one of the projects being offered by the Johnson group of companies, by one or more of which Mr Hasell was employed as a marketing consultant. Control of the companies and the shares in members of that group had belonged to Mr Anthony (or Tony) Johnson; but on 29 June 1989 they had been transferred to his brother Mr G M Johnson. So far as relevant here, Mr Tony Johnson nevertheless remained in active charge of the group's activities on 30 June 1989, when the loan agreements were executed. At first instance in the original trial, Helman J found that on 30 June 1989 Tony Johnson was acting as the agent of the second plaintiff Rural Finance and had authority to manage its business. Those findings were challenged on appeal; but, said the Court of Appeal [para 58], "there is no basis for interfering with them". On the appeal to the High Court, this finding was not disturbed.

[8] That outcome assumes significance because of conversations that took place between Thornton and Tony Johnson on 30 June immediately before or at the time when the loan agreements were executed. In the action the defendant alleged (para 6 of defence) that in June 1989 Johnson Farm Products Pty Ltd on its own behalf and as agent for the second plaintiff Rural Finance agreed that Rural Finance would lend the sum of $434,000 to enable it to acquire 500 units in the partnership. To that extent, the parties are at one in these proceedings. It was the alleged terms of that agreement, designated in the pleadings as "the Operative Agreement", that were contentious. In para 6 of the defence the terms were alleged to be: (a) that the liability of the defendant was limited; (b) that it was limited to a payment of $70,000 on 30 June 1989 and two payments each of $35,500 on 30 September and 31 December 1989; after which (c) the income from the partnership would be applied in extinguishing the loan. The Operative Agreement in each case was alleged to have been reached by Hasell and Tony Johnson, acting on behalf of Rural Finance and Johnson Farm Management Pty Ltd, and Thornton on behalf of the defendants, in conversations in person or by telephone taking place between early June 1989 and 30 June 1989; but, in any event before the execution of the loan agreements on that date.

[9] From these allegations, it can be seen what the defendant borrowers were seeking to establish. The loan agreements (ex 2) contained no provisions limiting, either at all or to the three payments specified or the amount of the partnership income, the liability of the borrower to repay the loan, which in terms was unqualified. It was nevertheless the defendants' case that the effect of the Operative Agreement was so to limit it, with the result that the loans in each case were, to use Thornton's description, "limited recourse" loans. This expression was said by Mr Thornton to be one widely used in the mining industry. Its meaning is not free from ambiguity; but, if given the effect contended for here, the practical result was that, despite having on 30 June 1989 executed loan agreements requiring repayment of the face value of the amounts borrowed with interest, the defendants would nevertheless be legally liable to pay no more than the total of amounts specified in (a), (b), and (c), of para 6 of the defence, with interest; that is to say, in the case of Glengallan, $141,000 in total, together with any distributions of partnership income.

[10] At first instance, Helman J accepted as true the evidence of Hasell and of Thornton that the Operative Agreement as alleged was made between Rural Finance and the defendants on 30 June 1989. He considered that this finding was supported by a letter sent by Rural Finance on 29 November 1989 (to which I will refer as ex 29), and by another document headed "Guarantee" (referred to here as ex 15) executed by Tony Johnson, by Johnson Farm Management Pty Ltd and by Rural Finance on 19 December 1989. These, or at any rate the "guarantee" ex 15, were documents that Tony Johnson had, as an inducement to the defendants to execute the loan agreements in ex 2, assured Thornton on 30 June 1989 immediately before the agreements were executed would be provided to them in the future. The letter ex 29, which is on Rural Finance letterhead, is perhaps capable of being considered an offer to forego the whole of the loan indebtedness if the defendant paid the final $35,500 ahead of the time when it was due on 31 December 1989. The "guarantee" (ex 15) is expressed to be a "guarantee and indemnity" given by Johnson Farm Management and Rural Finance to the defendants that: (1) the only payments due were the stipulated sums (totalling $141,000 in the case of Glengallan) made or to be made on 30 June and 31 December; that (2) no further payment beyond those sums would be made by the defendant to either of those Johnson companies; and (3) that those two companies indemnified the defendant:

"3. Against any claims or demands by Johnson Farm Management Pty Limited or Rural Finance Pty Limited or any other party in the respect of the Red Claw Project or the said loan agreement in excess of the abovementioned ...".

By force of s 54(1)(a) of the Property Law Act 1974, this indemnity is to be construed as being made jointly and severally by each of Johnson Farm Management and Rural Finance. It was delivered to Mr Thornton on 19 December 1989 and received without adverse or any other comment from him.

[11] It might very well have been possible to view the letter ex 29 as embodying a promise by Rural Finance to the defendant to accept the total of $141,000 comprised in the three stipulated payments in full satisfaction of the defendant's liability to repay $434,000 under the loan agreement. In the ordinary way, the enforcement of a promise to that effect might be expected to meet with the decision in Foakes v Beer [1884] UKHL 1; (1884) 9 App Cas 605, holding that a promise to pay, or the payment of, a lesser sum does not in law discharge an existing indebtedness for a larger amount. But here, on one view of it, the creditor Rural Finance was offering to accept the lesser sum of $141,000 if the payment of $35,500 due on 31 December 1989 was paid (as it was on 19 December) before that date. Pinnel's Case (1588) Cro Eliz 126, from which the common law rule derives, itself affords authority that stipulating for and receiving payment of part of the debt in advance of the due date for payment constitutes consideration for the creditor's promise to release the whole of the debt. Here the payment was in fact made on 19 December 1989, which was some days before it was due. However, at the trial of these proceedings and in the appeals that have followed it, ex 29 has never been relied on as an instrument varying or otherwise having direct legal consequences or effect on the loan agreements, but only as evidence supporting, and in that sense corroborating, the defendants' oral evidence that there was an "Operative Agreement" in the terms alleged.

[12] The document entitled guarantee (ex 15) given on 19 December 1989, when the final sum of $35,500 was paid, presents more intriguing possibilities. The idea of a creditor providing a debtor with an indemnity against his own claim or demand for payment of the debt seems at first sight slightly absurd. But covenants or, if there is consideration, simple undertakings not to sue were at one time in the past not at all uncommon and were given effect at common law. If unlimited in duration, a promise not to sue operated as a release and, in order to avoid circuity, a defence to the claim, for the reason "that the damages to be recovered in an action for suing contrary to the covenant would be equal to the debt ... or sum to be recovered in the action agreed to be forborne". This extract from the judgment in Ford v Beech [1848] EngR 10; (1848) 11 QB 852, 871, where the authorities on which the rule was founded were reviewed by Parke B in the Exchequer Court, was quoted with approval by Dixon J (with whom Rich and McTiernan JJ agreed) in McDermott v Black [1940] HCA 4; (1940) 63 CLR 161, 186-187. See also [1940] HCA 4; 63 CLR 161, 176, per Starke J. It was a case in which the withdrawal of allegations that a contract had been induced by misrepresentations was held by the High Court (Latham CJ dissenting) to have the effect of a release which, since the Judicature Act, could be raised as a complete defence to an action on the debt. See also Bullen & Leake (3rd ed), at 670; Chitty on Contracts (24th ed) s1355, at 642. The undertaking of Rural Finance in ex 15 to indemnify the defendant, and so keep it harmless, against Rural's claims or demands in excess of the stipulated sums amounting to $141,000 is plainly susceptible of similar interpretation. The language of the agreement must, as Parke B emphasised in , be given "that construction which its language will admit, and which will best effectuate the intention of the parties" (11 QB 852, 866). On any view of it, ex 15 embodies an understanding by each of Johnson Farm Management and Rural Finance to indemnify the defendant and keep it harmless against a claim or demand by the other of them on the loan agreement to recover an amount in excess of those specified. To avoid circuity, a claim for damages for breach of that undertaking to indemnify might have been relied on as a complete defence to proceedings to enforce such a demand, like that in this action.

[13] In their reasons in these proceedings [2004] HCA 55; (218 CLR 471, 482 s 30) the High Court speculated briefly that the "guarantees" (ex 15) might have been releases. But it was not in that character, or as variations of the loan agreements, that the defendants relied on them in their pleaded defences. Instead, as their Honours recognised, the documents comprising exs 15 and 29 were used by the defendants to found a contention that the alleged Operative Agreement was oral; that it was made before the written loan agreement was executed; and contained provisions limiting the liability of the defendants. Describing it as "a more fundamental issue" which the defendants' contentions failed to address, their Honours said (at s 32):

"It is, and always has been, common ground that each of the [defendants] executed a written agreement on 30 June 1989. The [defendants] alleged that the "operative agreement" was not contained in that writing. It was said that the relevant agreement was reached earlier and was wholly oral. Yet it was not said that the written agreement should be rectified. It was not said that a defence of non est factum was available. It was not said that the written agreement was executed by mistake, or that its execution was procured by misrepresentation as to its contents or effect. (The misrepresentation was as to what had been said in the conversations, not what the document was or provided)."

[14] Their Honours went on to say (s33) that having executed a loan agreement, each of the defendants was bound by it, and that, not having been induced to do so by fraud, mistake or misrepresentation, they could not now be heard to say they were not bound by the agreement recorded in it. Their Honours added at s 36 that it had never been the defendants' case that an agreement, partly oral and partly in writing, had been made that was collateral to the loan agreement. If it had been, then the oral limited recourse terms alleged by the defendants contradicted the terms of the written loan agreement. And if there was "an earlier, oral, consensus":

"it was discharged and the parties' agreement recorded in the writing they executed. It is the written loan agreement which governed the relationship between Rural Finance and each [defendant]."

[15] The decision of the High Court rejected the defendants' contention that there was an Operative Agreement that in some way contractually qualified, limited or diminished the express terms of the loan agreement ex 2. This was, it may be added, also the view that had been adopted in the Court of Appeal in their reasons delivered on 27 September 2002 in the proceedings ([2002] QCA 380) from which the appeal was taken to the High Court. In reviewing the reasons of the trial judge, the Court of Appeal held (s 96) that the findings of fact made by his Honour did not support the conclusion that there was an "operative agreement" that was reached orally between Thornton and Hasell. On the contrary (s 98), their Honours held that the evidence clearly established that the loan agreements were those (ex 2) executed by Thornton on his own behalf and on behalf of the other defendants. Subsequently, Tony Johnson, Johnson Farm Management Pty Ltd, "and perhaps the second plaintiff" Rural Finance, provided to the defendants the guarantee and indemnity (ex 15) against repayments of principal other than those due on 30 September and 31 December 1989. But the provision of those instruments did not vary the fundamental liability of the defendants to Rural Finance under the written loan agreements (ex 2). It followed, the High Court said, that the finding of the trial judge that the oral agreement was reached at some time on or about 30 June 1989 "cannot stand" (s 97). The terms of the loan agreement were and remained those set out in ex 2.

[16] The High Court did not disturb or set aside any of the findings of fact made by the Court of Appeal. On the contrary, their Honours appear, with respect, to have accepted them as correct. Where the High Court differed from the Court of Appeal was in relation to what came to be called "the real money point" [2004] HCA 55; (218 CLR 471, 485; s 43). It raised the question whether Rural Finance had performed the terms of the agreements to lend in each case by providing the partnership not with cash, but with a series of cheques resulting in debit or credit entries in the accounts of the parties to the transaction with its banker ("the round robin"). To the contrary, their Honours held that each of these transactions was "legally effective" to constitute performance of the loan agreements [2004] HCA 55; (218 CLR 471, 486; s46). It was on that footing that the appeals were allowed.

