First Plaintiff v Second Plaintiff

1 This is a claim by Bendigo and Adelaide Bank Limited (ACN 068 049 178) and ABL Nominees Pty Ltd ("ABL Nominees") in its capacity as trustee for the Lighthouse Trust No. 12 (ACN 106 756 521) (collectively, "the Plaintiffs") against Dr MD Monirul Haque ("the Defendant") for principal and interest under three separate loans whereby the Defendant was lent money to fund his investments in certain of the Great Southern managed investment schemes. The first loan of $45,700.00 ("the First Loan") and the second loan of $21,460.00 ("the Second Loan") were both for the purpose of investing in the Great Southern Plantations 2007 Project ARSN 124 053 390 ("2007 Plantation Scheme"), and were made via deeds dated 30 June 2007 and 1 July 2007 ("the First Loan Deed" and "the Second Loan Deed" respectively).[1] The third loan of $55,275.00 ("the Third Loan") was for the purpose of investing in the Great Southern 2008 Almond Income Project ARSN 127 947 960 ("2008 Almonds Scheme") and was made via a deed dated 28 April 2009 ("the Third Loan Deed").[2]

2 The 2007 Plantation Scheme and the 2008 Almonds Scheme are two of a number of managed investment schemes managed by Great Southern Managers Australia Limited ("GSMAL") which failed in 2009. Many investors in these schemes, including the Defendant, invested solely or primarily using borrowed money. The Great Southern proceedings were a number of individual and group proceedings, heard together, by which investors in these schemes sought to avoid their obligations to repay the borrowed money. In 2014, the proceedings were settled and the deed of settlement, which is exhibited to the Affidavit of Stephen Flamer-Smith affirmed 8 August 2017 ("the Deed of Settlement"),[3] was approved by this Court on 11 December 2014.[4] Critically, by the Deed of Settlement the group members acknowledge and admit the validity and enforceability of their loan deeds.[5] The Plaintiffs say that the Defendant was a group member and therefore cannot deny the validity and enforceability of his loan deeds, while the Defendant says that he is not a group member because of the identity of the entity that made the loans which the Plaintiffs now seek to recover.

3 The Plaintiffs allege that each loan deed contained terms that:[6]

(a) ABL Nominees would lend the Defendant the relevant sum for the purpose of investing in the relevant Great Southern managed investment scheme;

(b) interest would be charged on the loaned sum;

(c) the Defendant would make monthly repayments to ABL Nominees; and

(d) if an event of default occurred under the terms of the respective loan deeds, ABL Nominees was entitled to demand all money payable by the Defendant at that date.

Further, it is said that pursuant to cl 7(c) of each loan deed, the Defendant is obliged to pay the Plaintiffs' legal costs, fees and expenses on a full indemnity basis.[7]

4 The Plaintiffs claim,[8] but the Defendant denies on the basis that the lender was Great Southern Finance Pty Ltd ("GSF") rather than ABL Nominees,[9] that on or about 1 July 2007 the sums the subject of the First Loan and the Second Loan were advanced to the Defendant by ABL Nominees and that on or about 15 June 2008 the sum the subject of the Third Loan was advanced to the Defendant by ABL Nominees. On the same basis, the Defendant denies that after the execution of the loan deeds, the rights under the loan deeds were assigned as follows between 2007 and 2008:[10]

(a) ABL Nominees assigned all of its rights under the loans and the loan deeds to Adelaide Bank Limited (ACN 061 461 550); and

(b) Adelaide Bank Limited then transferred all of its rights under the loans and the loan deeds to the First Plaintiff.

While the Defendant says further that he was never notified in writing of any assignment contrary to s 20 of the Property Law Act 1969 (WA),[11] it is sufficient to observe that for the reasons given by Davies J in Bendigo and Adelaide Bank Ltd v Howard,[12] even if each assignment was not valid at law, they were effective in equity.

5 The Plaintiffs claim that the Defendant, in breach of the loan deeds, has since August 2011 failed to make the monthly repayments required under each loan deed.[13]

Nature of the Plaintiffs' application for judgment

6 It is critical to note that the application of the Plaintiffs for judgment is not in the nature of an application for summary judgment, but rather an application for judgment to give effect to terms of settlement of the kind discussed by the Court of Appeal in Barratt v Rees.[14] An application of this kind was recently considered in Bendigo and Adelaide Bank Ltd v Lonergan,[15] where I said:[16]

1. The Plaintiff seeks to pursue its application for judgment as an application to give effect to terms of settlement of the kind discussed by the Court of Appeal in Barratt v Rees ("Barratt").[17] The nature of an application of this kind was discussed by the Court of Appeal in Barratt and the authorities reviewed.[18] As the Court of Appeal observed,[19] the summary procedure to enforce terms of settlement was described in detail by Smith J in Roberts v Gippsland Agricultural & Earthmoving Contracting Co Pty Ltd ("Roberts").[20] The Court of Appeal also made reference to the statement by Smith J in Roberts, concluding his Honour's review of what he had identified as "certain rather vaguely defined rules of practice":[21]

In deciding whether justice can be done under the summary procedure the Court, of course, needs to consider a variety of matters involving questions of degree. These, I think, must include the extent to which extraneous matters are involved, how substantial are the questions to be determined, to what extent questions of credibility are likely to arise, and whether pleadings and discovery may be desirable.

1. The Court of Appeal in Barratt also observed that the authorities were considered by Maxwell P and Nettle JA in Seachange Management Pty Ltd v Pital Business Pty Ltd, where their Honours said:[22]

In summary, therefore, the net effect of the authorities to this point seems to be that, although the power summarily to enforce a compromise is discretionary and is wider now than once was the case, it is not to be invoked unless the court is 'clearly satisfied that justice can be done'; and whether justice can be done is a question of degree. Consistently with the equitable origins of the power, one must weigh among other competing considerations the extent to which enforcement would involve extraneous matters, how substantial the questions to be determined as a precursor to enforcement may be, and procedural considerations like the desirability of pleadings and discovery and substantial cross-examination.

