Patel v Pleash

EVIDENCE

1. The plaintiffs read the following affidavits:
2. affidavit of Salima Mohmedali Lakhani affirmed 11 August 2023;
3. affidavit of Sameer Sabuddin Khoja affirmed 11August 2023; and
4. affidavit of Ravi Rameshkumar Patel affirmed 18 August 2023.
5. None of the witnesses relied on by the plaintiffs were required for cross-examination.
6. The plaintiffs tendered the following documents:
7. the exhibits to the affidavits that they read in the proceeding, namely exhibits SML-2; SSK-2; and RRP-2, which contain the various agreements the subject of this proceeding, documents related to a complaint made to the Australian Financial Complaints Authority (AFCA), correspondence with Angas Securities Limited and iLend, documents relating to the purported appointment of Mr Pleash and documents relating to the Hillcrest development (which is the described below);
8. confidential exhibit RRP-1, which contains the relevant leases upon which Jubilee relies in support of its claim for damages;
9. a bundle of documents produced in answer to a notice to produce by Mr Pleash (marked as exhibit 1 in this proceeding);
10. certain paragraphs of the affidavit of Mr Salim affirmed 16 December 2022 which had been filed and served in the proceeding (marked as exhibit 2 in this proceeding); and
11. selected documents from exhibit MS-1 to Mr Salim's affidavit (marked as exhibit 3 in this proceeding).
12. As mentioned, Mr Pleash read his own affidavit affirmed 17 November 2023 and tendered exhibit BAP-1 to that affidavit. Mr Pleash was cross-examined.

FACTUAL FINDINGS

1. I make the following findings of fact based on the evidence before me, which in the main was not contested. The oral representations relied upon by the plaintiffs were supported by evidence given by Mrs Lakhani, Mr Patel and Mr Khoja, whose evidence was not challenged and was broadly consistent as between themselves. Although Mr Salim had filed and served evidence contesting the content of the conversations in which he participated, he did not appear at the hearing and his account of the relevant conversations was not adduced in evidence.
2. iLend was incorporated on 7 December 2016. Mr Salim has been its sole director since 1 January 2020. iLend operates a loan broker business, facilitating offers of finance. Mr Salim carries out the day-to-day operations of the iLend business. Mr Pleash, who had accepted instructions from Mr Salim on a number of occasions gave evidence that Mr Salim himself also provided finance to third parties on occasion. It was not explored in the evidence as to whether Mr Salim did this directly, or through iLend or another company.
3. On 21 July 2020, the City of Port Adelaide Enfield, South Australia (the Council) entered into a contract with Mr Khoja to sell to Mr Khoja or his nominee the property situated at 483 North East Road, Hillcrest South Australia (Property) for $5,025,000.
4. On 26 October 2020, Jubilee was incorporated for the purpose of purchasing and developing the Property and was subsequently nominated by Mr Khoja as the purchaser of the Property pursuant to the contract with the Council. Mr Patel, Mrs Lakhani, Mr Khoja and Feroz Gulzar Ali Rammal were appointed as its directors and shareholders. On 11 January 2021, Mr Khoja and Mr Rammal transferred their shares to Mr Patel and Mrs Lakhani and resigned as directors of Jubilee. Mr Khoja continued to play an active role in relation to the acquisition and development of the Property by Jubilee, including in relation to sourcing finance for Jubilee. He liaised closely with Mr Patel and Mrs Lakhani in this regard.
5. The relevant exchanges between (i) Mr Salim and Mr Khoja and (ii) Mr Khoja and Mr Patel and Mrs Lakhani, including the communication of the representations the subject of the claim, occurred over the course of 10 and 11 February 2022.
6. On 10 February 2022, Mr Patel and Mrs Lakhani asked Mr Khoja to make enquiries about obtaining finance of about $10 to $15 million to assist Jubilee to purchase and develop the Property. Mr Khoja was introduced to Mr Salim through Prashant Kariya, a friend of Mr Khoja's who had experience in obtaining commercial finance and who was dealing with Mr Salim on another project. Mr Khoja had a telephone call with Mr Salim on 10 February 2022. During that conversation, Mr Salim told Mr Khoja that he would be able to get an offer of finance "quickly" and would be able to get "a better (interest) rate than anyone else". Mr Salim also said that the interest rate he could source would initially be 6% to 8% per annum with a private lender with a view to the plaintiffs then refinancing with a "bigger bank" and obtaining an interest rate of around 3% per annum.
7. Mr Khoja relayed the substance of this conversation to Mr Patel and Mrs Lakhani in person later that day. Mr Patel and Mrs Lakhani each deposed to their conversation with Mr Khoja in which he recounted what Mr Salim had told him. Mr Patel and Mrs Lakhani each said that during this conversation they were informed by Mr Khoja that iLend or Mr Salim would be able to obtain a loan between $10 million and $15 million on behalf of Jubilee, that iLend or Mr Salim would first approach a private lender for a loan for 3 years at a rate of around 8% and that Mr Salim would send Mr Khoja a list of all the documents that were needed to secure the loan. I note that Mr Patel and Mrs Lakhani do not say that in this conversation Mr Khoja repeated the representation in relation obtaining an interest rate of 3% upon refinancing with a bigger bank whereas Mr Khoja says he conveyed to this to them. Nothing turns on this discrepancy between the plaintiffs' witnesses on the narrow point of whether an interest rate of 3% was held out in the longer term. The allegation in respect of the representation that Mr Salim could source a loan for around 3% per annum made on 10 February 2022 is in practical terms qualified by the representations made on 11 February 2022, to which I will come.
8. Shortly after the telephone call between Mr Khoja and Mr Salim, Mr Khoja received an email from the email address info@ilendcapital.com.au, copied to Mr Salim, requesting certain information in respect of the finance that the plaintiffs were seeking, including personal identification documents, company details, property addresses, descriptions of assets and liabilities, council rates notice and all relevant documents in relation to the development of the Property. Mr Khoja forwarded the email to Mr Patel and Mrs Lakhani. Based on the documentary evidence, I infer that Mr Salim received emails directed to the info@ilendcapital.com.au email address in addition to emails sent to his direct email address Marwan.Salim@ilendcapital.com.au.
9. Mr Patel and Mrs Lakhani provided their personal identification documents and personal asset and liability information directly to iLend the following day on 11 February 2022.
10. On 11 February 2022, Mr Khoja received a telephone call from Mr Salim in relation to the indicative terms for the loan. Mr Salim informed Mr Khoja that iLend would be able to secure an offer of finance of about $12 million for 3 years at an interest rate of 7.9 % per annum. Mr Khoja conveyed the representations made by Mr Salim in this telephone call to Mrs Lakhani and Mr Patel.
11. On 11 February 2022, Mr Salim sent the iLend Agreement to Mr Patel and Mrs Lakhani for execution via DocuSign. The iLend Agreement included in clause (i) that the offer of finance which iLend was retained to source was to be "substantially" for $12 million for 3 years at 7.9% interest per annum. This is consistent with the earlier conversation between Mr Khoja and Mr Salim. In a portion of Mr Salim's affidavit that was tendered by the plaintiffs, Mr Salim deposes that he himself prepared the iLend Agreement which was emailed to the plaintiffs, that it was based on an agreement he became familiar with whilst working at a business called Loansec, and that he updated it from time to time. I will return to the terms of the iLend Agreement below.
12. Shortly after receiving the DocuSign email, Mrs Lakhani deposes that she forwarded the link to the iLend Agreement to Mr Khoja and called him that same day to raise concerns about the terms of the iLend Agreement. Mrs Lakhani deposes that she did not think the details of the iLend Agreement were correct and that she was unsure whether to sign the iLend Agreement. Mrs Lakhani spoke to Mr Khoja and said: [Lakhani]: Hi Sam. I have just received a link to an agreement from Lend. I have sent you a copy, but the details don't look right to me. Khoja: What do you mean? [Lakhani]: The agreement lists all our personal property under the address for security. The address should just be for the Hillcrest Property. There are a lot of conditions that don't look right. Can you speak to Prashant's broker? Khoja: Yes, I can give Marwan a call and see if its correct. [Lakhani]: The agreement says that we have to pay him once we sign, but also says that we only have to pay him after he gets us a loan. Can you ask if we need to pay him when we sign it, or if he should change it? Khoja: Let me call him.
13. Mrs Lakhani's and Mr Khoja's evidence varies in minor respects but is substantively to the same effect.
14. On 11 February 2022, Mr Khoja, on behalf of the plaintiffs, telephoned Mr Salim and raised Mrs Lakhani's concerns about the terms of the iLend Agreement. Mr Khoja then had a conversation with Mr Salim as follows: [Khoja]: We have just seen your agreement. I don't think it is correct. Salim: Don't worry about it. I just need you to sign it so I can get started. [Khoja]: Can we go through some of the points with you? It says that the property address for the security is all our private property, not just the Hillcrest Development. We don't want a loan over all of these properties, we just want a loan for the project at 483 North East Road. Salim: It is just a list of your assets, we just need it in there to show to the lenders that you have these assets. We are not going to put all of them as security. I need to show to the lenders that you have other property. You don't need to provide all of the property as security to the lender. If they ask you can just tell them 'no'. I just need you to sign it so I can start the process of actually sourcing loan proposals. [Khoja]: One of the points says that after the agreement is signed we have to pay you a fee of about $250,000. Is that right? Salim: No, no. There are no fees for just signing the agreement. It is our standard agreement and we can't change it. I just need you to sign it so I can contact the private lenders to get loan proposals. We need the agreement to make sure that iLend will get paid if you proceed with a loan. That is what the security is for. I already have found a lender, but I need the signed agreement so I can send it to you. [Khoja]: What about all the other conditions in the mandate? I thought you said you could get us a rate of around 3% Salim: Don't worry about them. I need to go to private lenders first to get a loan quickly. Then we can go to the bigger banks and get a better rate when we refinance, I just need a signed agreement so that I can get started, otherwise I can't present you with the proposals.
15. In respect of the proposed security, Mr Khoja's evidence, which I accept, is to the effect that Mr Salim claimed that the list of properties was a list of assets to show to lenders and that iLend would not include all of the properties as security. Further, that the security conferred under the iLend Agreement was for the purpose of securing such fees if any were payable to iLend if iLend performed the mandate.
16. In respect of the immediate liability to pay what is described in the iLend Agreement as the "Brokerage Fee/Success Fee" of $250,000, Mr Salim indicated that there were "no fees for just signing the agreement. It is our standard agreement and we can't change it." I accept Mr Khoja's evidence that Mr Salim said this. In a part of his affidavit that was tendered by the plaintiffs, Mr Salim said that he understood that the effect of the iLend Agreement was as follows: iLend is entitled to be paid its brokerage fees when iLend produces an offer of finance substantially in the terms of the mandate agreement.
17. Mr Salim also deposes that his own view was that if iLend produced an offer of finance substantially in the terms of the iLend Agreement, iLend is entitled to be paid its fees, whether or not the client accepted the offer.
18. I interpolate to note that Mr Salim's subjective understanding of the effect of the iLend Agreement which he drafted is relevant in the context of the claims against Mr Salim and iLend under the ACL and the ASIC Act. The proper construction of the iLend Agreement is to be determined objectively, by what a reasonable businessperson would have understood it to mean, rather than by reference to the subjectively stated intentions of the parties, including Mr Salim as the author of the document.
19. In respect of the other concerns raised by Mrs Lakhani, Mr Salim told Mr Khoja that he had already found a lender and not to "worry" about the higher rate as iLend could get a better rate upon refinancing. Mr Salim also told Mr Khoja that that he could not present the loan proposals to Jubilee until iLend received a signed agreement. Again, I accept Mr Khoja's evidence as to what Mr Salim said. I find that Mr Salim did this as a means of encouraging the plaintiffs to sign the iLend Agreement notwithstanding Mrs Lakhani's concerns.
20. Mr Khoja relayed the substance of his conversation with Mr Salim to Mr Patel and Mrs Lakhani later that day.
21. I find that the plaintiffs have established the following representations were made to Mr Khoja and the plaintiffs on 11 February 2022: (a) iLend could secure a loan on the following terms: (i) a loan amount between $10 to $15 million; (ii) a loan term of 3 years (36 months); (iii) a competitive interest rate of only 7.9% (interest only); and (iv) security over only the Property; (b) no fees would be payable to iLend unless iLend actually secured a loan on the above terms; (c) the iLend security is granted only if Jubilee obtains the loan, and no steps would be taken if Jubilee did not proceed with the loan; (d) the iLend Agreement was required to be signed so that Mr Salim could approach the "private lenders" to obtain written proposals of loans for Jubilee and provide assurance that iLend would be paid if Jubilee proceeded with the loan; and (e) iLend had already identified a lender for Jubilee that could provide the loan on the terms set out in (a) above, but that iLend could not present that offer unless Jubilee, Mr Patel and Mrs Lakhani signed the iLend Agreement.
22. On the basis on the representations made by Mr Salim, Mr Patel and Mrs Lakhani then applied their signatures to the iLend Agreement using the DocuSign facility in their capacity as directors of Jubilee and as guarantors with the result that the iLend Agreement was executed on 11 February 2022.
23. Mr Patel and Mrs Lakhani did not seek legal advice prior to signing the agreement.
24. On 15 February 2022, Mr Khoja, Jubilee and the Council executed a deed, through which Mr Khoja nominated Jubilee as the purchaser of the Property under the contract for purchase. Mr Patel and Mrs Lakhani executed the deed on behalf of Jubilee.
25. On 18 February 2022, Mr Salim sent Mr Patel, Mrs Lakhani and Mr Khoja, amongst others, an offer of finance (the ProLend Offer) sourced from ProLend Solutions Management Pty Ltd (ProLend). This email, as with many of the emails to which I will come, was also sent to two additional guarantors nominated in the ProLend Offer who were not parties to the iLend Agreement. The ProLend Offer was made on the basis that in addition to Jubilee, another company would be included as a borrower and in addition to Mr Patel and Mrs Lakhani, another two individuals would be included as guarantors.
26. The terms of the ProLend Offer included an offer to lend $3,573,337 for a term of three months with interest to be capitalised for the term. The terms in relation to interest included that an "Interest - Lower Rate" would be calculated at 11.99% per annum, payable in advance for the term of the loan", with an "Interest - Higher Rate" to be calculated at 24% per annum payable at ProLend's election if for whatever reason the loan goes into default. There was also a requirement that the borrower and/or guarantors pay "Minimum Interest" for a period of three calendar months.
27. The ProLend Offer also stipulated that the plaintiffs agree to provide security in the form of first registered mortgages over 461-487 North East Road, Hillcrest South Australia (SA) and 28 Saverio Blvd, Angle Vale SA and second registered mortgages over 24 Desaumarez Street, Kensington Park SA; 1 Douglas Ave, Hillcrest SA; 117 Redward Ave, Greenacres SA; and 2 Philpott Ave, Paradise SA. In addition, each borrower and guarantor was required to provide ProLend, by way of general security agreements, with a security interest over all their present and after acquired property to be registered on the Personal Property Securities Register (PPSR) and the directors of the borrowing companies were to provide personal and unlimited guarantees. As mentioned above, the ProLend Offer provided for two other guarantors in addition to Mr Patel and Mrs Lakhani.
28. On 19 February 2022, Mrs Lakhani emailed Mr Salim rejecting the ProLend Offer: Thank you so much for all your assistance and time. We have agreed and decided that we can't accept this offer as it is not what we expected it to be. Therefore we would request you not to execute this offer. We will get in touch with you if we need any future service from you. As of now, we will organise cash settlement of this property on 25th February 2022.
29. The plaintiffs rely on this email as effecting an immediate termination of the iLend Agreement.
30. After 19 February 2022 and until 31 October 2022, the plaintiffs did not have any further communications with iLend or Mr Salim.
31. On 8 March 2022, Jubilee completed the purchase and became the registered proprietor of the Property. Jubilee completed the purchase without recourse to any finance facilitated through iLend, no relevant offer of finance having been sourced by iLend.
32. In about April 2022, Jubilee commenced its redevelopment of the Property, using the services of Tonkin Schutz Design and Build Pty Ltd (TSDB). I interpolate to note that the plaintiffs' claim originally included a claim for loss or damage arising from its liability to pay TSDB's costs, which was not ultimately pressed.
33. At 5.09pm on 31 October 2022, an email was sent to Mr Patel and Mrs Lakhani alleging that they were "in default" of their "payment to iLend Capital". The email was sent from the email address credit@ilendcapital.com.au and copied to Mr Salim and the info@ilendcapital.com.au email address. The email signature is "Credit Management Team". Attached to the email was an invoice addressed to Jubilee dated 31 October 2022 (iLend Invoice). The email stated that the iLend Invoice was "due and payable immediately". In the iLend Invoice, iLend claims payment of $259,000, described as "Mandate Fee + Interest", and $7,700, described as "Legal Fees & Charges", in total a debt of $293,370 (inclusive of $26,670 GST). The iLend Invoice included as the "Due Date" the word "immediately" in red text and also in red text, an assertion that all "late invoices incur a 4% p/m interest fee".
34. At 5.31pm on that same day, iLend registered a security interest against "All present and after-acquired property - No exceptions", against Jubilee on the PPSR (AllPAP Registration). Mr Salim was nominated as the contact and address for service on the AllPAP Registration. The AllPAP Registration did not come to Jubilee's attention until later.
35. At the time iLend registered its alleged security interest, it had not provided any finance offer that accorded with clause (i) of the iLend Agreement.
36. On 4 November 2022, Jubilee received an offer of finance (the Angas Offer), which it accepted on that same day, from Angas, a different financier, which was not introduced to the plaintiffs by Mr Salim or iLend. Although there are two copies of the Angas Offer in evidence, both are missing pages. The issues in dispute in this proceeding do not require me to consider the terms of the Angas finance arrangements which were accepted by Jubilee. The purpose of the Angas finance was to fund the ongoing costs of the development of the Property, including an invoice issued by TSDB to Jubilee on 29 November 2022 which was payable on 15 December 2022. It suffices to note that the Angas finance was due to, but did not, settle on 2 December 2022 as a result of Mr Pleash being appointed as administrator of Jubilee on that day. The TSDB invoice was not paid and TSDB suspended construction work at the Property pending payment of the invoice.
37. On 17 November 2022, Jubilee lodged a complaint with AFCA in respect of the iLend Invoice.
38. Mr Salim dealt with Mr Pleash and his colleagues at Hall Chadwick in relation to Mr Pleash's appointment to Jubilee and two other companies from which iLend was seeking to recover fees. After Mr Pleash was appointed as the administrator of Jubilee, Mr Salim continued to deal with Mr Pleash and his colleagues in relation to the administration of Jubilee.
39. By email on 1 December 2022, one of Mr Pleash's subordinates, Duke Wolfgramm, provided Mr Salim with a deed of appointment and indemnity and a notice of appointment in relation to Mr Pleash's appointment as the administrator of Jubilee for Mr Salim's review and execution.
40. In the recitals of the deed of appointment, the security interest claimed by Jubilee is described as follows: A. [Jubilee] granted a security interest over all of the property and assets of [Jubilee] both present and after acquired in favour of the [iLend] (Charge) pursuant to the provisions contained