[17] The High Court did, however, conclude that, because of the basis on which the case had been decided in Queensland, both at trial and on appeal, certain issues remained to be determined. These concerned the significance of what had been said by or on behalf of Rural Finance on 30 June 1989, considered not as statements having contractual effect but as "operative misrepresentations or ... misleading or deceptive conduct" [2004] HCA 55; (218 CLR 471, 489; s 58). They were issues that required consideration "not only of what was said, but also whether what was said misled the [defendants]". It was these matters that the order of the High Court remitted to the Supreme Court for further consideration, and that were determined by Helman J on 28 July 2005 ([2005] QSC 172), from which this appeal now comes.

[18] The representations relied on by the defendants are pleaded in para 19(b) of the defence as having been made by Hasell and Johnson Farm Management Pty Ltd to Thornton in order to induce the defendant to sign the loan agreement. The representations are (omitting references to the now defunct "Operative Agreement") as follows:

"(i) the liability of the defendant pursuant to ... the loan agreement was limited in the manner pleaded in paragraph 6 hereof; and

(ii) the second plaintiff [Rural Finance] had sufficient funds to lend to the defendant (by way of a payment to [Rural Finance] on behalf of the defendant) to enable it to acquire 500 units in the limited partnership."

Paragraph 19(c) of the defence alleged that the defendant signed the loan agreement in reliance on those representations. Paragraph 19(f)(ii) raised an alternative defence of estoppel based on the same representations. Paragraph 20 alleged that, if the representations pleaded in para 19(b)(i) were untrue and the loan agreements were binding on the defendant, those representations constituted misleading and deceptive conduct in trade or commerce. Paragraphs 20A alleged that the representation pleaded in para 19(b)(ii) was false and misleading in that Rural Finance did not have, and in fact did not lend, funds to the defendant.

[19] The allegations in para 19(b)(ii) and 20A of the defence may be shortly disposed of. The representation that Rural Finance had sufficient funds to lend to the defendant to acquire the agreed number of units in the partnership was, as Helman J recognised in the judgment under appeal, disposed of by the decision of the High Court that the transactions involving the "round robin" of cheques and entries was legally effective under the loan agreements to constitute the lending or loan of money. The representation alleged in para 19(b)(ii) was, his Honour said, therefore "not false, misleading or deceptive as Rural Finance had sufficient funds to lend to the defendants and in fact lent money to the defendants by means of the round-robin". This conclusion was not challenged by the defendants on this appeal. The allegation in para 19(b)(ii) accordingly drops out of contention.

[20] Paragraph 19(b)(i) remains in issue. As I have said, it pleads a representation that the liability of the defendants under the loan agreement was limited in the manner pleaded in para 6 of the defence, meaning that it was limited to the payments totalling $141,000 in the case of Glengallan, and anything received by way of partnership distributions, of which in the event there was none. The Operative Agreement having been disposed of by the High Court decision, the alleged representations now fall to be considered not as contractual terms, but as statements alleged to have induced the execution of the loan agreements. For the representations to have such effect either at law or in equity it is necessary for the defendants to show that they were statements, not with respect to future conduct, but as to matters of past or present fact. A statement about the contents or effect of a written document is capable of amounting to a representation in this sense: for example, the representation in Curtis v Chemical Cleaning Co [1951] 1 KB 805 that the exemption clause in the garment cleaning contract there extended only to damage to beads and sequins, whereas by its terms it covered all liability for damage to articles cleaned. Mr Jackson QC relied on Bank of Australasia v Adams (1889) 8 NZLR 119, and on Bank of New South Wales v Flack (1984) ASC 55-323, in which that decision was followed by Connolly J. They were, however, both cases of representations, which were proved or alleged to be false, about the contents or effect of written instruments.

[21] It is not now possible for the defendants to rely on any misrepresentations about the contents or effect of the loan agreements in this instance. None was alleged to have been made. As the High Court said in the passage from the Court's reasons (218 CLR at s 32) that has been quoted in these reasons at para 13, it was not said that execution of any of the written loan agreements was procured by misrepresentation as to their contents or effect. Indeed, Mr Thornton had read the loan agreement ex 2 before executing it, and knew that it contained no term limiting the liability of the borrower to anything less than the full amount being borrowed. It was because of this that he spoke to Tony Johnson before executing those instruments on 30 June 1989, and was promised a document recording that limitation, which was later provided in the form of the "guarantee" ex 15 on 19 December 1989 when the final instalment of $35,500 was paid. On this appeal, it was at one stage somewhat faintly sought perhaps to suggest that, in making that promise, Tony Johnson had misrepresented his intention. The state of a man's mind is, as Bowen LJ remarked in Edgington v Fitzmaurice (1885) 29 Ch D 459, 483, as much a fact as the state of his digestion. But the defendants' pleaded defence contains nothing suggesting that Tony Johnson or anyone else on behalf of Rural Finance misrepresented the state of his or its intention. Any suggestion to that effect would (because Tony Johnson must have known his own intention) have amounted to fraud, which would have had to be specifically pleaded and clearly proved. There is nothing resembling it in the allegations in the defence.

[22] What remains is the allegation in para 19(b)(i) of a representation that liability under the loan agreement "was limited" in the manner pleaded in para 6 of the defence. Because Thornton knew when he executed it that the terms of the loan agreement were not so limited, the representation that it "was limited" is capable of referring only to some matter or act relating to the future, such as that it "would be" limited. That is the form in which it is stated in para 10(d) of the defendants' response dated 21 January, 2000 to the plaintiffs' Request no 8 for Particulars. The High Court said (s 40) that the only way in which the alleged limitation of recourse was capable of being reconciled with the written loan agreement ex 2 was as a limitation to be effected by the Johnson interests undertaking some secondary liability to the defendants to save them from harm if the venture did not produce profits sufficient to meet their obligations under the loan agreements. But, as their Honours also said, such an agreement would give the defendants no answer to the lender's claim for repayment, but only a right against other parties, such as Johnson Farm Management Pty Ltd.

[23] For the plaintiffs on appeal, Mr Couper QC submitted that the conclusion in s 40 (218 CLR at 485) of the High Court reasons amounted to a finding of fact, or perhaps of mixed law and fact, by the High Court. I am, with respect, not altogether persuaded that this is so. Their Honours were at that point in their reasons tending rather to test the legal implications of the defendants' submissions as they might perhaps have been expressed. On this appeal, the defendants submitted that the finding by Helman J in his reasons of 30 November 2001 that, in what was said in the conversation on 30 June 1989, Tony Johnson had been acting for Rural Finance as well as for Johnson Farm Management Pty Ltd and Johnson himself, has never been disturbed on any of the subsequent appeals. His Honour was, it was submitted, therefore not justified in finding, as he did ([2005] QCA 172 s 19) on this later occasion on 28 July 2005, that what was said to Thornton concerning limitation of recourse "was said on behalf of Johnson Farm Management" and, by implication, not on behalf of the second plaintiff Rural Finance.

[24] An order for remitter is, as the High Court said in Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 78 ALJR 324; 218 CLR 388, 416 and repeated in this very matter [2004] HCA 55; (218 CLR 471, 490 at s 61), not an order for retrial. From this it appears to follow that, except to the extent that further evidence is called at the hearing, one would expect original findings to stand if not disturbed expressly or by implication in the judgments leading to the remitter. In no other way has this Court of Appeal any jurisdiction to disturb findings of another Court of Appeal on an earlier occasion in the same matter. The plaintiffs on this appeal submit that the finding in question was in fact disturbed by the High Court. As I have said, I am not satisfied that this is so. But assuming that Tony Johnson was in fact authorised to act, and was acting, on behalf of Rural Finance on 30 June 1989 in making a representation or giving the assurance that documents would be provided to Thornton to the effect that the loan was "limited recourse", that representation or assurance did not prove to be false. On the contrary, the instrument of guarantee and indemnity (ex 15) was, in accordance with that promise or assurance, executed by Johnson Farm Management Pty Ltd and Rural Finance, and was furnished to the defendants on 19 December 1989.

[25] There has been some debate at the various stages in the litigation about whether ex 15 was validly sealed by Rural Finance as a party to it. For my part, it does not appear to matter whether or not it was. It was signed both in his personal capacity and for and behalf of Rural Finance by Tony Johnson, who is proved to have had that company's authority to do so. To be enforceable, a guarantee as distinct from an indemnity is required by s 56(1) of the Property Law Act 1974 (Qld) to be written and signed by the party to be charged or his authorised agent, and, if ex 15 is a guarantee, it satisfied this requirement. But it is, as I have suggested, in its character as an indemnity that ex 15 might have attained legal significance in this case. If, as I have suggested, it is effective as an indemnity against claims and therefore as an undertaking not to sue taking effect as a release of the indebtedness under the loan agreement, it operated as a complete defence to the proceedings instituted by the plaintiffs to recover the indebtedness in suit: see McDermott v Black [1940] HCA 4; (1940) 63 CLR 161. Quite apart from the question of its being sealed by Rural Finance, valuable consideration was given for it. The indemnity from Rural Finance against claims in respect of the balance of the indebtedness due under the loan agreements was given by, or agreed with Tony Johnson to be given, in consideration of the defendants executing those agreements on 30 June 1989. The indemnity in ex 15, whatever its effect in law, was, in my view, not unenforceable for want of consideration.

[26] Although in the pleadings the indemnity ex 15 is alleged to have had the effect of "varying" the Operative Agreement, ex 15 is nowhere relied on by the defendants as having the effect of varying the loan agreements (ex 2) as such. Instead, they were, as has already been explained, used by the defendants to support the allegation of an Operative Agreement that has now been decisively rejected in the High Court. On 30 June 1989 there was no misrepresentation by Rural Finance that induced the defendants, or Mr Thornton acting on their behalf, to execute the loan agreements ex 2. The most that was proved was a promise or assurance by Mr Tony Johnson on that day that, if the loan agreements were executed in the form of ex 2, he or Rural Finance would provide Mr Thornton and the other defendants with documents confirming that the loans were "limited recourse" loans ([2001] QSC 464 s 9]. Having by then (30 June 1989) read ex 2, Thornton was acutely aware that the loan agreements contained nothing at all to that effect and he protested about it to Mr Hasell. He nevertheless executed the loan agreements on the faith of the promise or assurance from Tony Johnson. There was no other subsisting representation of fact that induced him to do so on 30 June 1989, and none was alleged. It was acknowledged by Mr Jackson QC on appeal that it was never pleaded that the loan agreement (ex 2) was represented as being non-assignable.

[27] In his reasons for the decision on the remitter, Helman J made a number of findings ([2005] QCA 172 s 23) to the effect that any representations concerning limited recourse that were made on or before 29 June 1989 were "withdrawn" on 30 June when or before the loan agreements were signed. The defendants on appeal criticised the use of the language of "withdrawal" and the absence of any allegation to that effect in the pleadings. However, the sense in which his Honour was speaking of earlier representations as having been "withdrawn" is clear enough. It was that, once Mr Thornton saw that the loan agreements contained no reference to limited recourse, he knew that no representations to that effect were being made about those agreements. It was for that reason that he spoke to Mr Tony Johnson and received the assurance that, if the loan agreements were executed, documents would in the future be provided confirming that the loans were limited recourse loans.

