HP Mercantile Pty Ltd v Clements

resentation: Counsel: P M Knowles (Plaintiff) (12 and 14 March); J Simpkins SC/P M Knowles (20 March) C R C Newlinds SC/A d'Arville (Defendant) Solicitors: Versace McKenzie Lawyers (Plaintiff) Legal & Commercial Solutions (Defendant) File Number(s): 2009/289202

Judgment 1By its Second Further Amended Statement of Claim filed on 13 August 2012, the Plaintiff, HP Mercantile Pty Ltd ("HPM"), seeks judgment in respect of an amount of $4,790,125.84 which it claims is due by the Defendant, Mr Phillip Clements, in respect of a loan in relation to an agricultural scheme and interest on that loan and an amount of $152,689.84 in respect of harvesting and marketing costs as at 30 June 2012 and interest on that amount. 2The background facts are largely common ground and reflect an unfortunate history. A prospectus issued on 30 May 1994 offered the opportunity to subscribe to an orchard project on the terms of the Queensland Orchard Project Investment Deed dated 24 May 1994 between Tumut River Orchard Management Ltd ("TROM"), the investors in the Project ("Growers") and Australian Rural Group Ltd ("ARG") as Growers' representative ("Representative"). Broadly, the prospectus contemplated arrangements by which fruit from the orchard would be harvested by TROM and the proceeds paid to ARG, which would reimburse TROM for the costs of managing and harvesting the fruit. The balance available after those costs would then be paid to Growers, but Growers who had entered into a loan agreement to fund their investment in the Project would direct that that income be applied to repay amounts due on the relevant loans. There is a substantial issue in these proceedings as to the effect of that direction and whether the relevant loans remained non-recourse in character in the relevant circumstances. 3Mr Clements entered into two Licence Deeds dated 30 June 1994 by which TROM licensed designated allotments of land within the orchard to him. Clause 2 of the Licence Agreement granted the licensee (Mr Clements) the right to occupy and grow fruit on the land. By cl 3(b) of the Licence Agreement, TROM allowed the land to be used for the business of planting, growing and harvesting stone fruit. Clause 7 conferred the right to cultivate and harvest 150 stone fruit trees on each allotment. 4Also on 30 June 1994, ARG as Growers' representative entered into two agreements described as "Farming Agreements" with TROM on behalf of Mr Clements. The Farming Agreements provided, broadly, for TROM in its capacity as manager to develop and manage the orchard activities on Mr Clements' allotments. Recital B of the Farming Agreement records that the Grower, relevantly Mr Clements, wished to develop and enhance his farming activities. That recital was, of course, not particularly apt in respect of investors who had not previously undertaken "farming activities" in respect of the orchard or otherwise. By cl 2.1 of the Farming Agreement, TROM as manager agreed to supply trees to the Grower. Clause 2.2 of the Farming Agreement provided that rights in the trees passed to the Grower on the date of the Farming Agreement. By cl 10.1 of the Farming Agreement, TROM as manager was entitled to determine if the trees should be harvested. By cl 10.3 of the Farming Agreement, the Grower appointed the Representative (relevantly, ARG) as attorney for purposes including entering into a charge in the Grower's name over the "fruit and the proceeds therefrom". That cl will have a particular relevance in these proceedings, to which I will refer below. By cl 12.1 of the Farming Agreement, the Grower appointed the manager as its agent and nominee to sell the fruit, and that cl provided that the Grower had an interest in fruit taken from various allotments and pooled for the purposes of sale proportionate to the number of trees from which that fruit was obtained. 5Mr Clements also entered into two loan agreements with TROM as lender, one being for the principal sum of $335,400 referable to 26 farming allotments under the first Farming Agreement entered by Mr Clements, and the other in the amount of $232,200 referable to 18 farming allotments under the second Farming Agreement entered by Mr Clements. The original lender was, of course, the same entity as the manager of the Project. Recital A of the Loan Agreement referred to the Farming Agreements and Licence Deeds that have been entered into to develop and carry on the business of farming and sale of the produce. Clause 3.2(a) of the Loan Agreements provided that: "The Borrower shall: (a) repay the Principal Sum in the amounts and on the dates set out in Item 4 in accordance with either option 1 or 2 of schedule 1 to this agreement (depending on which option has been elected by the Borrower in accordance with Item 4." Mr Clements chose option 2 under each of the Loan Agreements, which provided for a first payment 3 calendar months after the date of the Loan Agreement; a second payment 6 calendar months after the date of the Agreement; a third payment 9 calendar months after the date of the Agreement; and for payment of: "Balance of the Principal Sum by direct deduction from monies payable by the Representative in pursuance of clause 18.8 of the Investment Deed representing the income of the Borrower in respect of the Borrower's farming allotment in accordance with clause 3.3 and 5.2 [of the Loan Agreement]." I will refer further to cll 3.3 and 5.2 of the Loan Agreement below. 6Clause 3.4 of the Loan Agreement in turn provided for the payment of interest on amounts payable under the Loan Agreements. Clause 5.1 of the Loan Agreement provided for the grant of security by Mr Clements and, in particular, Mr Clements thereby charged to the Lender: "All [his] right title and interest in the Farm Allotment and in the Farming Agreements relating thereto and for the purposes of more fully perfecting the security hereby granted [Mr Clements] authorises the lender to hold any documents of title and other agreements relating to [Mr Clements'] interest in the Farm Business and Farming Agreements." 7The Project was not a success. TROM was subsequently placed in liquidation and replaced as manager under the Farming Agreements by Treetops Projects Ltd ("Treetops") which was later also placed in liquidation. 8HPM relies upon a sequence of assignments of the claims to harvesting and marketing costs ands the loans owing to TROM, culminating in an assignment of those claims to HPM. Mr Clements does not contest the validity of those assignments. On or about 24 November 2006, HPM demanded payment by Mr Clements under cl 3.2(b) of the Loan Agreements of interest for the year ended 30 June 2006, and it is common ground that Mr Clements did not pay that amount. On or about 3 January 2007, HPM demanded repayment of the Principal Sum and Interest under the Loan Agreements, and that amount was also not paid by Mr Clements. The matters in issue in the proceedings 9The parties helpfully identified a number of questions that needed to be addressed in order to determine HPM's claim and structured their submissions by reference to those questions. I will structure this judgment in the same manner. It was common ground that, if an amount was found to be due and owing by Mr Clements under the Loan Agreements, then calculations set out in a loan statement on which HPM relied were an accurate reflection of the amount due. Mr Clements did not press a Cross-Claim which had been filed in the proceedings and did not read several affidavits that had been filed in the proceedings. Harvesting and Marketing costs 10The parties agreed that the two initial questions were whether HPM had established that Treetops expended money in providing Harvesting and Marketing Services (as defined in the Farming Agreements) and whether it had been proved that any monies due by Mr Clements in respect of those costs had not been paid. HPM contended that, if the answer to both questions was affirmative, its case to recover Harvesting and Marketing costs under the Farming Agreements would succeed. It does not seem to me that that latter proposition followed, particularly in the circumstances of this case, because it was possible that HPM could establish that such costs had been expended without establishing the amount of them so as to be able to obtain a judgment against Mr Clements in that amount. 11Paragraph 4 of the Second Further Amended Statement of Claim pleads that: "Between the periods of 30 June 1998 and 22 March 2000 (inclusive) Treetops incurred costs and expenses on behalf of [Mr Clements] pursuant to the Farming Agreements including (but not limited to) the actual costs and expenses incurred in providing the Harvesting and Marketing Services (as defined in the Farming Agreements). ..." By paragraph 3AA of his Fourth Further Amended Defence filed on 7 March 2014, Mr Clements denies that allegation. Paragraph 10 of the Second Further Amended Statement of Claim in turn pleads that Mr Clements is indebted to HPM for outstanding Harvesting and Marketing Costs (as defined in paragraph 4 of the Second Further Amended Statement of Claim) in the sum of $45,156.76 for the year ended 30 June 1999 and for the period from 1 July 1999 to 22 March 2000; paragraph 11 pleads that he is liable to pay interest on the unpaid amounts and was indebted to HPM for interest up to 30 June 2012 in the sum of $107,533.08; and paragraph 12 pleads the amounts of the Harvesting and Marketing costs for the year ended 30 June 1999 in the sum of $20,784.28 and for the period from 1 July 1999 to 22 March 2000 in the sum of $24,372.48. 12This claim depends on cl 20.3 of the Farming Agreements, which relevantly provided that: "In consideration for the Harvesting and Marketing Services to be undertaken by the Manager in each financial year for the term of this Farming Agreement the Grower shall pay to the Manager an amount equivalent to the Actual Costs, payable on or before 30th June in such financial year." The term "Actual Costs" is defined as the "actual costs and expenses incurred in providing the relevant services for the relevant financial year", and that definition provides that a certificate under the hand of the manager and approved by the auditor appointed under cl 16 of the Investment Deed was prima facie evidence of the actual costs in any financial year. HPM did not rely on the "prima facie evidence" provision since there is no suggestion that the amounts claimed were ever approved by an auditor appointed under that clause. Certain amounts payable by Growers under the Farming Agreements are subject to a limited recourse provision under cl 28 of the Farming Agreements, which is similar to a limited recourse provision in respect of the Loan Agreements to which I will refer below. However, requirement to pay Harvesting and Marketing Costs under cl 20.3 is not subject to that limited recourse provision. 