• Under the Mandate, Brokerage Agreement and Irrevocable Authority to Pay on First Drawdown or Settlement, whichever occurs first dated 11 February 2022
• Pursuant to the personal properties securities registration registered over [Jubilee] being registration number 202210310076005. B. The Charge has become, and still is, enforceable and the Chargee are entitled to enforce the Charge on the whole, or substantially the whole, of the Company's property.

1. The notice of appointment similarly described Mr Pleash's appointment as being (as written): … pursuant to the provisions contained

• Under the Mandate, Brokerage Agreement dated 11 February 2022; and
• Pursuant to the personal properties securities registration registered over the Company being registration number 202210310076005.

1. The notification of Mr Pleash's appointment to Jubilee, which he authenticated and caused to be lodged with the Australian Securities and Investments Commission (ASIC), included the following details: Provide the date of appointment. 02-12-2022 Type of administrator Administrator Method of appointment appointment by instrument Date of instrument: 11-02-2022 Description of instrument Mandate Brokerage Agreement Instrument is registered in Personal Property Securities Register Security Interest 202210310076005 Schedule of Property Security interest over all of the Company's PPSA personal property, both present and after acquired, and a fixed charge over all Other Property.
2. The only security interest identified in the notice to ASIC is the PPSR registration. The schedule of property refers to Jubilee's "PPSA personal property" and to "a fixed charge over all Other Property". Real property is not covered by the PPSA. "Other Property" is defined in clause (vii) of the iLend Agreement as "all present and after-acquired property of the Borrower(s) and Guarantor(s) which is not PPSA Personal Property". PPSA Personal Property is also defined in clause (vii).
3. In his Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) dated 6 December 2022, Mr Pleash provided the following information: … B. Circumstances of Appointment How was the appointment referred to me This appointment was referred to me by a representative of iLend Capital Pty Ltd ("the Referrer"). I note that the Referrer is a secured creditor of the Company. This is the third appointment referred to me by the Referrer. I believe that this referral does not result in a conflict of interest or duty because:

• Referrals from solicitors, business advisors, accountants and/or other professionals (such as secured creditors) are commonplace and do not impact on my independence in carrying out my duties as Administrator;
• There is no expectation, agreement or understanding between me and the Referrer regarding my conduct or approach towards this and any future likely referrals and I am free to act independently and in accordance with the laws and the requirements of the ARITA Code of Professional Practice;
• There is no understanding that any matters in respect to this appointment will be referred to the Referrer; and
• I have provided no other information or advice to the Company, the Directors of the Company being Mr Ravi Rameshkumar Patel and Ms Salima Mohmedali Lakhani, the Referrer and/or the Company's advisors prior to my appointment beyond that outlined in this DIRRI. Dealings/interactions with the Company, the Directors and/or others before the appointment The following telephone conversations and email exchanges took place prior to my appointment as the Administrator of the Company:
• On 29 November 2022, Duke Wolfgramm of Hall Chadwick had a telephone conversation with a representative of the Referrer;
• On 30 November 2022, Duke Wolfgramm of Hall Chadwick had a telephone conversation with a representative of the Referrer; and
• On 1 December 2022, Duke Wolfgramm of Hall Chadwick emailed a representative of the Referrer enclosing appointment documents. The telephone conversations and email exchanges were for the purposes of discussing and understanding the following:
• Background, nature and business of the Company;
• Current financial position of the Company and available options in the case of insolvency; and
• Possible appointment of the Administrator.

1. Prior to being appointed, Mr Pleash was informed that Jubilee was engaged in a commercial property development that was nearing completion.
2. As mentioned, on 2 December 2022, iLend appointed Mr Pleash as the administrator of Jubilee.
3. Mr Khoja deposes to two conversations he had with Mr Salim on 2 and 5 December 2022:
4. On 2 December 2022, I received a call from Salim and we had a conversation in words to the following effect: Salim: You guys need to pay me the $300,000 that you owe me. I've gone ahead and appointed an administrator over your company. You guys are screwed. [Khoja]: Why did you do this? Our finances are stuck because of what you have done. We can't get the finance to finish the project. Salim: I am happy to source a loan for you, and add the $300,000 into the new loan. All you have to do is get the loan through me. We can make it work. [Khoja]: No way Marwan. You are the last person I want to deal with, you bastard. Salim: You are a good guy, I trust you and I like you, just pay me and I will get rid of the administrator. Then you can carry on with your project. Or else, I will fuck you and the project. [Khoja]: You haven't done anything for us. You have forced us to sign the agreement, you have not even provided your service to us. All you got was a shit offer for a third of the amount that we wanted. We didn't even accept it. Why should we pay you $300,000? Salim: You and I can make it work. After this one, you have no idea what I am going to do with you guys. I will have the administrator take all of your property. I have worked with him before. We know what we are doing.
5. I then proceeded to hang up the call with Salim.
6. On 5 December 2022, I received a call from Salim and we had a conversation to the following effect: Salim: So, what have you guys decided? Are you going to pay me? [Khoja]: I am not the director, but the other two have decided to go with a lawyer. We don't want to pay you, and we are not going to pay you. This is wrong. Salim: If you go to a lawyer, I will go to a better lawyer and make things worse for you. I'll make your life hell. You guys are screwed. The administrator is on my side. I do work with him. I can make him go away, just pay me. If you keep going you will have to pay me more than $500,000 including all the charges. [Khoja]: No.
7. I then proceeded to hang up the call with Salim out of anger.
8. On that same day, I had a conversation with Patel to the following effect: [Khoja]: Marwan has been calling me. He said if we don't pay him $300,000 he will go more harsh with us and the claim will go up to $500,000. Patel: No way. What? We do not owe him anything. He rings us (being a reference to me) knowing that he has screwed us around with an administrator? [Khoja]: I know. He said that he has worked with this Administrator and knows what to do to make sure that we pay. Patel: Well. I don't know what Salima is going to say but I am not paying him a single dollar. He lied to us and is trying to scam us. This is wrong. [Khoja]: We have to do something quickly. The loan from Angas is now being held up. Patel: I know. We just have to find a solicitor and go through the proper process. I am not going to get extorted. The administrator hasn't even tried to call. This is just a scam. I do not even know how he did this. If we have to go to Court and get justice so, be it. People like him should be shut down.

THE PLAINTIFFS' CLAIMS

1. The plaintiffs' claims fall into four categories. I will address them in the following order, after first addressing the proper construction of the iLend Agreement, which is relevant to all of the relief claimed.

(1) Declaration that Mr Pleash's appointment not valid

1. The first claim advanced by the plaintiffs is for a declaration that the appointment of Mr Pleash as the administrator of Jubilee on 2 December 2022 was invalid. The plaintiffs seek declaratory relief under s 447A and 447C of the Corporations Act or Division 1 of Part III of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The declaratory relief claimed is more appropriately made under s 447C of the Corporations Act which is specifically directed to the Court's power to declare whether an administrator is validly appointed.

(2) Unconscionable conduct allegations

1. The second category of the plaintiffs' claims is that Mr Salim and iLend engaged in unconscionable conduct in causing Mr Pleash to be appointed as the administrator of Jubilee and for failing to do all things necessary to terminate that appointment. The plaintiffs rely on ss 20 and 21 of the ACL or in the alternative, ss 12CA and 12CB of the ASIC Act. The essential difference between the two claims is that the ACL provisions do not apply to conduct in relation to financial services whereas the ASIC Act provisions do.
2. The plaintiffs' claim is for damages and compensation against Mr Salim and iLend under ss 236 and 237 of the ACL, or ss 12GF and 12GM of the ASIC Act. I note that the relief claimed by the plaintiffs is identified in the amended statement of claim. The relief claimed in the amended originating process dated 14 December 2022 has been overtaken by the articulation of the claim for relief in the amended statement of claim. If it is necessary to do so, I will grant leave nunc pro tunc to the plaintiffs to file a further amended originating process (amended to reflect the relief claimed in the amended statement of claim and the basis on which the case was conducted).

(3) The ACL and ASIC Act claims

1. The third category of claims is based on misleading or deceptive conduct on the part of iLend and Mr Salim in contravention of:
2. ss 18, 20 and 21 of the ACL; and or
3. in the alternative, ss 12CA, 12CB and 12DA of the ASIC Act.
4. Again, the relevant difference between the two bases for the misleading or deceptive conduct claim is that the ACL provisions do not apply to conduct in relation to financial services whereas the ASIC Act provisions do.
5. The claim against Mr Salim is put on two alternative bases. First, that the impugned conduct was relevantly both his conduct and also conduct of iLend. Secondly, and in the alternative, that Mr Salim was relevantly knowingly involved in the contravening conduct of iLend.
6. In their misleading or deceptive conduct claims, the plaintiffs allege, amongst other things, that the impugned representations were made in respect of future matters within the meaning of s 4 of the ACL and s 12BB of the ASIC Act.
7. As part of their misleading or deceptive claims, the plaintiffs rely, amongst other things, on certain representations that were made by Mr Salim to Mr Khoja, and then conveyed by Mr Khoja to Mr Patel and Mrs Lakhani and attributed by Mr Khoja to Mr Salim. The plaintiffs contend that Mr Salim and iLend knew or ought to have known that Mr Khoja represented the plaintiffs and that the substance of the representations made by Mr Salim to Mr Khoja would be conveyed by Mr Khoja to the plaintiffs.
8. The plaintiffs' claim is for damages and compensation against Mr Salim and iLend under ss 236 and 237 of the ACL, or ss 12GF and 12GM of the ASIC Act.