[28] It was on the faith of that assurance, and not in reliance on any other or earlier representation, that the loan documents were executed. In that sense, it was and is correct to say that the earlier representations about limited recourse were "withdrawn". The defendants, acting through Mr Thornton did not rely on and were not induced by any such representations to execute the loan agreements. It is elementary that a plaintiff is bound to prove that the alleged misrepresentation induced him to act to his detriment, in this instance by entering into the contract on which he is sued. The fact of inducement may be proved, as it often is, by inference from the facts and circumstances including the character of the misrepresentation in question: see Redgrave v Hurd (1881) 20 Ch D 1, at 21-22. But, once an issue is raised as to whether it was a particular representation or something else that was the inducing cause, it is for the plaintiff to show what it was the representation that influenced him to enter into the contract or otherwise to act to his detriment as alleged. "The first observation to be made", said Griffith CJ in Holmes v Jones [1907] HCA 35; (1907) 4 CLR 1692, at 1697:

"is that it is clear that ... the representation must have been continuing down to the time when the contract was entered into, and must have been believed by the plaintiffs at that time, so as to be at that time an inducement to enter into the contract."

Whatever earlier representations there may have been, the defendants failed to establish that they relied on any of them in executing the loan agreements. It was the promise to provide in future documents recording the limited recourse character of the loans that was the inducing factor. In short, the defendants failed to prove the allegation made in para 19(c) of the defence.

[29] What has been said about the allegation in para 19(b)(i) in respect of misrepresentation at common law or in equity is also true of allegations of misleading or deceptive conduct. It may be acknowledged that the ambit of what may amount to misleading or deceptive conduct under s 52 of the Trade Practices Act 1974 (Cwth) is or is capable of being wider than misrepresentation at law or in equity. By s 51A(1) of the Act, where a corporation makes a representation with respect to any future matter (including the doing of an act), and it has no reasonable grounds for making it, the representation is taken to be misleading. By s 51A(2), in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation. There is a decision of the Full Court of the Federal Court that a party wishing to rely on s 51A should place the other party on notice as to his intention of doing so: O'Neil v Medical Benefits Fund of Australia Ltd [2002] FCAFC 188; (2002) 122 FCR 455, 459-462. That was in an appeal from a magistrate's court, in which proceedings are conducted with a degree of informality. Here the allegations were fully pleaded. Yet no reliance was placed on s 51A until Mr Jackson QC came to reply on this appeal. That strikes me as coming too late, to say nothing of the fact that the representation alleged has never been formulated or reduced to specific terms. Presumably if it were to be, the "future matter" about which the representation would be alleged would be Mr Tony Johnson's assurance that the defendants "would be" provided with a document or documents to the effect that the loans were, as Mr Thornton insisted, subject to "limited recourse" as alleged in para 6 and para 19(b)(i). That document, or documents to that effect, were received by the defendants in the form of ex 15 on 19 December 1989. In this, it is impossible find anything in the nature of falsity or misleading conduct by Rural Finance, or conduct that in fact misled or deceived the defendants. What, if anything, could in law be made of ex 15 itself was a matter for the defendants. In their pleadings, they chose not to rely on the indemnity it contained as a release or a defence to the claim that was being made against them for recovery of the indebtedness under the loan agreements, but to use it simply as evidence of the existence of the so-called Operative Agreement. Whether, according to its terms, it operated as a defence to the claim was not a matter that was remitted to this Court and we would not have power to deal with it if it were now to be relied on.

[30] This leaves for consideration the allegation of estoppel raised in para 19(f)(ii) of the defence, which the parties agreed should be determined by the Judge at the remitter hearing. It alleges, in the alternative to what is pleaded before, that the defendants:

"will suffer a detriment if the common assumption or the common intention arising from the Operative Agreement is now disavowed, and accordingly the plaintiffs are estopped from asserting that the loan agreement is the true agreement between the second plaintiff [Rural Finance] and the defendant or that the defendant is liable to either the plaintiff pursuant to either the Operative Agreement or the loan agreement."

This pleads a "conventional" estoppel of the kind discussed by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, at 674-675. The problem with it, for the defendants here, is that the allegation is founded on a common assumption or common intention "arising from the Operative Agreement". The High Court has held that, in the face of the loan agreement, no such Operative Agreement exists or can be given effect, and the same stricture appears clearly enough to extend to any "earlier, oral, consensus" in the nature of the common assumption or intention alleged in para 19(f)(ii). If it existed, it was discharged, or (as Helman J said) withdrawn, when the loan agreement was executed and recorded in writing (218 CLR, at 484 s 36). The loan agreement was what then governed the relation between Rural Finance and each defendant (ibid). The defendants cannot assert a "common assumption" falling short of a contract that is at odds with the express contract to which they agreed and into which they afterwards entered in the knowledge of its terms. That conclusion is supported by the decision of McLelland J in Johnson Matthey Ltd v A C Rochester Overseas Corp (1990) 23 NSWLR 190, which is referred to in the reasons of Holmes J in this appeal. Indeed, the word "conventional" in this species of estoppel is used to connote an informal agreement or understanding between the parties.

[31] I realise that under the doctrine of promissory estoppel, a plaintiff may be precluded from departing from a representation that has been acted upon by the defendant to his detriment. Modern authority, said McHugh J in State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170, 189, "establishes that the doctrine of estoppel is not confined to representations concerning existing facts", and a statement that a right under "an existing contractual relationship" will not be enforced is capable under certain conditions of constituting an estoppel. It may be that the defendants might have alleged that Rural Finance had promised not to enforce the balance of the loan, and that this gave rise to a form of promissory estoppel. If so, it was not what was represented on behalf of Rural Finance and it was not what the defendants pleaded. Until the loan agreements were executed, there was no existing contractual relationship capable of being suspended or rendered unenforceable in that way. The doctrine of promissory estoppel may, I realise, no longer now be confined to the suspension of existing contractual relations but is capable of affecting entry into new legal relations: see Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, at 406-407, 428-429. However, Rural Finance did not depart from the representation it made on 30 June 1989. In ex 15, it gave the document promised by Mr Tony Johnson. If it amounted to a promise that its contractual rights under the loan agreements would never be enforced, it constituted a release which has not been relied on as such at any time throughout the lengthy history of this litigation. It is now too late to raise it as an issue. It is not one of the matters that was remitted for determination under the order of the High Court made on 16 November 2004.

[32] Finally, a question was raised about the validity of the assignment by the second plaintiff Rural Finance to the first plaintiff Equuscorp of the rights of Rural Finance against the defendants. It was said that the form of the assignment that took place in January 1991 did not satisfy the requirements for a statutory assignment under s 199(1) of the Property Law Act 1974. However, in earlier proceedings between the same parties in Equus Financial Services Limited v Glengallan Investments Pty Ltd (CA 262 of 1993) the Court of Appeal on 19 May 1994 held that there was a valid assignment either in equity (per Fitzgerald P) or under the statute (Derrington J). No attempt was made to appeal against that decision, which still stands, and, in my opinion, continues to bind the parties before us. In any event, it is difficult to see what practical difference the point, if good, can make to the outcome. If there was no effective assignment, the second plaintiff Rural Finance itself remains entitled to enforce the loan agreement against the defendants with precisely the same consequences as if the first plaintiff Equuscorp alone had succeeded in the claim. I would not set aside the judgment of Helman J on this ground.

[33] I may add that if the defendants had sustained their allegation in para 19(b)(i) that they were induced by misrepresentation to enter into the loan agreements, I would have held that their right to rescind or to defend on the strength of those misrepresentations amounted to "equities" having priority over the right of the assignee within the meaning of s 199(1) of the Property Law Act 1974. At least that is so if those equities (to which s 199(1) expressly makes the assignment subject) were asserted before the assignment took place. See Re H Simpson & Co (1963) 81 WN (Pt 1) (NSW) 207, 209, per Jacobs J. However, in view of the other conclusions I have arrived at, it is not necessary to determine this question finally.

[35] JERRARD JA: These appeals are from a judgment delivered on 28 July 2005 ("the second judgment") giving judgment for the first respondent against each appellant, and dismissing each appellants' counter claim. The second judgment was after a trial which was only one of many steps in a proceeding brought by the first respondent in this Court. It is the assignee of loans made by the second respondent to each appellant, and it has sought judgment on those loans in contested proceedings it began in 1991. The first respondent pleaded the assignment was on either 7 January 1991 or 17 November 1994.

[36] In each claim the first respondent sought a judgment against each defendant for the principal amount of a loan entered into pursuant to a written loan agreement dated 30 June 1989, together with the agreed interest thereon, that being at the then commercial (high) rate. Each defendant contested the first respondent's claim, denying that the respective defendant had had any liability at the time of the loan assignment to the assignor, the second respondent.

[37] Judgment for each defendant after a trial had been given on 30 November 2001, ("the first judgment")[1]. In the first judgment the learned trial judge upheld contentions by each defendant that:

• the defendant had satisfied all of its obligations under the loan agreement before the assignment, and there was accordingly no enforceable obligation left for assignment;

• irrespective of the defendants' performance of their obligations, the second respondent had not lent any money to any defendant.

[38] The basis on which the defendants each succeeded on the defence that no further obligation to repay any money existed under the written loan agreement was that that agreement was not the operative one between the parties, which was instead an oral agreement made in June 1989, by which each defendants' liability to repay money lent by the second respondent pursuant to the written loan agreement was significantly limited. Firstly, it was limited by an agreement that each defendant borrowing money from the second respondent would pay one year's pre-paid interest and two relatively modest payments in reduction of the principal sum due, those payments to be made within six months of the date of the loan, and from whatever funds were available to each defendant. Secondly, once those payments were made by the agreed dates, each defendant would no longer be responsible for repayment of the remainder of the principal sum, nor for any interest, from any source other than the profits that each defendant would earn as a partner in a limited partnership registered under the Partnership (Limited Liability) Act 1988 (Qld), and carrying on business on land near Innisfail. The limited partnership would participate in a venture or scheme to farm, harvest, and market fresh water crayfish.

[39] A company Johnson Farm Management Pty Ltd ["Johnson"] was to be the farm manager of this scheme. That company had apparently been successful with a like scheme farming blueberries at Coffs Harbour. Investors who entered into those limited partnerships were invited by the promoter to anticipate both significant taxation advantages by way of permitted deductions for moneys invested, and also considerable profits from the venture.

[40] A Mr Thornton, one of the defendants, was an accountant and a chairman of the GWA group of companies. A Mr Hasell was engaged in 1989 as a marketing consultant by Johnson to procure investors in that fresh water crayfish project, named the Red Claw project. Mr Hasell knew Mr Thornton, and approached him as a potentially interested investor. Thereafter Mr Thornton at all relevant times acted on behalf of each of the appellants, all of whom became investors in the Red Claw project.

[41] A critical step for each investor, obviously enough, was becoming a partner in a Red Claw partnership, of which three were formed and registered under the Partnership (Limited Liability) Act on 30 June 1989. As it happened, the crayfish project suffered severe cash flow problems leading to its reconstruction in September 1992, the dissolution of the partnerships formed on 30 June 1989, and the removal of Johnson as farm manager. Each defendant had applied on 30 June 1989 for Red Claw project partnership units to the company (Forestell Securities (Australia) Limited) which was to be the general partner of each partnership, completing the application form on 30 June 1989 at a meeting at which Mr Thornton was present, Mr Hasell, and the appellant Mr Prendergast (another investor). That meeting being held in Mr Thornton's office in GWA House.