13Mr Clements contended that there was no evidence that would justify findings that any Harvesting and Marketing Costs under cl 20.1 of the Farming Agreements were expended by Treetops. HPM initially relied on a memorandum dated 19 September 2001 issued on the letterhead of Merilbah Investments Pty Ltd ("Merilbah"), to which Treetops had assigned its rights to the Harvesting and Marketing Costs. That memorandum was signed by Mr Andrew Purcell, who was not a director of Merilbah, and the schedules attached to it were said to establish the amount of the Harvesting and Marketing Costs. That memorandum was admitted as a business record under s 69 of the Evidence Act 1995 (NSW), but I held in an earlier judgment that the schedules attached to it were not properly admissible as business records under s 69 of the Evidence Act and admitted them subject to a limitation under s 136 of the Evidence Act that they were not proof of the facts asserted in them. HPM ultimately did not press its claim to Harvesting and Marketing Costs in the amount pleaded, namely $45,156.56, which was the amount purportedly confirmed by Mr Purcell's memorandum. 14HPM instead relied on a different quantification of Harvesting and Marketing Costs which was different in each of the two periods in issue from the amount initially claimed as to the amount of those costs per lot and as to the total amount payable by Mr Clements. The difference between the respective amounts was not large, with the amount claimed against Mr Clements in respect of Harvesting and Marketing Costs in 1999 being $1,413.72 less than the amount initially pleaded, and the amount referrable to the 2000 year being $1,489.40 greater than the amount originally pleaded. Nonetheless, Mr Newlinds, who appeared with Mr d'Arville for Mr Clements, submits that the amounts now claimed were not pleaded by HPM and it did not open its case by reference to those amounts and that HPM should not be permitted to alter its case to claim the different amounts, where Mr Clements would have objected to the tender of the documents now relied on to establish those amounts had HPM previously identified that it was seeking to claim them. 15It seems to me that Mr Clements would suffer real prejudice by the change that HPM seeks to make to its claim, particularly where HPM relies, in closing submissions, on the fact that the evidence of Harvesting and Marketing Costs on which it now relies to establish the claim for the different amounts had not been addressed by the evidence of Mr Hennessy, an accountant whose evidence as to the inadequacy of Treetops' financial records was led by Mr Clements on the voir dire and subsequently admitted in the substantive proceedings by consent. The difficulty with HPM's change of approach is, not least, that it would deprive Mr Clements of fair notice of the case that had to be addressed by Mr Hennessy's evidence, where it would not have been apparent to him that HPM would seek to establish different amounts from those pleaded, by reference to documents that were inconsistent with the pleaded amounts. To put that proposition another way, there was no reason for Mr Clements to object to HPM's tender of or seek to falsify documents that were inconsistent with its pleaded case, on which he might well have relied to contest that pleaded case, and he would be prejudiced by a late change of that case to now rely on those documents and on the fact that he had not led evidence to falsify them where he had previously had no need to do so. To the extent that HPM seeks, in effect, to amend its pleading to claim a different amount from the claim pleaded - although it made no application to do so - I would not permit that amendment, given the prejudice that Mr Clements would suffer as a result. 16I am in any event not satisfied that HPM has in fact established the amount now claimed as the Harvesting and Marketing Costs payable by Mr Clements. HPM relied, to establish that amount, on "Operating Statement[s]" sent to Mr Clements (Chapman 9.10.2013, Ex RG 17-18, pp 486, 488), which had been tendered without objection where Mr Clements was not on notice of the change in HPM's case. Those documents refer to Harvesting and Marketing Costs of $19,370.56 (or $440.24 per allotment) in 1999 (CB 486) and $25,861.88 (or $587.77 per allotment) in 2000 (CB 488). HPM contends that these amounts are "substantiated" by schedules allocating the costs between projects managed by Treetops (Chapman 9.10.2013, Ex RG 21-22, pp 507, 518) and itemised lists of expenditure (pp 507-508, 523-524). Those documents allocate broad categories of expenditure (for example, brokerage and commission, chemicals, contract harvesting, contract packing etc) across various projects. Mr Chapman's affidavit dated 9 October 2013 refers to those schedules, but only to describe them as documents relating to the operating statements for the years ended 30 June 1999 and 30 June 2000. He gives no evidence as to who prepared those documents, when they were prepared or the basis on which or the source documents or systems from which they were prepared. Accepting that those documents were admitted without objection in the circumstances noted above, and may be business records of Treetops, I would nonetheless give them limited weight given the lack of evidence as to their origin and Mr Hennessy's evidence as to the deficiencies in Treetops' financial systems to which I will refer below. 17I accept, of course, as Mr Clements also accepted, that costs were necessarily incurred in respect of the relevant project where fruit was in fact harvested. However, it does not follow from that proposition that costs were incurred in the particular amounts stated, or were properly allocated to the relevant project where the schedules record costs incurred in respect of several projects. In my view, Mr Hennessy's evidence, to which I will now refer, substantially undermines the reliability of these documents, notwithstanding that he did not address the specific amounts on which HPM relies in the circumstances to which I referred in paragraphs 14-15 above. 18Mr Hennessy was the auditor for ARG (which, as I noted above, was the Growers' representative in respect of the Project) and was responsible for an investigation, in 2000, as to whether money from the sale of fruit in respect of Treetops' projects was being banked by Treetops and whether it was being banked into the correct accounts. His affidavit identifies substantial deficiencies in Treetops' financial reporting and exhibits a report (probably in late draft form) that he had prepared in respect of those matters. Mr Hennessy's report noted that Growers' statements were prepared by Treetops without appropriate financial statements having been prepared and he adhered to that view in his affidavit and in cross-examination (Hennessy 31.1.2014 [28(c)], Ex PH1 p 23, 14.3.2014 T67). He also gave evidence of the inadequacy of Treetops' financial records, which, in his opinion, were not sufficient to show the financial position of the projects or the trading performance of the projects and were not capable of being audited. He noted that no general ledger was maintained to record the day-to-day transactions for the projects and that there was an absence of documentary evidence to support the reasons for payments made from the proceeds of fruit sales (Hennessy 31.1.2014 [28]). That evidence in turn reflected the views that he had expressed in his report (Ex PH1, pp 21-23, 31-32), and he adhered to those views in cross-examination. I should add that I consider Mr Hennessy to have been an impressive witness, who plainly had a strong recollection of events. That was not surprising where Mr Purcell had claimed that a review by Mr Hennessy's firm had confirmed the accuracy of Harvesting and Marketing costs, in circumstances that the relevant documents had not, on Mr Hennessy's evidence, been provided to his firm or reviewed by it. It is not surprising that Mr Hennessy would have a clear recollection of the circumstances surrounding that matter. 19HPM relies on Mr Hennessy's concession in cross-examination that he was not in a position to know whether particular expenses were incurred by Treetops (14.03.2014 T68). That concession was properly made, but Mr Hennessy's lack of knowledge of specific expenses does not provide any answer to his evidence as to the inadequacy of the financial records upon which HPM relies to establish that those expenses were incurred. HPM also contends that Mr Hennessy did not give evidence refuting the specific evidence of Harvesting and Marketing Costs on which HPM now relies. However, that proposition also provides no answer to Mr Hennessy's wider criticisms of the reliability of Treetops' financial reporting systems, to the extent that the documents are derived from them, as well as emphasising the prejudice to Mr Clements in HPM's change of course to which I referred above. 20HPM also relied on schedules of debts attached to the Asset Sale Agreement between Merilbah and HPM by which the relevant debts were sold to HPM (Chapman 9.10.2013, Exs RC47, RC55, RC62, pp 639-643, 695, 739-743). Mr Chapman refers to these schedules to the Asset Sale Agreement in paragraphs 180-185 of his affidavit and indicates that they are "extracts" from the detailed schedules to that agreement, and that the detailed schedules to the document have not been included in his evidence because, he says, they contain confidential details of individual debtors which relate to assets other than HPM's Treetop debts are not relevant to any of the issues and are commercially sensitive. It does not seem to me that a party can simply choose to omit portions of tendered documents without leave of the Court, but I will take that matter no further where it was not addressed by the parties in submissions. Mr Chapman does not otherwise give evidence to identify the manner in which the information contained in those schedules was derived. I also do not consider that the schedules to the Asset Sale Agreement can be given substantial weight - although they were again admitted without objection where Mr Clements was again not on notice of the change in HPM's case - where the identity of the person who prepared them and whether the person who prepared them had knowledge of the relevant matters was not identified and where, if they were prepared by Merilbah which was the vendor of the assets, it was not shown how it would have knowledge of the relevant expenditures which would not have been made by Merilbah. If the information contained in those documents was derived from Treetops' financial records - which is a matter of speculation absent evidence of its source - then its reliability would be undermined by Mr Hennessy's evidence to which I refer above. 