Lopes v Taranto [2018] VSCA 288

CONTRACT - Guarantee - Guarantees securing amounts due under deed of loan - Estoppel by deed between lender and borrower - Borrower indebted under deed of loan - No privity between guarantors and debtor - Guarantors unable to claim deed of loan operated differently for purposes of guarantee - Labracon Pty Ltd v Cuturich [2013] NSWSC 97; (2013) 17 BPR 32,497; Begley v Attorney-General (NSW) [1910] HCA 69; (1910) 11 CLR 432, referred to.

PLEADINGS - Whether estoppel properly pleaded - Function of pleadings - Statements of issues - Estoppel argument canvassed during closing addresses - Applicants addressed estoppel issue in written submissions - Respondent eschewed estoppel by deed but argued deed of loan had same operation as against guarantors - Applicants alleged in supplementary closing submissions new case being run - No amendment sought - Banque Commerciale SA, en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, applied.

1 The applicants seek leave to appeal against a judgment of the County Court holding them liable under guarantees each of them had executed in favour of the first applicant's uncle. The respondent is the executor of the uncle's deceased estate.

2 The question at trial was whether the uncle was ever owed the moneys his estate claimed under the guarantees. The applicants contend that, in finding that a loan had been made by the uncle to the alleged debtor, the judge relied on an estoppel that had not been part of the case pleaded by the respondent. The applicants further contend that the conclusion reached by the judge that an estoppel had been established was wrong in any event. The applicants contend that the judge was also in error in accepting, in the alternative, that the respondent had established an indebtedness by the alleged debtor to the uncle other than by way of loan. They say that this basis of liability had also not been part of the case pleaded against them.

3 For the reasons that follow, leave to appeal will be granted but the appeal will be dismissed.

4 A deed of loan was executed on 24 May 2011 between Picarock Pty Ltd ('Picarock') as manager of the Picarock Unit Partnership ('the Partnership') and the respondent's uncle Joseph Taranto. Mr Taranto died on 18 February 2012.

in consideration of the sum mentioned in Item 4 of the Schedule hereto (herein called 'the loan') lent or agreed to be lent to the borrower [Picarock] (upon and subject to the terms and conditions hereinafter set out) by the lender [Mr Taranto], THE BORROWER HEREBY COVENANTS with the lender as follows:-

1. The borrower will repay the loan together with interest calculated at seven percent (7%) per annum as follows:

(i) The sum of Five Hundred Thousand Dollars ($500,000.00) on that date which is eighteen (18) calendar months from the date of this Deed;

(ii) The balance of the loan and interest on that date which is twenty four (24) calendar months from the date of this Deed;

PROVIDED HOWEVER that should the borrower sell either of the two (2) properties listed hereunder before the dates specified in this Clause, then the borrower shall repay to the lender the whole of the outstanding loan amount and accrued interest at that point in time when either or both of the Shopping Centres known as 'Glenmore Village' and 'Farm Street Market Place' are sold and settled, namely:

(i) Lot 5 on RP 859912 ('Glenmore Village'); and

(ii) Lot 1 on SP 166182 ('Farm Street Market Place').

1. The borrower may at any time repay the whole of the loan or any part thereof prior to the due date for repayment thereof.
2. If the lender shall in [his] discretion make any further advance or advances to the borrower the same shall as and from the date of each such advance be added to and become part of the loan and shall be repayable by the borrower to the lender in accordance with this deed. Reference in other clauses hereof to the loan shall be construed as including any such further advance thereon.

6 Clause 18 of the deed of loan defined 'Loan' to mean 'the sum of money first mentioned on the first page of this Agreement or such part thereof which the lender may advance to the borrower and further advances (if any)'. Item 4 of the schedule provided that the amount of the loan was $2,200,000.

7 The applicants Mr John Lopes and Mrs Kay Lopes executed the deeds of guarantee on 20 May 2011. Mr Lopes is a nephew of Mr Taranto. The guarantees were not in the same terms. The guarantee given by Mr Lopes defined the 'principal instrument' as 'Deed of Loan dated the 20th day of May 2011'. It was accepted that this was a reference to the deed of loan dated 24 May 2011. The guarantee relevantly provided:

1. Hereby request you to lend to the borrower the loan together with such further advances as you may in your discretion make to the Borrower (the loan and such further advances, if any, being herein called 'the principal sum') pursuant to the principal instrument bearing or intended to bear even date herewith to be executed by the borrower in your favour.
2. Agree to give this guarantee as collateral security to you for the repayment of the principal sum and interest, damages and all other moneys payable by or recoverable from the Borrower under or pursuant to or in connection with the principal instrument (such principal sum, interest, damages and other moneys being herein called 'the moneys guaranteed').

1. The Guarantors[1] hereby jointly and severally unconditionally guarantee to you the due and punctual payment of the moneys guaranteed.

8 A schedule to the guarantee defined the borrower as Picarock as manager of the Partnership and defined the loan as $2,200,000 'and further advances if any'.

9 The guarantee given by Mrs Lopes defined Picarock as 'the Debtor'. It was an 'all moneys' guarantee that made no reference to the deed of loan or an amount of $2,200,000. Relevantly, the guarantee provided as follows:

IN CONSIDERATION of Taranto at the request of the party named and described in Item 2 of the Schedule (hereinafter called 'the Debtor') and the party named and described in Item 3 of the Schedule (hereinafter called 'The Guarantor') agreeing to provide loans, advances or other accommodation to the Debtor AND whether at the discretion and during the pleasure of Taranto or otherwise, the Guarantor (jointly and severally if more than one):

1. HEREBY UNCONDITIONALLY AND IRREVOCABLY GUARANTEE to Taranto the due and punctual payment of the following ('Moneys Hereby Secured'):

1.1 all moneys due owing or remaining unpaid to Taranto by the Debtor, whether alone or jointly or jointly and severally with any other person and in whatever name, firm or style and whether as principal or surety (the 'Debtor on whatever account'), in any manner or pursuant to the Security or on any account or as a result of or by reason of any transaction or circumstance whatsoever:

1.2 all moneys (if any) advanced or paid by Taranto (or which Taranto (whether requested so to do or not) agrees or becomes liable to advance or pay to, for, or for the accommodation or on account of or pursuant to the Security on behalf of the Debtor on whatever account ...

10 Picarock went into receivership and was deregistered in May 2015. The respondent as executor of Mr Taranto's estate sued on the guarantees, alleging that Picarock had not repaid the sum of $2,200,000 which the respondent alleged had been lent to Picarock pursuant to the deed of loan. The course of the litigation in the County Court is set out at further length below.

11 Mr Lopes has had extensive and diverse business interests over many years. Those interests were shared, at least in part, with Mr Denis Ryan and his son Mr Denny Ryan. Mrs Lopes gave evidence that Denis Ryan was a business partner of Mr Lopes. Picarock was incorporated on 31 October 2003. Its directors included Denis and Denny Ryan. Entries in the financial statements for the Partnership suggested that, between at least 30 June 2005 and 30 June 2012, the unitholders in the Partnership were Waymake Pty Ltd ('Waymake'), a company primarily associated with Mr and Mrs Lopes and of which Denis Ryan was a director, and Mr Ryan himself. The judge found that the financial statements of the Partnership also disclosed a 'significant financial association with many other companies', relevantly including Code Up Pty Ltd ('Code Up') and Wemear Ira Pty Ltd ('Wemear').[2] The judge further found that Code Up was jointly owned and controlled by Mr Lopes (through Waymake) and Denis Ryan.

12 The respondent's amended statement of claim, after pleading probate of the will and the execution of the deed of loan, continued as follows:

3. The Picarock loan included the following terms:

(a) that Picarock would repay the loan sum of $2,200,000 together with interest calculated at 7% per annum in the following manner:

(i) $500,000 eighteen months from the date of the Picarock loan; and

(ii) The balance of the loan and interest twenty-four months from the date of the Picarock loan.

(b) In the event that Picarock failed to repay the loan and interest in accordance with the agreement, then Picarock will pay the Deceased all expenses costs and damages caused by the default and such sums shall bear interest at 7% per annum.

1. By Deed of Guarantee and Indemnity dated 20 May 2011 between the Deceased and the First Defendant ('the First Defendant's Guarantee') the First Defendant guaranteed the payment to the Deceased of all sums of money payable by or recoverable from Picarock to the Deceased under the Picarock Loan.

Particulars

A copy of the Deed of Guarantee and Indemnity dated 20 May 2011 is in the possession of the Plaintiff's solicitors and may be inspected at its office by prior appointment.

1. By Deed of Guarantee and Indemnity dated 20 May 2011 between the Deceased and the Second Defendant ('the Second Defendant's Guarantee') the Second Defendant guaranteed the payment to the Deceased of all sums of money payable by or recoverable from Picarock to the Deceased.

Particulars

A copy of the Deed of Guarantee and Indemnity dated 20 May 2011 is in the possession of the Plaintiff's solicitors and may be inspected at its office by prior appointment.