[42] Equally important to each investor was the source of the funds to be invested; by 30 June 1989 the promoter of the Red Claw Project - in essence, Johnson, which was one of the Johnson group of companies - had arranged for the second respondent to offer finance to potential investors. The second respondent was described in the first judgment as an in-house finance company, presumably for the Johnson group. Mr Anthony Johnson ("Mr Johnson") had been a director of it until 29 June 1989, and the learned trial judge concluded in the first judgment that he still had authority to manage its business, on and indeed well after 30 June 1989.[2] Mr Johnson was also the managing director of Johnson.

[43] The Johnson group had marketed the blueberry production scheme under the name the "Blueberry Hill Public Investment", and Mr Thornton knew of that scheme. His understanding was that investors in that particular project had enjoyed a limited obligation to repay loan moneys lent to them for investment in the blueberry growing venture. Mr Thornton was interested in investing in a similar project with a limited obligation to repay money lent. He expected the limitation would come from agreement between borrower and lender that repayments, for the most part, would be payable only out of the profits of the scheme.

[44] Contrary to that expectation, documents produced by Johnson shortly before 30 June 1989, offering loans by the second respondent, specifically advised that the loan was repayable over five years, and was not "non-recourse". Despite that, Mr Thornton still wanted a limited recourse loan in which the liability to repay money to the second respondent would largely be limited to repayment from profit; and Mr Hasell clearly intimated before 30 June 1989 that it was possible Mr Johnson would agree that each appellant investors' obligation to repay would be limited as described.

[45] No agreement was reached before 30 June 1989. At the meeting held that day at Mr Thornton's GWA House office, he was shown the relevant documents prepared for the appellants, by which each applied for partnership membership, and the relevant loan agreements. Each written loan agreement unambiguously provided that the lender could assign its right to another party, and for repayment in full of the money lent. It expressly provided that, without reducing the obligation of the borrower to repay the money lent, together with interest thereon, in full, the borrower authorised the general partner to pay to the second respondent any part of the partnership income to which the borrower became entitled, in reduction of interest and in reduction of the principal sum. The proposed agreement certainly did not limit any borrower's liability to repayment only out of profits or partnership income; it was actually the borrower who would get a limited recourse, ranking after the lender to a right to partnership income.

[46] Mr Thornton clearly appreciated that upon his reading of the documents, and in conversations with Mr Hasell after reading them, declined to sign unless promised that the loans were limited recourse, and not assignable. By limited recourse Mr Thornton meant that, other than in respect of pre-paid interest and two initial repayments of capital, the loans would be repayable only out of partnership income. In essence, Mr Hasell and Mr Johnson, to whom Mr Thornton spoke by telephone during the meeting and before signing any documents, agreed that Mr Thornton would be provided with further documents confirming that the loans were limited recourse loans. The evidence leads to the conclusion that Mr Hasell and Mr Johnson each understood the term "limited recourse" in the sense in which Mr Thornton understood it. Mr Thornton was also given an assurance by Mr Johnson that, being limited recourse loans, there was nothing to assign. Mr Thornton had expressed his concerns to Mr Hasell on an earlier date in June 1989 about the possibility of the loans being assigned, because he had read about ventures of that type where limited recourse debts were assigned to third party finance companies, the project failed, and the third party finance company sued the investor and recovered the loans in full. Mr Thornton wanted to avoid that consequence, and he got the promise and assurance described. He then executed all the relevant documents that day, including partnership applications and loan agreements.

[47] Two important steps in the narrative relied on by the learned trial judge in the first judgment were as follows. The first was that on 29 November 1989 the second respondent sent each defendant a letter reminding that defendant that its "second (and final) loan repayment in relation to your investment in The Red Claw Project falls due in December 1989", and offering a rebate for early payment. The second was that following a number of requests from Mr Thornton for written acknowledgement of the limited recourse loan agreement he had been promised on 30 June 1989, Mr Hasell gave him documents addressed to each defendant on 19 December 1989, and headed "Guarantee".

[48] The terms of those documents executed 19 December 1989 are curious, in that each describes only the wholly past consideration of the relevant appellant entering into the acquisition of that appellant's units in the Red Claw project with Johnson, and the appellant applying for a loan from the second respondent for the cost of those units. The signatories gave guarantees to each appellant that the only payment to be made by the appellant would be (one year's pre-paid interest) due on 30 June 1989, a specified further sum due on 30 September 1989, and another specified amount due on 31 December 1989; that no further payments would be made by the appellant beyond "the above" to Johnson, the second respondent, or "any other party"; and an indemnity to each appellant "against any claims or demands by Johnson or (the second respondent) or any party in respect of the Red Claw Project or the said loan agreement in excess of the abovementioned account."

[49] The description herein of what happened on 30 June 1989 very much relies on the findings of fact by the learned trial judge in the first judgment,[3] other than the express conclusion that Mr Johnson and Mr Hasell understood the term limited recourse in the same way as Mr Thornton. I consider that conclusion follows from the evidence and the other learned judge's findings of fact. In that judgment the learned judge accepted the evidence of Mr Thornton and Mr Hasell as to what was said on and before 30 June 1989. The judge upheld the first defence each defendant relied on, namely that the written loan agreement was not the agreement actually reached between the second respondent and each defendant, finding that there had been an oral agreement between the lender and each borrower that the second respondent would have limited rights to recover its loan from each defendant. The judge found they agreed that each appellant would pre-pay one year's interest, pay two payments of principal, and thereafter be relieved of personal liability for repayment, which would come only from partnership income. The learned judge accepted the evidence from Mr Thornton and Mr Hasell that an oral agreement in those terms had been reached, and accordingly held that, since each defendant had paid the agreed interest and agreed payments of principal, nothing more was owing under the (oral) agreement actually made. The judge concluded the written agreement did not reflect the terms of the true agreement between the parties, and the first respondent as the assignee had been assigned a right limited to repayment by each defendant from profits of the project.

[50] The learned judge held in the alternative that, because the loan transactions had been effected by a series of round robin cheques on 30 June 1989, with the second respondent having no funds at all on which to draw to make the loans that it had agreed to make, and with what was no more than an audit trail being created at the offices of the Westpac Bank in Melbourne on 30 June 1989, there had been no real loan of any money at all. On that discrete ground the defendants also succeeded entirely at the trial.

[51] The learned judge's first major ground for upholding the defence, namely that the real agreement between the parties was the oral agreement of 30 June 1989, was overturned by the judgment of this Court in Equuscorp v Glengallan Investments [2002] QCA 380. However, the conclusion that there had been no real loan at all was upheld, and the appeals from the first judgment were accordingly dismissed. In overturning the conclusion that there had been a binding oral agreement, this Court held that that conclusion was not supported either by the evidence, or by the findings of fact that the trial judge had made. Nor could that evidence or finding support the conclusion that the operative agreement was an agreement partly in writing and partly oral. Instead the evidence established that the loan agreements between the respective parties were the written ones executed on 30 June 1989, with each defendant subsequently being provided with a guarantee and indemnity by Mr Johnson, and perhaps the second respondent, indemnifying each defendant against repayment of principal other than the sums already paid.

[52] On appeal from the decision the High Court of Australia overturned the conclusion that the second respondent had not made any real loan to the defendant,[4] but upheld the conclusion that the agreements between the second respondent and the defendant were recorded wholly in the written loan agreements, and ruled that the defendants' contentions about an oral agreement that there would be a limited recourse loan had failed. The High Court then remitted to this Court the defendants' claim that there had been operative misrepresentation, and misleading and deceptive conduct, by the respondents.

[53] By agreement between the parties the issues to be determined by the learned trial judge on the remitted matter included alleged misrepresentations, an asserted estoppel, and whether prior equities affected the assignment by the second respondent. The parties agreed that the question of estoppel arose on the same factual bases as did the asserted misrepresentation and misleading and deceptive conduct. Accordingly, it too should be decided by the court at trial.[5] On the second (trial) hearing no further evidence was led by any party.

[54] Remitting those issues to this Court created particular difficulties for the appellants, because their pleadings remained unamended. They still pleaded in paragraph 6 of the defence and counter claim that there was an oral agreement made in June 1989. In paragraph 19(b) each pleaded that representations were made to the appellant Thornton by Mr Hasell and Johnson, both of them then acting as agent of the second respondent, to induce Mr Thornton to enter into both the oral agreement and subsequently to sign the loan agreement. The critical representation pleaded was that each appellant's liability pursuant to the oral agreement and the loan agreement was limited "in the manner pleaded in paragraph 6 hereof".

[55] Paragraph 6 pleaded that by that oral agreement it was agreed that the second respondent would lend (for example) the appellant Glengallan Investments $434,000, to enable it to acquire 500 units in the limited partnership, upon the following terms:-

"(a) the liability of the Defendant was, and is, limited;

(b) such liability was, and is, limited to a payment of $70,000

on 30 June 1989 and two payments of $35,500 each on 30 September 1989 and 31 December 1989;

(c) thereafter the income generated by the limited partnership

would be applied in extinguishment of the balance of the said loan."

The pleaded representation was that Glengallan Investments' liability was limited in that manner. That pleading does not allege any representation that there would be no further liability if there was no income generated. The defendants then pleaded in paragraph 20 that if, which was denied, the representations were untrue and the written loan agreement was binding, the representations constituted misleading and deceptive conduct in trade or commerce.

[56] The subsequent rulings on appeal that, contrary to the judgment for the appellants after the first trial, the relevant loan contract between the parties was limited to the written loan agreements and did not include the inconsistent terms of the pleaded oral agreements, does not necessarily mean that the parties did not make those oral agreements. That was recognised by the High Court in its judgment, in the observation that:

"The conclusion that the respondents are bound by the written loan agreements may leave open the possibility that an earlier consensus reached by the parties was in each case a collateral agreement (made in consideration of the parties later executing the written agreement), but that has never been the respondents' case."[6]

Likewise this Court was informed on appeal by senior counsel for the respondents that the appellants had not made a case on either trial, or in either earlier appeal, that the written document executed in December 1989 and expressed as a guarantee and indemnity by Mr Johnson, Johnson, and the second respondent, was an agreed variation in writing of the earlier written loan agreement.

[57] The respondent's pleading alleged instead that an agreement had been made between the second respondent and Glengallan Investments in November 1989, agreeing to vary the terms of the oral agreement, and further agreeing that the second respondent would provide Glengallan Investments with a document recording the terms of the oral agreement. That was all that was pleaded about the December 1989 document headed "Guarantee". It was not pleaded or argued on this appeal, and this Court was told that it was not part of the respondents' case in any court, that it was an agreed variation of the written loan agreement.

[58] This Court in the appeal from the first judgment concluded that that document would only have practical effect if there was an existing legal liability in the respondents to make re-payments of principal other than those specified as payable in 1989, and that whatever the legal effect of that document entitled "guarantee", it did not evidence the true nature of some earlier agreement between the parties which contained terms that the defendants had only to make two repayments of principal.[7] This Court also remarked that in December 1989 Mr Johnson, Johnson, and perhaps the second respondent, had provided to the defendants a guarantee and indemnity in terms of which they indemnified the defendant against repayments of principal other than those due on 30 September 1989 and 31 December 1989.[8]

[59] The High Court's resolution of the quite different earlier oral agreement, and the actual written loan agreement, was put in these terms:

"The only way to reconcile the earlier oral arrangement the respondents alleged and the written loan agreements they executed would be to understand the limitation of recourse to the respondents as a limitation which was to be effected by the Johnson interests undertaking some secondary liability to the respondents to save them harmless if the venture did not produce profit sufficient for the respondents to meet their obligations under the loan agreements. But such an agreement (perhaps of a kind intended to be effected by the Guarantees of December 1989) would give the respondents no answer to the lender's claims for repayment; it would no more than give the respondents a right against other parties." [9]

Who offered the guarantee?