21There is also now a fundamental contradiction within HPM's case, where Mr Purcell's memorandum, admitted in evidence as a business record, seeks to prove the correctness of the amounts that HPM originally pleaded, and on the other hand, the documents on which HPM now relies seek to prove different amounts for the same expenditures, which could only be correct if Mr Purcell's memorandum was incorrect. I do not consider that I can give substantial weight to Mr Purcell's evidence, but also do not consider that I can give substantial weight to the other records on which HPM now relies, given Mr Hennessy's evidence about the inadequacy of Treetops' financial records generally. 22There was a debate between the parties as to the extent to which any inference could be drawn from the fact that HPM had not led evidence from officers of Treetops in order to establish its case. I do not consider it necessary to resolve that debate, since it is not necessary to draw even the limited inference authorised by Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 that that evidence would not have assisted HPM's case in order to determine the matter. I do not consider that the documents on which HPM relies, even absent such an inference, can be given sufficient weight to establish the quantum of Harvesting and Marketing Costs for which it contends. 23It does not, however, follow that HPM has not established that some Harvesting and Marketing Costs were incurred by Treetops, albeit that it no longer presses its original claim to the amount of costs pleaded and should not be permitted to advance, and has not established, its different claim for the amount of Harvesting and Marketing Costs incurred. Mr Newlinds properly accepted that there appears to be no real contest that Treetops in fact undertook harvesting and marketing, and it is also common ground between the parties that the expenses of the Project incurred in the relevant period were greater than the sales proceeds from the fruit. It seems to me that it has been established that Harvesting and Marketing Costs were in fact incurred, although the amount of the costs that have been incurred has not been established. This will be relevant to whether an event of default has been established under the Loan Agreement, an issue that I will address below. 24Mr Clements also contends that there is no evidence that any such Harvesting and Marketing Costs had not been paid to Treetops from sources other than Mr Clements. Mr Chapman, who is the sole director of HPM, gave evidence in its case which was based on his review and understanding of business records held by HPM. Mr Chapman's evidence was that: "From my own personal knowledge and from my review of the business records of [HPM], other than the $5,000 payment of interest received by [HPM] on 17 May 2005, [HPM] has not received payment from any source, including [Mr Clements], for [Mr Clements'] Queensland Harvesting and Marketing Costs." 25Notwithstanding the introductory words of the paragraph, Mr Chapman does not suggest that he has any personal knowledge of events in respect of the Project prior to HPM's involvement in it. Mr Clements also points out that Mr Chapman conceded in cross-examination that he had not reviewed every document relating to the Project and, in any event, the statement made by Mr Clements is directed to the question whether HPM has received payment of the relevant amounts, not to whether Treetops had done so. Mr Clements also points to the issue as to the reliability of documents maintained by Treetops, which I have addressed above. As HPM points out, the onus of establishing a discharge of the relevant liability, once the liability is established, is upon Mr Clements. Mr Clements has led no evidence to suggest that he, or any person on his behalf, in fact paid monies that would discharge the relevant expenses. The principle in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 has no application as to that issue, because, where it was common ground that Harvesting and Marketing Costs had been incurred (although HPM had not established their amount), HPM did not have to prove that Mr Clements had not paid them, absent any evidence on his part to the contrary. Whether Mr Clements made his income from his interest in the Project available in its entirety to the Representative 26HPM contends that Mr Clements' failure to pay principal and interest due under the Loan Agreements gave rise to a default under cl 4.1(a) of the Loan Agreements. HPM contends that it demanded repayment of the principal sum and interest on the basis of that default by the issue of its Further Amended Statement of Claim on 30 March 2009. 27The first question identified by the parties in respect of the Loan Agreements was whether Mr Clements' "income from his interest in the Project" had been "made available in its entirety" to the Growers' Representative for the purposes of cl 5.2(c) of the Loan Agreements, which provides that the Lender will have no recourse against the Grower for the relevant amount, subject to the specified condition. It was common ground that, if Mr Clements had done so, HPM would not be entitled to rely on cl 4.1(a) of the Loan Agreements as giving rise to an event of default so as to deprive Mr Clements of the limitation on recourse against him under cl 5.2(c) of the Loan Agreements. 28HPM contends that cl 5.2(c) of the Loan Agreements allows for recourse against Mr Clements directly if the proceeds of the Project are insufficient to meet repayments and that that provision does not assist Mr Clements as, it contends, he did not comply with the condition that he have "made available" all income from his interest in the Project to the Growers' Representative. It was common ground between the parties that Mr Clements made the initial payments required under the Loan Agreements within the first year of the loan and that he did not receive any cash distributions or proceeds from the sale of fruit in respect of his participation in the Project. It was also common ground between the parties that, from the point at which ARG entered liquidation in 2002, the then manager of the Project, Horticultural Operations Ltd ("HOL"), did not remit fruit sale proceeds to ARG and that, between 3 June 2002 and 30 June 2006, the proceeds from the sale of fruit were retained by Panda Ranch (Qld) Pty Ltd ("Panda Ranch"), which had been appointed by HOL to carry out certain of its obligations under the Farming Agreements. It was also common ground that the expenses of the scheme were greater than the sales proceeds from the fruit in each of the relevant years. 29Whether these matters had the result that Mr Clements did not make available his income from his interest in the Project in its entirety to the Growers' Representative depends both on what amount could properly be treated as Mr Clements' "income from his interest in the Project" for the purposes of cl 5.2(c) of the Loan Agreements and on the content of Mr Clements' obligation to "make available" that amount to the Growers' Representative. This issue raises complex questions of construction and I have had regard to well-established principles as to the manner in which commercial contracts should be interpreted. In Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 at 109, Gibbs CJ observed that: "It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust>" Attention must be given to the language used by the parties and the commercial circumstances that the document addresses and the objects that it is intended to secure: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 at 589 [22]. In Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at [22] the High Court noted that: "The construction of commercial contracts is to be determined by what a reasonable person in the position of [the contracting party] would have understood them to mean (Gissing v Gissing [1971] AC 886 at 906; Christopher Hill Ltd v Ashington Piggeries Ltd [1972] AC 441 at 502; ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540). That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to the parties, and the purpose and object of the transaction (Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896; [1998] 1 All ER 98.) In Codelfa Construction Pty Ltd v State Rail Authority of NSW ((1982) 149 CLR 337 at 350. See further Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436 at 445 [39]; 186 ALR 289 at 301) ..." The Court should also seek to construe the several contracts relating to the Project so as to operate harmoniously and such that the performance of one contract would not amount to a breach of another contract in the scheme: Optus Vision Pty Ltd v Australian Rugby Football League Ltd [2004] NSWCA 61 at [23]. The relevant principles were summarised by Bergin CJ in Eq in Carlow Castle Pty Ltd trading as Greenhill Capital Partners v Aztec Resources Ltd [2014] NSWCA 123 at [70] (with whom Barrett JA agreed at [1]) as including, relevantly, that the meaning of words in a contract is to be determined objectively, with attention to be given to the language of the contract, the commercial circumstances the contract addresses, the purpose of the transaction and the objects intended to be secured by it. 30Turning now to the relevant provisions, cl 3.3 of the Loan Agreements provided for the manner in which repayments of the balance owing under the Loan Agreements were to be made by Mr Clements as follows: "The balance of the Principal Sum and accrued interest and all other monies which may from time to time be owing under this agreement to the Lender shall except as hereinafter provided be repaid to the Lender on the due dates for payment by direct deduction from the monies payable by the Representative to the Borrower in pursuance of clause 18.8 of the Investment Deed representing the income of the Borrower in respect of the Borrower's Farming Allotments and the Borrower by his execution of this agreement hereby authorises the Representative to pay to the Lender all such monies subject to the operation of clause 5.2." A schedule to the Loan Agreements also provided that: "Balance of the Principal Sum by direct deduction from monies payable by the Representative in pursuance of clause 18.8 of the Investment Deed representing the income of the Borrower in respect of the Borrower's Farming Allotment in accordance with clause 3.3 and 5.2." It will be noted that this provision treats the "income of the Borrower" in respect of his or her farming allotment as the amount received by the Borrower under cl 18.8 of the Investment Deed. 31Clause 5.2 of the Loan Agreements in turn provided that: "(a) The Borrower shall, by his execution of this agreement, be deemed to have irrevocably authorised and directed the Representative to pay to the Lender until the whole of the Principal Sum has been repaid and Interest paid, all amounts payable by the Representative to the Borrower in pursuance of clause 18.8 of the Investment Deed representing the income of the Borrower in respect of the income of the Borrower's Farm Business (the Borrower's Farming Allotments), to be applied by the Lender in payment of the amounts referred to in clause 3 and items 3 to 6 of the schedule 1 to this Agreement. (b) In the event that the Grower's income in any one year is insufficient after the deduction of any other amount payable to the Manager, to pay the Principal and Interest amounts referred to in Items 4C of option 1 or Item 4D of option 2, and items 5 and 6C of schedule 1 to this Agreement or part thereof then such Principal and Interest or part thereof may be paid out of the Grower's income in any subsequent year. (c) Subject to the Grower's income from his interest in the Project being made available in its entirety by the Grower to the Representative for the purpose of meeting the Grower's payment obligations to the Lender under the Loan Agreement, the Lender shall have no other recourse to the Grower for Principal and Interest amounts referred to in items 4C of option 1 or 4D of option 2, and items 5 and 6C of schedule 1 to this agreement hereto." 