(4) Costs

1. The plaintiffs seek an order for their costs against iLend, Mr Salim and Mr Pleash.

CONSIDERATION

1. The starting point is the proper construction of the iLend Agreement.

The iLend Agreement

1. The general principles concerning the construction of commercial contracts are well established and not in dispute. The plaintiffs point to the summary of the relevant principles, drawn from High Court authority, in Property Holdings Group Pty Ltd v Rosehill Panorama Pty Ltd (Administrators Appointed) [2023] NSWSC 1492 at [88] (Robb J). I note the Full Court has also on two recent occasions summarised the relevant principles: Star Entertainment Group Limited v Chubb Insurance Australia Ltd [2022] FCAFC 16; 400 ALR 25 at [8]-[12] (Moshinsky, Derrington and Colvin JJ) and Goldus Pty Ltd (subject to deed of company arrangement) v Australian Mining Pty Ltd (receivers and managers appointed) [2023] FCAFC 27 at [85]-[88] (Beach, Derrington, Halley JJ). I will not extract and repeat the articulation of the applicable principles. I apply those principles as relevant in what follows.
2. The iLend Agreement was drafted and updated over time by Mr Salim. The iLend Agreement bears the title "MANDATE, BROKERAGE AGREEMENT AND IRREVOCABLE AUTHORITY TO PAY ON FIRST DRAWDOWN OR SETTLEMENT, WHICHEVER OCCURS FIRST" and is somewhat curiously marked as a "TAX INVOICE".
3. Clause (i) of the iLend Agreement relevantly sets out, in clear terms, the purpose of iLend's engagement (as written): The borrower/s AND guarantor/s hereby engage and instruct ILEND CAPITAL PTY LTD to source an Offer of Finance/ Loan Approval secured by the above-mentioned Properties, on their behalf, substantially upon the following terms: a. Loan Amount $12,000,000.00 b. Term: 36 MONTHS c. Interest Rate (indicative rate) 7.9% p.a. Interest Only d. Security Requirement Guarantees, charges or mortgages As required by Lender. The Borrower/s AND guarantor/s and/or their related entities and associates appoint ILEND CAPITAL PTY LTD as their exclusive finance broker, and agree that they will not obtain, receive or procure similar services from any person or entity where services are similar or competitive in any way with the services offered by ILEND CAPITAL PTY LTD,
4. Relevantly the other clauses of the iLend Agreement are as follows: ii. ILEND CAPITAL PTY LTD hereby accepts the Borrower/s/Guarantor/s engagement and undertakes to use its best endeavors to obtain an offer of Finance/Loan approval from a source prepared to lend money to the borrower substantially upon the terms contained in Clause (i). iii. Under the terms of this Agreement, the Borrower/Guarantor hereby agrees to pay ILEND CAPITAL PTY LTD a Brokerage Fee/Success Fee of 2.2% OR $264,000.00 inclusive of GST based on borrowings of $12,000,000.00 exclusive of any commission payable by the lender/s to ILEND CAPITAL PTY LTD. The Borrower/Guarantor agree to pay the Brokerage Fee/Success Fee on demand when ILEND CAPITAL PTY LTD produces an offer for finance and shall be payable whether or not the Borrower/Guarantor accepts the finance offer; this agreement was terminated prior to the Borrower/Guarantor accepting the finance offer; or the Borrower/Guarantor terminates this agreement without cause. iv. This Brokerage fee is payable as follows: $264,000.00 Upon Execution of this Agreement (hereinafter referred to as the Brokerage fee or Success fee, inclusive of GST). While the payment of the Brokerage fee is due and payable upon execution of this Agreement, ILEND CAPITAL PTY LTD will accept payment of the brokerage fee upon drawdown or settlement of the loan, or in instalments as agreed by the Lender/mortgagee but reserves its rights to demand full payment should the Borrower/Guarantor refuse to proceed with the loan after it has been confirmed in writing v. In the event of the borrower/guarantor not taking up the offer of finance/loan offer after it has been confirmed in writing, substantially in the terms in (i.) above, by the Lender/mortgagee or its solicitor, then the Borrower/Guarantor agrees to pay the agreed Brokerage Fee as stated above. Furthermore, in the event that ILEND CAPITAL PTY LTD fails to provide an offer of finance/loan offer solely due to the borrower/guarantor's actions and non disclosure, whether they are erroneous, misleading and/or fraudulent, then regardless of whether ILEND CAPITAL PTY LTD provides a substitute offer of finance/loan offer (on substantially different terms), or withdraws their offer, the Borrower/Guarantor agrees to pay the agreed Brokerage Fee as stated above. vi. Once an Offer of Finance/Loan Offer is sourced by a Lender through ILEND CAPITAL PTY LTD, a Commitment fee is payable to ILEND CAPITAL PTY LTD in favour of the Lender/mortgagee, and the Borrower/s/guarantor/s agree to pay all commitment fees to ILEND CAPITAL PTY LTD and/or the Lender/mortgagee if requested. This Commitment fee does not constitute part of the brokerage fee/success fee and is payable IN ADDITION to the brokerage fee/success fee. vii. In Recognition of ILEND CAPITAL PTY LTD Providing its services under the terms of this Agreement, the Borrower/s/Guarantor/s hereby consents to ILEND CAPITAL PTY LTD securing payment of all of its monies/service fees which may become payable by the Borrower/s/Guarantors to ILEND CAPITAL PTY LTD under this guarantee, the Borrower/s/Guarantor/s hereby charge/s with the due payment of those monies all of the Borrower/s/Guarantor/s interest, right and title in the security properties as well as in any real property both (a) present, and (b) future, and the Borrower/s/Guarantor/s Against the above mentioned Properties consents to ILEND CAPITAL PTY LTD lodging and registering a Caveat(s) noting its interests hereunder without challenge by the Borrower/s/Guarantor/s. Such registration of a Caveat/s by ILEND CAPITAL PTY LTD over the Borrower/s/Guarantor/s property/ies shall not be challenged by the Borrower/s/Guarantor/s in any way whatsoever, and the Borrower/s/Guarantor/s agree/s not to take any steps in filing a "Lapsing Notice" via the Land Titles Office to have the Caveat/s removed, until such time the Borrower/s/Guarantor/s has/have paid all monies owing by it to ILEND CAPITAL PTY LTD as claimed from time to time. In addition to the charges over real property, the Borrower/s/Guarantor/s hereby grant to ILEND CAPITAL PTY LTD a PPSA Security Interest over all of the Borrower/s/Guarantor/s PPSA personal property, both present and after-acquired, and a fixed charge over all Other Property, to secure the payment of ILEND CAPITAL PTY LTD's monies/service fees which may become payable. The Borrower/s/Guarantor/s further agrees not to circumvent this agreement and deal or transact business directly with funder/s proposed or nominated by ILEND CAPITAL PTY LTD without first gaining consent from ILEND CAPITAL PTY LTD; upon such an event occurring the monies/service fee made under this arrangement will automatically become due and payable and not challenged by the Borrower/s/Guarantor/s in anyway whatsoever. In this agreement: PPSA means the Personal Property Securities Act 2009(Cth). PPSA Personal Property means: (a) all of the Borrower(s) and Guarantor(s) present and after-acquired property in which the Borrower(s) and Guarantor(s) can be a Borrower(s) and Guarantor(s) of a PPSA Security Interest including property in which the Borrower(s) and Guarantor(s) has, or may in the future have, rights or the power to transfer rights; (b) proceeds; and (c) PPSA retention of title property (as that term is defined in the Corporations Act). PPSA Security Interest has the meaning given to the term 'security interest' in the PPSA. Other Property means all present and after-acquired property of the Borrower(s) and Guarantor(s) which is not PPSA Personal Property.
5. I now turn to the construction of the iLend Agreement and iLend's purported performance of its obligations under the agreement.
6. The plaintiffs submit that the most important clause of the iLend Agreement is clause (i) which sets out, in clear terms, the purpose of iLend's mandate. The plaintiffs contend that clause (i) required iLend to "source an Offer of Finance/Loan Approval" on behalf of the plaintiffs "substantially upon" terms that the loan amount would be for $12 million, the term would be for 3 years and interest only would be payable at 7.9% per annum.
7. Subject to what follows, I accept the plaintiffs' submissions as to the proper construction of the iLend Agreement.
8. Pursuant to clause (i), iLend was required to "source an Offer of Finance/Loan Approval" on behalf of the plaintiffs "substantially upon" terms that the loan amount would be for $12 million, the term would be for 3 years and the interest payable would be 7.9% per annum. The clause is not ambiguous - the objective meaning is plain having regard to the whole of the iLend Agreement and taking into account the language used and the purposes and objects secured by the agreement, which are embodied in clause (i). Clause (i) defines the parameters of the offer which iLend was mandated to source on behalf of the plaintiffs. Construing clause (i) in this way does not result in any redundancy in the language used in the clause by the parties.
9. The only offer of finance presented by Mr Salim on behalf of iLend to Jubilee was the ProLend Offer. The ProLend Offer did not substantially meet the parameters of clause (i). That is readily illustrated by contrasting three of the relevant criteria specified in clause (i) with the corresponding terms of the ProLend Offer: Clause (i) ProLend Offer Loan Amount $12 million $3,573,337 Term 36 months 3 months Interest Rate 7.9 % pa "Interest - Lower Rate" 11.99% per annum with an "Interest - Higher Rate" to be calculated at 24% per annum payable at ProLend's election if for whatever reason the loan goes into default.

1. Contrasting the terms of the ProLend Offer against the requirements in clause (i), it is clear that the terms offered were not substantially in accordance with the parameters of the offer that iLend was mandated to source - the principal amount represented only 29.8% of the Loan Amount specified in clause (i), the term offered represented 8.33% of the term required and the interest rate offered at the "Lower Rate" was 51.8% above the rate specified and, at the "Higher Rate", 203.8% above the rate specified.
2. Apart from the ProLend Offer, no other loan offer was conveyed by iLend or Mr Salim to Jubilee in purported performance of the mandate the subject of the iLend Agreement.
3. I now turn to the plaintiffs' submissions in relation to termination of the iLend Agreement.
4. The plaintiffs rely on Mrs Lakhani's email of 19 February 2022, the text of which is extracted at paragraph 42 above, as terminating the iLend Agreement. The plaintiffs contend that Jubilee was entitled to terminate for a breach of a condition because the terms of the ProLend Offer, being the only offer submitted, were not substantially similar to the terms of the offer that iLend was mandated to source, as set out in clause (i). The plaintiffs submit that iLend's obligation set out in clause (i) clearly went to the "root of the matter" and was of such importance that, objectively, the plaintiffs would not have entered into the iLend Agreement unless its terms were strictly followed. Relevantly, the plaintiffs rely on Bettini v Gye (1876) 1 QBD 183 at 188 (Lord Blackburn); Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 641-642 (Jordan CJ) and Associated Newspapers Ltd v Bancks [1951] HCA 24; 83 CLR 322 at 337 (Dixon, Williams, Webb, Fullagar and Kitto JJ). The plaintiffs submit that the consequence of the plaintiffs' termination was to discharge the parties from their obligations and duties under the iLend Agreement as of February 2022, well before iLend issued the invoice dated 31 October 2022. Relevantly in this regard, the plaintiffs rely on McDonald v Dennys Lascelles Ltd [1933] HCA 25; 48 CLR 457 at 469-470 (Starke J) and 476-477 (Dixon J).
5. The plaintiffs acknowledge that the iLend Agreement does not expressly provide for its termination, but that several clauses expressly refer to obligations or liabilities contingent upon termination, including clauses (iii), (5)(d) and (6)(d).
6. Clause (iii) is extracted above.
7. Clause (5)(d) provides:
8. you are liable to pay ILEND CAPITAL PTY LTD the Commitment Fee: … d. whether it is you or ILEND CAPITAL PTY LTD who terminates this Mandate to Act.
9. Clause (6)(d) provides:
10. you are liable to pay ILEND CAPITAL PTY LTD the Valuation and Legal Fee: … d. whether it is you or ILEND CAPITAL PTY LTD who terminates this Mandate to Act.
11. Having regard to the terms of the iLend Agreement and the sequence of events, I do not regard termination for breach of condition as the appropriate lens through which to analyse the facts in the present case. In my view, the more apt analysis is that iLend did not perform its obligation under the iLend Agreement and accordingly the plaintiffs had no liability to pay the fees demanded. Having regard to the whole of the circumstances and the proper construction of the iLend Agreement, while it is clear that as at the date of Mrs Lakhani's email of 19 February 2022, iLend had not performed its obligations under the iLend Agreement, I am not satisfied that by that time, iLend had breached the agreement giving rise to a right to terminate. The iLend Agreement had been executed on 11 February 2022 and barely a week had passed during which iLend could have performed its obligations under the agreement. The plaintiffs did not accept the ProLend Offer which did not accord with clause (i) of the iLend Agreement. iLend did not submit any further offer to the plaintiffs at any time thereafter.
12. The evidence establishes that iLend did not perform its obligations under the iLend Agreement at any time prior to issuing the iLend Invoice on 31 October 2022. Non‑performance is the gravamen of the plaintiffs' second contention, namely that iLend's entitlement to the Brokerage Fee/Success Fee is conditional on iLend, at the very least, procuring an offer of finance substantially in accordance with the terms set out in clause (i).
13. Relevantly, iLend's obligation arises as a result of clauses (i) and (ii). By clause (ii), iLend accepts and undertakes to use its best endeavours to obtain "an offer of Finance/Loan approval from a source prepared to lend money to the borrower substantially upon the terms contained in Clause (i)". iLend's obligation to use its best endeavours to source an offer substantially upon the terms specified in clause (i) is a condition of the iLend Agreement. To seek to obtain an offer substantially upon the terms specified in clause (i) was an essential term of the iLend Agreement and while it may readily be accepted that iLend did not guarantee that it would obtain such an offer, it acknowledged and undertook to use its best endeavours to do so. The only offer submitted was the ProLend Offer. The ProLend Offer did not meet, precisely or substantially, the requirements set out in clause (i). Thus far I accept the plaintiffs' submissions. However, I am not satisfied that the plaintiffs have established that as at the date of Mrs Lakhani's email, that iLend had breached the condition imposed by clause (i). In my view, the evidence does not support that conclusion. However, what is clear on the evidence before me is that iLend did not perform its obligation under the iLend Agreement by proffering the ProLend Offer and took no further steps in purported performance of its obligations. iLend's next action was to issue the iLend Invoice on 31 October 2022.
14. Neither iLend nor Mr Salim have sought to lead evidence to establish that iLend had used its best endeavours to source an offer of finance that was substantially in accordance with clause (i) and that having expended its best endeavours the only offer available was the ProLend Offer. The evidence that is available gives rise to an inference that Mr Salim enticed the plaintiffs to execute the iLend Agreement on the basis that he had a relevant offer in hand that he would only convey to the plaintiffs if they executed the iLend Agreement. The oral representations to this effect are supported by the contemporaneous statement by Mrs Lakhani in her email of 19 February 2022 that the plaintiffs could not accept the ProLend Offer because "it is not what we expected it to be". The only offer conveyed by iLend was the ProLend Offer which fell well short of meeting the requirements of clause (i) and iLend's obligation under clause (ii).
15. I am satisfied that, properly construed, iLend's entitlement to the Brokerage Fee/Success Fee under the iLend Agreement was conditional on iLend performing its obligation to procure an offer of finance substantially in accordance with the terms set out in clause (i) and that iLend's right to demand payment of the Brokerage Fee/Success Fee was conditional on that offer being confirmed in writing. In circumstances where iLend failed to perform its obligation under clauses (i) and (ii), the obligation to pay the Brokerage Fee/Success Fee upon demand did not arise. I will address in turn each of the clauses which deal with iLend's entitlement to the Brokerage Fee/Success Fee.
16. Clause (iii) provides that iLend is entitled to a "Brokerage Fee/Success Fee of 2.2% or $264,000 inclusive of GST based on borrowings of $12,000,000" (emphasis added). The plaintiffs submit, and I accept, that the reference to $12 million is a reference to the Loan Amount specified in clause (i) and the success fee of $264,000 represents 2.2% of the Loan Amount specified in clause (i).
17. Clause (iii) provides that the Brokerage Fee/Success Fee is payable "on demand" when iLend "produces an offer for finance and shall be payable whether or not" that offer is accepted. The Brokerage Fee/Success Fee is only payable if an offer of finance is produced by iLend. Notwithstanding that the words "offer of finance" are not defined in the iLend Agreement, read in context having regard to the mandate and all the references to "offers of finance" in the agreement, and taking into account that the calculation of the Brokerage Fee/Success Fee is either calculated by reference to the loan amount sourced or otherwise based on the Loan Amount specified in clause (i), in its proper construction the reference in clause (iii) to an offer of finance means an offer on terms substantially similar to those set out in clause (i).
18. Clause (v) supports this construction. Clause (v) provides that if the borrower does not take up "the offer of finance/loan offer after it has been confirmed in writing, substantially in the terms in (i.) above" then the borrower agrees to pay the Brokerage Fee/Success Fee in any event. The Brokerage Fee/Success Fee is only payable when the offer of finance is produced and confirmed in writing "substantially in the terms" set out in clause (i).
19. Further support is provided by clause 7. Clause 7 provides that the liability to pay iLend the Brokerage Fee/Success Fee in full arises in circumstances where iLend has obtained an "Approval", whether conditional or unconditional, or an approval was not obtained because of the actions and non-disclosure of the borrower. Clause (7)(c) provides that the Brokerage Fee/Success Fee is "not payable" if iLend "does not provide an Approval" or if iLend "withdraws from the deal" and the borrower and guarantors are not at fault. As mentioned, "Approval" is defined in clause 1 as the exclusive retainer of iLend to "obtain approval for the Facility on a reasonable efforts basis" which in turn is the subject of clauses (i) and (ii). When properly construed, "Approval" and "Facility" are to be understood by reference to clause (i) and (ii) and the parameters stipulated in clause (i). To satisfy the definition of "Approval", the relevant offer of finance must be on terms that are substantially in accordance with those set out in clause (i). The Brokerage Fee/Success Fee is not payable if iLend does not provide an Approval that is substantially in the terms stipulated by clause (i).
20. I have not overlooked clause (iv). Clause (iv) provides that the Brokerage Fee/Success Fee is payable "upon execution" of the iLend Agreement. Viewed in isolation, the opening part of this clause appears to be inconsistent with clauses (ii), (iii), (v) and (7). The plaintiffs submit that it is inconsistent and a "commercial nonsense" in that the liability to pay the fee would arise upon execution, without more, and would mean that iLend would receive the benefit of the Brokerage Fee/Success Fee without performing the burden of obtaining an offer of finance substantially in the terms specified in clause (i). The plaintiffs also submit that if clause (iv) is given effect so as to require payment of the Brokerage Fee/Success Fee upon execution it would be unworkable because they submit that the relevant fee (which is styled as a "success fee") is calculated as a percentage of the loan sum secured and at the time of execution, there is not necessarily a relevant offer of finance in place that would enable the fee to be quantified.
21. I do not accept that clause (iv) should be construed in the way that the plaintiffs contend. Read in the context of the whole of the iLend Agreement, clause (iv) properly construed fixes the date on which the fee is due, if payable, and the date from which interest runs on the debt in respect of the fee pursuant to clause 10. The clause expressly permits payment to occur on drawdown or settlement of the loan, but reserves the right of iLend to "demand full payment should the Borrower/Guarantor refuse to proceed with the loan after it has been confirmed in writing". This construction of clause (iv) and clause 10 is supported by the title of the iLend Agreement which includes the description "IRREVOCABLE AUTHORITY TO PAY ON FIRST DRAWDOWN OR SETTLEMENT, WHICHEVER OCCURS FIRST" (emphasis added). This cuts against the opening words of the clause having the effect that the plaintiffs seek to impugn as inconsistent and commercially absurd. Read as a whole and in context, clause (iv) subjects iLend's right to demand payment to the condition that iLend must have confirmed in writing to the Borrower/Guarantor an offer of finance that in substance meets the criteria specified in clause (i). That is to say, that the obligation to make the payment is subject to iLend performing its obligations under the iLend Agreement in accordance with clauses (i) and (ii), which in combination operate as a condition subsequent.
22. Taking into account each of the relevant clauses of the iLend Agreement in the context of the iLend Agreement as a whole, in its proper construction, the Brokerage Fee/Success Fee is not payable unless iLend obtains, at the very least, an offer of finance substantially in accordance with the terms set out in clause (i).
23. On the facts here, iLend did not perform its obligations under the iLend Agreement in accordance with clause (ii) and was not entitled to payment of the Brokerage Fee/Success Fee.
24. I now turn to address the validity of Mr Pleash's appointment and whether the Court in its discretion should grant the declaratory relief claimed by the plaintiffs.