[60] That description does not exclude the possibility that the second respondent was a party to that guarantee, but limiting the guarantee to being an undertaking by the Johnson interests of a secondary liability is consistent with some of the evidence given at the trial, quoted in [47] and [49] in the judgment of Williams JA in the appeal from the first judgment. Williams JA quoted from the statement of Mr Thornton,[10] put in by the respondents at the first trial, apparently as evidence of a prior inconsistent statement. It had been used by Mr Thornton to refresh his memory, called for and a claim of privilege abandoned[11]; and was the subject of reasonably extensive cross-examination.[12]

[61] In that statement Mr Thornton described himself having impressed on Mr Hasell before 30 June 1989 that Mr Thornton wanted a loan of a limited recourse nature, and that Mr Hasell had said to him "I think I can get you a guarantee from Johnson Farm Management that the project will be self funding and that there will be no recourse by the lender after the initial payments and that all that would be required to be paid would [be] the first payment of interest and two payments of principal like the Blueberry Project."[13]

[62] In that statement Mr Thornton also describes how, when he was shown the actual loan agreement on 30 June 1989, he read it and observed that the documents made no mention of a limited recourse loan, and that the loan agreement clearly offered a full recourse loan, and did have an assignment clause. Mr Thornton described himself in that statement as telling Mr Hasell that the latter should tell Mr Johnson that the investors could not possibly sign the documents until they received an assurance that morning that the loans were of a limited recourse nature, and also that the loans could not be assigned to a third party. Mr Thornton's evidence in that statement was that after speaking with Mr Johnson on the telephone, Mr Hasell told Mr Thornton that Mr Johnson had said that he would provide Mr Thornton with a written document guaranteeing that the loans were limited recourse, and that because they were limited recourse there was nothing to assign, and Mr Thornton should not be concerned about assignment to a third party. Mr Thornton then spoke himself with Mr Johnson, who confirmed what Mr Hasell had just told him. Before signing the documents Mr Thornton repeated to Mr Hasell that he was doing so only on the basis that there was a limited recourse loan and that a third party could not sue him.

[63] That account in Mr Thornton's statement is entirely consistent with his being promised, and being satisfied with that promise, that he would be given a written document guaranteeing the loans were limited recourse, accompanied by an assurance that such a loan would be commercially unassignable. Mr Johnson's statement contained the conclusion that Mr Hasell had been speaking on behalf of the second respondent, which is a fair inference, but not the only one. That inference conflicts with the remark which Mr Johnson expressly attributed to Mr Hasell on an earlier occasion, that Mr Hasell thought he could get a guarantee from Johnson Farm Management Pty Ltd as to the project being self funding and the loan being limited recourse.

[64] The learned trial judge accepted Mr Thornton's evidence about the events of 30 June 1989, and found in the first judgment that Mr Johnson had assured Mr Thornton that it would not be necessary to provide that the loans were not assignable. The judge found that Mr Johnson had also promised to provide Mr Thornton with documents confirming that the loan was a limited recourse loan. The learned judge then held in the first judgment that in giving that assurance and in making that promise Mr Johnson was acting as the agent of the second respondent. Again that conclusion was open, but was certainly not the only conclusion open on the evidence before the learned judge. In the second judgment, the learned judge concluded that it was more probable than not that at that moment Mr Hasell and Mr Johnson were acting on behalf of Johnson, and it was more probable than not that it was that company undertaking the secondary liability to the defendants, rather than the lender, the second respondent. The learned judge reached that different conclusion because the judge considered that that was in conformity with the reasons of the High Court, particularly those in paragraph 40 of the judgment in the High Court, quoted above. I agree that that alternative conclusion was more in conformity with those reasons, but also observe that the different conclusion drawn after the second trial - on the same evidence and pleadings - was also a conclusion open on that evidence.

[65] That evidence included the written statement by Mr Hasell, corrected by Mr Hasell, and also put into evidence by the respondents during Mr Hasell's cross-examination.[14] That statement recorded that at the time of promoting the Red Claw Project and the Rural Finance loan to Mr Thornton, that being part of Mr Hasell's role, Mr Hasell had given a "implied comment" to the effect that Johnson might stand behind the loan,[15] that implication having been represented to Mr Hasell by Mr Johnson himself before 30 June 1999. Mr Hasell had also represented to Mr Thornton before 30 June 1989 that Johnson would guarantee "that the deal was a 'nonrecourse loan'. That is, the borrower was not up for more than the deposit plus two instalments."[16] Mr Hasell's own statement, made an exhibit by the respondents, agreed with Mr Thornton's written statement on the specific detail that what Mr Hasell had said before 30 June 1989 was that Johnson would "guarantee" limited recourse. That evidence supports the alternative conclusion the learned judge found.

[66] Mr Thornton's evidence in chief on the trial gave a more general account than that in his statement about conversations with Mr Hasell before 30 June 1999, in that he recalled Mr Hasell offering to speak with Mr Johnson about a loan on a similar basis to the Blueberry Venture - a limited recourse loan - but not that Mr Hasell said Johnson would provide a guarantee. As to 30 June 1989 itself, Mr Thornton's oral evidence was that Mr Hasell said that Mr Johnson had agreed yet again to Mr Thornton's request that the loan was a limited recourse one, and that Mr Johnson had said on the telephone that he did not believe that it was necessary to have non-assignability because, being a limited recourse loan, there was really nothing to assign. Further, Mr Johnson promised to provide Mr Thornton with written documentation confirming the fact that there was a limited recourse loan. Mr Thornton's evidence in chief did not identify the party on whose behalf he understood Mr Johnson made that promise.

[67] In cross-examination Mr Thornton agreed that his statement, in referring to the proposition by Mr Hasell that the latter could obtain a guarantee from Johnson, did accurately record what Mr Thornton had been told by Mr Hasell. Mr Thornton agreed that he could not recall Rural Finance being mentioned at that particular meeting, whenever it was.[17] It was put to Mr Thornton[18] that the assurance given on 30 June 1989 was that Mr Johnson guaranteed that Johnson would ensure that the loan was met from project profits, but Mr Thornton disagreed, asking - in answer - "Why did Rural Finance sign the thing - sign the document?" That evidence in cross-examination, and his evidence in chief which was silent as to his understanding of the source of the promised guarantee, really did not detract from such force as there was in his written statement, and that in the written statement of Mr Hasell, describing that foreshadowed guarantee as one Johnson would provide.

[68] In fact the document headed Guarantee, containing a guarantee and indemnity, was expressed to be given by each of Mr Johnson personally, Johnson, and the second respondent. Although the document itself recites only a past consideration, the appellants did not suggest in their argument that for that reason it was not worth the paper it was written on, and did not challenge the assumption in the judgment of this Court in the earlier appeal that it was an effective guarantee and indemnity, binding those parties to indemnify the appellants against repayments of principal other than those due on 30 September 1989 and 31 December 1989, and other than from profits thereafter.

[69] The evidence in the written statement of Mr Thornton and Mr Hasell supports the inference of fact drawn by the learned trial judge on the second trial that the guarantee and indemnity had been promised by Johnson and not by Rural Finance Pty Ltd. That evidence supports the further inference that that promise - expressly made on 30 June 1989 - induced entry into the written loan agreement. Other operative inducements would have included the confident expectation of an allowable tax deduction for the money that had been represented to the appellants as the total of each appellants' actual cash outlay, as well as the anticipated future profits from which all further repayments would come, and the assurance that the loans would be commercially unassignable.

[70] A conclusion that the promise of a document clarifying that each appellant would have to make only three payments (pre-payment of one year's interest and two payments of principal) to the second respondent, from sources other than each appellants' share of the partnership profits, was a promise made by the second respondent, is hard to square with the evidence quoted from in those written statements by Mr Thornton and Mr Hasell. But the conclusion that the promise to provide the requested documents was not made by the second respondent, as well as by Johnson, is equally hard to square with the terms of the letter sent by Rural Finance dated 29 November 1989, and with the fact that Rural Finance Pty Ltd was one of the three parties who executed the guarantee dated 19 December 1989.

[71] In cross-examination of Mr Thornton at the trial the point was made that the common seal of Rural Finance Pty Ltd had not actually been placed on that guarantee, whereas that of Johnson Farm Management Pty Ltd had been. It was suggested the omission was perhaps deliberate. The guarantee records on its face that the seal of the second respondent was "[h]ereunto affixed by authority of a resolution of the Board of Directors in accordance with the Memorandum and Articles and [sic] Association," but instead of the seal, there appeared only the signature of Mr Johnson. His signature was witnessed by Mr Hasell. Nothing really turns on the absence of that seal, because the provisions of s 80(1), (2), and (7) of the Companies Act 1989 (Cth), then applicable as part of the Companies (Code) of Queensland by virtue of s 6 of the Companies (Application of Law) Act 1981 (Qld), made the absence of a seal irrelevant, so long as Mr Johnson was acting with the authority of the company. There was no suggestion that he was not, and on the earlier appeal this Court held there was no basis for interfering with findings by the learned trial judge on the first trial that Mr Johnson had authority - before and on 30 June 1989 - to manage the business of the second respondent, to act as its agent, and to give guarantees on its behalf. Nothing in the evidence suggested that authority had not continued to at least the date of the written document.

[72] The fact that the second respondent did execute the guarantee and did offer its own indemnity to each appellant against any claims or demands by any other party in respect of the loan agreement, in excess of the amount of pre-paid interest and two repayments of principal, does not compel the conclusion that the promise to supply a document to like effect was made on its behalf on 30 June 1989, as well as on behalf of Johnson. It is a fact supporting the conclusion, but in light of the evidence in the two written statements, I agree with the conclusion drawn by the learned trial judge after the second trial that that promise was made on behalf of Johnson Farm Management.

Who gave the assurance of commercial unassignability?

[73] The appellant did not plead any representation reflecting the assurance given on 30 June 1989 that the loan by the second respondent, being a limited recourse loan, would be commercially unassignable. That opinion was proffered as the reason for it being unnecessary to amend each loan document by removing the clause expressly declaring each loan was assignable. I consider it probable that was an assurance, given by way of opinion, made on behalf of the second respondent, because it was that company's documents which would have needed amending if the loan was expressly made unassignable. That assurance was undoubtedly a significant operative inducement, but the appellants did not plead or base any claim for relief on that assurance having been given.

Did the second respondent make a representation about the loan?

[74] Regarding the oral representations pleaded, the respondent's senior counsel on this appeal principally submitted that it was not open to the learned judge to find that the second respondent had represented to any appellant on or before 30 June 1989 that either the loan it would make, or the written loan agreement, was for a limited recourse loan. The learned trial judge did not make that finding, but the respondent's counsel argued firmly that such a finding would not be open. Because I consider it a fair inference that the assurance the loan was commercially unassignable was made on behalf of the second respondent, and since I am satisfied that the learned judge was entitled to find as a fact - as the judge did on the first trial when the judge accepted Mr Thornton's evidence - that that statement was made to Mr Thornton, it follows that I disagree in part with the respondents' submission. Because the second respondent must be taken, by reasons of the circumstances and the assurance, to have known of the guarantee promised by Johnson, it was open to the learned judge to find that the second respondent did impliedly represent that its loan would be of a limited recourse nature, when the guarantee was given as promised. That was a representation, but not the same as what was pleaded in paragraph 6 of the defence and counter claim.