32It will be noted that cl 5.2(a) of the Loan Agreements is directed to amounts payable by the Representative to the Borrowers (which the Representative is directed to pay to the Lender) and cl 5.2(c) to amounts to be made available by the Grower to the Representative. Clause 5.2(a) refers to all amounts payable by the Representative to the Borrower under cl 18.8 of the Investment Deed, which are there characterised as "representing the income of the Borrower" in respect of the income of his or her Farm Business and Farming Allotments. Clause 18.6 of the Investment Deed in turn provides for the Representative to credit an amount to each Grower of the "Net Income" (as defined) in accordance with a specified formula. Clause 18.7 then provides for the Representative, after crediting that amount to the Grower's account, to deduct all costs, expenses and outgoings as are properly chargeable to the Grower under the relevant agreements from that account and pay them to the persons entitled to them and cl 18.8 provides for the Representative to cause any remaining amount standing to the credit of the Grower's account to be paid to the Grower less a further specified deduction. That amount would thereafter be subject to the Borrower's direction that it be paid by the Representative to the Lender made under cl 5.2(a) of the Loan Agreement to which I have referred above. Clause 5.2(b) in turn contemplates that the amount payable by the Representative to the Borrower (which is in turn to be paid to the lender) may be less than is required to pay the specified Principal and Interest amounts in a particular year and provides for any shortfall to be paid in any subsequent year. 33Clause 5.2(a) of the Loan Agreements also adopts the concepts "income of the Borrower" and "income of the Borrower's Farm Business" and expressly provides that "amounts payable by the Representative to the Borrower in pursuance of cl 18.8 of the Investment Deed" represent "the income of the Borrower", equating the concept of "income of the Borrower" with the amount payable under cl 18.8 of the Investment Deed. At least in that clause, it seems to me that that concept cannot extend to the amount payable prior to the deduction of costs, expenses and outgoings under cl 18.7 of the Investment Deed and prior to the amount paid to the Grower under cl 18.8 of the Investment Deed, because that construction would have the result that the direction given by the Borrower to the Representative under cl 5.2(a) of the Loan Agreement would then require payment to the Lender of amounts that cl 18.7 of the Investment Deed required to be paid to other persons as costs, expenses and outgoings. The Grower is, of course, the same person as the Borrower where a Grower funds his or her investment in the Project by a loan. 34It should also be noted at this point that several other provisions in associated agreements similarly treat the income of the Grower or the Borrower as the amount received by the Grower or Borrower under cl 18.8 of the Investment Deed. The application for a loan signed by borrowers equated the Borrower's income "in respect of the Borrower's Farming Allotments" with his or her income under cl 18.8 of the Investment Deed, providing that: "... As long as principal and interest in respect of 1994/1995 and 1995/1996 are paid as and when due, principal repayments will be made out of the proceeds of all amounts payable by the Representative to the Borrower in pursuance of clause 18.8 of the Investment Deed representing the income of the Borrower in respect of the Borrower's farming allotments." That application form also stated that: "... As long as principal and interest are paid as and when due, interest payments will be made out of the proceeds of all amounts payable by the Representative to the Borrower in pursuance of clause 18.8 of the Investment Deed representing the income of the Borrower in respect of the Borrower's farming allotment." 35Clause 9(a) of the Licence Deed also treated the phrase "income of the Grower in respect of the Grower's Farming Allotment" as referring to the amounts received by the Grower under cl 18.8 of the Investment Deed. That clause relevantly provided that: "The Grower shall by his execution of this Licence Deed be deemed to have irrevocably authorised and directed the Representative to pay to [TROM], until the whole of the amounts referred to in clause 3(a)(ii) have been paid, all amounts payable by the Representative to the Grower pursuant to clause 18.8 of the Investment Deed representing the income of the Grower in respect of the Grower's Farming Allotment to be applied to [TROM] in payment of the amounts referred to in clause 3(a)(ii)." Clause 3(a)(ii) of the Licence Deed in turn provided for payment of a licence fee of a specified percentage of gross sale proceeds to TROM. The terms of cl 9(a) of the Licence Deed therefore treat the "income of the Grower" as being the amount payable to the Grower under cl 18.8 of the Investment Deed, not amounts that may be credited to the Grower's account under cl 18.6 of the Investment Deed prior to payment of the costs and expenses payable under cl 18.7 of the Investment Deed. 36It will also be noted that cl 5.2(c) of the Loan Agreements adopts different language from cl 5.2(a), referring to the "Grower's income from his interest in the Project", which is required to be "made available in its entirety" by the Grower to the Grower's Representative "for the purpose of [emphasis added] meeting the Grower's payment obligations to the Lender under the Loan Agreement." A critical issue in the proceedings is whether the concept of the "Grower's income from his interest in the Project" in cl 5.2(c) is the total amount of income attributable to Mr Clements' Farm Business, prior to costs and expenses, or is the lesser amount derived after the deductions provided under cll 18.7 and 18.8 of the Investment Deed, which would correspond to the amount specified in cl 5.2(a) of the Loan Agreements. I am conscious that the fact that cl 5.2(c) uses different language from cl 5.2(a) of the Loan Agreements raises the possibility that it may be intended to refer to a different concept than that referred to in cl 5.2(a). The use of the language "Grower's income from his interest in the Project" might suggest that concept is intended to be to income anterior to the operation of cll 18.7 and 18.8 of the Investment deed. However, any inference that may be drawn from inconsistency of drafting is weaker where the several provisions to which I have referred above use different language to refer to the same concept, so that the amount derived by the Borrower or Grower under cl 18.8 of the Investment Deed is variously referred to in cl 5.2(a) of the Loan Agreements as "income of the Borrower in respect of the income of the Borrower's Farm Business (the Borrower's Farming Allotments)", in the Loan Application as "income of the Borrower in respect of the Borrower's farming allotments" and in cl 9(a) of the Licence Deed as "income of the Grower in respect of the Grower's farming allotment". 37HPM contends that the reference to the "Grower's income from his interest in the Project" in cl 5.2(c) of the Loan Agreements is to the Grower's gross income, prior to the deductions provided by cll 18.7 and 18.8 of the Investment Deed, and that the exclusion of recourse against Mr Clements under cl 5.2(c) of the Loan Agreements was not available to him unless the gross income from that interest was "made available" by Mr Clements to the Representative. In support of that submission, HPM submits that the concept of Mr Clements' "income" is a wider concept than the distributions of surplus to which he is entitled under cl 18.8 of the Investment Deed because the ordinary meaning of "income" is wider than the concept of "profit"; the use of the term "Net Income" in cl 18.3 of the Investment Deed distinguishes that term from the concept of income simpliciter and suggests that "income" refers to amounts received prior to deductions made in accordance with the Investment Deed; and cll 17.1 and 17.6 of the Investment Deed point to the same conclusion. I am not persuaded by those submissions, because the question is not the meaning that should be given to the term "income" but the meaning that should be given to the term "Grower's income from his interest in the Project" in cl 5.2(c) which draws attention to that amount which is not income simpliciter but income properly referable to the Grower's interest in the Project; because "income" is used in the several clauses to which I have referred above to refer to income after the relevant deductions and typically to income under cl 18.8 of the Investment Deed rather than to gross income; and by reason of the other matters to which I will refer below. 