1. Pursuant to the Picarock loan the Deceased lent to Picarock the sum of $2,200,000.
2. In breach of the Picarock loan Picarock has failed to repay the loan and has failed to pay any interest on the loan.
3. By a letter dated 14 February 2014 from the Plaintiff to the Defendants, the Plaintiff demanded payment from the Defendants the amount due under the Picarock loan pursuant to the First Defendant's guarantee and the Second Defendant's Guarantee.

Particulars

A copy of the letter dated 14 February 2014 is in the possession of the Plaintiff's solicitors and may be inspected at its office by prior appointment.

1. Notwithstanding the demand referred to in paragraph 8 above the Defendants have refused or neglected to pay the amount demanded or any part of it.

13 The applicants did not admit that the loan was of the nature and effect of a deed and did not admit that Picarock received any consideration for entering into the loan. They alleged that Mr Taranto lacked the requisite mental capacity to enter into the loan. The applicants did not admit paragraphs 4 to 8 of the statement of claim. Among other things, they argued that Mrs Lopes had executed the guarantee under duress and had been at a special disadvantage of which Mr Taranto had been aware. The applicants pleaded that they did not admit that any loan was in fact made by Picarock pursuant to the deed of loan, because 'such is solely within the knowledge' of Mr Taranto and Picarock.

14 On the first day of the trial, the parties appeared before a judicial registrar while the matter was in the reserved trial list. The parties had exchanged statements of relevant issues. Both parties agreed that the following two issues arose:

(a) whether there was no advance of loan moneys pursuant to the deed of loan and, if so, the effect of that on the guarantees;

(b) whether the guarantees were executed as a result of duress or unconscionability[3] and, in relation to the second defendant, as a result of the special disability, as a consequence of which they were unenforceable.

15 The applicants submitted that a further relevant issue (which they numbered (1)) was whether, pursuant to the deed of loan, Mr Taranto lent to Picarock the sum of $2,200,000. As explained below, the respondent was relying, not on an advance of $2,200,000 made by Mr Taranto to Picarock after the deed of loan, but on a series of smaller payments totalling that amount, involving other parties at earlier dates.

16 The judicial registrar asked about the additional issue which the applicants had identified. Counsel for the applicants explained that the paragraph was 'a pleadings point'. She explained:

The statement of claim specifically pleads that in paragraph 6 and the position of the defendants is that there was - the way it's pleaded is that there is a suggestion that the loan was made pursuant to that document. There was in fact no loan made pursuant to that document and as I understand the case the plaintiff proposes to run, although it hasn't been articulated in a court document, is that by reason of a number of payments out of the deceased's bank account and other payments, some seven years or so before the actual deed of loan, that somehow those payments inform that pleading. So that's a pleadings point.

17 Counsel for the respondent submitted that he had understood the point raised to be included in the matters upon which the parties were agreed, namely whether there was 'no advance of the loan moneys pursuant to' the deed of loan. Discussion about the relevance of the 'pleadings point' that had been raised continued. In light of the arguments in this Court as to the issues that were properly before the trial judge, it is unfortunately necessary to set out that discussion at some length:

MR NOONAN[4]: Paragraph 2 is there was no advance of the loan moneys.

JUDICIAL REGISTRAR: Pursuant to the loan.

MR NOONAN: So that's that moneys weren't paid pursuant to the loan. So there might have been some document called deed of loan but no money went across that allegation I understand it is correct, as my learned friend says, that in fact there were moneys paid beforehand that we say this deed of loan formalised in the position in relation to those and that is what it is. But we will prove that moneys were transferred pursuant to the loan. But does (1) seek to say something else other than that point?

JUDICIAL REGISTRAR: Because, Ms Skennar, if I look at paragraph 6 of the statement of claim, it is pursuant to the Picarock loan the deceased lent to Picarock the sum of 2.2 million.

MS SKENNAR[5]: Correct.

JUDICIAL REGISTRAR: And then para 2 of your statement of relevant issues is whether there was no advance of the loan moneys pursuant to Picarock loan and if so, the effect of that on the guarantees.

MS SKENNAR: Your Honour, I think the point is, is that my learned friend just told you that the plaintiff is going to say that the deed of loan apparently formalised those payments yet the Picarock loan in paragraph 6 of the statement of claim is defined as a deed of loan dated 24 May 2011. So the pleading in paragraph 6 is that, 'Pursuant to a deed ... (reads) ... money to Picarock'.

In fact, my learned friend has just told you his case is not that. He is saying that moneys were loaned at some earlier date and then the deed was entered into at a subsequent date. So my issue in paragraph 1 is that the plaintiff's case is not pleaded as the plaintiff intends to run it.

MR NOONAN: That's not true. We say that those funds were the loan. But either way, if my learned friend is right, she'll win. But all I want to understand, I don't care, that's fine, we'll answer whatever case and if we lose, that's for the court.

JUDICIAL REGISTRAR: Yes.

MR NOONAN: All I'm trying to understand here is, is a different point sought to be made by (1), because we submitted the statement of relevant issues which had the paragraph which is their paragraph 2.

JUDICIAL REGISTRAR: Yes.

MR NOONAN: They've added an extra point which is in paragraph 1. It seems to me that the point is the same. If there is a different point that's sought to be made, I'd like to know what the case is. Don't care, that's fine, they can [run an] extra point if they are, but the trial will run more smoothly if we know what the issue is and if there's not and maybe it's just been that there's been over zealousness and really it's the same point, that's fine too. We don't need to have an argument, but I'm just trying to understand.

JUDICIAL REGISTRAR: I think it's the distinction between the parties as to what prompted the payment for 2.2 million, whether it was pursuant to the deed of loan of 24 May 2011 which post-dated the transfer of money, or if the 2.2 million was transferred under something else.

MR NOONAN: I would point out it's a deed so it's not a consideration issue.

JUDICIAL REGISTRAR: Yes.

MR NOONAN: So the parties can of course by a deed agree that the money that has been advanced is a loan. It's not a question where there's prior advance, there's no consideration, there's no loan, which might have been the point because there wouldn't actually be a loan.

JUDICIAL REGISTRAR: That's right.

MR NOONAN: But if all the issue is this case is, does a prior - can the parties agree that money that's already been transferred in the loan, which of course happens all the time, it just depends on the executed document, if that's permissible, that's a very simple point, very easy. If they're right, they win. If we're right, we win. But if that's all the issue is.

JUDICIAL REGISTRAR: Yes, I think that's what the issue is.

MS SKENNAR: As you have articulated, Judicial Registrar, yes.

JUDICIAL REGISTRAR: Yes. Does that clarify what's all linked between (1) and (2)? It's this issue about [whether] the parties can agree that moneys that have been loaned previously can be the subject of a deed.

MR NOONAN: Yes, of the deed. Yes, exactly. So I still - sorry, how is that not the point?

MS SKENNAR: The point is the plaintiff is confined to the case it's pleaded. It proposes to run a different case. The pleading in paragraph 6 is that pursuant to that loan which is something that's occurred in May 2011 moneys were loaned.

The case that the plaintiff proposes to run is not that at all. It is moneys were previously loaned and then they were picked up in the deed of loan at a subsequent date. It's a completely different proposition. I don't dispute that it's possible to in a deed deal with moneys that are loaned. I dispute whether or not if in fact no loan occurred whether or not the deed has any application.

JUDICIAL REGISTRAR: That's your paragraph 2.

MS SKENNAR: Yes.

MR NOONAN: Yes, as a pleading point.

JUDICIAL REGISTRAR: Yes.

MR NOONAN: I think we all understand the case.

JUDICIAL REGISTRAR: If need be, we'll amend the pleading, but I mean as was indicated, as you can see from the contents of the court book and the contents of the agreed finality, we all agree that we know that this is what the defendant relied on. If there's a formal point being taken that that's not documented even though everyone understands, we'll amend the document. I don't know if that point is being taken.

MS SKENNAR: So far the parties have behaved on a very technical basis and the plaintiff has forwarded the defendant very strict requirements about what the defendant's case is and it be restricted to its pleadings. The defendant is entitled to adopt the same position, which is what is occurring.[6]

18 The question then arose whether paragraph 6 of the amended statement of claim required amendment, as follows:

JUDICIAL REGISTRAR: Do you need to amend paragraph 6?

MR NOONAN: I'm happy to. There's no prejudice to anyone. Everyone knows the issue. If the point is being taken, we'll amend it, that's not a problem.

JUDICIAL REGISTRAR: Ms Skennar, your client isn't taken by surprise is it by what Mr Noonan is agitating?

MS SKENNAR: That's not quite true, Your Honour. I mean the defendant can surmise what the plaintiff's case might be from correspondence previously. But realistically the plaintiff should have articulated its case properly in the first instance rather than having found some documents in disclosure augmenting what it says was its position in relation to the case.

So while it's possible for the defendants in this case to surmise what that case might have been it's simply not appropriate for them to have pleaded on the basis that it has been pleaded and I object to it. The defendants are entitled to run their defence on the basis that the plaintiff simply can't prove what it has alleged in paragraph 6 of the statement of claim. There's been no attempt, despite having the documents for a long period of time, to amend it. That's what they've asserted until today and that should be the position that they're to be confined to.