1. It is important to stress that an application of the kind discussed in Barratt is not an application for summary judgment, whether under Part 4.4 of the Civil Procedure Act 2010 or under the summary judgment provisions of the Supreme Court (General Civil Procedure) Rules 2015.
2. In the present circumstances, I am of the opinion that the discretion of the Court should be exercised in favour of proceeding summarily to enforce the settlement approved in the Great Southern Group Proceedings.[23] ... For the reasons which follow, the defences available to [the Defendant] are severely constrained. Consequently, extraneous matters are not involved, the questions to be determined are not substantial or of a nature which would lead to questions of credibility being raised and where justice and procedural fairness between the parties would only be served by trial of all issues on pleadings and with discovery.

While not directly submitting that this analysis was incorrect, counsel for the Defendant made a number of submissions as to the proper approach to the present application.

7 In particular, reference was made to the finding of Smith J, which was cited with approval in Barratt v Rees,[24] in Roberts v Gippsland Agricultural & Earth Moving Contracting Pty Ltd that a party will usually be required to proceed by separate bill to enforce a settlement agreement which contains provision for matters extraneous to the suit compromised:[25]

In the light of these considerations certain rather vaguely defined rules of practice came to be acted upon which were, I think, substantially as follows: -

(a) The Court would ordinarily leave a party to proceed by separate bill if the agreement involved matters extraneous to the suit compromised. And it regarded an agreement as falling within this general category, (i) if it dealt with property as to which no question was raised in the suit, or (ii) if it provided for things to be done which went beyond the ordinary range of what the Court would order in such a suit, or (iii) if its enforcement involved giving effect to equities of a different nature from those involved in the suit, or (iv) if there were parties to the agreement who were not parties to the suit.

(b) On the other hand in cases not falling within this first general category the Court would ordinarily enforce the agreement in the suit compromised. In particular this was so if the agreement related solely to the conduct or prosecution of that suit, or to the staying or dismissal thereof, or to the granting of the whole or part of the relief claimed therein or to the doing of that which the suit was brought to enforce.

...

[citations omitted]

8 In this respect, counsel for the Defendant noted that the effect of the decision of the Court of Appeal in Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd[26] is that the Deed of Settlement compromised not only the Great Southern proceedings, but also claims which were not raised in those group proceedings.[27] It is said that as a result, the present application seeks to enforce a settlement agreement which involves matters extraneous to the suit, and therefore ought not to be granted. Yet as the Defendant accepts, the Plaintiffs have not sought to enforce the Deed of Settlement by summons in the relevant group proceedings but instead via a separate bill in issuing the present, separate, proceeding. In essence, the present application for judgment is a trial on the following questions:

(a) Is the Defendant a group member?

(b) If the Defendant is a group member, is he bound by the Deed of Settlement?

(c) If the Defendant is bound by the Deed of Settlement, are there any defences upon which the Defendant relies which are such as to prevent judgment being granted in favour of the Plaintiffs in respect of his loans in accordance with the Deed of Settlement?

In the submission of the Plaintiffs these questions should be answered as "yes", "yes" and "no" respectively, with the effect that judgment should be entered in their favour. The Defendant only submits that the first question should be answered "no", and does not cavil with the submissions of the Plaintiffs with respect to the second and third question.[28] On this basis alone, the Defendant submits that judgment should not be entered, the Court should find that he is not a group member, and the matter should proceed to trial on that basis.

9 However, with respect to the Defendant's submission that the present procedure was inappropriate, it was open to the Defendant to identify any defences which would be open to him even if he was subject to the Deed of Settlement and upon which he would seek to rely at trial if the present application were refused on the basis that this summary procedure was inappropriate. Given that the Defendant had this opportunity and has not identified any defences which are incompatible with the grant of judgment if the Court is satisfied that the Defendant is a group member, there is in my view no barrier to proceeding to enforce the Deed of Settlement in the manner referred to in Barratt v Rees,[29] subject of course to consideration of the submissions of the Defendant with respect to the question of his group membership.[30] Indeed, this approach is concordant with the comments of Maxwell P and Nettle JA in Seachange Management Pty Ltd v Pital Business Pty Ltd,[31] as well as with the overarching purpose of the Civil Procedure Act 2010.[32]

10 It follows, for these reasons, that the evidence relied upon by the parties in these proceedings is constrained. The Plaintiffs rely on the affidavits of Stephen Flamer-Smith affirmed on 8 August 2017, 29 March, 22 May, 29 June and 11 July 2018. The Defendant objected to this evidence to the extent that it pertained to events prior to March 2009, being the time at which Mr Flamer-Smith commenced employment with the Plaintiffs. His evidence prior to that date, I accept, can only be relied upon as a narrative which contextualises various business records which do not rely on his contemporaneous employ for their admissibility. The Defendant relies on his affidavit sworn on 27 April 2018. Counsel for the Defendant accepted at the hearing of this application that to the extent that the Defendant deposes to his understanding of certain documents, that evidence can similarly only assist by providing narrative.[33]

11 The Plaintiffs apply for judgment against the Defendant to give effect to the Deed of Settlement on the basis that he is a group member and therefore subject to the Deed of Settlement. They submit that, in relation to the First Loan and the Second Loan, the Defendant was a group member in the group proceeding in Samantha Murray v Great Southern Managers Australia Limited & Ors S CI 2011 04476 ("the Plantation Group Proceeding"), and in relation to the Third Loan, the Defendant was a group member in the group proceeding in Janet Micallef v Great Southern Managers Australia Limited & Ors S CI 2011 03513 ("the Almonds Group Proceeding"). The relevant definitions of "group member" are found in the Further Amended Statements of Claim in each group proceeding. In respect of the Plantation Group Proceeding, group members are defined to be persons who inter alia:[34]

(a) at any time during the period between 1 April 2007 and 31 March 2008 inclusive acquired and/or held an interest as a member in the 2007 Plantation Scheme;

(b) entered into a land and management agreement with GSMAL for woodlots in the 2007 Plantation Scheme; [and]

(c) entered into a loan with ABL Nominees to fund payment of the application fees in respect of the 2007 Plantation Scheme.

...

12 In respect of the Almonds Group Proceeding, group members are defined to be persons who inter alia:[35]

(a) at any time during the period between 21 December 2007 and 15 June 2008 inclusive acquired and/or held an interest as a member in the 2008 Almonds Scheme;

(b) entered into a land and management agreement with GSMAL for almondlots in the 2008 Almonds Scheme; [and]

(c) entered into a loan with ABL Nominees to fund payment of the application fees in respect of the 2008 Almonds Scheme.