38HPM also relies on cl 18.7 of the Investment Deed which allows the Representative to deduct costs, expenses and outgoings that are properly chargeable to the Grower under his agreements from the Grower's account established under cl 18.6 of the Investment Deed. I accept that these provisions contemplate that an amount may be credited to the Grower prior to the allocation of those costs, expenses and outgoings, but do not consider that that amount is properly treated as the Grower's income from his interest in the Project for the purposes of cl 5.2(c) of the Loan Agreements for the reasons to which I have referred in the preceding paragraph. HPM also contends that, because the Grower has a proprietary interest in either the fruit or the proceeds of the sale of fruit, prior to distributions under cl 18.8, income generated from that property would ordinarily be construed as income. Again, it seems to me the question whether income could, in a broad sense, be characterised as the Grower's income for some purposes is of limited assistance in determining whether that income is the "Grower's income from his interest in the Project" for the purposes of cl 5.2(c) of the Loan Agreements, and that submission is also inconsistent with the other uses of the term "income" to refer to the income derived by the Grower or Borrower under cl 18.8 of the Investment Deed. 39There seems to me to be a further, and compelling, reason why HPM's construction of cl 5.2(c) of the Loan Agreements cannot be accepted. That clause requires that the "Grower's income from his interest in the Project" is both made available "in its entirety" by the Grower to the Representative and is made available "for the purpose of meeting the Grower's payment obligations to the Lender under the Loan Agreement". It seems to me that the second aspect of that clause requires that the amount to be made available by the Grower to the Representative is applied for that purpose. That requirement could not be satisfied if HPM's construction of the phrase "Grower's income from his interest in the Project" as referring to the gross income of the Grower were adopted. The Grower's gross income, being the amount of that income prior to the costs and expenses to be paid under cl 18.7 of the Investment Deed, could not, in my view, be made available to the Representative for "the purpose of meeting the Grower's payment obligations to the Lender under the Loan Agreement" where part of it was necessarily to be applied under cl 18.7 of the Investment Deed to those costs and expenses. 40Mr Simpkins, who appeared with Mr Knowles for HPM, responded to that difficulty by submitting that the reference to "the purpose of meeting the Grower's payment obligations to the Lender" under this clause should be read, in effect, as "a purpose of meeting the Grower's payment obligations" to the Lender so that requirement was satisfied if the Grower's gross income were made available for a purpose of meeting the Grower's payment obligations to the Lender and for other purposes including meeting the costs and expenses of the Project, or alternatively for the purpose of part of it being applied to meeting the Grower's payment obligations to the Lender. I do not accept that submission, which does not seem to me to be consistent with the language of the clause. 41Mr Simpkins submitted that the alternative construction of cl 5.2(c) of the Loan Agreements (as referring to the amount payable, subject to the direction, to Mr Clements under cl 18.8 of the Investment Deed) would leave the Lender exposed to the risk of diversion of income at the point prior to an amount being payable by the Representative to the Borrower under cl 18.8 of the Investment Deed, so as to be subject to the direction contained in cl 5.2(a) of the Loan Agreements. That proposition seems to me at least to require the qualification that the payment of costs and expenses required to be paid under cl 18.7 of the Investment Deed prior to payment of an amount to the Grower cannot properly be characterised as a "diversion" of income where it is contemplated by the relevant agreements. It also does not seem to me that it should be assumed that the Loan Agreements are necessarily intended to allocate the relevant commercial risk - namely that the amount of the costs and expenses would have the result that no amount was available to be paid by the Representative to the Grower, so as to fall within the scope of that direction - to the Borrower rather than to the Lender. 42Mr Clements also contends, and I accept, that to the extent that there is any ambiguity in cl 5.2(c) of the Loan Agreements, reference may also be had to the surrounding circumstances. There is, in my view, sufficient uncertainty or ambiguity in that clause - particularly as to whether the Grower's "income" is to be determined for the purposes of that cl on a gross basis or under cl 18.8 of the Investment Deed and after costs or expenses being deducted - to warrant reference to the surrounding circumstances: Codelfa Constructions Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 at 352; Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604 at [3]; Current Images Pty Ltd v Dupack Pty Ltd [2012] NSWCA 99 at [32]. There is reference to the manner in which the limited recourse character of the loan is intended to operate in the prospectus which provided (Chapman 9.10.2013, Ex RG 1) that: "IF, AND ONLY IF, the Minimum Principal Repayments and the first two Interest Payments are made in the manner and by the date specified and the Borrower performs all other duties and obligations under the Loan, Licence and Farming Agreements then the recourse of the Lender to the Borrower for the other amounts payable under the Investor Loan shall be limited to the Borrower's income from his Farming Allotments and the Borrower qualifies for the Lower Interest Rate for the term of the Loan. If not then the Borrower becomes personally liable for all other amounts payable under the Investor Loan Agreement at the Higher Interest Rate." That statement also adopts the phrase "income from [the Grower's] farming allotments" which, as I have noted above, is used in the contractual documents to refer to the income received by the Borrower under cl 18.8 of the Investment Deed. The prospectus also refers to the manner in which the balance of the Principal Sum was to be paid as follows: "Balance of the Principal Sum by direct deduction from income of the Farm Business in accordance with clause 18.7 and 18.8 of the [Investment] Deed and clauses 3.3 and 5.2 of the Investor Loan ..." The taxation opinion contained in the prospectus similarly summarised the effect of the limited recourse provision as follows: "The balance of the principal sum is paid from the income of the Investor's Farming Allotments. Providing the Investor complies with this and his other obligations, while he has an obligation to pay the balance, the Lender has recourse only to the income of the Investor's Farming Allotments and not to the Investor personally." 43Having regard to these matters, and acknowledging that the issue is complex and possibly finely balanced, it seems to me that the concepts "Grower's income" and "Borrower's income", referable variously to the Farming Allotments, Farming Business and the Grower's interest in the Project, refer to the amount available to the Grower or the Borrower under cl 18.8 of the Investment Deed after the payment of costs and expenses required to be paid under cl 18.7 of the Investment Deed, and that the matters to which I referred in paragraphs 39-40 above provide strong support for that conclusion. 44There was also debate between the parties as to whether Mr Clements became the owner of the trees and the fruit. Mr Clements relied on cll 2 and 5 of the Licence Deed and the general principle that a tree belongs to the person on whose land the tree grows (Peter Butt, Land Law, 6th ed 2010, Thomson Reuters, para 3.37). He also referred to a statement in the Prospectus for the Project that: "Investors do not obtain a freehold or leasehold interest in the Land, the Licensed Area, which reverts with improvements to the Manager after the expiry of the Licence and Farming Agreement." Mr Clements contended that the true position was that he obtained a licence to enter the orchard so as to farm fruit and was not the "owner" of proceeds from fruit sales unless and until an amount was payable to him by the Representative under cl 18.8 of the Investment Deed. HPM also referred in opening submissions to an issue whether ARG held funds on trust for the grower prior to any distribution of net surplus to the grower under cl 18.8 of the Investment Deed. HPM ultimately accepted that neither proposition was necessary to its case, and it does not seem to me that either proposition assists in determining the questions of construction of cl 5.2 of the Loan Agreements which I have addressed above. Whether Mr Clements "made available" the relevant amounts to the Growers' Representative 45The next question is whether Mr Clements "made available" the Grower's income from his interest in the Project, construed (in my view) as the amount payable to him under cl 18.8 of the Investment Deed to him, to the Growers' Representative so as to satisfy the requirements of cl 5.2(c) of the Loan Agreements. In oral submissions, Mr Simpkins submitted that "made available" meant, in effect, that the Borrower must ensure that the gross sale proceeds were paid to the Representative and that the Representative then paid those gross sale proceeds to the Lender (20.3.2014 T92). 46The ordinary meaning of the phrase "made available" depends upon the meaning of the term "available", which is defined in the Shorter Oxford English Dictionary as "[a]t one's disposal, within one's reach" and in the Macquarie Dictionary as "ready to use; at hand; of use or service". The concept of "made available" in turn involves putting something at another's disposal or within its reach or making it available for another's use. That ordinary meaning of that phrase seems to me to be consistent with the interpretation of that concept in the case law considering statutes where that phrase is used, albeit in a somewhat different context. In Gosling v McCombie [1972] HCA 56; (1972) 126 CLR 487 at 506, Walsh J observed that the expression "made available" appearing in s 111 of the Bankruptcy Act 1966 (Cth) depended upon: "Whether or not the real effect of what has taken place is that [a second person] was enabled to carry out or to take part in a dealing with [the first person's] property, in a way which but for [the first person's] concurrence would not have been possible, which is similar to that in which [the second person] could have dealt with property which [the second person] owned, and which gives to [the second person] a benefit or advantage." In Thompson v Smith [1976] HCA 56; (1976) 135 CLR 102 at 105, Gibbs J observed that property was "made available", within the ordinary meaning of those words, when a person placed it at the disposal of another or did something which enabled the other person to use the property either at will or in a particular way. In that case, his Honour observed that a wife who joined with her husband in giving a mortgage over land owned as joint tenants to a third party did not make the land available to the husband, because he was not enabled to deal with it in any way. 47Mr Clements points out that there are several directions and authorities contained in the relevant agreements, which remained in place throughout the relevant period: Loan Agreements cll 3.3, 5.2(a); Farming Agreements cl 28.1; Licence Deed cl 9(a). It seems to me that Mr Clements "made available" the Grower's income from the Project (construed as the amount payable by the Representative under cl 18.8 of the Investment Deed to him) to the Representative so as to satisfy the requirements of cl 5.2(c) of the Loan Agreements, by taking the steps necessary to confer the right to that income on the Representative by cl 5.2(a) of the Loan Agreements and the other authorities and directions in the associated documents and thereafter not resiling from that position. It seems to me that each of the matters noted by Walsh J in Gosling above are satisfied, where the directions given by Mr Clements would allow the Representative to deal with the Grower's income from the Project in a way which but for Mr Clements' concurrence would not have been possible, which is similar to the way in which the Representative could have dealt with a right to income to which it was directly entitled, and which gave it (and, ultimately, TROM as lender and HPM as its assignee) the benefit or advantage of applying that income to reduce the amount owed by Mr Clements as Borrower. By contrast with the position in Thompson v Smith above, it seems to me that the directions given by Mr Clements made available the relevant income to the Representative in that they established the mechanism for that income to be made available. That proposition is no less true where the amount of that income was nil, because no payments were made to Mr Clements under cl 18.8 of the Investment Deed where, it is common ground, the costs and expenses of the Project exceeded its income. 