JUDICIAL REGISTRAR: I think paragraph 6 is almost the legal conclusion that the plaintiff is wanting the trial judge to find based on the facts and hopefully the evidence Mr Noonan wishes to flush out of his two witnesses. The 24 May 2011 document, the deed, that formalises the prior lending of the $2.2m.

MS SKENNAR: The plaintiff [is] in its statement of claim required to plead the material facts on which it relies. If at a point of time it realised that it wasn't exactly as it's pleaded in the statement it was required to amend it. It's not a matter of now coming to court and saying there is this other set of material facts that are appropriate and I should have pleaded, and here I am on the first day of trial now conceding that I need to amend it to plead them.

The defendant is entitled to run its defence on the basis that that is the plaintiff's position, that the money's were loaned pursuant to a deed that occurred long after any transfer of moneys occurred that it could possibly rely upon.[7]

19 The judicial registrar asked counsel for the respondent for the correspondence between the parties where the issues had been agitated. In the course of submissions counsel for the respondent took objection to the 'artificial' manner in which the applicants were proceeding. He described a letter dated 4 August 2016 from the respondent's solicitors to the applicants' solicitors describing how the payment of the loan moneys to Picarock was to be proved as an attempt to advance the resolution of the matter, rather than a response to an informal request for particulars.

20 The judicial registrar then proposed treating the 4 August 2016 letter as further and better particulars subjoined to paragraph 6 of the amended statement of claim. Counsel for the respondent submitted that that would be a sensible resolution. The judicial registrar then asked counsel for the applicants whether that clarified what was sought to be pleaded at paragraph 6. She responded:

MS SKENNAR: It's not in an ordinary format as to an amended pleading but if you're minded to make that order then I probably cannot resist it, although I repeat my previous submission, which is that leave should not be granted because the plaintiff had an opportunity to cast its case. It sent this letter in August 2016, more than a year ago, and no attempt has been made to change its pleading.

JUDICIAL REGISTRAR: Yes. But it's not a surprise to your client given the email at 115, the email where he sets out the chronology of those payments to Picarock which amounts to 2.2 million.

MS SKENNAR: Your Honour, there's no evidence about that email. It means nothing apart from what it says on its face. It's not necessarily that it's related to the letter. It's just a document that was attached to the letter at the relevant time upon which the plaintiff apparently at that point placed some weight. It is not proof of anything at this point. So it cannot be that by reason of that email the defendants are not taken by surprise. As I said before, the defendants should [not] be left to discern from correspondence possible changes in the plaintiff's case.

JUDICIAL REGISTRAR: I don't know if it's [a] change [in] the plaintiff's case. It's the background information which is found in the chronology and your submission that in July 2003 there were these withdrawals from bank accounts which provided the balance of the loan funds. So you object to the fact that that informs the loan being made. But that's precisely the plaintiff's case.

MS SKENNAR: The plaintiff's case is pleaded, and I'm only repeating myself, is that moneys were loaned pursuant to the deed of loan. It does not say that they were loaned prior to the deed of loan and incorporated by reason of the way the deed of loan is drafted. It's a prospective loaning of funds, not a retrospective loaning of funds.

JUDICIAL REGISTRAR: Yes. Mr Noonan, I order that the correspondence from court book 111 to 115 be particulars subjoined to paragraph 6. Then it really is a legal argument and a matter for the trial judge as to whether you can have prospective or retrospective loaning of funds.

MR NOONAN: Yes, exactly. If they're right we lose and if not we win.

JUDICIAL REGISTRAR: Yes.[8]

21 The letter dated 4 August 2016 from the respondent's solicitors to the solicitors for the applicants, ordered to stand as particulars to paragraph 6 of the amended statement of claim, stated that the respondent considered that the following materials 'sufficiently evidence the payment of the loan monies to Picarock as provided for in the loan agreement between the parties':

Code Up Pty Ltd ACN 058 454 078 ('Code Up')

The plaintiff's [sic] understand that Code Up was the administrative company that was used by your client Mr Lopes and his business associates to service various other entities, including Picarock Pty Ltd. I hereby enclose[9] a company search of Code Up which shows Mr Lopes as a former director of the entity, along with Mr Denis Ryan and other various parties.

Please note the following:

• A payment of $1,200,000 is recorded as received by Code Up on 4 July 2002 from 'J & L Taranto'. It is the plaintiff's contention that this date has been incorrectly logged on the accounting software and it should read 4 July 2003, which would match the withdrawal of the same amount from the deceased's Westpac Bank Account 18-0140 of which statements have already been provided to your clients.
• A loan is shown as owing from Code Up to 'J & L Taranto' in the sum of $1,200,000 on the Balance Sheets for the financial years 2003 through to 2008.
• Code Up also shows interest paid of $120,000 per year ($10,000 per month) to 'J & L Taranto' which commences on 28 July 2003 and these payments are reflected in the deceased's Westpac Bank Account 18-0140 as deposits each month. It is the plaintiff's contention that the commencement of interest payments in July 2003 supports the view that the initial sum of $1,200,000 was lent in July 2003 and not 2002 as listed on the accounting records.

Picarock Pty Ltd /Picarock Unit Partnership ('Picarock')

With respect to the balance of $1,000,000 shown on Mr. Lopes' ... email to Lawcorp, the plaintiff's [sic] note the following:

• The 2004 Balance Sheet of Picarock shows an amount of $1,000,000 owing to an entity called Wemear Ira Pty Ltd ACN 006 210 537.
• The enclosed account history[10] for that loan account shows that this amount was paid to Picarock as follows:

- 20 October 2003 - $150,000.00.

- 3 December 2003 - $250,000,00.

- 17 December 2013 - $100,000.00.

- 26 February 2004 - $300,000.00.

- 27 February 2004 - $200,000.00.

The breakdown of those payments matches the breakdown specified by your client Mr Lopes in his aforesaid email to Lawcorp Lawyers dated 11 May 2011.

• I hereby enclose[11] a company search of Wemear Ira Pty Ltd which shows that the director at the time of these payments was Mr Vincent Taranto, the son of the deceased Joseph Taranto.

22 The letter of 4 August 2016 referred to an email discovered previously from Mr Lopes to the respondent's solicitor dated 11 May 2011 being enclosed with the letter. This seems to be an erroneous reference to an email dated 12 May 2011. In that email, Mr Lopes forwarded a list of payments sent to him by email by Mr David Jahnke, finance manager of Ryan Group Queensland Pty Ltd. That email, also dated 12 May 2011, relevantly provided as follows:

Hi John,

We have tracked and recorded the following payments from J & L Taranto:

• 04/07/02 $1,200,000 paid to Ryan Group

The following payments were paid to Picarock Pty Ltd.

• 20/10/03 $150,000

• 03/12/03 $250,000

• 17/12/03 $100,000

• 26/02/04 $300,000

• 27/02/04 $200,000

All of these transactions are recorded as loan funds against Picarock PL.

Thanks and regards,

David Jahnke

23 It is convenient to refer also to an email dated 11 May 2011 from Mr Lopes to the respondent's solicitor which did not form part of the particulars. That email was in the following terms:

Don

Please find attached reports relating to the pickarock properties. The glenmore property has been strata tiled and as previously shown will realize a value of approximate 6.5 to 7.0 mill. The farm st property will yield in the order of 14 mill a total 21 mill.

I have enclosed the bill rollover account

The net proceeds will cover the loan repayment to Joseph Taranto

Our lawyer was out today but I will be speaking to him early tomorrow morning and he will clarify the structure re the properties

Offered as further security will be a personal guarantee from Kay Lopes

Her personal assets are

Rembrandts distribution

Half family home net 500k

Half waterfront block net 400k

Waterfront duplex net 400k

Their are other beneficial assets in pharmacies and the [remaining] equity in the picarock properties

Also their will be charge over a company triglow which owns property with my brother net 800k

Today I am asking for permission for a partial release of funds so as settlement can be effected on next Monday that amount is 1 million dollars

I asked Peter Carlei of Russo pellicano Carlei to draft personal guarantee but he said that that document needed to be drafted by you

I know this has been difficult for all parties for which I apologise but it would be appreciated if you could give it your urgent attention

Regards

John lopes

24 The above letter and emails were all put into evidence at the trial. In addition, a letter from the solicitors who prepared the deed of loan, Griffiths Parry, confirmed that they did so on instructions received from the directors of Picarock. When this correspondence is read with the discussion before the judicial registrar, it was in our view clear beyond argument that the respondent's case at trial was that the whole of the $2,200,000 had been 'lent' well before the deed of loan was entered into; and that the advances comprising that total sum were those set out in the 12 May 2011 email and the 4 August 2016 letter.

25 At trial it was not in dispute that Picarock had not paid $2,200,000 to Mr Taranto before it was deregistered. The relevant questions were whether Picarock was indebted to Mr Taranto for that sum under the deed of loan and, if so, whether that liability had been guaranteed by the applicants.