The appointment of Mr Pleash

1. The administration process presently in issue arises under 436C of the Corporations Act, which is located in Part 5.3A of the Corporations Act. The object of Part 5.3A is set out in s 435A: Object of Part The object of this Part, and Schedule 2 to the extent that it relates to this Part, is to provide for the business, property and affairs of an insolvent company to be administered in a way that: (a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or (b) if it is not possible for the company or its business to continue in existence - results in a better return for the company's creditors and members than would result from an immediate winding up of the company.
2. Part 5.3A provides in ss 436A to 436C for the appointment of an administrator in three scenarios. An administrator may be appointed by the company if the board thinks the company is or will become insolvent: s 436A. A liquidator or provisional liquidator of a company may appoint an administrator under s 436B if he or she thinks the company is or will become insolvent. Finally, a secured creditor may appoint an administrator subject to satisfying the requirements of s 436C.
3. Section 436C provides: Secured party may appoint administrator (1) A person who is entitled to enforce a security interest in the whole, or substantially the whole, of a company's property may by writing appoint an administrator of the company if the security interest has become, and is still, enforceable. (1A) Subsection (1) applies in relation to a PPSA security interest only if the security interest is perfected within the meaning of the Personal Property Securities Act 2009. (2) Subsection (1) does not apply to a company if a person holds an appointment as liquidator, or provisional liquidator, of the company.
4. Relatedly, ss 448A and 448B relevantly provide: Appointee must consent A person cannot be appointed as administrator of a company … unless: (a) the person has consented in writing to the appointment; and (b) as at the time of the appointment, the person has not withdrawn the consent. and: Administrator must be registered liquidator (1) A person must not consent to be appointed, and must not act, as administrator of a company or of a deed of company arrangement. (2) Subsection (1) does not apply if the person is a registered liquidator. … (3) An offence based on subsection (1) is an offence of strict liability.
5. The appointment of the administrator pursuant to s 436C is not made by an order of the court. In the context of s 436C, the requirement for the administrator to consent serves as a guardrail on a secured creditor's ability to appoint an administrator to a company over which the creditor holds security. Only a person who is a registered liquidator, and is accordingly experienced in corporate insolvency and regulated by ASIC, is eligible to be appointed as an administrator. Without such a practitioner consenting in writing to accept an appointment as an administrator, a secured creditor cannot appoint an administrator. An offence of strict liability is committed by a person who consents to act as an administrator if the person is not a registered liquidator. The important safeguard provided by the mechanism of conditioning the secured creditor's ability to appoint an administrator on the proposed administrator's consent being given in writing is readily apparent.
6. In addition to securing the consent of a registered liquidator to act as administrator, a secured creditor's right to appoint is also conditional upon the creditor being entitled to enforce a security interest in the whole, or substantially the whole, of the company's property and the security interest must have become, and still be, enforceable at the time of the administrator's appointment.
7. Consistently with s 435A(a), an administrator's primary obligation is to administer the company under their control in a way that maximises the chances of the company, or as much as possible of its business, continuing in existence. If it is not possible for the company or its business to continue in existence, then consistently with s 435A(b), an administrator's obligation is to administer the company in a way that results in a better return for the company's creditors and members than would result from an immediate winding up of the company. The extensive powers bestowed on administrators must be exercised for the purpose of achieving the object of Part 5.3A of the Corporations Act.
8. In the context of an appointment under s 436A, it has been recognised that an administrator has an obligation to take some steps to satisfy themselves as to the validity of their appointment, at or immediately after the time of their appointment: Re O'Neill v Advantage Hearing Pty Limited [2013] NSWSC 175 at [10] (Black J); Re Lime Gourmet Pizza Bar (Charlestown) Pty Ltd [2015] NSWSC 244 at [72] (Black J); Re Condor Blanco Mines Ltd [2016] NSWSC 1196 at [138]-[139] (Barrett AJA); Re Stellar Agritech Pty Ltd [2023] NSWSC 1003 at [43] (Williams J). There are however limits on the administrator's obligation in this regard. In the context of an appointment by the directors of company, an administrator is not required to undertake "some form of independent verification of the factual basis on which the directors proceed in that appointment": Re Lime Gourmet at [72] (Black J). By contrast, if it is "as plain as a pikestaff" that the appointment is for an extraneous purpose, the administrator would fail to discharge their responsibilities by accepting the appointment. In Re Condor at [142], Barrett AJA (as his Honour then was) observed that: If it were as plain as a pikestaff, without any form of inquiry, that directors were resorting to administration for an extraneous purpose (because, for example, they actually said so or immediately obvious and observable circumstances left no alternative explanation), the practitioner asked to accept appointment would fail to discharge the relevant responsibility by accepting. Beyond any such patently obvious case, however, there can be no expectation that the responsibility at the time of appointment extends to considering possibilities of improper purpose and abuse of process.
9. An appointment under s 436A is different from an appointment under s 436C. An essential point of difference is that an appointment under s 436C is made by a third party whereas an appointment under s 436A is made by the directors of the company upon the directors resolving that the company is insolvent or likely to become insolvent. The power of a third party secured creditor to make an appointment is subject to the creditor being presently entitled to enforce a security interest over the whole, or substantially the whole, of the company's property. The plaintiffs submit that where it is a third party making the appointment purportedly based on having a present entitlement to enforce a security interest over the whole or substantially the whole of the company's property, the administrator is in a position to, and should before accepting the appointment, take reasonable steps to satisfy themselves that there is a proper basis for the appointment based on the information made available to them by the third party appointor.
10. The appointment of an administrator to a company has the real potential to have a significant and possibly detrimental impact upon the company's business and property. The administrator assumes control of the company's business, property and affairs to the exclusion of all others. The administrator is empowered to terminate or dispose of all or part of the company's business and property; carry on the company's business and manage its property and affairs; appoint and remove directors; and act as the company's agent. While the administrator is liable for all debts incurred by the company in performance of the administrator's duties, the administrator has the benefit of an indemnity against the property of the company: ss 443A and 443D.
11. It is well-established that a statutory power must be exercised for a purpose for which it is conferred: Kazar v Duus [1998] FCA 1378; 88 FCR 218 at 233 (Merkel J). As Barrett AJA (as his Honour then was) observed in Correa v Whittingham [2013] NSWCA 263 at [4]: … the power vested in a court by s 447A is a statutory power which may be exercised only for the purpose for which it was granted: The Queen v Toohey; Ex parte Northern Land Council [1981] HCA 74; (1981) 151 CLR 170. The "nexus" with the operation of Part 5.3A to which reference is made in the decided cases must be understood accordingly. The relevant purpose is to be ascertained by reference to the language of the statute, its subject matter and objects and the consequences of a decision that the power has been exceeded: Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355.
12. In construing s 436C, it is relevant to take into account the whole of the context. That context includes the object of Part 5.3A as set out in s 435A, the significant impact that the appointment of an administrator may have on a company's fortunes and that instead of an immediate curial sanction of the appointment, the appointment takes effect upon a registered liquidator consenting to accept the appointment. Viewed in this context, the administrator's statutory function under s 436C extends to taking reasonable steps to be satisfied based on the information available to the administrator that the appointor is entitled within the confines of s 436C to make the appointment before consent is given to accept the appointment. What is required of an administrator in this regard will depend on the particular facts of each case. To construe s 436C otherwise would be to facilitate the power conferred by s 436C being used for a purpose that is inconsistent with the object of Part 5.3A and outside the conditions stipulated in s 436C. The power to appoint an administrator under s 436C is not conferred on a secured creditor as an alternative to the statutory demand process to facilitate the recovery of debts. It is an orthodox principle of statutory construction that an interpretation that promotes the underlying purpose or object of a provision is to be preferred to one that would not: Acts Interpretation Act 1901 (Cth), s 15AA.
13. The appointment of an administrator by a secured creditor is not part of the process of enforcing a security. As Robb J observed in Photios v Cussen [2015] NSWSC 336 at [44]-[45]: [44] … the appointment, by the holder of a security interest issued by a company, of administrators of the company under s 436C, is not an act of enforcement of the security, or an act in aid of the realisation of that security. The appointment of an administrator by a secured creditor is a step which may often result in the creditor's right under the security never being enforced at all: see Australian Innovation Ltd v Dean-Willcocks [2001] NSWSC 1204; (2001) 40 ACSR 531 [25]-[33]. [45] The requirement that the security interest be enforceable is, for the purposes of s 436C, a trigger for the entitlement to appoint the administrator under s 436C, and not part of the process of enforcing the security. …
14. In Re Cyprus Community of NSW Ltd [2024] NSWSC 1629 at [87], Black J said: … The exercise of the power to appoint an administrator will be invalid, and the purported appointment will be invalid, if that power is exercised for an ulterior or extraneous purpose and that purpose is substantial in the sense that the decision would not have been made but for the ulterior purpose: Kazar at 233; Blacktown City Council v Macarthur Telecommunications Pty Ltd (2003) 47 ACSR 391; [2003] NSWSC 883; St Leonards Property Pty Ltd v Ambridge Investments Pty Ltd (2004) 210 ALR 265; [2004] NSWSC 851; Keneally at [96]. An appointment of an administrator is for an improper purpose if it is for a purpose other than one "in furtherance of the object of Pt 5.3A as set out in s 435A": McMaster v Eznut Pty Ltd (2006) 58 ACSR 199; [2006] WASC 109 at [135]. …
15. I now turn to the particular facts giving rise to Mr Pleash's appointment.
16. Mr Salim sought advice from Mr Pleash on the administration process as a means of debt recovery. Mr Pleash said he was providing advice to Mr Salim about whether there was a basis for iLend to initiate "an appointment of some description". Mr Pleash acknowledged in his evidence that he understood the purpose of Mr Salim's approach was "effectively debt recovery". Mr Pleash understood that the primary purpose of his appointment was to recover a debt which Mr Salim said was due to iLend. Mr Pleash received email correspondence with the subject line "Jubilee Infrastructure - Ravi Patel - recovery", which he understood to be a reference to debt recovery.
17. Mr Pleash said that if there had been a power to appoint a receiver under the relevant security, then he would have suggested that. The iLend Agreement does not include a power to appoint a receiver. Mr Pleash's evidence was that he suggested to Mr Salim that iLend had the option of appointing an administrator under s 436C. He said that he understood that "obviously, there needed to be a debt, and there obviously needed to be also a default on that debt". Mr Pleash said that in order to accept the appointment he needed to be sure that there was a debt that was due and payable and unless he had been satisfied of those circumstances, he would not have accepted the appointment. He accepted that an important part of his role, before consenting to accept the appointment, was to satisfy himself of those requirements.
18. Mr Pleash primarily acted in reliance on the information he was given by Mr Salim and iLend without scrutinising the veracity of that information by reference to the core documents which had been provided to him.
19. By way of context, Mr Pleash had accepted two earlier appointments which were referred from Mr Salim which arose from the non-payment of brokerage fees. The other companies to which Mr Pleash was appointed as administrator on instructions received from Mr Salim were identified by Mr Pleash as JW Property Developers and Mandari Investments. The circumstances and course of those administrations are not otherwise revealed in the evidence before me.
20. Mr Salim took up Mr Pleash's suggestion in relation to the appointment of an administrator in all three companies from which iLend was seeking to recover alleged debts and Mr Pleash accepted each of the appointments.
21. Mr Pleash's evidence as to his asserted understanding of the purpose for which an administrator could be appointed under s 436C warrants close attention. He first accepted that debt recovery was outside the terms of the objects and purposes in s 435A. Mr Pleash gave evidence that he would not accept an appointment if he believed that the appointment was not made for a proper purpose or he was not satisfied that there was a debt that was due and payable. The critical passage of Mr Pleash's evidence was as follows: And all three matters were all concerned with the recovery of debts, weren't they?---They were. Yes. You didn't think that that was an appropriate vehicle, that is, appointing an administrator for the purposes of recovering the debt, did you?---It was an available mechanism to him under the Act. Did you think that that was within the scope of the purpose of part 5.3A?---The objective, possibly not, but it was available to him under that section. When you say possibly not, what do you mean by that?---Well, the - the - the provision provides - provides that power. I had thought - let me - - -?---And you're saying that - yes. Let me put this another way to you?---Yes. You, I think, had said earlier on in your evidence, and please correct me if I'm wrong, but one of the matters that you give consideration to before you accept an appointment is whether or not the purpose of the appointment falls within the permitted purpose of part 5.3A?---Yes. Do you agree with that?---And - yes. And I think you accepted that debt recovery wasn't part of the permitted purpose of part 5.3A?---Under the objectives, yes. Yes?---Under that section that you mentioned, yes. And you knew at the time of the acceptance of your appointment in respect of Jubilee that Mr Salim and iLend were simply using that mechanism for the purposes of debt recovery, didn't you?---Yes. Yes. And you knew at that time that that was not a permitted purpose under section - sorry, under part 5.3A of the Corporations Act?---It wasn't part of the objectives, but I knew that there was - there was power under section 436C for him to do it. I -I took the view that it - there was power under section 436C for him to do it. Even though you knew that he was doing it for an improper purpose?---He was doing it for - to recover a debt that he was owed - - - Yes. And that's - - -?--- - - - a secured debt. As you understood it, that was outside the scheme that was proposed for part 5.3A?---The - under that section that says objectives, yes, but the power seems to provide it - provide for it under section 436C.
22. On 29 November 2022, prior to Mr Pleash's appointment, Mr Salim provided Mr Pleash with copies of:
23. the iLend Agreement;
24. the ProLend Offer;
25. the ProLend mortgage application form dated 18 February 2022, executed by Mr Patel and Mrs Lakhani on behalf of Jubilee as the borrower;
26. a PPSR tax invoice and verification statement dated 31 October 2022 which noted the AllPAP Registration;
27. an ASIC company statement for Jubilee issued on 26 October 2021 which listed Mr Patel and Mrs Lakhani as the directors and shareholders of Jubilee; and
28. an ASIC invoice statement summary for Jubilee dated 26 October 2021.
29. Mr Pleash was also provided with a copy of certain "demand" documents. On 29 November 2022, Mr Wolfgramm sent an email to Mr Salim requesting "a land title search in the Company's name to determine what real property is owned by the Company and any registered mortgages" and "copies of any previous demands issued to the client by iLend".
30. Documents were provided by iLend in response to Mr Wolfgramm's request. The first document is styled as a letter of demand. It is undated. It is not addressed to Jubilee. It is addressed to Mr Patel and Mrs Lakhani. There is no delivery address. There is nothing on the face of the document or in the form of any supporting evidence to suggest that this letter was in fact sent, and if so, when it was sent. There is an internal reference in this letter to an invoice for $267,000 which is described as being dated 18 February 2022. No such invoice was included in the bundle of materials provided by iLend to Mr Wolfgramm and there is no such invoice in the evidence. The invoice referred to in the letter had a different date to the iLend Invoice and referred to a debt which was materially different to the sum claimed in the iLend Invoice. The document repeatedly uses the plural form inaccurately. It refers to "our offers for refinance" and "Mandate agreements". There was a single offer, the ProLend Offer, and only one mandate agreement, the iLend Agreement. As mentioned, the secondary reference to an invoice dated 18 February 2022 in this document is not supported by any primary record and there is no contemporaneous reference to an invoice dated 18 February 2022.
31. I find that the plaintiffs did not receive the undated letter of demand or the invoice said to be dated 18 February 2022 referred to therein. The first communication from iLend or Mr Salim after Mrs Lakhani's email of 19 February 2022 was the email of 31 October 2022 attaching the iLend Invoice. There is no credible evidence that supports a finding that either the letter of demand that iLend supplied to Mr Wolfgramm or invoice referred to therein were sent to the plaintiffs. The anomalies on the face of the letter of demand cast serious doubt about whether the document was prepared in or around February 2022. The document appears to have been prepared at around the time Mr Salim was seeking to appoint Mr Pleash and for the purpose of providing it to Mr Wolfgramm. On balance, taking into account the whole of the evidence including the unchallenged evidence of the plaintiffs and the contemporaneous documents, I find that the letter of demand was created in late November 2022 in response to Mr Wolfgramm's request for copies of any previous demands issued to the Jubilee by iLend. It is not a document that was sent to the plaintiffs.
32. There are other features of the documents provided by iLend to Mr Wolfgramm and Mr Pleash that are curious. The iLend Invoice refers to a "Mandate Fee", however the iLend Agreement does not provide for a "Mandate Fee". The amount claimed in the line item for "Mandate Fee + Interest" does not change between the date of the purported first invoice allegedly dated 18 February 2022 and the date of the iLend Invoice being 31 October 2022, even though if the invoice was legitimate and had been calculated in accordance with the iLend Agreement, one would expect this amount to increase to include further interest in the period between 18 February 2022 and 31 October 2022.
33. For completeness, I note that another feature of the iLend Invoice is that the iLend Invoice refers to legal fees and charges. There is no evidence of any legal fees or charges. The evidence demonstrates that Mr Salim drafted the iLend Agreement. There is no suggestion that lawyers were involved in preparing the iLend Agreement. The documents which purport to have been issued to recover the alleged debt are all generated by iLend. There is no evidence of lawyers being involved. I do not think that this odd aspect of the iLend Invoice would have been apparent to Mr Pleash at the time he was contemplating accepting the appointment, but it is another aspect of the invoice which supports my conclusion as to the provenance of the document.
34. Mr Pleash did not in any substantive way query any of the documents provided to him before he accepted his appointment as an administrator of Jubilee. In his cross-examination, Mr Pleash said that he read the letter of demand when it was provided to him and notwithstanding the anomalies on the face of that document and that there was no evidence to suggest that it had in fact been sent, he did not recall having any reservations about the letter of demand. Mr Pleash was not provided with any invoice dated 18 February 2022. Mr Pleash could not recall whether he asked for any further information in relation to that invoice. He accepted that he did not make any enquiries to reconcile the differences between the letter of demand which referred to an invoice dated 18 February 2022 and the iLend Invoice (which was dated 31 October 2022).
35. The plaintiffs contend that, in the circumstances described above, Mr Pleash failed to take appropriate steps to satisfy himself that iLend was in fact entitled to appoint him as an administrator of Jubilee under s 436C. I accept that submission for the reasons which follow.
36. Prior to accepting his appointment, Mr Pleash did not seek any instructions or information from Mr Salim or iLend as to whether any other offers of finance had been provided by iLend to Jubilee. The only offer with which Mr Pleash was provided was the ProLend Offer.
37. After initially equivocating, Mr Pleash agreed that a review of the iLend Agreement and the ProLend Offer indicated that the ProLend Offer did not match the mandate embodied in the iLend Agreement. He accepted that would have been an obvious conclusion drawn by anyone reading those documents. However, Mr Pleash maintained that it was not obvious to him at the relevant time because the thought crossed his mind that the ProLend Offer may have been part of a wider transaction. Mr Pleash could not recall if he sought any instructions about whether the ProLend Offer was part of a broader transaction. He acknowledged that he did not seek any information about that possibility before he accepted the appointment to act as the administrator of Jubilee. He thought it was possible he sought some information about that after he was appointed.
