Bendigo and Adelaide Bank Ltd v Howard

1. [1]

   The plaintiff, by an amended statement of claim filed in the Local Court on 22 September 2016, claimed judgment against the defendant in the sum of $66,569.32 said to be owing under a loan by a predecessor in title of the plaintiff to the defendant on or about 15 June 2006. The loan was alleged to have been made by ABL Nominees Pty Ltd (ABL) to enable the defendant to purchase three grovelots in an olive plantation as part of a managed investment scheme called the Great Southern 2006 Organic Olives Investment Project. The scheme was set up and operated by Great Southern Managers Australia Ltd (GSMAL). The scheme enabled investors to borrow for their investment from either Great Southern Finance Pty Ltd (GSF) or preferred financiers of GSMAL of whom ABL was one.

2. [2]

   It was alleged in the proceedings that the defendant borrowed $24,490 from ABL. It was further alleged that the defendant defaulted in making repayments from 31 May 2009. That resulted in an acceleration event whereby the whole of the balance of the monies became due and payable.

3. [3]

   It was further alleged that on or about 23 June 2006 ABL assigned all of its rights under the loan agreement and a loan deed to Adelaide Bank Ltd and that on 1 December 2008 all rights under the loan agreement and the loan deed were transferred from Adelaide Bank to the plaintiff when the plaintiff merged with Adelaide Bank.

4. [4]

   By a judgment given on 23 August 2017, the plaintiff was unsuccessful in the proceedings in the Local Court and now appeals to this Court alleging errors of law identified in 23 grounds of appeal.

The investment

1. [5]

   On 15 June 2006 the defendant completed an application form to purchase three grovelots at a cost of $8,000 each. At paragraph 5 of the application which was headed “FINANCE (IF APPLICABLE)” the following appeared:

2. [6]

   At the same time, the defendant completed an application for term finance (the Finance Application). Since the principal issue in the matter concerns the completion of part of this form, the relevant part of the Finance Application is annexed to the judgment as “A”.

3. [7]

   A third document completed by the defendant was a Direct Debit Request. It was addressed to GSF, and requested GSF debit the defendant’s Commonwealth Bank (CBA) account identified on the form. The Request said this at the top:

4. [8]

   It can be seen from annexure “A” that the defendant identified that he wished to buy three grovelots at a cost of $24,000 which, with the loan fees of $490, totalled $24,490.

5. [9]

   The Finance Application then provided three tables containing loan options. The applicant was asked to select one loan option from one table only. The first table was for GSF as lender with loan terms for woodlots, grovelots and combined loans. The options were five different periods of a principal and interest loan.

6. [10]

   The second table was for GSF as lender with loan terms for woodlots only. There were four options for interest only loans for varying periods followed by principal and interest loans for varying periods. The defendant ticked the box in that table for a three year interest-only loan followed by seven years principal and interest.

7. [11]

   The third table was for ABL as lender with loan terms for grovelots or combined loans. The options were identical with those in the second table for GSF as lender.

8. [12]

   Clause 6 of the Finance Application relevantly provided:

9. [13]

   Purportedly, pursuant to clause 6 of the Finance Application, GSF completed and executed a loan deed dated 26 June 2007. The loan deed, as part of the standard form annexed to the Product Disclosure Statement, was said to be between the following parties:

10. [14]

    The plaintiff alleges that ABL advanced the funds to the defendant and that the defendant was allocated the three grovelots for which he had applied. The plaintiff drew attention to the direct debit request that the defendant signed on 15 June 2006 as part of his application which authorised GSF to deduct monthly payments from his CBA account. Loan repayments were made from that account to GSF from 31 July 2006 until 2009.

11. [15]

    The plaintiff claimed that, with effect from 23 June 2006, ABL assigned all its rights under the loan agreement and the loan deed to Adelaide Bank Ltd. The plaintiff further alleged that, on or about 1 December 2008, all those rights were transferred from Adelaide Bank to the plaintiff upon the plaintiff’s merger with Adelaide Bank. Notice was given to the defendant of the assignments on or about 30 April 2009.

12. [16]

    The whole investment and funding arrangement was complicated and intricate. The arrangement was governed by a Loan Sale and Servicing Deed executed by four parties to the arrangements on 25 June 2004. Those parties were GSF as the Seller, ABL as the Lender, Adelaide Bank as the Standby Servicer and Collections Agent, and GSMAL as the Originator. It is not necessary to set out the operative provisions of that Deed. It seems likely, however, that the ultimate funding for the project was to come from Adelaide Bank which would provide GSF and ABL with funds to meet the liability of the investors to GSMAL.