26 The trial judge first dealt with an argument that was advanced by the respondent to the effect that the status of the deed of loan as a deed made it unnecessary for the estate to prove that Mr Taranto lent or agreed to lend $2,200,000 to Picarock. This argument seems to have been put on the basis that the fact that the deed of loan was a deed meant that it did not matter whether the loan which was said to have constituted the consideration for Picarock's covenant to pay Mr Taranto was in fact advanced. In substance, the question was whether the statement in the deed of loan that Mr Taranto had lent or agreed to lend $2,200,000 to Picarock gave rise to an estoppel against Picarock. As explained later in these reasons, however, the argument was really that the deed of loan operated as between the parties to the guarantees in the same way as it did between the parties to the deed themselves. In that way, it was said that the statement in the deed of loan operated to bind the guarantors. It is convenient, at the risk of some inaccuracy, to describe this as an estoppel argument.

27 Mr and Mrs Lopes resisted this argument on two grounds. It was contended that the argument was not open on the pleadings and that, in any event, the suggested estoppel did not arise on the proper construction of the deed of loan.

28 The judge held that it was clear, both from the terms of the deed of loan and from what was said before the judicial registrar on the first day of the trial, that the estate was relying on past advances as constituting the loan said to have been 'lent' by Mr Taranto to Picarock pursuant to the deed of loan. The judge added that he also did not accept that the estate's reliance on the fact of the deed of loan being a deed was 'a further version of its case'.[12] He stated that the document was unequivocally identified in the amended statement of claim as a deed and that Mr and Mrs Lopes had expressly joined issue on that allegation.

29 The judge then referred to the principles governing estoppel by deed.[13] He referred to the following classic statement of the principles by Lord Maugham in Greer v Kettle:[14]

Estoppel by deed is a rule of evidence founded on the principle that a solemn and unambiguous statement or engagement in a deed must be taken as binding between parties and privies and therefore as not admitting any contradictory proof. It is important to observe that this is a rule of common law, though it may be noted that an exception arises when the deed is fraudulent or illegal. The position in equity is and was always different in this respect, that where there are proper grounds for rectifying a deed, e.g., because it is based upon a common mistake of fact, then to the extent of the rectification there can plainly be no estoppel based on the original form of the instrument. It is at least equally clear that in equity a party to a deed could not set up an estoppel in reliance on a deed in relation to which there is an equitable right to rescission or in reliance on an untrue statement or an untrue recital induced by his own representation, whether innocent or otherwise, to the other party.[15]

30 Turning to the substantive issue, the judge explained how the alleged estoppel might operate against the applicants, as follows:

There is no doubt that Mr and Mrs Lopes are entitled to challenge the Deed of Loan, including in order to show that there is nothing owing or otherwise payable under the Deed. Any estoppel arising from the Deed cannot bind non-parties. However, Mr and Mrs Lopes' submissions tend to conflate this challenge, with their challenge to the respective guarantees. ...

I agree with the Estate that, in challenging the Deed of Loan, Mr and Mrs Lopes are not entitled to say that it operates differently for them than it does for Picarock. It is not relevant to the enforceability of the Deed to ask whether a third party (including a guarantor) does or does not know if there was actual money advanced. In my view, if the Deed of Loan gave rise to a valid and enforceable debt repayable by Picarock to Joseph Taranto, then (subject to the question of construction of the guarantees discussed below) that is the debt that engaged those guarantees.[16]

31 The judge then identified the first question as whether the recital to the deed of loan constituted 'a solemn and unambiguous statement in a deed that must be taken (as a matter of evidence) as binding between Joseph Taranto and Picarock'.[17] The judge identified the second question as being whether Picarock had grounds in equity for challenging the deed of loan. In relation to the first question, the judge held that what the parties intended by the phrase 'the sum ... lent or agreed to be lent' could 'hardly be clearer'.[18] The judge stated that it was the sum of $2,200,000, expressly identified by reference to item 4 of the schedule. He stated that in the circumstances, any ambiguity or uncertainty that might otherwise have attended the deed was eliminated.[19]

32 The judge held further that if there were any uncertainty about which funds the parties had in mind in framing the deed of loan, that uncertainty was properly resolved by reference to the surrounding circumstances and commercial purpose of the deed. He stated that the surrounding circumstances, and notably the emails of 11 and 12 May 2011, supported the conclusion that the covenant in the deed of loan concerning payment had been adopted by Picarock and Mr Taranto as a basis of their relationship.

33 In relation to the second question, the judge could see no basis for Picarock to raise an equitable challenge to the suggested estoppel.

34 The judge went on to consider whether, if he was wrong in the above conclusions, the estate had in any event proved on the balance of probabilities that the sum of $2,200,000 had been lent to Picarock by Mr Taranto. In that context, he noted that there were significant gaps and inconsistencies in the various financial statements on which the estate relied. However, he was satisfied that the emails of 11 and 12 May 2011, against the background provided by other financial statements, were:

at least strong circumstantial evidence that, by one means or another, the advance of $1.2 million originally made by Joseph Taranto to Code Up and the $1 million in advances by Wemear to Picarock, had come to be treated by those in control of Picarock as debts owing by Picarock to Joseph Taranto. That evidence is bolstered by the admission and evidence that Griffiths Parry prepared the Deed of Loan on instructions received from Picarock's directors.[20]

35 The judge drew inferences that any evidence that Mr Lopes or Mr Jahnke might have given would not have assisted the case of Mr and Mrs Lopes by proving otherwise. The judge noted in particular that it was apparent from the emails that Mr Lopes had an 'intimate and detailed knowledge of Picarock's financial affairs'.[21]

36 As a result, the judge found that at the time the deed of loan was executed on 24 May 2011, Picarock 'owed $2.2 million' to Mr Taranto, by reference to the transactions described in the email of 12 May 2011.[22]

37 The judge then moved to consider whether, as a matter of construction, the guarantees constituted security for the deed of loan. First, he held that the date of the deed of loan appearing in the guarantee executed by Mr Lopes was in error and that the parties intended that guarantee to be collateral security for the deed of loan. That matter is not in issue in the proposed appeal. Next, the judge noted that he had already rejected the submission that liability under the deed of loan was avoided because the $2,200,000 had not been advanced 'pursuant to' the deed of loan. The judge held that the guarantee of Mr Lopes by its express terms was an agreement by him unconditionally to guarantee to Mr Taranto the due and punctual payment of the money payable by Picarock under the deed of loan. The judge also noted that the guarantee executed by Mrs Lopes was drafted more widely than that of her husband. In particular, the deed of loan was not referred to at all in the description of the primary liability in her guarantee. It is not necessary to refer to other arguments considered by the judge. His conclusion was that as a matter of construction, both of the guarantees constituted security for the deed of loan.

38 Finally, the judge rejected the unconscionability defence that had been advanced by Mrs Lopes based on Garcia v National Australia Bank Ltd.[23] This aspect of the case is not pressed in the proposed appeal.

39 In the result, the judge ordered that there be judgment for the estate against Mr and Mrs Lopes in the sum of $2,200,000, together with interest at the rate of seven per cent per annum from 24 May 2011 until the time when demand was made against them, being 14 February 2014. Interest was payable thereafter at rates set under the Penalty Interest Rates Act 1983.

40 The applicants seek to appeal on the following proposed grounds:

Ground 1: The Judge erred in finding that the respondent had pleaded and was entitled to rely on the case that the Deed of Loan proved Picarock was indebted to Joseph, without proving that a loan had been made by Joseph to Picarock.

Ground 2: The Judge erred in finding that on the proper construction of the relevant operative provision of the Deed of Loan it proved that Picarock was indebted to Joseph Taranto, as a result of an estoppel by Deed, including by reason of:

2.1 Erring in finding that the emails referred to at [11] and [12] of the Reasons proved that each of Joseph Taranto and Picarock intended that the transactions totalling $2.2 million listed by Mr Jahnke in his email were to be treated as loan funds against Picarock and be repayable by Picarock to Joseph Taranto (the subjective intention finding);

2.2 Erring in treating the subjective intention finding as a relevant surrounding circumstance which could be used in the construction of the operative provision of the Deed of Loan, so as to give effect to the subjective intention of the parties.

Ground 3: The Judge erred in finding that the respondent had proved that the payments referred to in the letter dated 4 August 2016 and the attached email were amounts 'lent' by Joseph to Picarock within the meaning of the Deed of Loan as properly construed.

41 The applicants submitted that estoppel by deed had not been pleaded and that the respondent had not been entitled to prove its case without establishing that a loan had in fact been made by Mr Taranto to Picarock. As mentioned above, the judge accepted there was an estoppel by deed as between Mr Taranto and Picarock for the purposes of the deed of loan, and that Picarock's liability was guaranteed by the applicants.

42 The estoppel argument was raised at trial in the course of questions from the judge to counsel for the applicants during final addresses. The parties had that day exchanged written submissions, in which the applicants had contended that they were not parties to the deed of loan and were therefore not restricted from challenging the consideration alleged in it. They cited Greer v Kettle,[24] for the following propositions concerning estoppel by deed:

recitals of a deed do not estop all parties to the deed from ever alleging and proving the true facts; it is a question of fact as to whether the recital is intended to be an agreement that both parties admit a fact. Further, the recitals in a deed do not affect persons who are not parties or privies to the deed. The [applicants] were not parties to the [deed of loan] and are therefore not restricted from challenging the consideration alleged in the recitals in the deed of loan, it is submitted that the court must consider whether there was a loan by the deceased to Picarock.[25]

43 Further written submissions were then filed on the question of estoppel by deed. In his submissions, the respondent submitted that the reference to Greer v Kettle was misplaced because 'there is no allegation of estoppel arising from the recitals of the Deed of Loan and the defendants are not alleged to be "bound by the recitals" of the Deed of Loan per se'.[26] The submission went on to say that the applicants were 'not entitled to say that [the deed of loan] operates differently for them than it does for Picarock' and that the submission that the applicants were not entitled to accept aspects of the deed of loan that otherwise bound Picarock was 'plainly wrong'.