48HPM contends that the contention that Mr Clements "made available" the relevant amounts by giving the authorities and directions in cl 5.2(a) of the Loan Agreements and associated agreements should not be accepted, because it would render cl 5.2(c) otiose. I do not accept that submission. That clause would operate if Mr Clements in fact received and did not remit to the Representative a payment of income that ought to have been paid to it and by it to the Lender in accordance with those authorities and directions, or if Mr Clements successfully challenged the efficacy of those authorities and directions, for example, on the basis that they were invalid or liable to be set aside. There is no suggestion that Mr Clements has received any such income or taken any step to interfere with the operation of the authorities and directions of that character. 49In his oral closing submissions, Mr Simpkins made the additional submission that, even if the reference to the "Grower's income from his interest in the Project" in cl 5.2(c) of the Loan Agreements was directed to income derived by Mr Clements under cl 18.8 of the Investment Deed, it was a necessary step in making income under that clause available to the Lender that the gross income first be made available to the Representative. It does not seem to me that that submission assists HPM, where the event that triggers the loss of the non-recourse character of the loan under cl 5.2(c) of the Loan Agreements is Mr Clements not making available the "Grower's income from his interest in the Project" (which I have held, on its proper construction, is the amount which he received under cl 18.8 of the Loan Agreements) to the Lender. It seems to me that the terms of that clause require that whether that event has occurred be determined by reference to that amount and at the point it is to be made available to the Representative, not at any anterior point. I would add that the construction for which HPM contends would have the result that the non-recourse character of the loans would be lost if, for example, the gross income was simply not derived because of the commercial failure of the Project or because other parties did not comply with their obligations under the various Agreements. It might be thought that that result would deprive the concept of a "non-recourse" borrowing of much of its content, and would have the perverse result that the non-recourse character of the loan would be lost in the primary circumstance where it was likely to be relied upon by a Borrower. Whether the limited recourse provision in clause 5.2(c) of the Loan Agreement ceases to have effect on default 50A further issue arose as to whether, as HPM contended, the limited recourse provision in cl 5.2(c) of the Loan Agreements was also subject to the default provision in cl 4 of the Loan Agreements. That clause relevantly provided that: "4.1 The Principal Sum and Interest shall immediately become payable and each Security shall immediately become enforceable at the option of the Lender upon the happening of one or more of the following events without the necessity for any notice or demand: (a) If, subject to the operation of clause 5.2 below, default be made by the Borrower in the due and punctual payment of the Principal Sum or Interest or any instalment of Principal and Interest at any time due and payable by the Borrower to the Lender; (b) If default be made by any person other than the Lender of any observance or performance of any obligation contained on its part contained in this Agreement or in any Security or on any other account or transaction between the Lender or the Borrower. (c) If the Borrower shall cease to carry on the Farm Business ... (f) If the Borrower without the prior consent of the Lender creates or attempts or purports to create any mortgage or charge over any part of the property the subject of any Security ranking or which might rank in priority to or pari passu with that Security." 51HPM contends that upon default under cl 4.1, the principal sum and interest under the Loan Agreements became immediately payable and security held by TROM (or HPM as its assignee) became enforceable. HPM refers to four events of default, namely, a failure by Mr Clements to comply with a demand to make an interest payment giving rise to a default under cl 4.1(a) of the Loan Agreements; a failure by Mr Clements to pay the Harvesting and Marketing Costs due under the Farming Agreements giving rise to a default under cl 4.1(b) of the Loan Agreements, which has arguably been established for the reasons noted above, although the amount due has not been established; a failure by Mr Clements to continue to carry on the "Farm Business" from some time in 2007 giving rise to a default under cl 4.1(c) of the Loan Agreements; and the grant of a crop lien in favour of Moriatis Holdings Pty Ltd giving rise to a default under cl 4.1(f) of the Loan Agreements. 52An anterior question arises whether an event of default, for the purposes of cl 4.1 of the Loan Agreements, deprives Mr Clements of the ability to rely upon the limited recourse provision in cl 5.2(c) of the Loan Agreements. If the effect of default is not to deprive Mr Clements of the protection of that provision, then the existence of the relevant events of default does not assist HPM in establishing a claim against Mr Clements personally, as distinct from a claim to principal and interest which is enforceable against its security. 53HPM contends that the conclusion that cl 5.1(c) of the Loan Agreements is subject to the events of default in cl 4.1 of the Loan Agreements (other than cl 4.1(a)) is supported by the fact that the default provision in cl 4.1(a) of the Loan Agreements is expressly made subject to cl 5.2. However, that qualification may well reflect the need to recognise the operation of cl 5.2(b) which provides for payment of principal and interest from the Grower's income in a subsequent year, so that a default should not arise in that situation. If the intended reference is to cl 5.2(c), then it would confirm the position which would in any event exist where that clause was not made subject, in its terms, to cl 4.1. In either case, it does not follow that the other default provisions in cl 4.1(b)-(d) qualify the operation of cl 5.2(c), where neither clause contains a reference to such a qualification. HPM also contends that its construction is supported by the fact that cl 4.1 provides that the principal sum and interest are immediately due and payable on an event of default. I do not accept that submission since a statement that those amounts are immediately due and payable does not require that the claim to them be enforceable against the Borrower personally, as distinct from being enforceable against security which it has given, where a non-recourse provision is in place. HPM also contends that if cl 4.1(b)-(g) do not allow for recourse against the Borrower, they provide little benefit to the Lender. I also do not accept that submission, since an event of default would allow the Lender to have recourse to the security given by the Borrower, notwithstanding that the limited recourse provision continued to have effect. 54The non-recourse provision in cl 5.2(c) is qualified, in its terms, only by the requirement that the Grower's income from his interest in the Project be made available in its entirety by the Grower to the Representative for the specified purpose. It is not qualified, as it could have been, by any express statement that it ceases to operate when an event of default occurs. From the Borrower's perspective, a non-recourse provision that ceased to have effect when an event of default occurred would be of little benefit, because it is precisely in that situation that the Borrower is likely to have most need of it. Conversely, cl 4.1 is capable of being given a sensible operation, in accordance with its terms, without being treated as creating further exceptions to cl 5.2(c) of the Loan Agreements that are not apparent on the face of that clause. In particular, cl 4.1 of the Loan Agreements provides for the Principal Sum and Interest to become immediately payable and for each security to become immediately enforceable on an event of default, which would allow the Lender to exercise its consequential rights under that clause, notwithstanding that cl 5.2(c) continues to treat the loan as non-recourse against the Borrower, subject to the limitations contained in that clause. In that situation, the Lender may exercise its security, so as to recover the amounts that are due and payable to it, against the interests in the Project that are secured by the Borrower, without any inconsistency with the limited recourse provision. 