[75] That means the available conclusions are that on 30 June 1989, relevant representations inducing entry into the written loan agreement included:

• a promise on behalf of Johnson that documents would be provided later, demonstrating or guaranteeing that the loan was a limited recourse loan;

• an assurance on behalf of the second respondent that such a limited recourse loan would not be assignable;

• by necessary inference from the above, a representation by the second respondent that it expected that when the document was given, the net outcome would be a limited recourse loan, with consequent commercial un-assignability;

• by further necessary inference, a representation by the second respondent that it expected the loan would then, apart from three specified payments, be repayable only from profits of the partnership.

[76] The appellants therefore did not establish by evidence that the pleaded representations were the ones made by the second respondent. Rather, the evidence they led established that the representation Johnson made to Mr Thornton was that he would be supplied on a later date with documents confirming that the loan transaction into which each defendant was about to enter was for a limited recourse loan, and the second respondent represented that the consequence would be the majority of the repayments were payable only out of the profits of the venture into which the money lent would be invested. The representation was not false, nor misleading or deceptive as to the provision of a document; each defendant was later given the guarantee. The document supplied, however, did not describe the loans as "limited recourse", or use the term, or state that further repayment of the loans would be due only from partnership profits. The representation by Johnson as to the promised documents was not matched by what was given, and the representation by the second respondent was wrong as to the predicted effect of the document received.

[77] To the extent that the representations proved to be made were representations by Johnson about a future matter, namely steps that would be taken on some later date, and representations by the second respondent as to its expectation of the effect of those, the representation by Johnson was not misleading, because it did as Mr Johnson said it would. The guarantee was provided. Evidence that it was is evidence that the second respondent had reasonable grounds for making the two representations I consider it did make, sufficient to satisfy the obligation cast on it by s 51A of the Trade Practices Act 1974 (Cth). That is particularly so because Mr Thornton, who had acted as agent for all the defendants, did not object or protest that the terms of the guarantee and indemnity differed from what had actually been promised to him on 30 June 1989. The terms did not, regarding non-assignability, because he was not promised an unassignable loan. Instead, he was assured that qualities which his loan transaction would ultimately have would render the loan commercially unassignable. That was a very different assurance, and about which he has not complained. It has taken the first respondent 15 years of litigation to get this far on the assigned loans.

[78] The appellants sought in oral argument to rely on s 51A of the Trade Practices Act, by expressing the representations made to them in June 1989 as representations (by the second respondent) that the appellants' liability under the loan agreement would not be enforced,[19] other than for three payments and thereafter solely out of profits. Senior counsel for the appellants later argued,[20] as I understood it, that because the second respondent called no evidence of reasonable grounds for making that representation, it should be deemed (by reason of s 51A(2)) not to have had reasonable grounds for making it. It would follow it was a misleading representation.

[79] The problem with that submission was that that representation was not the one pleaded, and not the one proven. The appellants pleaded they were promised limited liability, not that liability would not be enforced. They proved a different representation by the second respondent. I respectfully disagree with the submission that the pleaded representation could or should be interpreted in the sense into which the appellants' senior counsel refined it. The respondents also protest that the appellants had neither pleaded nor otherwise indicated that they were placing reliance on s 51A of the Trade Practices Act, contrary to the proposition in O'Neil v Medical Benefits Funds of Australia Ltd [2002] FCAFC 188; (2002) 122 FCR 455 at 459 to 462, that as a matter of procedural fairness a party wishing to rely on s 51A should so indicate to the other party. As to that complaint, the Full Federal Court in Bowler v Hilda Pty Ltd (1998) 80 FCR 191 treated s 51A(2) as an evidentiary provision (at 206 and 213). What matters here is that the appellants pleaded a representation that their liability was limited, not that it would not be enforced, and proved a representation by the second respondent that when further documents were provided as promised, the loan would be repayable from profits only, and for that reason only would be unassignable.

[80] Senior counsel for the appellants also argued that the pleaded representations were not as to the contents or effect of the written loan agreement, but as to the private right of the appellants under private instruments, and thus representations of present fact. Whether or not that submission accorded with the terms of the pleaded representations, it accorded with the observation in the High Court that the appellants had not said that the written agreement was executed by mistake, or that its execution was procured by misrepresentation as to its contents or effect.[21] Because Mr Thornton actually read the written loan agreement on 30 June 1989, and saw that it provided for assignment of the loan and not for a limited recourse loan, he was not in any way misled or deceived as to the contents or effect of the written loan agreement. There is room for the view on the evidence Mr Thornton gave that, had he not read the documents, he would have been led (by a combination of Mr Hasell's silence about their actual content and his earlier representations), into the incorrect belief that the documents he was about to sign did provide for a limited recourse, non-assignable loan. However, that question does not arise, because he read them.

[81] He had not been specially alerted by anything Mr Hasell said prior to reading the documents himself to the fact that those documents put in front of him on 30 June 1989 provided for assignable, full recourse loans. Indeed Mr Thornton's statement recorded that when given those numerous documents on that 30 June 1989 meeting, he was told by Mr Hasell that "... they're the same as the Blueberries",[22] which of course they were not.

[82] Because Mr Thornton read the documents, and understood them, he had the further conversation with both Mr Hasell and Mr Johnson described herein, and which the learned trial judge accepted took place, in which he was promised the later provision of documents confirming a limited recourse loan, accompanied by the described assurance of commercial un-assignability. In those circumstances I respectfully agree with the analysis by the learned trial judge in the judgment now under appeal, namely that the pleaded representation was withdrawn on 30 June 1989. Although the result is the same, I would express it as that Mr Thornton ascertained on that date that the pleaded representation was untrue with respect to the written loan agreements, because they did not contain the terms he expected they would. He so advised the second respondent and Johnson, who replaced the pleaded representations with a different one, as to steps Johnson would take in the future and the effect those steps would have.

[83] As to the argument that the representation (pleaded) was as to private rights, and so as to an existing fact, the two principal cases relied on for the proposition (MacKenzie v Royal Bank of Canada [1934] AC 468 at 476, and West London Commercial Bank v Kitson (1883-84) 13 QBD 360 at 362 to 363) appear genuinely to be ones where there was an argument, on the analysis in those judgments (which it is unnecessary to describe) that there was a representation of a fact. Assuming that the pleaded representation could be so understood - as a statement of the appellants' private rights -it was not the one proved.

[84] The appellants pleaded a very limited form of estoppel in paragraph 19(f)(ii) of their defence.[23] They did not plead a promissory estoppel, and pleaded only an estoppel based on an asserted common assumption or common intention arising from the oral agreement each defendant alleged had been made in June 1989 between Johnson, on its own behalf and as agent for the second respondent, and the defendant. That unamended pleading suffers from the deficiency that appellate courts have held the contractual relationship between the parties did not include the terms of any oral agreements in June 1989. However, recasting the pleaded representation as one that alleged reliance on promises made and accepted on 30 June 1989 is insufficient for the appellants, because they were each given the guarantee. The persons making the oral representation the appellants relied on on 30 June 1989 fulfilled the assumption or expectation created by those promises.

[85] Mr Thornton was promised written documents, said to guarantee that the otherwise obviously unlimited recourse loans were ones in which the second respondent's rights of recourse were expressly limited, and he was given those. Those documents did not provide that the loan was not assignable, but the appellants were not promised a document that said it was. They were promised a document that would limit recourse, and got a document which limited the second respondent's recourse, and obliged it to indemnify each appellant against claims by others.

[86] That guarantee inhibited only the second respondent's capacity to enforce liability over and above the amount of the specified interest and two repayments of capital, but entitled the second respondent to recover all of its principal debt, together with interest, from profits generated. Had the scheme been successful and made substantial profit, the second respondent may have ultimately been repaid by each appellant the agreed amount for the high rate of interest, and repaid all the money lent. Had the scheme been profitable, the second respondent may have been successful in obtaining an assignment of the loan to an assignee who in turn was fully paid both interest and capital from the scheme profits. Had the scheme faltered at the very end, running into difficulties very late in the piece such that not all of the loan could be repaid from the last lot of otherwise reasonably anticipated profits, then the terms of the guarantee did not preclude that assignee from seeking repayment from each appellant, who in turn could look to the second respondent to indemnify it for those amounts necessary to complete repayment in full.

[87] All of those outcomes were possible from the terms of the guarantee and indemnity, which the appellants by their conduct treated as satisfying the promises made to them, and which in turn helps to define the nature of the limited recourse promised. It was not a promise of non-assignability, whatever accompanying opinions were given, and on which expressions of opinion no claim has been based.

[88] The appellants' own conduct in claiming a taxation deduction for one year's pre-paid interest in full, being based on the total sum lent, is consistent only with an acknowledgement that a liability did exist to the second respondent to repay the whole sum, albeit with the expectation that liability, for the most part, would be satisfied from one source only. But the event about which no express oral promise or written agreement was made, namely an assignment of the second respondent's rights under the written loan agreement to another party, did happen. That other party has enforced those rights under the written loan agreement, and has got judgment for the unpaid principal together with interest. The appellants argue that an estoppel is raised in its favour, but I disagree. They got that for which they bargained, and also what was additionally promised to them. There was no promise that the loans were legally unassignable, nor that the second respondent would not assign them. The second respondent (now in liquidation) is liable on its indemnity, presumably worthless, but the appellants did not ask for any security with their respective guarantee and indemnity. In those circumstances I am not persuaded that it was unconscientious for the second respondent to assign the lability to it under the loan agreement, or for the first respondent to enforce it and get judgment. It is not made unconscientious for the first respondent to do that because of the fact that the second respondent is in liquidation.

[89] Assuming in the appellant's favour that the first respondent took the assignment with full notice of both the terms of the written loan agreement and of the guarantee and indemnity document, and also of the promises made before the written loan agreement was entered into, the result is that the first respondent took with notice only that the second respondent would be obliged to indemnify the appellants for loan repayments made to the first respondent. On a close analysis of the documents and the promises, there was no promise that the terms of the guarantee and indemnity would bind an assignee, and no pleading of any like promise or assurance. Instead, there was a very different undertaking in the guarantee, namely that the second respondent would indemnify against liability to another party, not that there would not be any such liability. In those circumstances I am satisfied there is no estoppel affecting the second respondent, and the first respondent is entitled to hold its judgment against the appellant.

[90] On the appeal the first respondent Equuscorp readily conceded that it was bound by any equities binding the second respondent, Rural Finance Pty Ltd, assuming there had been an effective assignment of the appellants' debts by the second respondent to the first. I am satisfied there are no relevant equities, and this Court has already held that there was an effective assignment, in another judgment on an appeal in these claims. [24] I would dismiss the appeal.