44 The applicants contended in reply that the respondent was now relying on a new argument that it was sufficient to rely on the deed of loan and 'look no further' in deciding whether there was a loan. They submitted that reliance on the argument should not be permitted because it was not pleaded, including by way of the particulars to paragraph 6 of the statement of claim. The applicants also made written submissions as to why the argument should be rejected in any event. The respondent did not seek to amend the pleading to accommodate the argument.

45 The respondent submitted in this Court that the trial judge was correct to find that the estoppel argument had been pleaded. It was said that the pleadings engaged with the status of the deed of loan as a deed and that the parties made submissions on the issue, including written submissions on the part of the applicants. The respondent noted that the applicants did not claim to have been taken by surprise by the argument.

46 At the hearing before us, senior counsel for the applicants submitted that it was not a question of surprise because the parties had proceeded on the basis that the trial was run according to the pleaded case. The real question was whether the judge was correct to hold that the estoppel argument fell within the respondent's pleaded case. It was submitted that the respondent made a forensic decision not to seek leave to amend and that the applicants were entitled to rely on the case pleaded against them. It was submitted that there was a possibility of prejudice because, if there had been an application for leave to amend, that would have presented the question whether to call further evidence of surrounding circumstances. Counsel said, however, that he was not in a position to say that any particular evidence would have been led had an amendment been sought and permitted at trial.

47 Counsel for the respondent submitted that the status of the deed of loan as a deed had been in issue on the pleadings and the applicants had advanced full argument at trial on the estoppel argument. He submitted that there was no prejudice in allowing the point to be run.

48 In ruling that the estoppel argument fell within the pleaded case, the judge relied on the identification of the deed of loan as a deed in paragraph 2 of the statement of claim and the fact that the applicants joined issue with that allegation.[27] This conveyed that it was unnecessary to prove consideration under the deed. Moreover, counsel for the respondent had submitted before the judicial registrar that '[t]he parties can of course by deed agree that the money that has been advanced is a loan'.[28] Earlier, the judge observed that the purposes of pleadings were to give notice to the other party of the case it has to meet, to avoid surprise to that party, to define the issues at trial and thereby to allow for relevant evidence to be admitted and for the trial to be efficiently conducted.[29] This was said to mean that an unduly restrictive or technical approach should not be taken to the interpretation of pleadings.[30]

49 The function of pleadings, and the circumstances in which they might not define the issues for resolution in a proceeding, were explained by Mason CJ and Gaudron J in Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd in the following terms:

The function of pleadings is to state with sufficient clarity the case that must be met. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities.

Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference.[31]

50 These observations remain apposite under the Civil Procedure Act 2009. While not always the case, ordinarily to require the parties to clearly identify the real issues in dispute facilitates the just, efficient, timely and cost-effective resolution of the dispute.[32] An instance of departure from the pleadings as the basis for determining the issues in the case may include a case where the court has employed a statement of issues, as envisaged by s 50A of the Civil Procedure Act.[33]

51 In our opinion, the statement of claim did not articulate a claim that, because the deed of loan contained a statement that a loan had been advanced, the respondent did not need to prove as a fact that there had been such a loan and the applicants were estopped from asserting the contrary. The allegation that the deed was a deed was perhaps capable of being understood, as the judge held, as containing an allegation that consideration was not required under the deed, but that still falls a long way short of fixing any consequences of that circumstance upon the applicants as guarantors who were not parties to the deed in question. It was not explained at all in the statement of claim how it was said that an estoppel operated to bind the applicants. Nor did the statement of counsel for the respondent before the judicial registrar, that the parties could agree by deed that money had been advanced as a loan, serve to place the applicants on notice of an estoppel argument.

52 On the above materials, this was not a case where, by reason of any alternative procedure adopted throughout the trial or because of the overall conduct of the case, it can be said that a basis other than pleadings has been chosen generally to define the issues in the proceeding. To the contrary, the parties' statements of issues exchanged before trial did not raise any estoppel issue and focussed instead on whether there was an advance of loan moneys pursuant to the deed of loan (itself an indication that the question of estoppel did not arise). But the issue did come up, albeit at a late stage in the trial, and was addressed in submissions which cast the matter in a different light. It will be necessary to come back to the significance of those submissions.

53 It is plain from the extracts of transcript set out earlier that the applicants, in particular, were concerned that the case run according to the pleadings, and that the respondent was on notice of that fact. This led to the order made in respect of paragraph 6 to regularise the pleading so that it aligned with the case being put by counsel for the respondent.

54 If the matter had ended there, in our opinion the respondent should not have been permitted to pursue the estoppel argument. However, the submissions made by the parties after evidence had closed altered the position. Those submissions reveal that the parties had in fact travelled beyond the pleadings. At the same time, they were to some degree at cross-purposes. The applicants engaged with the question whether there was an estoppel by deed, only to have the respondent deny that this was its argument. The respondent then articulated its argument in different terms (about the deed of loan operating no differently as between the respective sets of parties), to which the applicants raised their pleading objection.

55 The argument ultimately accepted by the judge, with which this appeal is concerned, was that set out at [30] above. In short, the judge accepted that any estoppel arising under the deed of loan could not bind third parties, but held that this did not entitle the applicants to say that the deed of loan operated differently for them than it did for Picarock. The question was whether the deed of loan gave rise to a valid and enforceable debt repayable by Picarock to Mr Taranto. In that context, the first question that arose was whether the deed of loan gave rise to an estoppel by deed against Picarock.

56 The position that emerges is that the applicants had accepted that a question arose regarding estoppel by deed, as between Picarock and Mr Taranto, and had addressed that question in writing, but they contested whether a further issue arose, namely whether it was sufficient for the respondent to rely on the deed of loan and 'look no further'. However, that 'new' argument involved no more than determination of the estoppel by deed argument that the applicants had already acknowledged and addressed. In the absence of privity between the applicants and Picarock, estoppel by deed could not operate directly.[34] The reason that estoppel by deed was significant was that it determined the obligations of Picarock towards Mr Taranto under the deed of loan, upon which obligations the guarantees then operated (subject to arguments as to their proper construction). This was the 'operate no differently' argument, upon which the estoppel argument necessarily depended.

57 Viewed in this light, the applicants' objection to the 'new' argument sat uncomfortably with their acceptance that an estoppel argument was in issue in the case. In those circumstances, the belated objection that the argument was not pleaded rings hollow. The applicants had no difficulty in identifying and addressing the estoppel argument in written closing submissions, indicating that it was regarded as properly in issue. While the material before us suggests that the case had to this point otherwise been run on the pleadings, the submissions reveal that the estoppel issue had none the less been treated as open. In these circumstances, the judge was correct to reject the claim that the respondent was advancing a new version of its case in its supplementary written submissions and to address the estoppel argument accordingly.

58 We would therefore reject the first proposed ground of appeal.

59 The applicants submitted that, on the proper construction of the deed of loan, it did not record an agreement that moneys had already been lent by Mr Taranto to Picarock. It was submitted that the judge had erred in relying on the emails of 11 and 12 May 2011 as aids to interpreting the deed, because they only recorded the subjective intentions of Mr Lopes and Mr Jahnke and there was no basis for finding that they reflected the intention of Picarock. It was submitted that the emails were not relevant to any point of construction of the deed of loan.

60 The respondent submitted that the judge had correctly applied the objective approach to contractual interpretation and used the emails properly to identify the commercial purpose of the loan. However, the judge had regarded the language of the deed as clear without needing to resort to extrinsic material.

61 It is convenient to describe briefly the judge's reasoning in respect of this aspect of the case. We have already set out his reasoning for accepting that an estoppel could operate so as effectively to bind the applicants.[35] After referring to the principles governing the construction of contracts, the judge reasoned as follows:

In this case, what the parties intended by the phrase 'the sum ... lent or agreed to be lent' could hardly be clearer. It is the sum of $2.2 million, expressly identified by reference to item 4 of the schedule. As the Estate has submitted, the position may have been different if a reference to funds 'lent' was the sole or defining descriptor of the amount to be repaid. But in circumstances where the amount of $2.2 million is expressly identified, any ambiguity or uncertainty that might otherwise have attended the Deed, is eliminated. ...

Further, if there were uncertainty about what funds the parties had in mind in framing the provision, that uncertainty is to be resolved by reference to the surrounding circumstances and commercial purpose of the Deed. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context.