13. [17]

    The present proceedings were not commenced until June 2016.

The nature of the appeal

1. [18]

   Section 39(1) of the Local Court Act 2007 (NSW) gives a right of appeal to this Court from a decision of a magistrate sitting in its General Division, but only on a question of law. Section 40(1) enables leave to be given by this Court if it is asserted that the ground of appeal involves a question of mixed law and fact. In the present case no leave is sought by the plaintiff, and each of the grounds of appeal asserts that the magistrate erred in law in the way described in the ground of appeal.

2. [19]

   In written submissions, the defendant challenged the whole basis of the appeal, asserting that any errors identified were errors of fact not susceptible of review. It is necessary to set out some of the defendant’s submissions in that regard. The submissions read as follows:

3. [20]

   In the light of those and other similar submissions, specific to particular grounds of appeal, it is appropriate at this stage to set out the principles for identifying an error of law.

4. [21]

   In R L & D Investments P/L v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479 Kirby J said:

5. [22]

   In Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Kirby P, having considered a number of English and Australian authorities, said (at 151):

6. [23]

   In the same case, Glass JA (with whom Samuels JA agreed) said (at 155-156):

7. [24]

   In similar vein, in Prieston v Warwick John Williams Pty Ltd [2017] NSWSC 1577 Bellew J said:

8. [25]

   It is clear, however, that construction of a document is a question of law: Westport Insurance Corporation v Gordian Runoff Limited (2011) 244 CLR 239; [2011] HCA 37 at [82]; Jennings v Credit Corp Australia Pty Ltd (2000) 48 NSWLR 709; [2000] NSWSC 210 at [11].

Grounds of appeal

1. [26]

   It is convenient to deal with the grounds of appeal in groups pertaining in each case to the subject matter or issue with which the grounds deal. In most cases, but not all, these are grouped as appear in the plaintiff’s written submissions.

2. [27]

   In her judgment the magistrate asked herself this question:

3. [28]

   The Magistrate held that she was not satisfied that, objectively determined, the defendant chose ABL as the lender and merely made a misnomer or error by ticking box 2 which specified GSF as the lender. The Magistrate held further that she was not satisfied that the Court should rectify the finance application as a matter of construction so that it read as if the defendant had ticked box 3 and chosen ABL as the preferred lender.

4. [29]

   The plaintiff submitted that it was indisputable that there was a mistake inherent in the box ticked for the Finance Application. The plaintiff submitted that the magistrate’s implicit holding that the tick against the GSF box was effective to the extent that it precluded ABL as the lender, failed to have regard to the fact that the lending was sought for grovelots on 10/3 terms. Accordingly, GSF could not have been the desired lender because it did not fund grovelots on that basis.

5. [30]

   Although ground 4 of the grounds of appeal asserted that the Magistrate erred in law in holding that the Finance Application should not be rectified in that way, the plaintiff now abandons that ground.

6. [31]

   In written submissions, the defendant submitted that these grounds of appeal sought new findings on the facts and that no error of law was identified. The defendant submitted that the plaintiff did not challenge the test employed by the magistrate in considering when a court may correct errors in a document as a matter of construction.

7. [32]

   However, Senior Counsel for the defendant acknowledged in oral submissions that, inasmuch as these grounds concerned the proper construction of documents, they involved questions of law. The defendant submitted, nevertheless, that no error was demonstrated in the construction of the documents identified by the Magistrate.

8. [33]

   Whether the issues raised by these grounds of appeal are questions of law is not easy to answer. In the first place, the issue here is not what is the proper construction of a contract; the question is whether a contract has come into existence with ABL as the plaintiff maintains. That question involves an examination of a number of documents to determine if a contract exists and, if so, with what entity. To decide that matter it is necessary to determine objectively the defendant’s intention in completing the documents. Inferences may be drawn from the way the documents have been completed. That is a determination of fact: Holloway v McFeeters (1956) 94 CLR 470 at 480; Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155 at 168; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356.