[91] Since writing this judgment, I have had the benefit of reading McPherson JA's authoritative analysis of the facts and law. To construe exhibit 15 as an undertaking not to sue and as taking effect as a release of the indebtedness under the loan agreement would be a construction very beneficial to the appellants, but not necessarily one which would "best effectuate the intention of the parties", as suggested by Parke B in Ford v Beech [1848] EngR 10; (1848) 11 QB 852, cited by McPherson JA. I respectfully so consider because the documents in this transaction were carefully drawn, no doubt because they were intended to withstand the scrutiny of the Commissioner of Taxation. Exhibit 15, while curious in its terms, did not promise that the second plaintiff would not ask the appellants for further payments. Instead it guaranteed that they would only make three payments and make no more. The document said nothing about loan repayments to the second plaintiff being made only from Red Claw project income, and nothing about the second plaintiff or any other party not being entitled to payment, or accepting those three payments in satisfaction of liability.

[92] HOLMES J: I have read the reasons of McPherson and Jerrard JJA. I adopt what their Honours have set out as to the background to the case. I differ as to the content and effect of the representations made to the defendants on 30 June 1989, but agree, with respect, with the conclusion that the appeals should be dismissed.

[93] In his judgment given in November 2001, the trial judge, Helman J, accepted as true the oral evidence of the three men present at the 30 June 1989 meeting, Mr Thornton, Mr Hasell and Mr Prendergast. Mr Thornton said in evidence in chief that during the month of June he had discussions with Mr Hasell about how the defendants would be required to repay the loans for the venture: three payments (two part-payments of principal and one of interest) were to be made, with the balance of the loans being repaid exclusively from income from the venture. On 30 June 1989, Mr Hasell presented him with the loan agreement which contained no reference to any limitation of liability. The following conversations ensued:

"What did you say? -- I told him that under no circumstances would I sign the loan agreements or enter into the agreements because it did not reflect what the - we had understood to be our arrangement.

What did he say to that? -- He said that it must be a mistake, that these have been just left in.

And what happened then? -- He said that - I said to him that, "I would not agree to sign anything unless I had an assurance that these loans were limited recourse and that there was no assignability." To that he said that, "I will ring Tony Johnson and I will clear the matter up", which he did from the phone in my office.

Was the phone on speaker phone? -- No, it was my private line and there was no speaker phone available.

All right. Now after Mr Hasell had been speaking to Mr Johnson on the phone did something further happen involving yourself? -- Yes he did. Alistair said, "Tony Johnson has agreed to your request yet again and that your loans are limited to recourse." I picked up - took the phone from Alistair Hasell and I confirmed with Tony Johnson that what Alistair had told me was correct. He also said to me that, "He did not believe that it was necessary to have non assignability because there was - being limited recourse loans there was really nothing to assign." He also - sorry ------

Yes, go on? -- He also promised to provide me with written documentation confirming the fact that there was a limited recourse loan so that in effect on the day we would have a written agreement, a verbal agreement and the verbal agreement would be confirmed in writing thereafter."

[94] Mr Hasell's evidence as to what happened on 30 June 1989 was that he told Mr Thornton and Mr Prendergast that if they were to invest, they would have

"... to put up pre-paid interest for the first 12 months and to commit to pay two instalments of principal ..."

He had telephoned Mr Johnson to confirm that that was so. Then, he said, Mr Prendergast and Mr Thornton indicated to him they would sign the loan agreements

"... on the basis that - of my representations to them ... and that there was going to be paperwork prepared to document the non-recourse loan."

[95] Mr Prendergast said that on 30 June 1989 Mr Hasell told him that there

"... would be a payment of interest and there would be two payments of principal."

When Mr Thornton had read the loan agreement and realised that it did not contain any provision to that effect, Mr Hasell telephoned Mr Johnson and he, (Hasell) and Mr Thornton spoke to Mr Johnson. Then, Mr Prendergast said,

"... in accordance with the discussion with [sic] Barry Thornton had with Tony Johnson, we agreed that the arrangement as far as we were concerned was that we would pay the interest in advance on the loan for 12 months. We would pay two instalments of principal on 30 September 1989 and 30 December, and that was the basis that I signed the loan agreement, and Mr Johnson would provide us with the documents supporting the agreement."

[96] As to the content of the telephone conversation between Mr Thornton and Mr Johnson, the learned trial judge found, in accordance with Mr Thornton's oral evidence, as follows:

"Mr Anthony Johnson, to whom Mr Thornton spoke on the telephone while the meeting was in progress, assured Mr Thornton that it would not be necessary to provide that the loans were not assignable because 'being limited recourse loans there was really nothing to assign'. ... Mr Anthony Johnson also promised to provide Mr Thornton with documents confirming that the loans were limited recourse loans. In giving that assurance and in making that promise Mr Anthony Johnson was acting as the agent of the second plaintiff ..."

He characterised the understanding reached by Mr Thornton for the defendants and Mr Hasell on behalf of the second plaintiff, fortified by the assurances of Mr Johnson also speaking on behalf of the second plaintiff, as an agreement for loan of the monies pursuant to which

"The unconditional liability of each of those defendants was to be limited to three payments: the first on 30 June 1989, the second at the end of September 1989 and the third and final payment (which was to be equal to the second) at the end of December 1989. The first payment was to be a pre-payment of interest and the second and third payments were to be repayments of principal. After those payments had been made the defendants were to remain liable to repay the money they had borrowed and to pay interest, but only from their shares in the profits of the projects ..."

[97] His Honour rejected a submission for the plaintiffs that at the highest the discussions on 30 June 1989 resulted in an agreement by Mr Johnson to guarantee that the project income would meet the defendants' liabilities under the loan agreements. In that context, he said this:

"An arrangement of the kind contended for on behalf of the plaintiffs would have revealed Mr Thornton to have been extremely gullible to say the least. He is a business man of considerable experience, and I do not accept that he was so gullible as to expose himself and his associates to a risk of the magnitude inherent in a mere personal guarantee."

[98] On the basis of the oral evidence accepted by the trial judge in November 2001, I do not think one can say that the relevant representations were confined to a promise to provide a guarantee, whatever the effect of its provision, and a representation that the loan would not be assignable. Rather, in my view, the fundamental representation was that the second plaintiff would not look to the defendants for repayment of the loans except in the limited way described, with written confirmation of that promise to follow.

[99] The alternative view, that the relevant representation was as to provision of a guarantee that the loans were of limited recourse, is more consistent, it is true, with what is contained in Mr Thornton's unsigned statement. In both the Court of Appeal and the High Court, attention was, for some reason, focussed on Mr Thornton's statement rather than his evidence in chief. But that statement was not part of the defendants' case. It was produced as a document relied on by him to refresh memory, and the basis on which it was tendered by counsel for the plaintiffs was not articulated. It was not tendered as a prior inconsistent statement - there was no argument as to its having been made by Mr Thornton - and the defendants had not sought its tender. But on whatever basis it made its way into evidence, the learned trial judge preferred Mr Thornton's oral evidence.

[100] Which version - statement or oral evidence - was considered on appeal was probably not of much consequence; the question then was whether the dealings prior to the written loan agreements could have contractual effect. But in considering the issues of misrepresentation and estoppel, just what was accepted in this regard assumes prime importance; and it is to be noted that at no stage of the appellate process was it suggested that the trial judge ought not to have accepted Mr Thornton's evidence.

[101] When the matter came back before him in 2005, the learned trial judge's reasoning as to the nature of the representation and its source seems to have been heavily influenced by the need to decide the matter in conformance with the High Court's decision. At paragraph 17 of his judgment, he said this:

"The only way to reconcile any earlier oral arrangement the defendants allege and the written loan agreements they executed is to understand the limitation of recourse to the defendants as a limitation which was to be effected by the Johnson interests' undertaking some secondary liability to the defendants to save them harmless if the venture did not produce profits sufficient for the defendants to meet their obligations under the loan agreements."

[102] That was a direct quote from the High Court's reasons at paragraph 40.[25] Thus, the learned trial judge reasoned, if Mr Thornton and the other defendants

"... were induced to execute the loan agreements by anything said on 30 June 1989 it was by an undertaking of secondary liability ..."

Since the company undertaking that secondary liability was more probably than not the Johnson Farm Management Group, rather than the second plaintiff as lender, it followed that Mr Hasell and Mr Johnson were speaking on its behalf rather than on behalf of the second plaintiff in what they said to Mr Thornton concerning limitation of recourse.

[103] On that basis, his Honour found that although the representation pleaded in paragraph 19(b)(i) was made up to 29 June 1989, it must be taken as having been withdrawn on 30 June 1989 and replaced by an undertaking of secondary liability by Johnson Farm Management; notwithstanding his finding that the assurance given and promise made to Mr Thornton by Mr Johnson were given and made when Mr Johnson was acting as agent for the second plaintiff. Accordingly, the defendants failed to make out the representation necessary to defences founded on estoppel or misleading and deceptive conduct.

[104] I do not think, however, that anything that the High Court said in the paragraph quoted by his Honour amounted to a rejection of the finding of fact made in his first judgment. That passage entailed no more than a considering of how the limitation of recourse might take effect as an agreement without conflicting with the written loan agreements; it did not amount to making a positive finding that that was the nature of the representation made. Indeed, their Honours made it clear subsequently in the judgment that live questions remained as to reliance on the representation as to limited liability and whether the plaintiffs were misled. The Court of Appeal's focus was similar; as the High Court observed:

"The Court of Appeal's conclusions about the consequences that followed from that acceptance [of the defendants' evidence about what was said on the subject of limited liability before execution of the written loan agreement] were directed to identifying what was the agreement between the parties rather than to the issues whether the statements about limited recourse were operative misrepresentations, or constituted misleading or deceptive conduct."

It was therefore necessary to remit those matters for further consideration.

[105] It seems to me, then, that there is no warrant for departing from the learned trial judge's original findings as to what was said on 30 June 1989 and on whose behalf. There was a representation made on behalf of the second plaintiff that the defendants' liability to repay the loans would be limited; that is to say the second plaintiff would accept payment by way of the prepaid interest and two subsequent instalments and thereafter seek to recover only against partnership profits. That was not a representation withdrawn by the loan agreements because it was not a representation as to what the second plaintiff's rights were under those agreements but as to how the second plaintiff would seek to enforce those rights. The making of that representation is supported by the content of the letter of 29 November 1989 which, consistently with such a promise, advises that the second (and final) loan repayment is due in December 1989.

[106] The biggest hurdle in the way of the defendants is the form of their pleading, the relevant parts of which are to be found at paragraphs 6, 19(b)(i) and 19(f)(ii) of the further further further amended defence and counter claim. Taking the pleading in the case of Glengallan Investments Pty Ltd as representative, in paragraph 19(b)(i) appears the allegation that Hasell and Johnson (who are earlier alleged to be agents of the second plaintiff), in order to induce the defendant to enter into the "Operative Agreement" and to sign the Loan Agreement, represented to Thornton as agent of the defendant that "the liability of the defendant pursuant to the operative agreement and the loan agreement was limited in the manner pleaded in paragraph 6 ..."

[107] Paragraph 6 pleads what is described as the "Operative Agreement": that is, an agreement for the second plaintiff to loan the defendant $434,000 among terms which are said to include

"(a) the liability of the Defendant was, and is, limited;

(b) such liability was, and is, limited to a payment of $70,000.00 on 30 June 1989 and two payments of $35,000.00 each on 30 September 1989 and 31 December 1989;

(c) thereafter the income generated by the limited partnership would be applied in extinguishment of the balance of the said loan.