In this case, the surrounding circumstances (and notably the emails of 11 and 12 May 2011), show that each of Joseph Taranto and Picarock intended that the transactions totalling $2.2 million listed by Mr Jahnke in his email and asserted by him to be 'recorded as loan funds against Picarock PL', were to be treated as such and be repayable by Picarock to Joseph Taranto. These documents ... also expressly support the conclusion that the covenant in the Deed of Loan concerning payment has been adopted by Picarock and Joseph Taranto as a basis of their relationship.[36]

62 The relevant passage in the deed of loan recited that:

in consideration of the sum mentioned in Item 4 of the Schedule hereto (herein called 'the loan') lent or agreed to be lent to the borrower [Picarock] (upon and subject to the terms and conditions hereinafter set out) by the lender [Mr Taranto],

before continuing: 'The borrower will repay the loan ...'.

63 The applicants submitted, in short, that the deed did not state that the loan had been made and so did not by its terms establish an indebtedness of Picarock to Mr Taranto. The judge found, and the respondent submits, that the reference to the amount 'lent or agreed to be lent' was to the sum of $2,200,000 mentioned in the schedule. So much may be accepted, but the critical question is whether the deed of loan, on its proper construction, stated that this sum had in fact been 'lent' rather than 'agreed to be lent'.

64 The only support in the deed itself for that construction lies in the provision made in cl 3 for further advances. Conceivably, this could explain the words 'agreed to be lent'. But such amounts are in the discretion of the lender. They are not amounts 'agreed to be lent'. Moreover, the words 'lent or agreed to be lent' qualify 'the sum mentioned' in the schedule, namely $2,200,000. It follows that the words 'lent or agreed to be lent' would not be construed as stating that the sum of $2,200,000 had already been lent in the absence of admissible material outside its text supporting that construction. We turn then to material beyond the text.

65 In Eureka Operations Pty Ltd v Viva Energy Australia Ltd,[37] Santamaria, Ferguson and McLeish JJA referred to decisions of the High Court, including Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd[38] and Electricity Generation Corporation v Woodside Energy Ltd,[39] and stated that:

In the first place, the objective approach to contractual interpretation requires reference to the 'text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose'.[40] It follows that the meaning of a word or clause cannot be determined by reference to its own text alone. As such, resort to the 'ordinary meaning' of the word or clause can be no more than a starting point in a process which in every case requires the reader of the contract to look further to context and purpose. Nor is it necessary that there be ambiguity, however understood, before undertaking that further process. Context (as defined above) and purpose are always relevant, no matter how clear the 'ordinary meaning' is said to be.

Secondly, the objective approach calls for the relevant provision to be interpreted as a reasonable businessperson would have understood it, which is revealed by considering the language used in the contract, the circumstances the contract addresses and the commercial purpose or objects to be secured by it, each of which is ordinarily able to be identified by reference to the contract alone.[41] Again, the notion of 'ordinary meaning', while plainly a relevant aspect of this inquiry, cannot serve to foreclose consideration of these other elements. It is always possible that, despite the 'ordinary meaning', reference to context, the circumstances the contract addresses and its commercial purpose or objects will show that a reasonable businessperson would have understood a different meaning to apply. It is inherent in the test of the reasonable businessperson that he or she must be taken to be aware of more than just the text of the provision being construed.

Construction in the present case should therefore be approached on the basis that the 'ordinary meaning' of the relevant provisions is only one aspect of the wider inquiry, and that there is no need to establish any ambiguity arising from the text before undertaking that inquiry. It may be that no reason emerges to depart from the ordinary meaning of the words used.[42] But the whole inquiry must be undertaken, whether or not the ordinary meaning can be

described as unambiguous when read in isolation. Establishing ambiguity is not a threshold to be met before completing the inquiry. [43]

66 It is clear, then, that there is a distinction between 'context' (being the entire context of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and 'the circumstances the contract addresses and its commercial purpose or objects'.[44] As to the latter, admissible evidence of mutually known objective background circumstances is always admissible, no matter how clear the 'ordinary meaning' of the words to be construed is said to be.

67 In Pacific Carriers Ltd v BNP Paribas,[45] the High Court stated:

The construction of the letters of indemnity is to be determined by what a reasonable person in the position of Pacific would have understood them to mean. That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to Pacific and BNP, and the purpose and object of the transaction. In Codelfa Constructions Pty Ltd v State Rail Authority of NSW, Mason J set out with evident approval the statement by Lord Wilberforce in Reardon Smith Line Ltd v Hansen-Tangen:

In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.[46]

68 In Electricity Generation, French CJ, Hayne, Crennan and Kiefel JJ stated:

The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach ... will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd,[47] unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties ... intended to produce a commercial result'.

A commercial contract is to be construed so as to avoid it 'making a commercial nonsense or working commercial inconvenience'. [48]

69 In Mount Bruce, French CJ, Nettle and Gordon JJ stated:

The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.[49]

70 In Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd,[50] Kiefel, Bell and Gordon JJ synthesised the previous High Court authorities as follows:

It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.

Clause 4 is to be construed by reference to the commercial purpose sought to be achieved by the terms of the lease. It follows, as was pointed out in the joint judgment in Electricity Generation Corporation v Woodside Energy Ltd, that the court is entitled to approach the task of construction of the clause on the basis that the parties intended to produce a commercial result, one which makes commercial sense. It goes without saying that this requires that the construction placed upon cl 4 be consistent with the commercial object of the agreement.[51]

71 The use of the words 'in the position of the parties' in this synthesis of the principles of interpretation of commercial contracts, when read together with Electricity Generation, supports the statements in the above-quoted passage from Eureka that, in every case and whether or not there is ambiguity in the language, the Court should have regard to objective evidence of facts known to both parties as to commercial purpose.

72 Gageler J delivered a separate judgment agreeing with the plurality as to the result, and stating that the clause of the contract in question should be:

construed by reference to what a reasonable person in the position of the original parties to the lease would have understood by its language, considered in the context of the memorandum of agreement as a whole and against the background of the knowledge which the original parties to the lease can be taken to have had at the time of its execution.[52]

73 In this case, the 11 and 12 May 2011 emails, when read against the background of the financial statements to which the trial judge referred, reveal that the commercial purpose of the deed of loan was to provide for Picarock to repay the $2,200,000 which had been lent by Mr Taranto and persons or entities associated with him to various entities associated with Mr Lopes. When that commercial purpose is taken into account, it is clear that the words 'or agreed to be lent' in the recital cannot refer to the defined 'loan' of $2,200,000. The words 'or agreed to be lent' in the recital are unnecessary surplusage and should be disregarded. Thus, the recital to the deed of loan should, on its proper construction, be read as stating that the sum of $2,200,000 had in fact been 'lent' before the deed was entered into. That statement is sufficiently unambiguous to constitute an estoppel by deed.[53]

74 Clause 3 of the deed of loan then governs any agreement to lend further money above the $2,200,000. It provides that any further advances are to be 'added to and become part of the loan and shall be repayable by the borrower to the lender in accordance with this deed'.

75 On that basis, the judge was correct to find that, on the proper construction of the deed of loan, it provided that Picarock was indebted to Mr Taranto in the amount of $2,200,000. Proposed ground 2 is therefore not made out.

76 Although not a ground of appeal, we note that the result of the above construction and consequent estoppel by deed as between Mr Taranto and Picarock is that the applicants are liable under their guarantees for Picarock's indebtedness under the deed of loan. As the trial judge held, the guarantees obliged the applicants to pay any amount which Picarock failed to pay under the deed of loan as properly construed,[54] as the applicants were not entitled to contend that the deed of loan 'operates differently for them than it does for Picarock'.[55]

77 The third proposed ground of appeal arises only if the applicants succeed on the first two grounds, which they have not done. However, it was fully argued and we will deal with it.

78 The ground contends that the judge erred in finding, in the alternative to his conclusion upholding the estoppel argument, that the payments referred to in the letter dated 4 August 2016 were amounts 'lent' by Mr Taranto to Picarock within the meaning of the deed of loan as properly construed. The applicants submitted that the case pleaded depended, not upon establishing an indebtedness between Mr Taranto and Picarock, but on proving a loan. Paragraph 2 of the pleading had been explicit in that regard and the particulars to paragraph 6 did not alter that position. They showed only that the respondent was alleging a past loan, rather than a loan to be made in the future.

79 The applicants submitted that the use of the word 'repay' in cl 1 of the deed of loan indicated that Picarock was obliged to 'pay back or refund money'.[56] It followed that, in order for there to be any liability under the deed of loan, there must first have been an amount of $2,200,000 lent to Picarock by Mr Taranto, either before or after execution of the deed of loan. It was submitted that it was not sufficient to establish that Picarock was indebted to Mr Taranto on some other basis.[57]

80 Applying this analysis to the payments described in the letter dated 4 August 2016, the applicants submitted that the advance of $1,200,000 by Mr and Mrs Taranto to Code Up was not an amount lent to Picarock, and that the payment of $1,000,000 made by Wemear to the Partnership was not an amount lent by Mr Taranto. As to the payments to Code Up, it was submitted that there was no evidence of an assignment of the debt from Code Up to Picarock, and none had been pleaded. At best, Picarock had assumed an obligation to repay a loan made to Code Up. But because that was not an amount owing in respect of an amount lent by Mr Taranto to Picarock, it was not a loan which Picarock covenanted to 'repay'.