38. Mr Pleash accepted that prior to his appointment all he had was the mandate requiring a loan in or substantially in the amount of $12 million and the ProLend Offer offering to loan a principal sum of $3.573 million. It was put to Mr Pleash in cross-examination that without more information, he could not possibly be satisfied that it was appropriate to accept any appointment to Jubilee as an administrator because of any debt claimed by iLend. In response, Mr Pleash again reiterated that he assumed that the ProLend Offer was part of a wider transaction and again acknowledged that he could not remember asking for any information to confirm his assumption before he accepted the appointment. Mr Pleash's evidence in this respect reveals that he relied on his own pure speculation and made no enquiry at all to ascertain if it was correct. Mr Pleash later asserted in cross-examination that he himself did not assess whether the ProLend Offer was substantially on the terms set out in clause (i) of the iLend Agreement because he would "have relied upon the secure creditor in terms of their assessment of …whether they believed the - the mandate had been triggered".
39. When Mr Pleash was pressed on this issue, he agreed that before accepting the appointment, it was incumbent upon him to form his own view as to whether there was a relevant current security interest which was enforceable. He also accepted that in order to determine if there was a presently enforceable security interest, he would first have to consider the agreement and whether there was a debt currently outstanding under the agreement. He baulked however when the cross‑examiner asked him the following questions, taking refuge again in his unquestioning reliance on iLend: And the mechanism for doing that required first a determination as to whether or not iLend had performed its obligations under its agreement; correct?---Up to - well, up to a point. As I said, I - I would have relied on iLend confirming that they - being satisfied that they had a debt that they could recover. Are you sure that's the evidence you want to give? You want to rethink that?---It was up to you, let me suggest, sir, to determine whether or not the iLend agreement had been complied with; is that not so?---It's up to - it was up to me to determine - well, it was up to me to be satisfied that iLend confirm that they had a secured debt that they could recover. Yes. And that required you to consider the documents that you had been provided, let me suggest, for that very purpose, did it not?---Yes. Yes. And you were provided with the iLend agreement, weren't you?---I was provided with the iLend agreement. And you were provided with the ProLend offer of finance, weren't you?---Yes. And I suggest to you that it was obvious to Blind Freddy that the ProLend offer was not substantially upon the terms set out in the iLend agreement; do you agree with that or not?---I don't agree with it necessarily.
40. Mr Wolfgramm dealt with Mr Salim in obtaining information and reported to Mr Pleash.
41. Prior to accepting his appointment, Mr Pleash arranged for a partner from the Adelaide office of Hall Chadwick to conduct a drive-by of Jubilee's property to obtain some information about the state of the development. It was put to Mr Pleash in cross-examination that in the circumstances he well understood that his acceptance of the appointment as administrator would be detrimental to Jubilee. His response was to acknowledge that he thought it was a possibility, but did not know "for sure". Mr Pleash may not have known as a certainty that his appointment would be detrimental to Jubilee, but as an experienced registered liquidator he knew that it was highly probable that it would be.
42. As mentioned, Mr Pleash's appointment took effect on 2 December 2022.
43. The description of the security interest claimed by Jubilee in the deed of appointment is extracted at paragraph 54 above.
44. The deed of appointment does not make any express reference to any charge over real property. The effect of recitals A and B is to assert that the purported right to register a PPSR interest has been conferred under the iLend Agreement and registered under the PPSR legislation with the number 202210310076005.
45. The PPSR interest referred to was not registered within the time frame required by s 588FL(2)(b)of the Corporations Act, which provides that in order to avoid vesting by virtue of the mechanism in s 588FL(4), a registration must be lodged within 20 business days from the creation of the security agreement (s 588FL(2)(b)(ii)), or six months must expire from the date of the registration before the relevant appointment is made (s 588FL(2)(b)(i)), or the registering party must obtain a court order under s 588FM (s 588FL(2)(b)(iv)), whichever is the latest. Here the registration was later than six months before the appointment of Mr Pleash as administrator and 20 days after the relevant security interest under the iLend Agreement is purported to have come into force and no other time had been fixed by the Court under s 588FM. The result is that any PPSR security interest arising under the iLend Agreement vested in Jubilee as at the date of Mr Pleash's appointment: s 588FL(4). The PPSR interest was therefore not available as a basis upon which to effect Mr Pleash's appointment.
46. Mr Pleash's evidence was that he understood at the time of his appointment that the PPSR registration did not supply a valid basis for his appointment. Mr Pleash denied that he accepted the appointment on the basis of the PPSR registration. He claimed that his appointment was in fact supported by a charge over real property arising under the iLend Agreement. Mr Pleash's evidence on this topic was implausible. The contemporaneous documents relating to his appointment suggest that Mr Pleash was principally, if not exclusively, relying on the PPSR registration as the basis for his appointment. As to whether Mr Pleash was also relying on iLend having a charge over real property, the contemporaneous documents are somewhat more opaque.
47. Both the deed of appointment and the notification of the appointment to ASIC are framed by reference to the PPSR registration ostensibly made pursuant to the iLend Agreement. While Mr Pleash maintained that the deed of appointment recitals should be construed so that reference to the iLend Agreement implicitly included a reference to a charge on real property effected by that agreement, he accepted that the notification to ASIC only identified the PPSR registration as the basis for his appointment. He said that the notification to ASIC was wrong and that he understood at the time that the PPSR registration did not supply a valid basis for his appointment. He could not explain how he came to make the mistake of relying on the PPSR registration in the documents. After saying the notification to ASIC was probably completed by the most junior person in the office, he accepted that the content of the notification was his responsibility. It was put to Mr Pleash that his evidence in relation to not relying on the PPSR registration as the basis for his appointment was false. Mr Pleash did not accept that proposition.
48. I am conscious of the gravity of concluding that I do not accept Mr Pleash's evidence given his status as a registered liquidator. Affording due weight to the contemporaneous documents, I have concluded that Mr Pleash primarily relied on the PPSR registration as the relevant security interest for the purpose of s 436C. However, I am not satisfied that I can exclude that he also relied in part on his understanding that iLend had a charge on real property which supported his appointment.
49. Nothing turns on this issue in isolation. If Mr Pleash was also relying on a charge on real property, then it was incumbent on him to satisfy himself that the relevant charge comprised a security interest in the whole, or substantially the whole, of the property of Jubilee and that it was presently enforceable. Mr Pleash could not recall making any inquiries as to whether there were any caveats lodged by iLend on any properties. He did not know the value of the properties. Although he thought that his firm may probably have asked iLend about the value of any mortgages over the properties, he could not be sure and had no recollection of getting this information from iLend. At the time he accepted his appointment, Mr Pleash was not in a position to ascertain even in general terms whether the equity available in these properties constituted the whole or substantially the whole of the property of Jubilee. He did not have the mortgages, and he could not recall whether he had been given information in relation to the mortgage position. He made no reference to having received that information in his affidavit and no documents were in evidence to suggest that the information had been provided to him or his colleagues. He accepted that he would first need to find out what the debt position was in order to work out whether iLend had a security interest over the whole, or substantially the whole, of Jubilee's property. He said he "assumed that - well, the question was that the land was - my - my - my understanding was the land was the substantial - substantially, all the assets of the company."
50. Mr Pleash ultimately accepted that in his consideration as to whether he ought to consent to the appointment, he did not turn his mind to the issue. He then immediately retreated and asserted that he had turned his mind to it because "otherwise, we wouldn't have been able to proceed with these - the appointment". He was unable to demonstrate in a meaningful way that he had satisfied himself even at a general level that iLend was entitled to appoint an administrator to Jubilee in accordance with the requirements of s 436C.
51. Mr Pleash was keen to ensure that he got the referrals from iLend that had been offered to him by Mr Salim. He accepted that the referrals would generate revenue for his firm. He denied that he did not care whether there was a proper basis for his appointment because he just wanted the fees.
52. At the time he accepted the appointment, I am satisfied that despite his equivocation, Mr Pleash knew that Jubilee was undertaking a commercial development on the property, that it was close to completion and that the effect of the appointment of an administrator would seriously adversely impact Jubilee. As a registered liquidator, based on the information that had been provided to him, he needed to exercise care to satisfy himself that the power under s 436C was properly engaged and being deployed for a proper purpose before he agreed to the appointment. Without his consent to taking the appointment, Jubilee would not have been placed in administration on 2 December 2022.
53. On 6 December 2022, he met with Mrs Lakhani and following that meeting he received a detailed email setting out, with supporting documents, her chronological account of the plaintiffs' dealings with Mr Salim and iLend. Also on 6 December 2022, Mr Pleash received the comprehensive letter from the plaintiffs' solicitors challenging the validity of his appointment. Upon receipt of the plaintiffs' solicitors' letter, Mr Pleash forwarded the letter to Mr Wolfgramm. In an email sent on the morning of 7 December 2022, Mr Wolfgramm told Mr Pleash (as written): The terms of the Prolend offer do not match the terms in the Mandate. I asked Marwan about this yesterday and he recalled that they were only approved for $3 mill based on a review of security property. Marwan also advised that the Mandate provides that iLend will still get paid its fees regardless of the amount of loan finance - I haven't seen that on the Mandate.
54. Mr Pleash did not respond to Mr Wolfgramm's email. Mr Pleash did not disclose Mr Wolfgramm's email in his affidavit.
55. Mr Wolfgramm sent a further email on 7 December 2022 at 10.51am in the following terms (as written): Hi guys Blair and I spoke w/ Marwan, Marwan was quite worked up about it.. he said he will send a few emails over that shows the Directors agreed to borrow a lesser sum ($3mill)… but that still doesn't answer why Marway still charged mandate fee on $13mill. So we should hopefully get that today / soon for review. Ciindy - not sure if you were on the emails. Jubilee Directors lawyers have queried validity of our appointment on the basis that the loan offer sourced by iLend was only $3mill - not the $12 mill on the mandate. They also raise other issues regarding the appointment and asked us to respond by tomorrow. Will forward you their corro. Regards Duke
56. Mr Pleash did not disclose this email in his affidavit. There is no evidence of Mr Salim or iLend supplying Hall Chadwick with the emails that he claimed showed that the plaintiffs agreed to "borrow a lesser sum".
57. As mentioned, in his oral evidence Mr Pleash said although the ProLend Offer was not consistent the terms of the iLend Agreement, he thought that it was possible that the ProLend Offer may have formed part of a wider transaction. This was pure speculation on Mr Pleash's part. It does not appear to be based on information provided to Mr Pleash by iLend. Having regard to Mr Wolfgramm's emails, even if Mr Pleash had, up to that point in time, acted on the assumption he says he made, he could not have continued to operate on that assumption after he received Mr Wolfgramm's email.
58. On 7 December 2022, Mr Pleash emailed Mr Wolfgramm and others working on the Jubilee matter reporting on a phone call he had with Angas' solicitors at 6.15pm on the previous day (as written): I took a phone call from James Neate of Lynch Meyers at 6:15pm yesterday He acts for angas who were apparently going to settle project finance for the company last Friday. He asked me for the background to the appointment I advised Ilend was a secured creditor under Section 439C He suggested the PPSR would have vested and I advised it was not an appointment under the PPSR but the charge over the real property dated Feb 22 He enquired whether it was a registered mortgage - I advised no it was a charge on the real property and he said if appointment was not valid - I was trespassing and I would not be entitled to an indemnity. I agreed with him when he said that was not his role to ventilate. He did say however Angas may have a damages claim as the company was not in a position to settle the finance. He asked what was the intention behind the VA - I suggested one option would be for the directors to pay the debt possibily through a Deed He suggested it seemed like a debt collection exercise and the appropriate process for that was receivership and I had duties to other stakeholders. I advised him I was aware of that - he advised he will forward correspondence outlining his concerns
59. Mr Pleash was cross-examined on this email. As in other parts of his evidence, Mr Pleash referred to s 439C. I understood that he meant to refer to s 436C of the Corporations Act, being the provision under which he was appointed. He maintained that the appointment of an administrator under s 436C as a means of debt collection was "an option that's available under section [436C]".
60. Mr Pleash agreed that to work out whether there was a proper basis for his appointment, he had to be satisfied that there was an outstanding debt. He was taken to the alleged demand letter which referenced an invoice of 18 February 2022 and the iLend Invoice dated 31 October 2022. It was put to him that it would have been obvious that this purported demand letter was not addressed to Jubilee, referenced the date of the ProLend Offer (18 February 2022) and was for an alleged fee that was well over 2.2% of the principal $3.5 million of the ProLend Offer. Mr Pleash responded by saying that he relied on the secured creditor's calculation of their debt and that he generally did not "ask a secured creditor how they calculate their debt at the time of the appointment". Mr Pleash's answer sought to downplay the stark reality that the debt claimed was entirely divorced from what was provided for in the iLend Agreement. It was not a mere matter going to the method of calculation as Mr Pleash appeared to suggest.
61. Mr Pleash accepted that he was not given any invoice dated 18 February 2022 and that the only invoice he received was dated 31 October 2022. When asked if he thought at the time that that was odd, he said that: in my dealings with iLend, they - it wouldn't have - it actually wouldn't have surprised me that they were issuing an - an invoice after - after the event, because there were a number of instances of this. They had a number of files which were at different - which they informed me they were different levels of collection. Mr Pleash did not grapple with or seek to explain the obvious inconsistencies and gaps that were evident in the information supplied by iLend.
62. Mr Pleash acknowledged that he received documents from iLend that were on their face inconsistent. Further, that he would have noticed at the time that the documents were inconsistent but that he did not ask any questions of iLend about the inconsistency or attempt himself to ascertain the true position. He said the only information he had as to Jubilee's response to the alleged debt before his appointment was that the purported invoices had not been paid. Mr Pleash acted in accordance with iLend's direction without himself applying even a basic level of scrutiny. The obvious anomalies in the documentation he was given demanded that he apply a basic level of scrutiny to satisfy himself that it was in order to accept the appointment under s 436C.
63. The circumstances of Mr Pleash's appointment made it plain that iLend and Mr Salim were acting for an extraneous and impermissible purpose, namely debt collection. Indeed, Mr Pleash acknowledged that he understood that the purpose of his appointment by iLend was to facilitate debt collection. Mr Pleash maintained that the appointment of an administrator to facilitate debt collection was an "an option that's available" under the Corporations Act.
64. Even if debt collection was a permissible purpose for the exercise of the power under s 436C, which it is not, before consenting to act as administrator Mr Pleash had to satisfy himself that iLend was a creditor with a debt that was presently due and payable secured over the whole, or substantially the whole, of Jubilee's property. iLend's entitlement to appoint an administrator under s 436C depended on iLend demonstrating that it fell within the criteria of s 436C. Mr Pleash did not, even at a superficial level, satisfy himself that Jubilee in fact owed the debt claimed by iLend. He deferred to Mr Salim as to whether iLend was entitled to make the appointment under s 436C including on the critical issue of whether there was a secured debt that was presently due and payable in the whole, or substantially the whole, of Jubilee's property. Mr Pleash accepted the appointment principally on the basis of the PPSR registration. As an experienced registered liquidator, Mr Pleash would have recognised, if he had reviewed the documents with which he was supplied, that the purported PPSR interest had not been perfected and could not be relied on to support his appointment. Although Mr Pleash appears also to have relied on a charge on real property, he did not take steps to confirm for himself that iLend was entitled to enforce a security interest and if so, whether the security interest was in the whole, or substantially the whole, of Jubilee's property. He simply, and uncritically, relied on Mr Salim. For completeness, I note clause (vii) of the iLend Agreement, properly construed, is an agreement to create a charge that is contingent on iLend performing its obligations under the iLend Agreement. Accordingly, even if Mr Pleash had relied on the charge on real property as providing a basis for his appointment, there were no relevant "monies/service fees" which were payable and which could be secured by such a charge.
65. The immediately obvious and observable circumstances in which Mr Pleash accepted the appointment would have caused a registered liquidator, acting reasonably, to question whether iLend was entitled to appoint an administrator to Jubilee under s 436C. Upon examination of the iLend Agreement and the ProLend Offer, it should have been apparent that iLend had not performed its obligation under clause (i) and (ii) of the iLend Agreement and that Jubilee was not obliged to pay the claimed fee. Mr Wolfgramm reached a conclusion to this effect, which he communicated to Mr Pleash on 7 December 2022. Jubilee was not indebted to iLend under the iLend Agreement. iLend was not entitled to appoint Mr Pleash as an administrator under s 436C.
66. For the purpose of the present proceeding, it is not necessary for me to make a positive finding as to whether Mr Pleash genuinely believed that debt collection was a permissible object to support the exercise of the power in s 436C. I am satisfied that if he did genuinely hold this view, he was wrong. As a registered liquidator he should have been conversant with the object of Part 5.3A as set out in s 435A and the requirements of s 436C.
67. The purpose of debt recovery is clearly outside the statutory objectives of Part 5.3A. To use the power under s 436C for debt recovery is an abuse of process which is analogous to using the statutory demand procedure as a lever to obtain the payment of a debt which is bona fide in dispute: Niardone v Clubb (No 3) [2021] FCA 1449 at [40] (Colvin J), relevantly citing Re Wollongong Coal Ltd [2015] NSWSC 1680 at [82] (Black J), Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85 at [2] (Martin CJ) and Grocon Constructors (Qld) Pty Ltd v Dexus Funds Management Limited as Trustee for the Dexus 480Q Trust (No 2) [2019] FCA 1117 at [14]-[16] (Moshinsky J).
68. The appointment of an administrator is subject to the general power conferred by s 447A which extends to the Court ordering that an administration end if the Court is satisfied that the provisions of the Corporations Act concerning the appointment of administrators are being abused: see Spacorp Australia Pty Ltd v Fitzgerald [2001] VSC 61 at [27] (Beach J) and Re Sales Express Pty Ltd (Administrators Appointed) [2014] NSWSC 460 at [19] (Brereton J). The Court has power under s 447C to declare that the appointment of an administrator was invalid.
69. The plaintiffs have established that Mr Pleash's appointment as the administrator of Jubilee was invalid - s 436C was not enlivened because iLend did not have a presently enforceable security interest. In the circumstances, I am satisfied that the plaintiffs have established that Mr Pleash's appointment resulted from an abuse of the legislative scheme and the power under s 436C. I am satisfied that it is appropriate and utile to make a declaration under s 447C of the Corporations Act that the appointment of Mr Pleash as the administrator of Jubilee on 2 December 2022 was not valid. I am further satisfied that it would be appropriate if it is necessary to do so to make an order requiring ASIC to correct the corporate register to expunge the reference to Jubilee being in administration in the period 2 to 16 December 2022.
70. I now turn to consider the claims against iLend and Mr Salim under the ACL and or ASIC Act.