55I recognise that at least the first passage in the prospectus quoted in paragraph 42 above seems to have contemplated that the non-recourse character of the loan was subject to the wider range of the Grower's obligations under other agreements. HPM did not, as its primary position, seek to rely on that matter to qualify the operation of cl 4.1 or 5.2(c) of the Loan Agreements. Its primary position was that the prospectus did not provide any material assistance as to the construction of cl 4.1, although it did advance an alternative submission that that statement supported the view that the non-recourse character of the Loan Agreements was conditional on the Borrower's compliance with its obligations under it. Absent any relevant ambiguity in cl 4.1 or 5.2(c) of the Loan Agreements or any claim for rectification, estoppel or a statutory claim for misleading conduct, that statement cannot lead to a different result than would be reached on the construction of those provisions. It does not seem to me that any such ambiguity exists and no claim for rectification or estoppel or statutory claim for misleading conduct was pleaded. Whether a default occurred under clause 4.1(a) of the Loan Agreement by non-payment of interest 56Mr Clements accepts that a demand for payment of interest was made on 24 November 2006 and that that amount was not paid, but contends that default under cl 4.1(a) of the Loan Agreements is not established by reason of the non-recourse provision in cl 5.2(c) of the Loan Agreements. Given the views that I have expressed as to the construction of that clause, no such default has been established. Whether a default occurred under clause 4.1(b) of the Loan Agreement by failure to pay Harvesting and Marketing expenses 57The parties identified a further issue as to whether, on the proper construction of the relevant contracts, any proved failure to pay Harvesting and Marketing Costs amounted to an event gving rise to a default under cl 4.1(b) of the Loan Agreements. It was common ground that, if it was not established that Treetops expended Harvesting and Marketing Costs, or that such Harvesting and Marketing Costs had not been paid, or that a failure to pay Harvesting and Marketing Costs gave rise to an event of default under cl 4.1(b) of the Loan Agreements, then HPM's reliance on cl 4.1(b) of the Loan Agreements to contend that it was entitled to recover Principal and Interest against Mr Clements personally could not succeed. It is not strictly necessary to decide this question given the view that I have reached as to the proper construction of cll 4.1 and 5.2(c) of the Loan Agreements as set out above, which has the result that a default under cl 4.1(b) of the Loan Agreements does not deprive the loan of its non-recourse character under cl 5.2(c) of the Loan Agreements. I should nonetheless say something further as to this issue in case an appellate court were to reach a different view from that which I have reached in respect of the non-recourse provision. 58Clause 4.1(b) of the Loan Agreement applies: "If default be made by any person other than the Lender of any observance or performance of any obligation contained on its part contained in this agreement or in any Security or on any other account or transaction between the Lender or the Borrower." The term "Security" is defined as the Loan Agreement or any security now given to or held by the Lender for the payment of the whole or any part of the Principal Sum and interest thereon. By cl 5.1 of the Loan Agreements, Mr Clements as borrower charged his right, title and interest in the Farm Business and in the Farming Agreements, which therefore constituted "Security". 59It seems to me that a default by Mr Clements in respect of the obligation to pay Harvesting and Marketing Costs under cl 20.3 of the Farming Agreements (to which I referred in paragraph 12 above) would be a default by a person other than the Lender, namely Mr Clements, of an obligation contained in a Security, the Farming Agreement. I also accept, as HPM contends, that the words "between the Lender or Borrower" in cl 4.1(b) of the Loan Agreements extend to a dealing between HPM and Mr Clements since, although the term "Lender" is defined in the Loan Agreements by reference to TROM as party to it, the Loan Agreements in turn provides in cl 1.2(d) that a reference to a party to the Agreement includes a reference to, relevantly, its assigns. Mr Simpkins accepted in oral submissions that the consequence of HPM's argument, in respect of this clause of the Loan Agreements, was that any breach of a large number of obligations between a relatively large number of parties would deprive the Borrower of the non-recourse character of the loan. However, that result does not arise where, as I have held, a default under cl 4.1(b) of the Loan Agreements does not deprive the loan of its non-recourse character arising under cl 5.2(c) of the Loan Agreement. 60Mr Clements also contended the phrase "other account or transaction" in cl 4.1(b) of the Loan Agreements should be construed ejusdem generis to mean any transaction in the nature of a loan. Mr Clements also referred to the formulation of that principle as that one word in a list of expressions should not be given a meaning so broad as to be inconsistent with adjoining words or render those other words irrelevant: Lend Lease Real Estate Investments Ltd v GPT Re Ltd [2006] NSWCA 207 at [32]. It does not seem to me that treating "transaction" as having a wide meaning, as it would ordinarily have, is either inconsistent with - as distinct from expanding - the adjoining words or renders those words irrelevant. HPM submitted that that rule was one of a number of guides which could be used in interpreting a provision, by reference to its proper construction and context, and contended that the term "account or transaction" should not be given the limited reading for which Mr Clements contends. HPM also contends, with substantial force, that the term "transaction" should not be limited to a transaction in the nature of a loan, where cl 4.1(b) contemplates that a default may arise from the conduct of persons other than the Borrower. However, it does not seem to me that a failure to pay Harvesting and Marketing Costs would be a failure to perform an obligation in respect of a "transaction" or "account" between the "Lender or the Borrower" because the Lender is not party to any such transaction or account. 61Possibly because of the late change in the way in which HPM put its case in respect of Harvesting and Marketing Costs, the parties did not address another question that seems to me to arise in determining whether a breach of cl 20.3 of the Farming Agreements is established so as to establish a default under cl 4.1(b) of the Loan Agreements. That question is whether it could be properly be held that Mr Clements had breached cl 20.3 of the Farming Agreements where HPM now does not press its claim for the amount previously claimed by way of Harvesting and Marketing Costs and first identified the amount now claimed in closing submissions. It might be suggested that it would be a harsh and surprising result if cl 20.3 of the Farming Agreements and cl 4.1(b) of the Loan Agreements were to be construed as having the result that a breach of the former clause and a default under the latter clause was established by a Borrower not previously paying an amount that is now not said to be correct, or not previously identifying for itself that a different amount that was not established in these proceedings might be payable, determining that amount for itself and paying it before it was claimed. It seems to me preferable that I express no final view as to that question where it is not necessary to do so to determine the matter and it was not addressed by the parties' submissions. Whether a default occurred under clause 4.1(c) of the Loan Agreement by Mr Clements ceasing to carry on the Farm Business 62The next question identified by the parties was whether HPM had proved that Mr Clements had ceased to carry on the Farm Business at any relevant time, giving rise to a default under cl 4.1(c) of the Loan Agreements, so as to deprive the loan of its non-recourse character under cl 5.2(c) of the Loan Agreements. This question also strictly does not arise, given the view that I have reached as to the proper construction of cll 4.1 and 5.2(c) of the Loan Agreements as set out above. Nonetheless, I will also address this question against the possibility that an appellate court may take a different view from that which I have formed. 63HPM contends that an event of default occurred when Mr Clements ceased to carry on a Farm Business, for the purposes of cl 4.1(c) of the Loan Agreements. That default is particularised as follows: "By approximately December 2007 Panda Ranch (Qld) Pty Limited ... as operational manager, ceased to conduct the Farm Business on behalf of [Mr Clements] and thereafter [Mr Clements] failed to conduct the Farm Business either in its own right or through an agent or manager appointed to operate the Farm Business on its behalf." HPM contends that it demanded repayment of the Principal Sum and interest under the Loan Agreements by the issue of the Further Amended Statement of Claim. 64The term "Farm Business", as used in cl 4.1(c) of the Loan Agreements, is defined in Recital A of the Farming Agreements as the "develop[ment] and carry[ing] on of the business of farming of stone fruit trees on the Borrower's Farming Allotment(s)". The relevant agreements contemplated that that business would be carried on by the manager, initially TROM, and later HOL, on behalf of the Growers. It does not seem to me that a question arises, as Mr Clements contends, as to whether he should not be held responsible for any breach of the Farming Agreements by HOL. The question at issue is not whether Mr Clements should be imputed responsibility for another party's breach, but whether the Farm Business was or was not carried on by him, whether by himself or by some other party on his behalf, as a matter of fact. 65Mr Clements contends that there is no evidence that Panda Ranch had ceased to manage the orchard until at least December 2008 or January 2009 and that, by that time, Mr Clements was no longer under any obligation to carry on the Farm Business, as his Farming Agreements and Licence Deed had concluded in June 2008 and the Project as a whole had concluded in November 2008. Mr Clements also contends that there is no evidence to establish that some other person did not take over from Panda Ranch and continue to operate the Farm Business or that any failure to continue farming was not by reason of an "act of God" within the meaning of cl 32 of the Investment Deed. HPM relies on statements made by a director of Panda Ranch, Ms Silm, in a questionnaire provided to the liquidator of Panda Ranch (Ex P1) that Panda Ranch's business was that it grew "citrus trees and other fruit trees for commercial sale in Mundubbera Queensland" and that it "ceased trading" in approximately July 2007 and that "business ceased due to lack of water". Those statements create a strong inference that, from approximately July 2007, Panda Ranch ceased to perform work on the orchard. HPM also points out, and I accept, that the evidence indicates that no other person replaced Panda Ranch in performing work at the orchard. In particular, Mr McKay, a director of HOL, wrote to Panda Ranch on 11 December 2008 referring to the agreement between HOL and Panda Ranch to manage the trees on the orchard and seeking advice as to the status of the property with respect to ownership, management and the state of the trees, indicating its understanding that Panda Ranch was still responsible for those matters (Chapman 9.10.2013, Ex RC73, p 873). 