81 In relation to the $1,000,000 payment made by Wemear, it was submitted that the evidence went no higher than showing that the amount was regarded as a loan to Picarock. This fell short of establishing that it was a loan from Mr Taranto.

82 The applicants pointed out that neither Mr Lopes nor Mr Jahnke was an officer of Picarock. They submitted that, even if the judge was correct to hold that the emails of 11 and 12 May 2011 constituted circumstantial evidence that the advances had come to be treated by those in control of Picarock as debts owing by Picarock to Mr Taranto,[58] that would not establish that they were in fact debts between those parties. Instead, the emails actually showed that any debts existed between different parties. Moreover, even if they established debts between Picarock and Mr Taranto, they would still not be debts in respect of loans made by Mr Taranto to Picarock.

83 The respondent submitted that the applicants' argument based on the meaning of the word 'repay' failed to address the judge's criticism that this approach involved impermissibly trying to construe a clause by giving one word in it a meaning without reference to the context in which that word was used.

84 The respondent submitted that all the evidence pointed to the conclusion that, as at 24 May 2011, Picarock owed Mr Taranto $2,200,000. The evidence was that Mr Lopes was in business with the Ryan group through the Partnership and was at various times a director of Code Up and two other companies which had been noted in Picarock's 30 June 2004 accounts against $900,000 of the advances totalling $1,000,000. Mr Lopes had, in the context of finalising the deed of loan, forwarded Mr Jahnke's itemised list of transactions to Mr Taranto's solicitor. The deed of guarantee he executed referred to $2,2000,000 and any further advances, indicating a distinction between the current debt and further advances. The respondent relied also on the fact that the deed of loan was drafted on instructions from Picarock's directors.

85 The respondent submitted that there was no contrary evidence and that Jones v Dunkel inferences were readily available as a result of the failure of Mr Lopes and Mr Jahnke to give evidence.[59]

86 The first issue that arises on the above submissions is whether it was open on the pleadings for the respondent to prove an indebtedness of Picarock to Mr Taranto other than by way of loan. That depends upon how paragraphs 2 and 6 of the statement of claim are to be understood. In that regard, the particulars constituted by the letter of 4 August 2016 and attached email are of central importance. Although those documents were ordered to stand as particulars to paragraph 6, that paragraph, read with its particulars, is then to be read as part of the whole pleading.

87 It is true that paragraph 2 of the statement of claim alleges an agreement by Mr Taranto to lend and by Picarock to borrow. Equally, paragraph 7 pleads a failure by Picarock 'to repay the loan'. But it is clear from paragraph 6 that the 'loan' in question was a reference to an arrangement for payment of the amounts described in the particulars, which were not advanced as loans by Mr Taranto to Picarock. To read paragraphs 2 and 7 otherwise would defeat the purpose of the particulars altogether. Moreover, the applicants cannot have been in doubt after the hearing before the judicial registrar that the respondent's case was based on asserting an indebtedness on the part of Picarock to Mr Taranto and not necessarily a loan. The applicants' pleading point therefore fails.

88 The issue then becomes whether the deed of loan obliged Picarock to pay Mr Taranto any sum by way of indebtedness otherwise than by way of loan. Put differently, did the deed of loan only oblige Picarock to repay a loan. It is in this context that the applicants' argument about the meaning of 'repay' arises.

89 It should first be noted that the deed of loan defines 'the loan' as the sum mentioned in item 4 of the schedule, namely $2,200,000. Clause 18 contains a second definition of the term 'Loan' which similarly refers to 'the sum of money' mentioned earlier. It is that amount that Picarock covenanted to 'repay'. It is true that the recital describes the amount as 'lent or agreed to be lent to the borrower ... by the lender', but the definition does not stipulate that the amount to be repaid must in fact be the subject of any loan.

90 This tends to bear out the judge's observation that to commence the process of construction by ascribing a meaning to the word 'repay' inverts the proper approach. In truth, 'repay' can mean that money is paid back to a person either by the person to whom it was provided in the first place (as the applicants would have it) or by another person on their behalf or pursuant to some other arrangement. The language of the deed to which attention has been drawn does not demand the former construction. The strongest support for that construction comes from the words of loan in the recital, which describe the making of a loan directly between borrower and lender. That terminology is likewise used to define the parties. But the critical provision, cl 1, calls upon Picarock simply to repay $2,200,000 together with interest. By virtue of cl 3, that amount stands to be increased on account of any future advances made by Mr Taranto to Picarock, but it is the amounts, rather than their character as loans or otherwise, that is essential to the repayment obligation.

91 For these reasons, the deed of loan was not confined to an obligation to repay amounts advanced by way of loan from Mr Taranto to Picarock but was capable of applying to the repayment of indebtedness in the amount of $2,200,000 acknowledged between the parties, howsoever arising. We have reached that conclusion without having regard to extrinsic material. However, if it were thought necessary to have resort to such material, for the purpose of construing the repayment obligation, it would properly include the emails of 11 and 12 May 2011 by which the financial transactions making up the $2,200,000 amount were explained to Mr Taranto's solicitor, taken together with the evidence that Picarock gave instructions for drafting the deed of loan. As discussed in relation to ground 2, the emails amply support this construction of cl 1. They demonstrate that the commercial purpose of the transaction was to document Picarock's obligation to pay to Mr Taranto a sum in the amount of $2,200,000 which had been advanced in instalments between various parties other than Picarock and Mr Taranto.[60] The emails are consistent only with a construction of cl 1 which extends to repayment of indebtedness of that amount arising otherwise than by way of loan.

92 The question is then whether the applicants succeed in their challenge to the judge's finding that the respondent had established the requisite indebtedness on the part of Picarock to Mr Taranto.[61]

93 The applicants contended that the respondent had failed to establish a sufficient circumstantial case as the foundation upon which adverse Jones v Dunkel inferences could be based.[62] This depends principally upon the 11 and 12 May 2011 emails and various financial statements to which the judge referred. The judge set out the evidence in the financial statements in terms which the applicants did not dispute:

Turning first to the $1.2 million advance, bank statements for an account with Westpac in the name of Joseph and Linda Taranto show a cheque withdrawal on 4 July 2003 for $1.2 million. For reasons not explained, a loan from J & L Taranto first appears in the balance sheet of Code Up for the year ended 30 June 2003 (that is, for the financial year ending four days before the cheque withdrawal). However, there is no evidence of Joseph Taranto making any payment in this sum to interests associated with Mr Lopes any earlier than 4 July 2003. The Code Up financial statements show annual interest payments of $120,000 by Code Up to J & L Taranto commencing in the financial year ending 30 June 2004. From that time until 30 June 2008, the $1.2 million loan from J & L Taranto remained on Code Up's balance sheet each financial year.

On 1 July 2008, the [Partnership] 'Transaction Detail by Account' records a journal entry 'transfer Taranto debt from Code Up'. From that date Code Up's balance sheet ceased to show a $1.2 million debt to J & L Taranto. Instead, the [Partnership] balance sheet showed a $1.2 million debt owed to J & L Taranto for each of the financial years ending 30 June 2009 to 30 June 2010 (inclusive). No more recent [Partnership] financial statements were in evidence.

Moving next to the advances totalling $1 million by Wemear, these appear in a 'Transaction Detail by Account' for Picarock for the year ended 30 June 2004 under the heading 'Loans-Unsecured Wemear Ira Pty Ltd'. There are five payments, with the first on 20 October 2003 and the last on 27 February 2004 in round amounts ranging from $100,000 to $300,000. The descriptors for each entry are not particularly illuminating; they include 'Code Up', 'Manstar' and 'Poolmere. Manstar Pty Ltd and Poolmere Pty Ltd appear from the ASIC records to be further companies associated with either Mr Lopes or Denis Ryan (or both).

The balance sheet for the [Partnership] recorded a loan of $1,000,000 from Wemear for the year ended 30 June 2004, but not thereafter. The balance sheets of Picarock continue to show a debt of $1 million to Wemear for each financial year ending 30 June 2004, 30 June 2005 and 30 June 2006. There were no balance sheets for Picarock after 2006 in evidence.

The Estate submits that various financial statements for the [Partnership] and Picarock referred to above suggest that the Wemear loan was distributed in the accounts of the [Partnership] to other loan accounts or otherwise adjusted as an accounting exercise within the [Partnership], but that it remained a liability of $1 million owed by Picarock to Wemear. The Estate concedes that it is not clear precisely how or when before May 2011, the Wemear loan to Picarock came to be considered a debt due to Joseph Taranto, rather than his son's company (noting that Vincent Taranto had died in 2010).[63]

94 When he came to consider this material, the judge found that it was not sufficient, standing alone, to support a Jones v Dunkel inference. However, the emails of 11 and 12 May 2011 then came into the picture. The judge said:

Turning to the evidence itself, I accept that there are significant gaps and inconsistencies in the various financial statements on which the Estate relies. Those financial statements alone do not supply the evidence on which a Jones v Dunkel inference could operate. However, in my view, the position changes with the two emails of 11 and 12 May 2011. There was no challenge to the admissibility of those emails. I am satisfied that the emails against the background provided by the financial statements, are at least strong circumstantial evidence that, by one means or another, the advance of $1.2 million originally made by Joseph Taranto to Code Up and the $1 million in advances by Wemear to Picarock, had come to be treated by those in control of Picarock as debts owing by Picarock to Joseph Taranto. That evidence is bolstered by the admission and evidence that Griffiths Parry prepared the Deed of Loan on instructions received from Picarock's directors.[64]

95 The judge concluded that Mr Lopes, in particular, had an 'intimate and detailed knowledge of Picarock's affairs' and was 'probably uniquely placed' to explain the history of the dealings between the Lopes and Ryan entities and the Taranto family. He was therefore satisfied that nothing that Mr Lopes could say would have contradicted the inferences the judge drew about the emails and related evidence.[65] He relied also on the failure of Mr Jahnke to give evidence.