...

13 It is clear, and the Defendant does not contend otherwise, that the Defendant held an interest as a member in each scheme during the relevant periods.

Did the Defendant enter into a land and management agreement with GSMAL for each of the schemes?

14 The relevant agreements between the Defendant and GSMAL are in evidence in this proceeding. The land and management agreements in respect of the 2007 Plantation Scheme are exhibits SFS-59 and SFS-60 to the Affidavit of Stephen Flamer-Smith affirmed 29 June 2018, and the licence and management agreement in respect of the 2008 Almonds Scheme is exhibit SFS-61 to the Affidavit of Stephen Flamer-Smith affirmed 29 June 2018.

15 For completeness, it should be noted that the definition of group member in the Almonds Group Proceeding refers to "land and management agreement" although no such agreements were entered into in respect of the 2008 Almonds Scheme. Rather, those investors each entered into a "Licence and Management Agreement". In circumstances where this latter agreement has the same role in the product disclosure statement ("PDS") of the 2008 Almonds Scheme as the "Land and Management Agreement" has in the PDS of the 2007 Plantation Scheme, and indeed, other Great Southern managed investment schemes, the reference to "land and management agreement" in the definition of "group member" must be read as a reference to a "Licence and Management Agreement". Moreover, it should be noted that I accept the contention, implicit in the submissions of the Plaintiffs, that "Land and Management Agreement" as defined in the 2007 Plantation Scheme PDS falls within the scope of the term "land and management agreement" as used in the definition of group member as set out in the Further Amended Statement of Claim in the Plantation Group Proceeding, notwithstanding that "land and management agreement" is neither defined in that pleading nor capitalised. There is an obvious logical connection between the two terms, and in any event the Defendant does not cavil with this approach.

Did the Defendant enter into a loan with ABL Nominees to fund payment of the application fees for each of the schemes?

16 The principal contention of the Defendant with respect to the question of his group membership is that he is not a group member in respect of either group proceeding because he borrowed from GSF rather than ABL Nominees.[36] The application materials completed by the Defendant were substantially the same in relation to each investment,[37] and so, whether or not each application resulted in a loan between the Defendant and ABL Nominees or not largely turns on the same considerations. Accordingly, the following analysis is directed to the documents pertaining to the First Loan, which, subject to any distinctions which are noted, applies mutatis mutandis to the Second Loan and the Third Loan. As can be seen from the reasons which follow, there are, in my view, three propositions which the Plaintiffs have established which make clear that the lender was ABL Nominees and not GSF.

The loan applications were not for finance from GSF specifically

17 First, the applications by the Defendant for each of the loans were not for finance from GSF specifically. As the Plaintiffs submit, from each Application for Term Finance,[38] it is apparent that the Defendant "appl[ied] for term finance from either Great Southern Finance Pty Limited (GSF) or ABL Nominees Pty Ltd (ABL), with the lender to be determined in GSF's discretion". Moreover, each Application for Term Finance[39] contained a section headed "Term of Loan Deed - Term Finance", which set out the terms on which finance would be provided. It was made clear at the commencement of that section that the relevant "Lender" would be either GSF or ABL Nominees, depending upon which party approved the proposed loan:[40]

This deed is made on... between the following parties:

[If the proposed loan has been approved by GSF, the Lender under this loan deed is GSF. If the proposed loan deed has been approved by ABL [Nominees], the Lender under this loan deed is ABL [Nominees].]

...

18 Further, in the completed Project Application Forms in respect of the 2007 Plantation Scheme, it is clear that finance may be provided by a financier other than GSF:[41]

I/we hereby apply to Great Southern Finance Pty Ltd, or to a preferred financier of GSMAL, to borrow the amount of...

The same form of words is used in the Project Application Form in the PDS for the 2008 Almonds Scheme,[42] and while a completed form with respect to this application is not in evidence, it is apparent that such a form was completed at the time.[43] In any event, having regard to the balance of the evidence, the absence of a completed form is not decisive as to the identity of the lender. In this way, upon the submission of the completed applications by the Defendant, the identity of the lender remained undecided pending a decision by GSF.

19 Second, the evidenc_e prima facie_ establishes that ABL Nominees was the lender. In particular, while each of the loan deeds were signed on behalf of the Defendant by GSF in accordance with the power of attorney conferred by the respective application forms, they were "signed sealed and delivered by the Lender: ABL Nominees Pty Ltd ACN 106 756 521 by its duly appointed attorneys" Bruno Romeo and Graeme Perich.[44] While the Defendant submits that this only suggests that ABL Nominees believed it was the lender,[45] the Plaintiffs submit and I accept, that this prima facie establishes that the lender was ABL Nominees because it is the critical document that gives rise to the loan. What is more, it is significant that all of the moneys lent to the Defendant were advanced by ABL Nominees.[46]

20 The Defendant submits that this evidence does not show that ABL Nominees rather than GSF approved the Defendant's loan applications. In my view, it is plain that it is, at the very least, a fair inference - even having regard to the summary nature of the present application[47] - that ABL Nominees, as the "Lender" under the loan deeds and the entity which advanced the loaned sums, approved the loans.

No evidence that GSF rather than ABL Nominees was the lender

21 Thirdly, the evidence relied upon by the Defendant does not detract from the prima facie position which has been established by the Plaintiffs that ABL Nominees was the lender for each loan. The Defendant gave evidence on affidavit that he applied for finance from GSF for each of his loans.[48] Having regard to the terms of the documents executed by the Defendant and on behalf of the Defendant, particularly the Applications for Term Finance, the Project Application Forms and the Loan Deeds, it is plain that the Defendant's evidence in this respect can only go to his subjective understanding,[49] which in the present circumstances is irrelevant to the true identity of the lender. This analysis applies equally to the Defendant's evidence that he received correspondence "confirming financing by GSF", where the documents exhibited in support of that assertion do not support the proposition that GSF confirmed the financing.[50]

22 The Defendant submits that the fact that GSF is identified by its name "Great Southern Finance Pty Ltd" in various of the application materials while the "preferred financier" is only described as such entails that, construing the intention of the parties objectively, it is more likely that the intention was, at least on the part of the Defendant, that the lender would be GSF.[51] This is, on my view, simply incorrect: in construing the objective intention of parties it is necessary to read the documents as a whole and consider the effect of their terms. Whether a party is described or named or referred to by some other means is of no consequence, unless ambiguity is occasioned by the mode of reference. No such ambiguity arises in the present circumstances as "preferred financier" is a clear term.