9. [34]

   One consideration in that process is whether there has been a mistake or misnomer. The learned magistrate considered she was bound by the decision of Kunc J in New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Limited [2015] NSWSC 176. In that case his Honour said:

10. [35]

    The learned Magistrate applied the principles in that case to the facts before her to conclude that there was no misnomer or mistake. Whether or not there was a mistake which needed to be corrected was part of the interpretation or construction of the document which, in that way, involved a question of law: New South Wales Land and Housing Corporation at [61]. The test from that case is,

11. [36]

    In fact, by the time of the hearing before the Magistrate, the Court of Appeal had delivered its judgment on an appeal from Kunc J’s decision: Simic v Land and Housing Corporation (NSW) [2015] NSWCA 413. Although the decision at first instance was upheld, Emmett AJA (with whom Bathurst CJ and Ward JA agreed) suggested a somewhat different test. His Honour said at [113]:

12. [37]

    On a further appeal to the High Court, the decision in respect of which had not been given by the time the Magistrate heard or decided the present case, the Court of Appeal’s decision was overturned. The significant matter for present purposes is that, although both Kunc J and the Court of Appeal had construed a reference in a contractual document by reading “Corporation” for “Principal”, the High Court held that such a construction was not available. However, the Court held that Kunc J had been correct in holding that, if it had been necessary to rectify the contract, the pre-requisites were present to apply that remedy. In doing so, the majority judgment approved at [108] Kunc J’s view that:

13. [38]

    The High Court reaffirmed the proper approach to construction of a document by citing at [78] the passage from Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]:

14. [39]

    The defendant gave evidence, apparently without objection, that he intended to choose GSF. He said so in his affidavit which was marked as an exhibit without any objections to it. He gave oral evidence to the same effect both in chief and in cross-examination without objection. Such evidence was inadmissible: Westport at [82]. The Magistrate appears to have disregarded that evidence and correctly considered the matter objectively – see at paragraphs [41], [43] and [44] of her Honour’s judgment.

15. [40]

    There was evidence to suggest that the lender was GSF and was objectively intended by the defendant to be the lender. Not only did the defendant indicate on the Finance Application that he selected GSF, he also completed the Direct Debit request which was addressed to GSF and was also expressed to be used “ONLY…IF USING” GSF. The plaintiff submitted that the direct debit request was not of assistance in determining the identity of the lender because the same request was used irrespective of the lender. The plaintiff submitted that the pro-forma request application attached to the Product Disclosure Statement contemplated GSF or a “preferred financier”.

16. [41]

    However, an examination of the part of the Product Disclosure Statement dealing with the direct debit request shows that under the heading, “Direct Debit request service Agreement”, the name “Great Southern Finance Pty Ltd” appears together with its ACN and address. The agreement defines “direct debit request” as meaning “the Direct Debit Request between us and you”. The definition of “us or we” is said to “mean… Great Southern Finance Pty Ltd who (sic) you have authorised by signing a direct debit request”. In the same way the pro forma request provides for the borrower to,

17. [42]

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

18. [43]

    On the other hand, it seems clear from the investment application that the defendant was interested only in investing in grovelots because that application was only for grovelots, and the defendant further identified that he wanted grovelots on the Finance Application. Moreoever, the amount of finance he sought was $24,000 made up of 3 grovelots at $8,000 per lot as he stipulated on both application forms.

19. [44]

    From an objective standpoint, what the defendant sought in completing the documents was impossible to achieve. GSF did not fund for grovelots alone where the investment was to be funded by an interest-only loan for any period of time. The only funding for grovelots by GSF was by a principal and interest loan.

20. [45]

    When considering whether there was a mistake or misnomer, the Magistrate identified a number of possibilities which meant that it could not be said that it was plain to all concerned that the defendant intended to nominate ABL in the third box. Those possibilities were that the defendant might have intended a principal and interest loan or, if told of the impossibility of his choice, might have decided not to go ahead with the matter.

21. [46]

    Of those, the most likely alternative possibility was that the defendant would, if asked, have opted for a principal and interest loan with GFS from the outset, because it seems reasonably clear that he wanted an investment in grovelots. The plaintiff’s submissions, by implication, suggest that the defendant almost certainly desired an interest-only loan for 3 years followed by principal and interest for 7 years, with the result that he must have intended ABL as the lender. The execution of the Direct Debit to GSF together with the indication on the Finance Application of GSF as the lender makes it much more likely that the variable was the nature of the loan and not the identity of the lender. In any event, that likelihood points strongly against the contractual arrangement being able to be construed in the way for which the plaintiff contends.

22. [47]

    In my opinion, the Magistrate correctly applied the test as expressed by Kunc J, and now approved by the High Court, to the facts of this case. It cannot be said to be plain to all that the defendant intended to select ABL as the financier in the light of the choice of GSF on the Finance Application and the completion of the Direct Debit which was only to be completed if GSF was the chosen financier.

23. [48]

    To the extent that the question is one of law alone, no error is shown.