96 The applicants, as already mentioned, contend that the respondent had not proved a sufficient circumstantial case upon which to erect a Jones v Dunkel inference justifying a finding in the respondent's favour.[66] It was pointed out that the amount of $1,200,000 was not recorded as having been lent to Picarock, and the sums totalling $1,000,000 had been lent by Wemear, not by Mr Taranto. There was no pleading, and no explanation, as to how these transactions had been transformed into an indebtedness on the part of Picarock to Mr Taranto.

97 The resolution of this issue depends, as the judge recognised, on the emails of 11 and 12 May 2011. Those emails were sent by Mr Lopes to Mr Taranto's solicitor. While Mr Lopes was not an officer of Picarock, there was evidence of his close involvement with Mr Ryan in the business conducted by the Partnership which Picarock managed. It could properly be inferred that Mr Lopes was passing information on to Picarock's solicitor for the purpose of informing the entering into of the deed of loan.

98 The references to the expected realisation of the Glenmore and Farm Street properties in the email of 11 May 2011 were plainly relevant to the negotiation and drafting of cl 1 of the deed of loan. Mr Lopes described the net proceeds of sale of 'the pickarock properties', being the same properties mentioned in the deed of loan in connection with the timing of repayment, as 'cover[ing] the loan repayment to Joseph Taranto'. This served to indicate that Picarock was being treated as indebted to Mr Taranto.

99 More specifically, the tabulation of past payments totalling $2,200,000 in the 12 May email recorded Mr Jahnke as stating that all of the payments 'are recorded as loan funds against Picarock'. That statement, made by a person with knowledge of Picarock's affairs and conveyed by Mr Lopes to Mr Taranto's solicitor, supports an inference that Picarock was confirming to Mr Taranto the amount of the indebtedness between them.

100 It is true that the respondent neither pleaded nor sought to prove the underlying transactions by which Picarock came to be indebted to Mr Taranto in the sum of $2,200,000. However, the evidence referred to suggested that some transactions, of whatever nature, had taken place with the identified result. At the very least, it enabled an inference to that effect to be drawn. The onus lay on the respondent to prove the alleged indebtedness. For that purpose, the evidence provided a sufficient foundation, in our opinion, for the judge to rely on a Jones v Dunkel inference against the applicants.[67] That is because it lay within the knowledge of Mr Lopes and Mr Jahnke to explain the information Mr Lopes conveyed to Mr Taranto's solicitor, and in particular to give evidence that it did not, in fact, reflect any underlying transactions giving rise to the alleged indebtedness.

101 In circumstances where Mr Lopes and Mr Jahnke were available to give evidence as to these matters and failed to do so, the judge was amply justified in drawing the inference that such evidence would not have advanced the applicants' case. It was then further open to the judge, as it is to this Court, to take that inference into account in deciding to draw the further inference, open on the evidence, that the alleged indebtedness existed.[68] On that basis, the trial judge's conclusion should be upheld.

102 For these reasons, in our opinion, ground 3 fails.

103 The result is that, while leave to appeal should be granted on all proposed grounds, the appeal must be dismissed.

[2] Taranto v Lopes [2017] VCC 1613 [4] ('Reasons').

[3] The respondent did not initially accept that unconscionability had been properly pleaded. There was debate before the judicial registrar as to whether it was necessary for the applicants to have pleaded unconscionability in terms in their defence, or just the facts supporting a claim of unconscionability.

[4] Counsel for the plaintiff/respondent.

[5] Counsel for the defendants/applicants.

[9] The enclosed document did not form part of the particulars to paragraph 6.

[14] [1938] AC 156.

[16] Reasons [33]-[34] (emphasis added).

[23] [1998] HCA 48; (1998) 194 CLR 395.

[24] [1938] AC 156.

[26] The deed of loan had only a single recital, but nothing turns on this.

[29] Ibid [23], citing Dare v Pulham (1982) 148 CLR 658, 664-5.

[30] Ibid, citing Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 (Greenwood, McKerracher and Reeves JJ).

[31] (1990) 169 CLR 279, 286-7 (citations omitted). See also Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd [No 2] [2015] VSCA 185; (2015) 48 VR 558, 625 [45] (Redlich, Whelan and Santamaria JJA).

[32] See Civil Procedure Act s 7; United Petroleum Australia Pty Ltd v Herbert Smith Freehills (2018) 128 ACSR 324, 409 [445] (Elliott J).

[33] See Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd (2017) 52 VR 664, 753-4 [317]-[324] (Hargrave J).

[34] Labracon Pty Ltd v Cuturich [2013] NSWSC 97; (2013) 17 BPR 32,497, 32,512-3 [105]-[108] (Lindsay J). See, as to the position regarding guarantors in that regard, Begley v Attorney-General (NSW) [1910] HCA 69; (1910) 11 CLR 432, 439-40 (Griffith CJ) ('Begley'); Ekes v Commonwealth Bank of Australia Ltd [2014] NSWCA 336; (2014) 313 ALR 665, 695 [120] (Bathurst CJ, Beazley P agreeing); Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd [2014] VSC 57 [134]-[147] (Garde J). It was held in Begley that although the guarantor was not a privy of the debtor so as to be bound by an earlier decision to which the debtor was a party, the guarantor was 'entitled to have the liability proved as against him in the same way as the principal debtor': [1910] HCA 69; (1910) 11 CLR 432, 440, quoting Ex parte Young; In re Kitchin (1881) 17 Ch D 668.

[35] Reasons [34]-[35], set out at [30] above.

[36] Ibid [39]-[41] (citations omitted).

[37] [2016] VSCA 95 ('Eureka').

[38] [2015] HCA 37; (2015) 256 CLR 104 ('Mount Bruce').

[39] [2014] HCA 7; (2014) 251 CLR 640, 656-7 [35] (French CJ, Hayne, Crennan and Kiefel JJ) ('Electricity Generation').

[40] Mount Bruce [2015] HCA 37; (2015) 256 CLR 104, 116 [46] (French CJ, Nettle and Gordon JJ); see also at 132 [109] (Kiefel and Keane JJ).

[41] Ibid 116 [47]-[48] (French CJ, Nettle and Gordon JJ), 132 [109] (Kiefel and Keane JJ), 134 [120] (Bell and Gageler JJ); Victoria v Tatts Group Ltd [2016] HCA 5; (2016) 90 ALJR 392 [71]-[72] (French CJ, Kiefel, Bell, Keane and Gordon JJ).

[42] Moreton Bay Regional Council v Mekpine Pty Ltd [2016] HCA 7; (2016) 256 CLR 437, 451 [58] (French CJ, Kiefel, Bell and Nettle JJ).

[43] Eureka [2016] VSCA 95 [45]-[47] (emphasis added) (citations in original).

[45] [2004] HCA 35; (2004) 218 CLR 451.

[46] Ibid 462 [22] (emphasis added) (citations omitted).

[47] [2009] EWCA Civ 636 [28].

[48] [2014] HCA 7; (2014) 251 CLR 640, 656-7 [35] (citations omitted).

[49] [2015] HCA 37; (2015) 256 CLR 104, 116-17 [46]-[49] (emphasis added) (citations omitted).

[50] [2017] HCA 12; (2017) 91 ALJR 486 ('Ecosse').

[51] Ibid 491 [16]-[17] (emphasis added) (citations omitted).

[53] Greer v Kettle [1938] AC 156, 171 (Lord Maugham).

[56] Sibonna Nominees Pty Ltd v Vouzas [2013] VSCA 369 [36] (Warren CJ).

[57] This argument appeared in the applicants' written case in connection with proposed ground 2 but it is more conveniently dealt with as an aspect of its argument under ground 3. Both grounds, of course, involve the construction of the deed of loan.

[59] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 308 (Kitto J), 312 (Menzies J), 320-2 (Windeyer J).

[60] Electricity Generation [2014] HCA 7; (2014) 251 CLR 640, 656-7 [35] (French CJ, Hayne, Crennan and Kiefel JJ).

[61] This question again arises only assuming that the estoppel argument is rejected.

[62] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 308 (Kitto J), 312 (Menzies J), 320-2 (Windeyer J).

[66] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 308 (Kitto J), 312 (Menzies J), 320-2 (Windeyer J).

[68] O'Donnell v Reichard [1975] VicRp 89; [1975] VR 916, 938 (Newton and Norris JJ).