23 What is more, the Defendant submits that sufficient ambiguity to justify the matter proceeding to trial arises out of the documents which, on the Plaintiffs' submissions, establish that the loans were made by ABL Nominees pursuant to the origination procedure under both the 2006 Loan Sale and Servicing Deed and the 2007 Loan Sale and Servicing Deed.[52] That procedure, set out in clauses 2.1(b), 2.6A and 2.18 of each Loan Sale and Servicing Deed, involved the advance of funds by ABL Nominees to GSMAL upon the acceptance by ABL Nominees of an offer from GSF contained in an "Origination Notice" ("the Origination Procedure"). The alternative procedure set out in clauses 2.1(a), 2.4, 2.5 and 2.6 of each Loan Sale and Servicing Deed was for ABL Nominees to accept an offer contained in a "Sale Notice" whereupon funds would be advanced to GSF in respect of loans that had been made by GSF and which were then to be assigned to ABL Nominees ("the Assignment Procedure"). It is common ground that only under the Origination Procedure would ABL Nominees have made the loan to the investor.

24 The Defendant accepts that an origination notice was issued under the Loan Sale and Servicing Deed in respect of the First Loan.[53] However, he submits that the letter from ABL Nominees to GSF in response,[54] which is relied upon by the Plaintiffs to establish that funds were advanced by ABL Nominees, is ambiguous because it refers to "Sale and Origination Notices", and a "Sale Notice" is a document which is used only under the Assignment Procedure. While it is accepted that the "Sale Notice" ostensibly referred to in that letter is not in evidence, the Defendant submits that it is a matter giving rise to sufficient ambiguity to justify discovery and a full trial on this issue.[55] Yet this misunderstands the nature of the present application: it is a trial on those issues which remain open to the Defendant in light of the Deed of Settlement, including of course the issue of the applicability of the Deed of Settlement.[56] In any event, I am satisfied that while the reference to a "sale notice", and indeed other documents relating to the Origination Procedure and the Assignment Procedure,[57] may be confusing for the reasons submitted on behalf of the Defendant, any such confusion evaporates once regard is had to the evidence as a whole, and in particular to the applicable PDS.

25 The Defendant also notes that he received confirmation from GSMAL that he had acquired an interest in each scheme.[58] Such confirmation is entirely compatible with finance being provided by ABL Nominees, as is apparent from the terms of the application materials to which reference has been made.

26 Reliance is also placed on the fact that until August 2011, the Defendant made monthly repayments to GSF by direct debit in satisfaction of the outstanding debts, and no payments were ever made to ABL Nominees.[59] This too is of no consequence, GSF having received payments as agent for ABL Nominees under the direct debit authority that was signed by the Defendant,[60] consistently with each loan deed and each PDS.

27 Prior to this proceeding, the Defendant says that he had not received a copy of the First Loan Deed, the Second Loan Deed or the Third Loan Deed.[61] As a result, the Defendant submits, noting the limited relevance of his subjective opinion, that he understood that he had entered into a loan agreement with GSF in respect of each investment. Additionally, the evidence of the Defendant is that he never received notification that any of his loans had been assigned, and moreover that no notification was received from either of the Plaintiffs that either of them were the lender to whom he owed money.[62] While there is evidence that the Defendant was sent at least the First Loan Deed and the Second Loan Deed,[63] and that he was notified of the assignment of each loan,[64] this is of no consequence as it goes only to the Defendant's subjective understanding after the conclusion of the loan.[65] Even accepting that post-contractual conduct may be relied upon in ascertaining the identity of parties to a contract,[66] the Defendant's subjective understanding is of no assistance given the clear position established by the documentary evidence. By contrast, it cannot be, as the Defendant would have it, that the conduct of ABL Nominees in advancing funds and entering the loan deeds evidences only the beliefs of ABL Nominees.[67] After all, this conduct on the part of ABL Nominees is the conduct which gives rise to the loans.

28 In relation to the loan the subject of the Third Loan Deed, the Defendant has sworn an affidavit in which he gives evidence that he received a letter from GSF in respect of the approval of that loan:

On or about 1 July 2008, I received a letter from GSF which stated:

"I am pleased to inform you that your request for a loan to finance your application for 10 almondlot(s) in the above project has now been approved."

Now produced and shown to me and marked "MH-17" is a true copy of the letter from GSF dated 1 July 2008.

In my view, there are two reasons why this does not establish the contention of the Defendant that the loan was approved by GSF.[68] First, while the text of the letter is correctly extracted in the Defendant's affidavit, his description of the letter as being from GSF is not apparent from the letter itself. Indeed, the letter - as exhibited - is unsigned and sent on generic "Great Southern" letterhead, without any reference to GSF, whether as the sender of the letter or as the entity which has approved the loan. Secondly, even if this letter was from GSF, it does not state that the loan was approved by GSF, only that the loan was approved, and it would remain open for further documentary or other evidence - such as the loan deeds - to show that the loan was approved by ABL Nominees.

29 The Defendant submits that the construction of the loans the subject of this proceeding ought to be considered in the context of the Defendant's broader relationship with GSMAL and GSF. Specifically, he notes that prior to 2007, he borrowed money from GSF to invest in other schemes managed by GSMAL, and that the process for obtaining that finance was very similar to that by which the loans the subject of this proceeding were obtained.[69] While the contractual context might have some relevance in the event that there was ambiguity as to the identity of the lender,[70] it is unhelpful in the present circumstances both because the documentary evidence is largely conclusive as to the identity of the lender and because the surrounding circumstances at best show that the Defendant might have subjectively assumed that the lender would be GSF. What is more, the Defendant has not identified any reason why he would have been interested in the precise entity from which he was to borrow money. Thus, this context does not assist the Defendant.