General principles relevant to the ACL and ASIC Act claims.

Application of the ACL or the ASIC Act

1. The plaintiffs rely on the ACL and the ASIC Act, in the alternative.
2. iLend, as a corporation, is subject to the ACL pursuant to s 131(1) of the Competition Act.
3. Mr Salim, as a person ordinarily resident in New South Wales and otherwise carrying on business in New South Wales, is subject to the ACL pursuant to s 28 and s 32 of the Fair Trading Act 1987 (NSW).
4. To the extent the alleged contraventions are predicated on conduct in trade and commerce, the plaintiffs have established that requirement.

Conduct in relation to financial services

1. Section 131A of the Competition Act relevantly limits the scope of ss 18, 20 and 21 of the ACL by excluding conduct in relation to "financial services". Conduct in relation to "financial services" is covered instead by ss 12CA, 12CB and 12DA of the ASIC Act.
2. The meaning of "financial services" is set out in s 12BAB of the ASIC Act, including by reference to the term "financial product" as defined in s 12BAA. A person provides a financial service when that person provides financial product advice or deals in a financial product: s 12BAB(1). Financial product advice includes a recommendation or opinion that is intended to influence someone in making a decision in relation to a financial product: s 12BAB(5). A financial product relevantly includes a "credit facility": s 12BAA(7)(k). Regulation 2B of the Australian Securities and Investments Commission Regulations 2001 (Cth) broadly defines a credit facility as including a loan facility of the kind sought by Jubilee and in respect of which iLend was mandated to act.
3. Section 12BAB(1) of the ASIC Act provides that a person provides a financial service when that person provides financial product advice or deals in a financial product. In relation to the former, s 12BAB(5) provides that financial product advice includes a recommendation or opinion that is intended to influence someone in making a decision in relation to a financial product.
4. Section 12BAB(7) provides that dealing in a financial product includes applying for or issuing a financial product. That definition is expanded by s 12BAB(8) which provides that arranging for a person to deal in a financial product itself constitutes dealing in a financial product.
5. Having regard to the findings of fact I have made in relation to the dealings between Mr Salim and iLend and the plaintiffs, I am satisfied that the plaintiffs have established that the conduct that they seek to impugn as misleading or deceptive was conduct properly characterised as the provision of financial services within the statutory meaning. I will return to the issue of whether the conduct alleged to be unconscionable was conduct which satisfies the statutory description of financial services.

Joint misconduct

1. The plaintiffs allege that the relevant contraventions were committed by both iLend and Mr Salim.
2. It is well established that more than one individual may engage in the same misconduct: see Care A2 Plus Pty Ltd v Pichardo [2024] NSWCA 35 at [106]ff (Bell CJ, with whom Stern and Basten JJA agreed); Touch for Health Pty Ltd as Trustee for Knight Superannuation Fund v Property Mentors Australia Pty Ltd (No 3) [2024] FCA 1381 at [176]-[178] (Neskovcin J); Australian Securities and Investments Commission v Narain [2008] FCAFC 120; 169 FCR 211 at [96] (Jacobson and Gordon JJ).
3. That Mr Salim was an employee and/or director of iLend does not necessarily immunise him from liability for contravening conduct: Narain at [94] (Jacobson and Gordon JJ). For an individual to be jointly liable, their role must be "more than merely ministerial": Pichardo at [107] (Bell CJ). The necessary assessment involves a holistic assessment of the nature of the information conveyed, the surrounding circumstances and the relationship between the parties: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 at [39] (Gleeson CJ, Hayne and Heydon JJ).
4. The evidence before me demonstrates that Mr Salim was more than a mere conduit of information. His role was not simply ministerial. Mr Salim relevantly controlled iLend and in particular in its dealings with the plaintiffs. He was the sole director of iLend. He managed the "day-to-day operations" of the iLend. It was Mr Salim who made the relevant representations. He drafted the pro-forma agreement on which the iLend Agreement was based and he drafted the iLend Agreement itself. He sent the iLend Agreement to Mrs Lakhani and Mr Patel. When Mrs Lakhani raised concerns about the effect of the iLend Agreement before signing it, it was Mr Salim who made representations which were directed to allaying her concerns and encouraging the plaintiffs to execute the agreement. At all times he understood that under the iLend Agreement, iLend was relevantly, only entitled to be paid its fees when iLend produced an offer of finance substantially in the terms of its mandate. He represented that iLend had such an offer in hand when it did not. Mr Salim was responsible for all aspects of iLend's dealings with Hall Chadwick in relation to Mr Pleash's appointment. Mr Salim formulated the information he fed to the plaintiffs based on his own knowledge and experience; he initiated the approach to Mr Pleash and Hall Chadwick; and made the decisions necessary to effect Mr Pleash's appointment.
5. I am satisfied that the conduct the plaintiffs seek to impugn was conduct that was committed by both iLend and Mr Salim.
6. It is convenient to first address the unconscionable conduct claims.