(i) Alastair Hasell and Tony Johnson acted on behalf of the Second Plaintiff and on behalf of Johnson;

(ii) Barry Thornton acted on behalf of the Defendant;

(iii) the conversations relied on are approximately 2 telephone conversations and 2 conversations face to face between Thornton and Hasell and approximately 2 telephone conversations Hasell made to Tony Johnson in the presence of Thornton between in or about early June 1989 and 30 June 1989 but prior to the execution of the Loan Agreement;"

[108] In s 19(f)(ii) detriment is pleaded "if the common assumption or the common intention arising from the Operative Agreement is now disavowed", so that the plaintiffs are, it is said, estopped from asserting either that the loan agreement is a true agreement or that the defendant is liable to either plaintiff under either the "Operative Agreement" or the loan agreement.

[109] Particulars were sought of the common assumption, the common intention and the detriment pleaded. The following were provided in response:

"(i) The common assumption was that the terms of the Loan Agreement imposed no obligation upon the Defendant great [sic] than or different from the terms of the Operative Agreement;

(j) The common intention was that the terms of the Loan Agreement imposed no obligation upon the Defendant greater than or different from the terms of the Operative Agreement;

(k) The detriment which would be suffered is that the Defendant would be obliged to pay the balance of the loan from its own resources."

[110] As to misleading or deceptive conduct the defendants pleaded

"20. If (which is denied) the said representations pleaded in paragraph 19(b)(i) were untrue and the Loan Agreement is binding on the Defendant such representations constitute misleading and deceptive conduct in trade or commerce."

The defendants' case: estoppel and misleading or deceptive conduct

[111] In written submissions on this appeal, the defendants contended that there was a mistaken common assumption in terms of 19(b)(i); that is, that the liability of the defendants under the loan agreements was limited. Mr Jackson QC, arguing the appeal, put the matter more delicately: the common assumption was one as to the legal relationship between the parties: that they would enter the transaction, including the making of the loans, but there would be a limitation on the ability of the second plaintiff to recover personally from the defendants. The defendants' case was that by that "limited-recourse" representation they were induced to sign the loan agreement; they would suffer detriment if that representation were departed from; the second plaintiff was therefore subject to an estoppel in seeking to enforce above and beyond the extent to which it represented it would do so; and the first plaintiff, taking from the second plaintiff by assignment, was subject to the equity created by the estoppel. The alternative case was that the making of the representation amounted to misleading and deceptive conduct within the meaning of s 52 of the Trade Practices Act 1974. The defendants relied on s 51A of the Trade Practices Act: since the plaintiffs had adduced no evidence to the contrary they were deemed not to have had reasonable grounds for making the representation.

[112] Estoppel by convention, as described in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd[26],

"is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying."

There is reason to think, however, that a broader approach might now be taken; that conventional estoppel is available where the agreed or assumed state of affairs is as to the legal effect of conduct[27], a proposition explicitly rejected in Con-Stan Industries[28].

[113] Here, of course, the defendants contend for an estoppel based on what was represented in negotiations before they signed a contract making no provision for what was represented. In State Rail Authority of New South Wales v Heath Outdoor Pty Ltd[29] Kirby P cautioned against too great an alacrity to discern the basis for estoppel in pre-contract negotiations, because of its effect in rendering written contracts uncertain. McHugh JA, on the other hand, did not think that promissory estoppel, at least, should be so confined; the

"decisive consideration [was] that it is unconscionable for a promisor to insist on his strict rights if he had induced the promisee to give them to him by an assurance that they will only be used in a particular way or in particular circumstances and the exercise of those rights is contrary to the assurance."[30]

[114] In Johnson Matthey Ltd v A C Rochester Overseas Corp,[31] McLelland J took the view that an estoppel by convention, being in the nature of an agreement, was to be regarded as superseded by a subsequent written contract. The parole evidence rule thus operated to require exclusion of evidence of pre-contract negotiations designed to prove such an estoppel.[32] A similar reluctance to permit evidence to be given of an alleged estoppel by convention arising in pre-contract negotiations was exhibited by Miles CJ in Skywest Aviation Pty Ltd v Commonwealth of Australia[33] and by Bryson J in Australian Cooperative Foods Ltd v Norco Cooperative Ltd.[34]

[115] On the other hand, Rolfe J in Whittet v State Bank of NSW & Anor,[35] took the view that pre-contractual negotiations could be relied on to found an estoppel by convention. In that case the plaintiff had signed an "all monies" mortgage on the strength of an understanding with the relevant bank that the maximum liability under it was $100,000. Rolfe J, preferring the approach of McHugh JA in State Rail Authority v Heath, found that the plaintiff had made out an estoppel by convention.

[116] Assuming that it is, as Rolfe J considered, permissible to find an estoppel made out on the strength of an understanding reached in negotiations prior to contract, there is a further difficulty here in what is actually pleaded. The common assumption, taking paragraph 19(b)(i) and paragraph 6 in combination, is as to the effect of the loan agreement: that liability under it would be limited to the specified payments and partnership income. That was also the assumption identified in the defendants' written submissions. But any such common assumption was displaced by the document's content; it cannot stand in the face of Mr Thornton's clear evidence that he had read the loan agreement and knew that it contained no term to that effect. And the views expressed by the High Court on appeal certainly do not encourage the notion of a common understanding as to the loan agreement's having an effect different from its terms. At paragraph 36 the court observed:

"If there was an earlier, oral, consensus, it was discharged and the parties' agreement recorded in the writing they executed".[36]

In consequence, Mr Jackson was forced to argue on this appeal a kind of hybrid estoppel: a common assumption, not as to the effect of what was agreed, but as to what the second plaintiff would do.

[117] The evidence, in any event, does not really reflect any common understanding; what it does support is the making of a representation that the plaintiffs would not seek to recover from the defendants beyond the specified payments and partnership income; in other words that it would not rely on the rights of enforcement set out in the loan agreement. It is doubtful that, as a common law estoppel, an estoppel by convention can be founded on what is in essence a representation as to intended future conduct;[37] but that constraint disappears if one considers the evidence from the perspective of promissory estoppel.

[118] There is support for the view that promissory estoppel may be based on a representation that contractual rights will not be enforced, at least in the context of a pre-existing contractual relationship.[38] But there has been considerable debate - as, for example, in State Rail Authority v Heath, referred to above - about whether pre-contractual negotiations can give rise to an estoppel whose effect would be at odds with the terms of the contract. Wright & Anor v Hamilton Island Enterprises Ltd [39], a decision of this Court, suggests a positive answer to that question.

[119] In Wright, the appellant had been held estopped from terminating licence agreements, as it was otherwise entitled to do, on the basis of promises, made before the licence agreements were entered, that they would be renewed provided that the prospective licensees, in effect, operated their business under the licences satisfactorily. The court held, consistently with the approach of McHugh JA in State Rail Authority v Heath, that a promissory estoppel could be made out, notwithstanding the existence of a subsequent inconsistent written contract, provided that the evidence was sufficient to support the requirements of estoppel. The facts in Wright seem on all fours with those here: a promise, offered as an inducement to enter an agreement, not to enforce all the terms of the agreement.

The hiatus between the pleadings and the representation

[120] The difficulty, of course, is that the pleading here is in terms of estoppel by convention, the common assumption being as to the effect of the loan agreements (as is reinforced by the particulars given); whereas what is tenable on the evidence is a promissory estoppel, the promise being that the loan would not be enforced beyond the three payments and partnership income. Similarly, the allegation of misleading conduct turns on the representation as to the effect of the loan agreement, alleged in paragraphs 19(b)(i) and 6 in combination. The plaintiffs with some justice make the point that they could not have adduced evidence of reasonable grounds for making the representation as to enforceability now relied on, since it was never pleaded.

[121] One can understand the pleading in this form in the first instance; it reflected what was alleged as to the operative agreement and might provide a second string to the bow if that pleading failed. But it is very difficult to understand why it was persisted with in light of the High Court's conclusions, not only that there was no operative agreement, but also that there was no available consensus about the effect of the loan agreement.

[122] Mr Jackson drew our attention to the plaintiffs' written submissions provided to the learned trial judge on the first trial. Those submissions specifically advert (at paragraph 18) to "promissory or equitable estoppel" and go on to argue that "a promise of the kind for which the defendants contend, ie a promise to limit the defendants' obligations under the loan agreement," given in the context of pre-contractual negotiations, would not ordinarily support an estoppel. It seems clear that the plaintiffs at the first trial recognised and addressed a potential argument that the representation on 30 June 1989 was a promise capable of founding a promissory estoppel.

[123] It might at that stage have been possible to say that promissory estoppel, having been so addressed, could properly be the subject of a finding, but matters have moved on considerably since then, with the remitter of issues by the High Court. There really was no scope left once that took place for any looseness of expression as to what was in contention; but the parties consented to an order that defined the issues by reference to the existing pleadings, including paras 6 and 19A-20 of the further further further amended defence and counterclaim, and the particulars thereof. I do not think it is now open to find for the defendants on a representation different from that pleaded.

[124] As to the remaining matters in issue, the representation I have identified, being as to future conduct rather than any existing state of affairs or past event, cannot be characterised as a misrepresentation, and I agree, with respect, with what McPherson JA has said as to the validity of the assignment.

[1] Equuscorp v Glengallan Investments [2001] QSC 464.

[3] Fuller accounts can be read in the judgment of this Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2002] QCA 380; Appeal Nos 11475 of 2001, 11476 of 2001, 11473 of 2001, 11478 of 2001, 11479 of 2001 and 11480 of 2001, 27 September 2002 and the High Court judgment in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55, 10 February 2005.

[4] See Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471.

[5] The judgment under appeal, [4] and [5].

[6] At (2004) 218 CLR 484 at [36].

[7] Equuscorp Pty Ltd & Anor v Glengallan Investments Pty Ltd [2002] QCA 380 at [92].

[8] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2002] QCA 380 at [95].

[9] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 at p 485 at [40].

[11] After the cross-examination cited Mancorp P/L v Baulderstone P/L (1991) 57 SASR 87, and MGICA (1992) Ltd v Kenny & Good Pty Ltd (1996) 61 FCR 236.

[12] The statement was put in as an exhibit at AR 259. Cross-examination on it began at AR 251; it was called for at AR 207.

[13] At AR 892, in [24] of that statement.

[19] Transcript of argument, at pages 58 and 70.

[20] Transcript of argument, at pages 129 and 130.

[21] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 at [32].

[24] Equus Financial Services Limited v Glengallan Investments Pty Ltd [1994] QCA 157; Appeal No 262 of 1993, 19 March 1994.

[25] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 79 ALJR 206 at 213.

[26] [1986] HCA 14; (1986) 160 CLR 226 at 244

[27] Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175 per Samuels JA at 185-9. See the discussion of this development in Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd [2003] NSWSC 851 per Austin J at paras 147-155.

[29] (1986) 7 NSWLR 170.

[31] (1990) 23 NSWLR 190.

[33] (1995) 126 FLR 61 at 105.

[34] [1999] NSWSC 274; (1999) 46 NSWLR 267 at 279.

[35] (1991) 24 NSWLR 146.

[37] Although a less rigid approach has been advocated: Commonwealth v Verwayen (1991) 70 CLR 394 per Mason CJ at p 413; per Deane J at p 444-445; Foran v Wight & Anor [1989] HCA 51; (1989) 168 CLR 385 per Mason CJ at pp 411-12; per Deane J at p 435.

[38] Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406.

[39] [2003] QCA 36