30 The Defendant also refers to a number of sections of the PDSs and other application materials which are said to support the contention that the money was ultimately borrowed from GSF. In particular, reference is made to the "Loan Conditions", where it is provided:[71]

Interest Free Finance

By crossing the interest free loan box at section 5 of the Application Form on pages 102 and 106 of the PDS and signing the Application Form, Applicants are making Application to Great Southern Finance Pty Ltd ("the Lender") to borrow an amount equal to the amount shown on section 5 of the Application Form, on the following terms and conditions...

31 The Defendant suggested that the operative section of the application form suggested that the finance was to be obtained from GSF, having regard to the fact that no other potential financier was identified in the form:[72]

5. Finance

I/we hereby apply to Great Southern Finance Pty Ltd, or to a preferred financier of GSMAL, to borrow the amount of...

[Defendant's emphasis]

32 The direct debit form was said to be to similar effect, again given that the identity of the alternative financier was not identified:[73]

Direct Debit Request - Great Southern Plantations 2007 & 2008 Projects

PLEASE ONLY COMPLETE THIS FORM IF USING GREAT SOUTHERN OR PREFERRED FINANCE (SECTION 5 OF THE APPLICATION FORM)

The Defendant further noted that throughout the Direct Debit Request Service Agreement[74] and the Direct Debit Form[75] there are a number of instances where the documents can only be interpreted as referring to the applicant and GSF in particular, rather than including the possibility that the finance would be provided by a preferred financier.[76]

33 The Defendant also makes reference to a document titled "Great Southern MIS Agribusiness Projects 2007 - Fast Facts" which he received by post and which summarised the process of applying for certain Great Southern managed investment schemes, including the 2007 Plantation Scheme but not including the 2007 Almonds Scheme.[77] The Defendant submits that this document identified GSF as the relevant financier for any loans in respect of schemes to which the document applied, and that there was no suggestion of an alternative financier being possible.[78] However, this document states that optional interest only periods are available from the "preferred financier", being ABL Nominees. All of the Defendant's applications were for loans including such an interest only period, and on this basis it cannot be said that the "Fast Facts" document supports the contention of the Defendant with respect to the identity of the lender. What is more, in each loan application the Defendant authorised "GSF to advance the term finance as a principal and interest loan without an interest only period where a principal and interest loan with an interest only period is not eligible to be advanced by ABL [Nominees]", which supports the inference that loans with interest only periods, such as those made to the Defendant, were advanced by ABL Nominees. Finally, it should be noted that this document purports to be a general summary only, and in the circumstances of the scheme, the precise identity of the lender is unlikely to be a critical issue for potential investors.

34 With regard to the effect of the foregoing,[79] the Defendant relies upon the decision of Davies J of the Supreme Court of New South Wales in Bendigo and Adelaide Bank Ltd v Howard [2018] NSWSC 383 ("BABL v Howard"). That proceeding concerned the attempted recovery by the plaintiff of loans made to an investor in the Great Southern 2006 Organic Olives Investment Project, and substantially similar documents were considered by the Court. Importantly, and in contrast to the present case, there was no suggestion that the Defendant was a group member in BABL v Howard.[80] That being said, the Plaintiffs bear the burden of establishing that the Defendant is a group member, and insofar as the decision of Davies J supports the contention that the Defendant in the present case entered into a loan with GSF and not ABL Nominees - that issue being preliminary to the question of whether the Defendant is a group member - the fact that the defendant in BABL v Howard was not a group member is of no moment. For the reasons which follow, I am of the view that BABL v Howard does not detract from the preceding analysis as to the identity of the lender. Importantly, BABL v Howard was the determination of an appeal from a magistrate, and so was confined to questions of law, though views were expressed on questions of mixed fact and law.

35 The critical passage of BABL v Howard relied upon by the Defendant is as follows:[81]

1. There was evidence to suggest that the lender was GSF and was objectively intended by the defendant to be the lender. Not only did the defendant indicate on the Finance Application that he selected GSF, he also completed the Direct Debit request which was addressed to GSF and was also expressed to be used "ONLY...IF USING" GSF. The plaintiff submitted that the direct debit request was not of assistance in determining the identity of the lender because the same request was used irrespective of the lender. The plaintiff submitted that the pro-forma request application attached to the Product Disclosure Statement contemplated GSF or a "preferred financier".
2. However, an examination of the part of the Product Disclosure Statement dealing with the direct debit request shows that under the heading, "Direct Debit request service Agreement", the name "Great Southern Finance Pty Ltd" appears together with its ACN and address. The agreement defines "direct debit request" as meaning "the Direct Debit Request between us and you". The definition of "us or we" is said to "mean... Great Southern Finance Pty Ltd who (sic) you have authorised by signing a direct debit request". In the same way the pro forma request provides for the borrower to,

[r]equest and authorise Great Southern Finance Pty Ltd... to arrange for any amount Great Southern Finance Pty Ltd may debit or charge you to be debited... .

There is no mention in that section of the Product Disclosure Statement nor in the pro forma request of other than GSF, and no mention of another "preferred financier".

1. Neither the Product Disclosure Statement nor the pro-forma request assists the plaintiff. Further, there was no evidence, despite clause 8.3 of the Loan Sale and Servicing Deed (to which reference will be made) that the direct debit request form was used irrespective of the lender.

36 It is sufficient to observe that, unlike in BABL v Howard, there is evidence before this Court that the direct debit request form was used irrespective of the lender, as is made clear by the narration found in the affidavit of Stephen Flamer-Smith:[82]

One of GSF's roles as Servicer under the 2006 LSSD and 2007 LSSD was to collect on behalf of the second plaintiff as Lender, payments made by borrowers by way of direct debit (see clauses 8.3(a) and 8.8(a) of the 2006 LSSD and the 2007 LSSD). GSF used the direct debit authorisation provided by the borrower when applying to join the relevant scheme to do this.

Further, while it is true that there are references in the Direct Debit Request Form to GSF in particular, in respect of the 2007 Plantation Scheme PDS, this was under a heading which includes reference to "OR PREFERRED FINANCIER".[83] While the same was not true of the Direct Debit Request Form in respect of the 2008 Almonds Scheme PDS, this is not decisive having regard to the role of GSF as servicer under the 2007 LSSD which is helpfully described in the passage of the affidavit of Mr Flamer-Smith just set out.