Unconscionable conduct allegations

1. The plaintiffs allege that Mr Salim and iLend engaged in unconscionable conduct in causing Mr Pleash to be appointed as the administrator of Jubilee and for failing thereafter to do all things necessary to terminate that appointment.
2. The claim is advanced under ss 20 or 21 of the ACL or alternatively ss 12CA and 12CB of the ASIC Act. The only material difference between the two provisions is that the latter applies to conduct in relation to financial services whereas the former does not. Whereas it is relatively clear that the conduct alleged to be misleading or deceptive was conduct properly characterised as involving the provision of financial services, the position in relation to the conduct alleged to be unconscionable is perhaps less clear. The answer to that question will be informed by whether iLend's and Mr Salim's conduct in appointing an administrator is properly characterised as being in relation to the financial services the subject of the iLend Agreement. Given the elapse of time between the entry into the iLend Agreement and the action taken to recover the purported debt arising under that agreement, it is arguable that the conduct in appointing an administrator was not in relation to financial services. However, for the reasons which follow, I have concluded that when the impugned conduct is placed in the whole of the context, it is conduct in relation to financial services.
3. First, the conduct was directed to the collection of an alleged debt in relation to the alleged provision of the financial services the subject of the iLend Agreement. The administration was initiated in purported reliance on s 436C which is conditioned on the attributes of the underlying financial service - the debt in issue must be presently enforceable and secured and the security must extend to the whole or substantially the whole of the alleged debt.
4. Second, as the conversations in December 2022 between Mr Khoja and Mr Salim make plain, the impugned conduct was also directed to forcing the plaintiffs to take up future financial services from iLend in relation to not only payment of the alleged debt but also the provision of finance necessary to complete its property development, and to dissuade Jubilee from dealing with Angas, a rival financier, as it had intended. The impugned unconscionable conduct is directly linked to the supply of financial services the subject of the iLend Agreement and to possible supply of financial services by iLend to Jubilee if Jubilee had acceded to the threats made by Mr Salim to Mr Khoja in the conversations on 2 and 5 December 2022: cf Perpetual Nominees Ltd v McGoldrick (No 3) [2017] VSC 78; 317 FLR 227 at [239] (Vickery J) where the unconscionable conduct in issue was the conduct on the part of the liquidators.
5. For completeness, I note that if the conduct is not properly characterised as being in relation to financial services, then it is conduct that would be caught by the corresponding provisions of the ACL in any event.

Section 20 of the ACL and s 12CA of the ASIC Act

1. Section 20 of the ACL and s 12CA of the ASIC Act each provide that a person must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law from time to time.

Section 21 of the ACL and s 12CB of the ASIC Act

1. Section 21 of the ACL and s 12CB of the ASIC Act each provide that a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or the acquisition or possible acquisition of goods and services, engage in conduct that is, in all the circumstances, unconscionable. As noted, the statutory prohibition under the ASIC Act is directed to unconscionability in relation to financial services.

Unconscionability

1. The term "unconscionable" in the each of these legislative schemes picks up various grounds of equitable intervention to refuse enforcement of or to set aside transactions which offend equity and good conscience: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; 214 CLR 51 at [42] (Gummow and Hayne JJ); Australian Securities and Investments Commission v Kobelt [2019] HCA 18; 267 CLR 1 at [14] (Kiefel CJ and Bell J). However, the provisions are not limited by the unwritten law relating to unconscionable conduct: s 21(4)(a) of the ACL; s 12CB(4)(a) of the ASIC Act. Ordinarily, conduct is described as unconscionable where the plaintiff is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired facilities, financial need or where other circumstances affect the plaintiff's ability to conserve their own interests, and the other party unconscientiously takes advantage of that opportunity: Berbatis at [55] (Gummow and Hayne JJ).
2. Courts have repeatedly refused to provide a comprehensive definition of "unconscionability" because "the range of such conduct is wide and can include bullying or thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct": see Tonto Home Loans Australia v Tavares [2011] NSWCA 389 at [291] (Allsop P, with whom Bathurst CJ and Campbell JA agreed).
3. Conduct will meet the statutory meaning of "unconscionable" if, in all the circumstances, it "falls sufficiently short of acceptable norms, standards or values that it warrants condemnation as conduct that is offensive to the conscience": Productivity Partners Pty Ltd v Australian Competition and Consumer Commission [2024] HCA 27; 419 ALR 30 at [60] (Gageler CJ and Jagot J).
4. Section 22 of the ACL and s 12CC of the ASIC Act respectively set out the matters which the court may have regard to for the purposes of considering whether s 21 of the ACL and s 12CB of the ASIC Act have been contravened. The considerations listed in s 12CC are non-exhaustive, but provide "express guidance as to the norms and values that are relevant to inform the meaning of unconscionability and its practical application": Stubbings v Jams 2 Pty Ltd [2022] HCA 6; 276 CLR 1 at [57] (Gordon J). Those "are matters that the legislation requires to be considered, in the overall evaluation of the totality of the circumstances but only to the extent that those matters are applicable": Productivity Partners at [60] (Gageler CJ and Jagot J); [101]and [315] (Gleeson J). Section 12CC(1) of the ASIC Act relevantly provides: (1) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 12CB in connection with the supply or possible supply of financial services to a person (the service recipient), the court may have regard to: (a) the relative strengths of the bargaining positions of the supplier and the service recipient; and (b) whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) whether the service recipient was able to understand any documents relating to the supply or possible supply of the financial services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient or a person acting on behalf of the service recipient by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the financial services; and (e) the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier; and … (g) if the supplier is a corporation - the requirements of any applicable industry code (see subsection (3)); and … (i) the extent to which the supplier unreasonably failed to disclose to the service recipient: (i) any intended conduct of the supplier that might affect the interests of the service recipient; and (ii) any risks to the service recipient arising from the supplier's intended conduct (being risks that the supplier should have foreseen would not be apparent to the service recipient); and (j) if there is a contract between the supplier and the service recipient for the supply of the financial services: (i) the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the service recipient; and (ii) the terms and conditions of the contract; and (iii) the conduct of the supplier and the service recipient in complying with the terms and conditions of the contract; and (iv) any conduct that the supplier or the service recipient engaged in, in connection with their commercial relationship, after they entered into the contract; and (k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the service recipient for the supply of the financial services; and (l) the extent to which the supplier and the service recipient acted in good faith.
5. Section 12CB of the ASIC Act (and s 21 of the ACL) operates to prescribe and administer a normative standard of conduct which is assessed having regard to the totality of the circumstances and the considerations identified in s 12CC of the ASIC Act to the extent they are relevant to the particular case: Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 at [23], [41] (Allsop CJ); Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28; 258 CLR 525 at [189] (Gageler J); Kobelt at [87] (Gageler J); and Productivity Partners Pty Ltd (trading as Captain Cook College) v Australian Competition and Consumer Commission [2023] FCAFC 54; 297 FCR 180 at [161(b)] (Wigney and O'Bryan JJ). These norms involve, inter alia, honesty and fairness when dealing with customers.

The unconscionability of iLend's conduct

1. For the following reasons, I am satisfied that the conduct of Mr Salim and iLend in appointing Mr Pleash as the administrator to Jubilee and their subsequent refusal to take steps to set aside that appointment was unconscionable in the requisite sense.
2. For the reasons already given, the ProLend Offer, being the only offer submitted through iLend, was not substantially similar to the terms mandated in clause (i) of the iLend Agreement and accordingly iLend did not perform its obligation under clause (ii) of the iLend Agreement and was not entitled to be paid the Brokerage Fee/Success Fee.
3. Mr Salim's own understanding, and through him, iLend's understanding, was that iLend's entitlement to demand payment was conditional on iLend sourcing an offer that was substantially in accordance with clause (i) of the iLend Agreement. Mr Salim and iLend knew that while it did not matter whether Jubilee accepted the offer, it was essential that an offer that substantially complied with the terms in clause (i) must have been provided to Jubilee by iLend in order for the relevant fee to be incurred. No such offer was sourced by iLend and provided to Jubilee. iLend was not entitled to issue the iLend Invoice and was not otherwise entitled to press for the payment sought therein.
4. Mr Salim and iLend effected the AllPAP Registration on 31 October 2022, in circumstances where iLend had not performed its obligations under the iLend Agreement, no relevant debt was owing by Jubilee to iLend and Mr Salim and iLend had represented that no steps would be taken in relation to the security (which was directed to security fees payable to iLend). iLend delayed in issuing the iLend Invoice for a period of about eight months. iLend failed to give any notice of the AllPAP Registration to Jubilee.
5. Mr Salim and iLend were aware that Jubilee had lodged the AFCA Complaint on 17 November 2022. Upon being put on notice of Jubilee's complaint, they knew that Jubilee was disputing its liability to pay the debt claimed by iLend and also calling into question their broader conduct in relation to the iLend Agreement. In this regard, I take into account that under rule A.7.1 of the AFCA Complaint Scheme Rules, iLend was restricted from taking any action to recover or enforce the alleged debt which was the subject of the complaint or to protect any assets alleged to secure that debt.
6. Given the business in which they were involved, Mr Salim and iLend would readily have appreciated that the appointment of an administrator was a very serious step to take and would likely have serious financial consequences for the plaintiffs. That was especially so because Mr Salim and iLend knew that Jubilee was undertaking a substantial commercial development and there was a real and material dispute as to whether the underlying debt existed, and if so, whether iLend was entitled to enforce any security interest.
7. The letter of demand which Mr Salim and iLend provided to Hall Chadwick was created in response to Mr Wolfgramm's request. For the reasons I have already given, I find the document was not sent to the plaintiffs in and around the date of the purported invoice referred to therein, or at all. The document was not what Mr Salim represented it to be to Hall Chadwick. It was given to Hall Chadwick as part of Mr Salim and iLend's pitch to get Mr Pleash to accept the appointment.
8. The telephone conversations between Mr Khoja and Mr Salim on 2 and 5 December 2022, extracted at paragraph 61 above, make it clear that Mr Salim and iLend appointed Mr Pleash for an impermissible purpose, in effect as a standover tactic. Mr Salim used the appointment of Mr Pleash to put undue pressure on the plaintiffs to pay the approximately $300,000 iLend was demanding and to which it was not entitled. In addition, Mr Salim was using the appointment of Mr Pleash to attempt to force Jubilee into dealing further with iLend in relation to the future provision of finance. He continued to do so after he was informed by Mr Khoja that Jubilee had secured finance from another financier (Angas) which had stalled as a result of the administration. By their conduct, Mr Salim and iLend sought to take advantage of the plaintiffs' commercial and financial vulnerability at a time when they were managing the later stages of financing and completing a significant commercial development. The tactics employed by Mr Salim and iLend were unfair and predatory. Mr Salim's and iLend's conduct objectively satisfies the ordinary meaning of the word "unconscionable" - it was against conscience and falls well short of acceptable norms, standards or values. It warrants condemnation.
9. For these reasons, I am satisfied that the plaintiffs have established that by their conduct iLend and Mr Salim contravened the relevant unconscionability provisions of the ASIC Act. Had I not been satisfied that the conduct is properly characterised as being in relation to financial services, I would have found that the conduct contravened the corresponding provisions of the ACL.

Involvement in the contraventions

1. The plaintiffs also allege in the alternative that Mr Salim was "involved" in the relevant contraventions, within the meaning of s 2 of the ACL and s 79 of the Corporations Act. Given my finding above as to joint misconduct, it is not necessary to determine this issue. Had it been necessary to do so, I would have been satisfied on the basis of the findings I have made that Mr Salim was involved in iLend's contraventions in the requisite sense so as to be liable to the plaintiffs.

Misleading or deceptive conduct claim

1. The plaintiffs claim that Mr Salim and iLend engaged in misleading or deceptive conduct by making various statements prior to the execution of the iLend Agreement.
2. That claim is advanced under either s 18 of the ACL or s 12DA of the ASIC Act. Both sections provide that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. The relevant difference between the two provisions is that, as noted above, the former does not apply to conduct in relation to financial services whereas the latter does.

The approach to claims of misleading or deceptive conduct

1. The principles concerning the assessment of whether conduct is misleading or deceptive are summarised by the High Court in Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 277 CLR 186 as follows: [80] The principles are well established. Determining whether a person has breached s 18 of the ACL involves four steps: first, identifying with precision the "conduct" said to contravene s 18; second, considering whether the identified conduct was conduct "in trade or commerce"; third, considering what meaning that conduct conveyed; and fourth, determining whether that conduct in light of that meaning was "misleading or deceptive or ... likely to mislead or deceive". [81] The first step requires asking: "what is the alleged conduct?" and "does the evidence establish that the person engaged in the conduct?". The third step considers what meaning that conduct conveyed to its intended audience. As in this case, where the pleaded conduct is said to amount to a representation, it is necessary to determine whether the alleged representation is established by the evidence. The fourth step is to ask whether the conduct in light of that meaning meets the statutory description of "misleading or deceptive or ... likely to mislead or deceive"; that is, whether it has the tendency to lead into error. Each of those steps involves "quintessential question[s] of fact". [82] The third and fourth steps require the court to characterise, as an objective matter, the conduct viewed as a whole and its notional effects, judged by reference to its context, on the state of mind of the relevant person or class of persons. That context includes the immediate context - relevantly, all the words in the document or other communication and the manner in which those words are conveyed, not just a word or phrase in isolation - and the broader context of the relevant surrounding facts and circumstances. It has been said that "[m]uch more often than not, the simpler the description of the conduct that is said to be misleading or deceptive or likely to be so, the easier it will be to focus upon whether that conduct has the requisite character". That said, the description of the conduct alleged and identified at the first step should be sufficiently comprehensive to expose the complaint, because it is that conduct that will ultimately, as a whole, be determined to be or not to be misleading or deceptive.
2. In short, the question is whether, objectively, the conduct complained of, viewed as a whole, had a sufficient tendency to lead a person exposed to that conduct into error. The intention of the contravenor is irrelevant and, consequently, there will still be a contravention even when the contravenor acted honestly or reasonably.

Future matters

1. The plaintiffs also allege that the representations were made in respect of future matters within the meaning of s 4 of the ACL and s 12BB of the ASIC Act. Those sections provide, in effect, that if there were no reasonable grounds for the making of those future representations, the conduct is taken to have been misleading or deceptive.
2. Both sections operate as "deeming provision(s)" which impose upon iLend and Mr Salim an "evidential burden" to adduce some evidence establishing that there were reasonable grounds for making that representation, although the ultimate onus still rests with the plaintiffs.