66HPM also submits, and I accept, that the Court may more readily draw these inferences where Mr Clements had served, but did not read, affidavits of Mr McKay and Mr Coates, who were former officers of HOL, and who are likely to have been able to give evidence as to whether farming operations had continued at the orchard after June 2007. HPM also contends, and I also accept, that neither the pleadings nor the evidence raise any question as to whether the orchard had failed or the Farming Business had ceased by reason of an "act of God" and that HPM is not required to disprove that possibility. HPM also points out, and I also accept, that cl 32 of the Investment Deed which deals with "force majeure" is directed to exoneration of the manager and the Representative and does not affect HPM's rights as against Mr Clements as Borrower. 67For these reasons, I consider that an event of default arose under cl 4.1(c) of the Loan Agreements by a failure to carry on the Farm Business at least from June 2007. However, for the reasons noted above, that matter does not deprive Mr Clements of the protection of the limited recourse provision under cl 5.2(c) of the Loan Agreements, and therefore does not support a judgment for the amount of principal and interest in HPM's favour against him. Whether a default occurred under clause 4.1(f) of the Loan Agreement on the grant of a crop lien 68A further question identified by the parties was whether the grant of a crop lien created a "mortgage or charge over any part of the property the subject of any Security ranking or which might rank in priority to or pari passu with that Security" giving rise to an event of default under cl 4.1(f) of the Loan Agreements. A further issue as to whether the grant of a subsequent charge gave rise to a default under that provision was not pressed by HPM. It was common ground that, if the answer to the first question was no, then HPM's reliance on cl 4.1(f) of the Loan Agreements so as to deprive the loan to Mr Clements of non-recourse character would fail. It is also not strictly necessary to decide this question, since the view that I have reached as to the proper construction of cll 4.1 and 5.2(c) of the Loan Agreements as set out above has the result that a default under this clause would render the debt due and payable but the limited recourse provision would continue to have effect unless the exception in cl 5.2(c) was triggered. Nonetheless, I will address this issue (although not every argument raised in respect of it by the parties) against the possibility that an appellate court may take a different view of the construction of these clauses from that which I have formed. 69As I noted above, cl 4.1(f) of the Loan Agreements provides for an event of default where the Borrower: "without the prior consent of the Lender creates or attempts or purports to create any mortgage or charge over any part of the property the subject of any Security ranking or which might rank in priority to or pari passu with that Security." The term "Security" is defined as the Loan Agreements and "any security now or hereafter given to or held by the Lender for the payment of the whole or any part of the Principal Sum and interest thereon". HPM contends that Mr Clements created or purported to create a charge of lien over property the subject of the Security, within the meaning of cl 4.1(f) of the Loan Agreements, by reason of the grant of the Mundubbera Orchard Crop Lien ("Moraitis Crop Lien") between HOL, ARG and Moraitis Holdings Pty Ltd ("Moraitis") in about September 2001. HPM also contends that it demanded repayment of the Principal Sum and interest arising from that event by the issue of the Further Amended Statement of Claim. 70The Moraitis Crop Lien relevantly provided that: "In consideration of [Moraitis] funding the Ongoing Works in respect of the trees and Fruit growing on the Orchard, HOL gives [Moraitis] a preferential Lien for the total value of the crop of Fruit growing on the Orchard and which will be harvested from the next immediate Orchard harvest." The term "Lien" was defined as "[t]his crop lien including its annexures and schedules". Clause 2(a) of that crop lien conferred on Moraitis an absolute and unfettered right, title and interest to the total fruit crop from the next immediate harvest after the date of the Lien and cl 2(b) conferred an entitlement to sell the harvested crop and deal with the gross sale proceeds in accordance with a Funding Agreement between HOL, Moraitis and ARG. Clause 3 provided that Moraitis was entitled to register that Lien with the appropriate body and recover the costs of registration out of the fruit sale proceeds. 71HPM contends that the terms "lien" or "charge" are frequently used as interchangeable at general law, and relies on Re Price; ex parte Tinning (1931) 26 Tas LR 158 at 160 as authority for that proposition. As Mr Newlinds points out, that decision does not assist HPM, because the question in issue in that case was whether the relevant arrangement was a charge, mortgage or lien, and it was not necessary for the Court there to determine whether a lien also constituted a mortgage or a charge in that case. On the other hand, Mr Clements contends that the Moraitis Crop Lien did not amount to a mortgage or charge, and refers to cases considering the definition of charge under the Corporations Law. In Re Trendent Industries Pty Ltd (in liq) (1983) 8 ACLR 115; 1 ACLC 980 at 987, Needham J distinguished between a possessory lien, which depended for its existence on possession, and a charge which exists regardless of possession. In Seka Pty Ltd (in prov liq) v Fabric Dyeworks (Aust) Pty Ltd (1991) 28 FCR 574 at 580; 4 ACSR 455, Pincus J distinguished between a lien, which gives rise to a right to retain possession against the lienor, and a "charge" within the meaning of s 9 of the Corporations Law. In Osborne Computer Corporation Pty Ltd v Airroad Distribution Pty Ltd (1995) 37 NSWLR 382 at 388; 17 ACSR 614, Rolfe J treated that decision as authority that a lien is not a charge and, after a detailed reviewed of the authorities and relevant academic writings, held (at 390) that a pledge did not constitute a charge. 72It seems to me that those decisions necessarily extend to the position in respect of a "charge" at general law, since the definition of charge in s 9 of the Corporations Law and in the Corporations Act 2001 (Cth) refers to "a charge created in any way" and depends upon the concept of a charge at general law: Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd [2000] HCA 25; (2000) 202 CLR 588; Cinema Plus Ltd (admin apptd) v Australia & New Zealand Banking Group Ltd [2000] NSWCA 195; (2000) 49 NSWLR 513 at [39]. It also seems to me that there is no reason not to adopt the same approach in construing the term "charge" as used in cl 4.1(f) of the Loan Agreements. For that reason, the grant of the Moraitis Crop Lien did not constitute the grant of a charge in breach of that Loan Agreements. The decisions in Seka and Osborne Computer also establish that a lien is not a mortgage, so far as the definition of "charge" in the Corporations Law extended to include a mortgage. 73Mr Clements also contends that, even if the Moraitis Crop Lien was a mortgage or charge, it was not over "part of the property the subject of" the Security under the Loan Agreements, because the Moraitis Crop Lien only applied to fruit after it was harvested, and Mr Clements did not have any right in respect of fruit after it had been harvested other than a right to receive income from its sale. HPM responds that Growers including Mr Clements had rights over the fruit and the undistributed fruit sale proceeds, which was the subject of Security by reason that it was the Borrower's interest under the Farming Agreement. I do not consider it necessary to determine this question, where I have found that a default under this clause was not established on other grounds, and would not deprive Mr Clements of the benefit of cl 5.2(c) of the Loan Agreements in any event. 74Next, Mr Clements contends that the Moraitis Crop Lien would not rank in priority to, or pari passu with, the Security under the Loan Agreements. HPM contends that it need only be shown that the charge "might" rank pari passu, or in priority to the Loan Agreements. I accept that, as HPM contends, the crop lien would have ranked in priority to the unregistered security in the Loan Agreements, had it been registered under the Bills of Exchange and Other Instruments Act 1955 (Qld), and it seems to me that this is sufficient to establish that aspect of a potential default under this clause. 75Mr Clements also contends that the Moraitis Crop Lien achieved the same result as the Grower's Representative entering into a loan secured by a charge as permitted by cl 10.3 of the Farming Agreements. That clause relevantly provided that: "The Grower hereby irrevocably appoints the Representative the attorney of the Grower under power in the Grower's name and as the Grower's act and deed for the purpose of borrowing such monies as required to harvest Fruit from time to time to be secured by a charge or charges over such Fruit and the proceeds therefrom, PROVIDED THAT any liability of the Grower in respect of such borrowing shall be limited to the value of the Fruit and any proceeds therefrom. ..." Mr Clements contends that the Loan Agreements should not be construed in a manner that an act permitted under the Farming Agreements would amount to an event of default under cl 4.1(f) of the Loan Agreements and that, properly construed, cl 4.1(f) applies only to a "charge or mortgage" that was not necessary to continue the Farm Business. I cannot accept that submission where the Moraitis Crop Lien was not a charge for the reasons noted above and therefore was not within the permission under cl 10.3 of the Farming Agreements. 76Mr Clements and HPM also join issue on other questions, such as whether Mr Clements was party to the Moraitis Crop Lien or authorised it and whether entry into that crop lien was necessary for the continuation of the Farm Business. HPM in turn contends that the latter issue is not open to Mr Clements, where the Court had previously declined leave in respect of a pleading to that effect. I do not consider it necessary to determine those issues given the other findings that I have reached above. Conclusion 77In the result, HPM has established that Mr Clements failed to pay Harvesting and Marketing Costs of an uncertain amount, but has not established the quantum of those Harvesting and Marketing Costs so as to be entitled to a judgment for a money amount against him in that regard or interest on that amount. HPM is not entitled to judgment against Mr Clements for the balance of the principal and interest on the loans, beyond the amounts he has already paid, by reason of cl 5.2(c) of the Loan Agreements, or interest on that amount. The proceedings should therefore be dismissed. I will hear the parties as to costs.