37 Finally, and critically, in contrast to BABL v Howard,[84] the Defendant in the present proceeding did not tick a box specifying GSF as the lender.[85]

38 At their highest, the specific sections of the application materials relied upon by the Defendant to which reference has been made, could, if considered in isolation, lead a potential investor to think that the lender was GSF in particular. Yet once each and every application document is considered as a whole, it is plain that the finance will, at GSF's option, be provided by GSF or a preferred financier. For these reasons, none of the references to GSF to which the Defendant has referred detract from the position that the PDS, the Project Application Form and the Application for Term Finance, both individually and cumulatively, make clear that the finance may be provided by an entity other than GSF. Indeed, it could be said that there is a surplus of clarity in this respect given that the identity of the lender is of no real consequence to a potential investor. In the circumstances, it is plain that the lender was ABL Nominees, with the effect that the Defendant, not having opted out, is a group member.

Consequences of the Defendant being a group member

39 For the reasons which follow, the consequence of the Defendant being a Group Member is that he is bound by the terms of the Deed of Settlement[86] of the group proceedings and, particularly, the acknowledgment that each of his loan deeds are valid and binding (cl 4.1.4) and the release of any Claims (as defined in the Deed of Settlement) that he might otherwise have against the Bank in this proceeding (cll 4.1.10 and 4.1.12).

40 In light of the importance of the provisions of the Deed of Settlement, it is helpful to set out the following provisions of cl 4:

1. SETTLEMENT OF CLAIMS INVOLVING BEN PARTIES AND JAVELIN

4.1 On and from the Approval Date, all Claims against the BEN Parties and Javelin and any of their respective Related Bodies Corporate, Related Entities or Related Persons will be settled as follows.

4.1.1 The BEN Parties agree to waive Interest Relating to Overdue Amounts accrued and unpaid as at the Approval Date, in respect of the Loan Deeds of:

4.1.1.1 the Lead Plaintiffs;

4.1.1.2 Group Members; and

4.1.1.3 M+K Counterclaim Claimants,

insofar as those loans are between those persons and the BEN Parties.

4.1.2 The BEN Parties agree not to commence or continue debt recovery proceedings against M+K Clients until at least 30 days after the Approval Date.

4.1.3 Javelin will agree to vary the terms of the Loan Deeds of the Lead Plaintiffs and Group Members whose Loan Deeds were assigned to Javelin (collectively, Javelin Borrowers) in accordance with clause 5, whether or not a Javelin Borrower has ceased making repayments.

4.1.4 The Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs' Loan Deeds and the Group Members' Loan Deeds.

4.1.5 The M+K Counterclaim Claimants acknowledge and admit the validity and enforceability of their Loan Deeds.

4.1.6 Each of the Lead Plaintiffs acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed.

4.1.7 Subject to the operation of clauses 5.1 to 5.19, Raymond Drummond acknowledges and admits his liability to Javelin to pay the Money Payable under his Loan Deed.

4.1.8 Each of the M+K Counterclaim Claimants acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed.

4.1.9 Each of the plaintiffs by counterclaim to the Uplifted Proceedings acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed.

4.1.10 The Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members release the BEN Parties and their Related Entities and Javelin and its Related Entities from all Claims.

4.1.11 The M+K Counterclaim Claimants release the BEN Parties and their Related Entities from all Claims.

4.1.12 Each of the Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members and each of the M+K Counterclaim Claimants agree that they will not bring or pursue, or procure that a third party bring or pursue, a Claim against the BEN Parties or their Related Entities and Javelin and its Related Entities.

4.1.13 Each of the BEN Parties and their Related Entities and Javelin and its Related Entities may plead this Deed as a bar or defence to any claim or action (including a claim for costs) brought by any of the Lead Plaintiffs, the Group Members or the M+K Counterclaim Claimants relating to a Claim.

...

...

Critical to these provisions of cl 4 are the definitions of "Claim", "Loan Agreements" and "Loan Deeds" which appear in the definitions and interpretation provisions of cl 1.1, as follows:[87]

...

"Claim" means any claim, demand, action, suit or proceeding for damages, debt, restitution, equitable compensation, account, injunctive relief, specific performance, declaratory relief or any other remedy, whether by original claim, cross-claim, claim for contribution or otherwise whether presently known or unknown and whether arising at common law, in equity, under statute or otherwise and whether involving a third party or party to this Agreement and all liabilities, losses, damages, costs (including legal costs on a full indemnity basis), interest, fees, and penalties of whatever description (whether actual, contingent or prospective) arising out of, or in connection with the contents of or the facts giving rise to, the PDSs, the Loan Agreements and or the allegations made in or the facts giving rise to each of the Proceedings.

...

"Loan Agreements" means the loan agreements under which monies were advanced to Scheme Members to finance their interest in managed investment schemes of which GSMAL, and (in the case of the Great Southern 2008 Future Forestry Investment Scheme) GSMAL and Rural Funds Management Limited (formerly Great Southern Funds Management Limited), is or was the responsible entity.

...

"Loan Deeds" means the Loan Agreements the subject of the Group Proceedings and the M+K Counterclaim Proceedings entered into between:

1. the Lead Plaintiffs, Group Members or M+K Counterclaim Claimants and GSF, which were subsequently assigned by GSF to one or more of the BEN Parties or Javelin; or
2. the Lead Plaintiffs, Group Members or M+K Counterclaim Claimants and ABL Nominees Pty Ltd, which were subsequently assigned by ABL Nominees to one or more of the BEN Parties.