The misleading or deceptive conduct

1. The plaintiffs contend that the various representations, including as to the effect of the iLend Agreement, made by Mr Salim to Mr Khoja on 10 and 11 February 2022, which were relayed to Mrs Lakhani and Mr Patel were misleading or deceptive.

The 10 February 2022 conversation

1. On 10 February 2022, Mr Salim, in telephone conversation with Mr Khoja, made a number of statements about iLend's ability to source a suitable loan.
2. The substance of that conversation is extracted at paragraph 20 above. During the conversation, Mr Salim represented that iLend could procure an offer of finance for Jubilee of between $10 to $15 million, initially at between 6% to 8% per annum and subsequently, at 3% per annum. Mr Khoja conveyed the substance of this conversation to Mrs Lakhani and Mr Patel shortly thereafter.

The 11 February 2022 conversations

1. On 11 February 2022, Mr Salim, in two telephone conversations with Mr Khoja, made a number of statements concerning his ability to source a loan for the plaintiffs in accordance with the parameters incorporated into the iLend Agreement and about the iLend Agreement, including as to its effect.
2. The substance of the first conversation is addressed at paragraph 24 above. In that conversation, Mr Salim said that he could procure an offer of finance for Jubilee of $12 million, for 3 years, at an interest rate of 7.9%. The substance of that conversation was reinforced by clause (i) of the iLend Agreement, which was sent by Mr Salim and iLend to Mr Patel and Mrs Lakhani on 11 February 2022.
3. The substance of the second conversation is addressed at paragraph 28 above. In that conversation, Mr Salim said that there were no fees for signing the agreement; that it was iLend's standard agreement and that it could not be changed; that it needed to be signed so he could "get loan proposals"; that he had "already found a lender"; the loan agreement was needed to make sure that iLend will get paid if Jubilee proceeded with a loan and that was what the security was for. Importantly, the representations made by Mr Salim were to the effect that no fees would be payable to iLend unless iLend actually sourced a loan in accordance with the parameters in clause (i) and that the security granted under the iLend Agreement would only apply to secure iLend's fees if payable. Mrs Lakhani and Mr Patel relied on these representations in executing the iLend Agreement.
4. I would have been clear to Mr Salim that Mr Khoja was acting as an agent for the plaintiffs in dealing with Mr Salim and that he would convey the substance of the representations made to him by Mr Khoja to the plaintiffs. That is evident from the following. In his initial call with Mr Salim, Mr Khoja stated that the directors of Jubilee had asked him to speak to Mr Salim and to pass on all information to them. Similarly, any information or documents required by iLend which were requested of Mr Khoja were ultimately provided by Mr Patel and Mrs Lakhani. Mr Khoja was not included as a party or signatory to the iLend Agreement and did not receive a DocuSign link from iLend in relation to the iLend Agreement. Mr Khoja presented Mrs Lakhani's concerns about the iLend Agreement to Mr Salim on behalf of Mrs Lakhani, rather than Mrs Lakhani doing so directly.

The nature of the representations

1. In considering the conduct of Mr Salim and iLend, I take into account the following contextual matters:
2. the business of iLend is a loan brokerage business offering finance from non-bank lenders for, and as required by its clients;
3. iLend's business is based upon being able to procure offers of finance for its clients "quickly";
4. iLend accepted a mandate that required it to use its best endeavours to obtain an offer of finance substantially in accordance with the plaintiffs' request as recorded in clause (i) of the iLend Agreement; and
5. iLend's entitlement to any fee was conditional upon it procuring an offer of finance substantially in accordance with clause (i) of the iLend Agreement.
6. I accept Mrs Lakhani's and Mr Patel's evidence that, as a consequence of the representations made by Mr Salim to Mr Khoja which were conveyed to them and having read clause (i) of the iLend Agreement, they executed the iLend Agreement because they believed that:
7. Mr Salim and iLend could obtain a loan of between $10 to $15 million at an interest rate of 7.9% per annum for 3 years;
8. no fees would be payable to iLend unless it actually secured a loan within these terms;
9. the security only applied to secure iLend's fees and that no fees were payable for simply signing the agreement;
10. the iLend Agreement had to be executed so that iLend could present a loan offer to Jubilee within the agreed terms; and
11. Mr Salim and iLend had already identified a potential lender prepared to offer Jubilee a loan on terms substantially in accordance with clause (i) of the iLend Agreement.
12. The beliefs formed by Mrs Lakhani and Mr Patel were reasonable based on the substance of the representations made by Mr Salim to their agent, Mr Khoja, having regard to clause (i) of the iLend Agreement.
13. It is well established that compensation may be available under s 12GF of the ASIC Act, or ss 6 and 237 of the ACL, to a person who relies on a misrepresentation which has been conveyed to a person who has, in turn, conveyed that misrepresentation to the claimant. The rationale for that liability has been said to arise when the person making the representation could have reasonably foreseen, understood or expected that the representation would be communicated to the claimant. For the reasons already given, I am satisfied that Mr Salim and iLend knew that Mr Khoja represented the plaintiffs and could have reasonably foreseen, understood or expected that the substance of the representations made by Mr Salim and iLend would be conveyed by Mr Khoja to the plaintiffs. My conclusion in that regard is also supported by the following evidence:
14. the valuation report for the Property was issued to Mr Patel on 7 December 2021 and this was forwarded to Mr Salim and iLend on 10 February 2022;
15. the building contract provided to Mr Salim and iLend on 10 February 2022 was with Jubilee;
16. the 100 points of identification check requested by Mr Salim and iLend was provided by Mr Patel on 11 February 2022;
17. the statement of position provided by Mrs Lakhani to Mr Salim and iLend on 11 February 2022 under cover of an email that included the statement "as requested by Sam Khoja";
18. the 100 points of identification check requested by Mr Salim and iLend was provided by Mrs Lakhani on 11 February 2022 under cover of an email that included the statement "Based on your discussion with Sam Khoja"; and
19. the iLend Agreement drafted by Mr Salim named Jubilee, Mr Patel and Mrs Lakhani as parties and was sent to Mr Patel and Mrs Lakhani on 11 February 2022 via DocuSign by info@ilendcapital.com.au, an email address that Mr Salim appears to have controlled or at the least had access to.
20. I am satisfied that the representations are established by the evidence. The combined effect of the representations, assessed in context, was to lead the plaintiffs into error in deciding to execute the iLend Agreement. The plaintiffs were misled into believing that Mr Salim and iLend had an offer in hand that accorded with the mandate conferred by clause (i) of the iLend Agreement and that that offer would be provided to them if and when they signed the agreement. Instead, they were provided with the ProLend Offer which was not in accordance in substance or otherwise within the parameters set by clause (i) and did not provide Mr Salim and iLend with reasonable grounds for making the representations in so far as they related to future matters. The plaintiffs were further misled as to the circumstances in which iLend would demand the payment of alleged fees and takes steps in relation to the security granted under the agreement. It would have been apparent to Mr Salim that the plaintiffs had concerns about the terms of the iLend Agreement. The representations made by Mr Salim and iLend were directed to causing the plaintiffs to execute the iLend Agreement notwithstanding the concerns that Mrs Lakhani had raised. The representations were intended to and did lead the plaintiffs into error.
21. The plaintiffs have established that each of Mr Salim and iLend contravened s 12DA of the ASIC Act. Had it been necessary to do so, I would have found that Mr Salim was involved in the contravention committed by iLend. As mentioned, had I not been satisfied that the relevant conduct was in relation to financial services, I would have concluded that the corresponding section of the ACL has been contravened.

The loss and damage suffered

1. The plaintiffs have established that iLend and Mr Salim contravened the statutory prohibitions on engaging in conduct that is unconscionable and misleading or deceptive in relation to financial services.
2. In order to succeed on a claim for damages under these provisions, the plaintiffs must establish a causal nexus between the contravening conduct and the loss or damage claimed but it is not necessary that the contravening conduct be the sole cause of the loss.
3. The underlying sequence of events giving rise to both the unconscionability contraventions and the misleading or deceptive conduct contraventions are closely interrelated. The immediate cause of loss and damage flowing from both contraventions was the appointment of Mr Pleash as an administrator to Jubilee. That appointment was invalid. It caused the property development to be delayed and it also caused the plaintiffs to incur additional costs which were related to or occasioned by the administration.
4. The unconscionable conduct of Mr Salim and iLend was a direct cause of Jubilee being placed in administration in circumstances where the appointment was not valid.
5. The misleading or deceptive conduct of Mr Salim and iLend was also a cause of Jubilee being placed in administration when it should not have been. The plaintiffs entered into the iLend Agreement relying on the representations which were made to them and which included that the security granted under the iLend Agreement was in respect of iLend's fees and that iLend was only entitled to fees if it sourced an offer in accordance with the mandate conferred by the iLend Agreement. Those representations were fundamental to the plaintiffs being led into error in relation to entry into the iLend Agreement and, in due course, to Jubilee being placed in administration in reliance on the assertion of a debt said to arise and be secured under that agreement.
6. The loss and damage claimed by the plaintiffs as a consequence of the conduct of Mr Salim and iLend, was refined in oral closing submissions with the result that the plaintiffs' claim for damages is now closely confined.
7. The major component of the damages claim is for the loss of rent that would otherwise have been paid to Jubilee by the tenants of the Property arising as a consequence of the administration delaying the commencement of the relevant leases for at least one month. The administration came into effect on 2 December 2022 and remained in place until the orders made on 16 December 2022 shortly before the annual December/January holiday period. During the period of the delay, Angas postponed providing finance to Jubilee and TSDB suspended construction works on the Property until January 2023. This delay resulted in the commencement of the leases of units in the property being pushed back while the development was completed. The loss of rent for this period amounted to $93,578.50. The total amount has been calculated on the basis of the eight leases that form confidential exhibit RRP-1 and which are summarised in Mr Patel's affidavit. I find that the plaintiffs have suffered loss and damage of $93,578.50 for lost rent as claimed as a result of Mr Salim's and iLend's contraventions.
8. The plaintiffs do not press their claim for damages in respect of their additional liability to TSDB relating to this period.
9. The plaintiffs also established by evidence that Jubilee incurred additional costs as a consequence of the period it was in administration in the total sum of approximately $15,300, including: Angas' legal costs in respect of the delayed settlement of the loan ($5,734); additional accountant costs for assistance during the administration ($5,600); and additional real estate agent fees for managing the Property in the period that the tenants' occupation of the premises was delayed ($3,962).
10. The sums claimed are established on the evidence, which was not challenged.
11. I note that the claim made by the plaintiffs for damages arising from Mr Salim and iLend's conduct is conservative and as I have said, was significantly confined during closing submissions. The plaintiffs have established that they are entitled to the total amount claimed of $108,875.10.
12. I now turn to the issue of costs.

The Court's power to award costs

1. The Court has power to award costs both under s 1335(2) of the Corporations Act and s 43 of the FCA Act.
2. The position in relation to Mr Salim and iLend is that costs should follow the event. I will make an order against them for the payment of the plaintiffs' costs.
3. The plaintiffs contend that the costs of the proceeding should also be borne by Mr Pleash in circumstances where it was improper for him to have accepted the appointment on 2 December 2022 and to have remained as the administrator of Jubilee until he was removed by the Court on 16 December 2022.
4. Mr Pleash submitted that he should not be ordered to pay costs for the following reasons. First, he submits that he believed he was acting within the scope of his statutory power as an administrator in accepting the appointment. Secondly, that he effectively put pens down as soon as he was put on notice of the dispute in respect to his appointment and subsequently did not seek to actively oppose the plaintiffs' interlocutory application seeking orders to terminate the administration. Thirdly, he submits that he played a constructive part in this proceeding including maintaining a position of essential neutrality and making himself available for cross-examination.
5. Alternatively, Mr Pleash submits that any costs awarded against him should be reduced to take into account these matters or be apportioned between the other defendants on the basis that it was Mr Salim and iLend that caused Mr Pleash to be appointed. Mr Pleash further submits that while prior to his appointment he relied almost exclusively on information provided to him by Mr Salim and iLend, upon his appointment, he undertook all necessary steps to ascertain the assets of Jubilee consistent with his statutory requirements and professional obligations.
6. In his costs submissions, Mr Pleash relies on Re Condor in respect of the extent of an administrator's obligations to inquire into the motives for their appointment and the related costs judgment ([2016] NSWSC 1304) in which Barrett AJA ordered that the administrator to pay one half of the plaintiff's costs of the proceedings. Mr Pleash submits that this was not a blatantly obvious case requiring Mr Pleash to consider the possibility of an improper purpose.
7. I do not accept Mr Pleash's submissions.
8. I am satisfied that but for Mr Pleash accepting the appointment, Jubilee would not have been placed in administration when it was and this proceeding would not have ensued as it did. Mr Pleash should not have accepted the appointment in circumstances where the appointment was for a purpose foreign to that for which the power was conferred and where Mr Pleash did not undertake even a basic assessment of whether iLend otherwise satisfied the criteria in s 436C so as to be in a position to exercise validly the power of appointment. Mr Pleash, on his own account, failed to comprehend that the power conferred under s 436C had to be exercised in accordance with the objects specified in s 435A of the Corporations Act. In his role as a registered liquidator, it was his responsibility in the circumstances that were known to him to exercise appropriate care and diligence before accepting an appointment to act as an administrator on the say so of a company claiming to be entitled to exercise the power under s 436C.
9. Mr Pleash accepted in his cross-examination that the appointment of an administrator to a company has the potential to have a significant and detrimental impact upon the company's business and property. He was clearly aware of this potential in relation to his appointment to Jubilee given that Jubilee was to his knowledge engaged in a substantial property development.
10. While an administrator is not obligated to resign when their appointment is challenged, it was open to Mr Pleash to apply to the Court seeking declaratory relief in relation to the status of the administration or to join in the plaintiffs' application after the concerns in connection with his appointment were laid bare by his communications with Mrs Lakhani, the plaintiffs' solicitors, Mr Wolfgramm and Angas' solicitor. It was similarly open to Mr Pleash to not accept the appointment unless and until he had taken reasonable steps in the circumstances to satisfy himself that there was a valid basis for his appointment. He did not pursue either course.
11. The major part of the hearing was occupied with issues concerning Mr Pleash. This is not a case in which it is appropriate to seek to apportion the costs payable by each of the defendants. The factual controversy was in the main closely intertwined across the various claims for relief against the individual defendants.
12. Taking into account the procedural history and the conduct of the hearing, I am satisfied that the plaintiffs have established an entitlement to the costs order that they seek against Mr Pleash and that it is appropriate to make an order accordingly.
13. I will make an order that the plaintiffs' costs are payable by Mr Pleash, iLend and Mr Salim. The plaintiffs will be at liberty to enforce the costs order as they see fit. In the event that the plaintiffs enforce the costs order against only one of the respondents, that respondent will have a claim for contribution from the other respondents.

CONCLUSION

1. For these reasons, I am satisfied that the plaintiffs are entitled to the relief they seek. I will make an order that the plaintiffs provide for my consideration short minutes of order to give effect to these reasons. I certify that the preceding two hundred and fifty-nine (259) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.

Associate: Dated: 14 February 2025 SCHEDULE OF PARTIES NSD 1073 of 2022 Defendants Fourth Defendant: JUBILEE INFRASTRUCTURE PTY LTD (ADMINISTRATORS APPOINTED) ACN 645 415 774