Clause 1.1 of the Deed of Settlement also defines the "Approval Date", which is the date upon which the Court approved the settlement of the Great Southern Group Proceeding, which approval was granted on 11 December 2014 in Clarke.[88]

41 The effect of the Deed of Settlement on group members in the Great Southern Group Proceedings has now been considered on two occasions by the Court of Appeal. The first occasion was in Byrne v Javelin Asset Management Pty Ltd ("Byrne"),[89] and the second in Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd ("Pekell").[90] At the outset it is important to emphasise that the Great Southern Group Proceedings did not proceed to judgment. Rather, these group proceedings were concluded by the settlement now embodied in the Deed of Settlement which was, as indicated previously, approved by the Court under s 33V of the Supreme Court Act 1986. This is in contrast to the position with respect to the Timbercorp Managed Investment Schemes litigation, which proceeded to judgment in Woodcroft-Brown v Timbercorp Securities Ltd ("Timbercorp").[91] The criticality of this difference is that the group members in the Timbercorp proceedings, which went to judgment, are only bound to the extent of the common issues in the group proceedings, whereas, as is made clear by the Court of Appeal in Byrne and Pekell, the group members in the Great Southern Group Proceedings are bound by the provisions of the Deed of Settlement, properly construed; and whether or not the operation of that deed extends to settle issues and claims beyond what would otherwise be within the ambit of the common issues in those group proceedings is a question of construction.

42 On 3 July 2018, this Court handed down its decisions in ABL Custodian Services Pty Ltd v Freer ("Freer")[92] and Bendigo and Adelaide Bank Ltd v Lonergan.[93] Both decisions concerned applications for judgment against borrowers who were group members in the Great Southern group proceedings. Critically, the Defendant does not cavil with the effect of the Deed of Settlement as expounded in these cases.[94]

43 The effect of the decision in Freer can be summarised in the following terms:[95]

(a) the discretion of the Court should be exercised in favour of proceeding summarily to enforce the settlement approved in the Great Southern group proceedings ([9]);

(b) a consequence of being a group member in the group proceeding is that the group member is bound by the terms of the Deed of Settlement and particularly the acknowledgement that the group member's Loan Deed is valid and binding (clause 4.1.4) and the release of any Claims (as defined) ([14]);

(c) group members are bound by the provisions of the Deed of Settlement, properly construed; and whether or not the operation of that deed extends to settle issues and claims beyond what would otherwise be within the ambit of the common issues in the group proceedings is a question of construction ([16]);

(d) the admission in clause 4.1.4 of the Deed of Settlement as to the "validity and enforceability" of the Loan Deeds was to be taken as an admission that the loans had been made ([17]);

(e) the Court of Appeal had decided in Pekell[96] that the orders approving the Deed of Settlement had not been made in excess of jurisdiction ([22]);

(f) a group member cannot contest the making of the advance ([25]); and

(g) a group member cannot contest the assignment of the loan ([26]).

In light of this summary, it is not necessary, for present purposes, to set out the reasoning in Freer in which this position was reached with respect to the construction and operation of the Deed of Settlement on the basis of the decisions of the Court of Appeal in Byrne and Pekell.[97]

44 The Defendant has not identified, or indeed attempted to identify, any defences which might be available to him notwithstanding the application of the Deed of Settlement. Accordingly, the loan deeds are enforceable in accordance with their terms and those of the Deed of Settlement.

45 For the preceding reasons, orders will be made that:

(i) $104,360.29 in respect of the First Loan;

(ii) $57,072.27 in respect of the Second Loan;

(iii) $136,752.73 in respect of the Third Loan;

being $298,185.29, together with further interest that should accrue after 11 July 2018; and

(b) the Defendant pay the Plaintiffs' costs on an indemnity basis.

[1] Exhibits SFS-3, SFS-9 to the Affidavit of Stephen Flamer-Smith (8 August 2017).

[2] Exhibit SFS-12 to the Affidavit of Stephen Flamer-Smith (8 August 2017).

[3] Exhibit SFS-18 to the Affidavit of Stephen Flamer-Smith (8 August 2017).

[4] Clarke (as Trustee of the Clarke Family Trust v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) [2014] VSC 516.

[5] Deed of Settlement, cl 4.1.4; see also cll 4.1.10, 4.1.12.

[6] Amended Writ and Amended Statement of Claim (13 January 2017), [2], [7], [12].

[7] Amended Writ and Amended Statement of Claim (13 January 2017), [6], [11], [16].

[8] Amended Writ and Amended Statement of Claim (13 January 2017), [2A], [7A], [12A].

[9] Amended Defence to Amended Statement of Claim (13 February 2017), [2A], [7A], [12A].

[10] Amended Writ and Amended Statement of Claim (13 January 2017), [3], [8], [13]; cf. Amended Defence to Amended Statement of Claim (13 February 2017), [3], [8], [13].

[11] Amended Defence to Amended Statement of Claim (13 February 2017), [3(b)], [8(b)], [13(b)].

[12] [2018] NSWSC 383, [127].

[13] Amended Writ and Amended Statement of Claim (13 January 2017), [4], [9], [14].

[14] [2014] VSCA 327.

[15] [2018] VSC 357.

[16] Bendigo and Adelaide Bank Ltd v Lonergan [2018] VSC 357, [14]-[17]; see also ABL Custodian Services Pty Ltd v Freer [2018] VSC 255, [6]-[9].

[17] [2014] VSCA 327.

[18] Barratt v Rees [2014] VSCA 327, [10]-[18].

[19] Barratt v Rees [2014] VSCA 327, [12].

[20] [1956] VicLawRp 86; [1956] VLR 555; with reference also to O'Brien v O'Brien & Nicholls Pty Ltd [2001] VSC 411, [25].

[21] Roberts v Gippsland Agricultural & Earthmoving Contracting Co Pty Ltd [1956] VicLawRp 86; [1956] VLR 555 at 564; referred to by the Court of Appeal in Barratt v Rees [2014] VSCA 327, [13].

[22] Seachange Management Pty Ltd v Pital Business Pty Ltd [2009] VSCA 139; (2009) 23 VR 396 at 408, [40]; referred to by the Court of Appeal in Barratt v Rees [2014] VSCA 327, [14].

[23] Being the proceedings of which settlement was approved in Clarke (as Trustee of the Clarke Family Trust v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) [2014] VSC 516.

[24] [2014] VSCA 327, [12].

[25] [1956] VicLawRp 86; [1956] VLR 555.

[26] [2017] VSCA 51; (2017) 118 ACSR 592.

[27] Bendigo and Adelaide Bank Limited v Pekell Delaire Holdings Pty Ltd [2017] VSCA 51; (2017) 118 ACSR 592 at 606-9 [49]-[59].

[29] [2014] VSCA 327.

[31] [2009] VSCA 139; (2009) 23 VR 396 at 408 [40], extracted above, [6].

[32] Civil Procedure Act 2010 ss 7, 8.

[34] Exhibit SFS-15 to the Affidavit of Stephen Flamer-Smith (8 August 2017), [2].

[35] Exhibit SFS-16 to the Affidavit of Stephen Flamer-Smith (8 August 2017), [2].

[36] Defendant's Outline of Submissions in response to Application for Judgment (27 April 2018), [2(b)-(c)].

[37] See Affidavit of MD Monirul Haque (27 April 2018), [20], [39], [51].

[38] Exhibits SFS-1, SFS-8, SFS-10 to the Affidavit of Stephen Flamer-Smith (8 August 2017).

[39] Exhibits SFS-1, SFS-8, SFS-10 to the Affidavit of Stephen Flamer-Smith (8 August 2017).

[40] Exhibits SFS-1, SFS-8, SFS-10 to the Affidavit of Stephen Flamer-Smith (8 August 2017), "Term of Loan Deed - Term Finance".

[41] Exhibits MH-5, MH-13 to the Affidavit of MD Monirul Haque (27 April 2018).

[42] Exhibit SFS-11 to the Affidavit of Stephen Flamer-Smith (8 August 2017), 78.

[43] Affidavit of MD Monirul Haque (27 April 2018), [52].

[44] See Exhibits SFS-3 SFS-9, SFS-12 to the Affidavit of Stephen Flamer-Smith (8 August 2017).

[46] See Affidavit of Stephen Flamer-Smith (22 May 2018), [8]-[11], [13]-[14], [18]-[19].

[48] Affidavit of MD Monirul Haque (27 April 2018), [20], [39], [51].

[50] See Affidavit of MD Monirul Haque (27 April 2018), [31], [45], [46], [58]; see also exhibits MH-8, MH-15, MH-16 and MH-18.

[52] See Exhibit SFS-41 to the Affidavit of Stephen Flamer-Smith (22 May 2018) ("the 2006 LSSD"); SFS-49 to the Affidavit of Stephen Flamer-Smith (22 May 2018) ("the 2007 LSSD").

[53] Exhibit SFS-40 to the Affidavit of Stephen Flamer-Smith (22 May 2018).

[54] Exhibit SFS-42 to the Affidavit of Stephen Flamer-Smith (22 May 2018).

[56] See above, [8]; Transcript, 35-7.

[58] Exhibits MH-8, MH-15, MH-18 to the Affidavit of MD Monirul Haque (27 April 2018).

[59] Defendant's Outline of Submissions in Response to Application for Judgment (27 April 2018), [24].

[60] Affidavit of Stephen Flamer-Smith (22 May 2018), [24]-[26].

[61] Affidavit of MD Monirul Haque (27 April 2018), [29], [43], [56].

[62] Affidavit of MD Monirul Haque (27 April 2018), [32]-[34], [48]-[50], [59]-[61].

[63] Affidavit of Stephen Flamer-Smith (29 March 2018), [7], [12] and exhibits there referred to.

[64] Exhibits SFS-6, SFS-14 to the Affidavit of Stephen Flamer-Smith (8 August 2017); see also, above, [4].

[66] Webster Investments Pty Ltd v North Star Developments Pty Ltd (2016) 52 VR 610 at 633 [45].

[68] See also above, [21].

[69] Affidavit of MD Monirul Haque (27 April 2018), [3]-[8].

[70] See Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at 656-7 [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at 116-7 [46]-[52].

[71] Exhibit SFS-2 to the Affidavit of Stephen Flamer-Smith (8 August 2017), 98.

[72] Exhibit SFS-2 to the Affidavit of Stephen Flamer-Smith (8 August 2017), 102.

[73] Exhibit SFS-2 to the Affidavit of Stephen Flamer-Smith (8 August 2017), 103.

[74] Exhibit SFS-2 to the Affidavit of Stephen Flamer-Smith (8 August 2017), 99.

[75] Exhibit SFS-2 to the Affidavit of Stephen Flamer-Smith (8 August 2017), 103.

[76] See Exhibit SFS-2 to the Affidavit of Stephen Flamer-Smith (8 August 2017) at 99, in the Direct Debit Request Service Agreement, the definition of "us or we" and the use of those terms throughout 99-100; and at 103 in the direct debit request, text under headings "Request and Authority to Debit the Account Named Below to Pay Great Southern Finance Pty Ltd" and "Acknowledgment"; cf. Exhibit SFS-11 to the Affidavit of Stephen Flamer-Smith (8 August 2017), 79; and see below, [36].

[77] See Exhibit MH-4 to the Affidavit of MD Monirul Haque (27 April 2018).

[78] Defendant's Outline of Submissions in Response to Application for Judgment (27 April 2018), [20].

[79] See especially, above, [30]-[32].

[80] [2018] NSWSC 383.

[81] Bendigo v Adelaide Bank Limited v Howard [2018] NSWSC 383, [40]-[42].

[82] Affidavit of Stephen Flamer-Smith (22 May 2018), [24].

[83] See above, [32].

[84] Bendigo v Adelaide Bank Limited v Howard [2018] NSWSC 383, [28].

[86] The Deed of Settlement was approved by the Court under s 33V of the Supreme Court Act 1986 in Clarke (as Trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) [2014] VSC 516.

[88] Clarke (as Trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) [2014] VSC 516.

[89] [2016] VSCA 214.

[90] [2017] VSCA 51; (2017) 118 ACSR 592.

[91] [2011] VSC 526; (2011) 253 FLR 240; and on appeal to the Court of Appeal in Woodcroft-Brown v Timbercorp Securities Ltd (in liquidation) [2013] VSCA 284; (2013) 96 ACSR 307 and, in turn, to the High Court in Timbercorp Finance Pty Ltd (in liquidation) v Collins (2016) 259 CLR 212.

[92] [2018] VSC 355.

[93] [2018] VSC 357.

[95] Which is also the outcome and effect of the decision in Bendigo and Adelaide Bank Limited v Lonergan [2018] VSC 357.

[96] Bendigo and Adelaide Bank Limited v Pekell Delaire Holdings Pty Ltd [2017] VSCA 51; (2017) 118 ACSR 592.

[97] See ABL Custodian Services Pty Ltd v Freer [2018] VSC 355, [16]-[23].