24. [49]

    In Bonette v Woolworths Limited (1937) SR (NSW) 142 Jordan CJ (Halse Rogers and Bavin JJ agreeing) said (at 149-150):

25. [50]

    The extent of GSF’s authority was, therefore one of fact to be determined on the evidence. At best, the question concerning these grounds is a mixed question of fact and law. No leave has been sought, and the grounds must be rejected. If leave had been sought, I would have been of the opinion that no error of fact was demonstrated, the Magistrate’s conclusion being open on the evidence.

26. [51]

    The plaintiff drew attention to the decision of Slattery J in ABL Custodian Services Pty Ltd v Kunz [2016] SADC 145. In that case the investor applied to purchase woodlots in a similar scheme but ticked the box on the Finance Application for finance from ABL when it was only GSF that provided finance for woodlots. ABL provided finance only for grovelots or combined loans. Slattery J held that the ticked box was “a minor clerical error” where the “true intention was to obtain an investment in 65 woodlots”. The plaintiff submitted the error in the present case, the reverse of the one in Kunz, should be similarly treated.

27. [52]

    In my opinion Kunz is entirely distinguishable. There was no issue in that case about whether the lender was GSF or ABL. GSF made the loan and subsequently assigned it to ABL. That was not disputed. The issue was whether the loan, admitted to have been made, was made to the defendant or to a company, Total Hoarding Supplies Pty Ltd, associated with the defendant. The other issue was whether the defendant was liable because he was a member of a class action brought against GSF in the Supreme Court of Victoria which settled. Kunz is no authority for any principle that an error like the one in the present case is a minor clerical error.

28. [53]

    Grounds 1 to 3 should be rejected.

29. [54]

    These grounds concern the authority of GSF and the validity of the power of attorney which led to the execution of the deed of loan.

30. [55]

    The Magistrate found that, in ticking box 2 on the Finance Application, the defendant only authorised the execution of a loan deed in favour of GSF as lender and not ABL. Her Honour held that ABL was generally fixed with the knowledge of its agent GSF, and GSF knew that the defendant had ticked box 2 seeking finance from GSF. In those circumstances ABL was not entitled to rely on the loan deed executed by GSF under what was apparently a valid power of attorney, but rather was fixed with any knowledge of GSF as to the limitation of GSF's authority as attorney to execute the loan deed under the power of attorney. GSF as attorney was not authorised to sign the loan deed on 20 June 2007 in favour of ABL as a lender. Accordingly the loan deed was not binding on the defendant.

31. [56]

    The Magistrate also held:

32. [57]

    The plaintiff submitted that this finding implies that woodlots was the discrepancy, whereas, if grovelots on 10/3 terms was the starting point, then GSF is the discrepancy. The plaintiff submitted that another explanation is that the discrepancy was noted but treated as a slip as to what was desired to be accomplished by the Defendant. That led to the conclusion that there was a manifest error in the documents, and the matter could be resolved by regarding the lender to whom the defendant applied to as GSF or a preferred lender, as the application form to purchase made clear.

33. [58]

    The plaintiff submitted that the fundamental authority to GSF was to execute documents to finance the investment with a preferred lender on the required 10/3 terms. There were instructions that a preferred lender could be borrowed from and no express instructions that only GSF could be the lender. The only alternatives were that the reference to GSF was a mistake for ABL, or that the proposed investment was meaningless since lending by GSF for grovelots on a 10/3 basis was not available.

34. [59]

    The plaintiff submitted that if the agent’s mandate is conferred in such ambiguous terms or is so uncertain as to be fairly capable of more than one construction, every act done by the agent in good faith which is justified by any of those constructions is deemed to have been duly authorised even though the construction adopted and acted upon by the agent is not the one intended by the principal. Reference was made to Jones v Canavan [1972] 2 NSLWR 236 at 247-248. In those circumstances the onus is on the principal to prove the agent has failed in his duty.

35. [60]

    The plaintiff submitted further that the finding by the Magistrate that ABL is fixed with GSF’s knowledge does not sit comfortably with clause 5.1(c) and 5.2 of the Loan Sale and Servicing Deed made between, inter alia, ABL and GSF.

36. [61]

    The defendant submitted that the plaintiff’s case concerning this issue changed during the course of the case. Mr Flamer-Smith, the relevant officer of the plaintiff, said in his affidavit that ABL accepted and approved the Finance Application. However, in cross-examination he conceded that in fact GSF approved the Finance Application on behalf of ABL. In that way the alleged agency of GSF and whether or not ABL was fixed with GSF’s knowledge only arose because the plaintiff’s case changed during the course of the hearing.

37. [62]

    The defendant submitted that the plaintiff’s submission about the selection of GSF as a manifest error ignores the deliberate direction of the defendant that GSF was to be the recipient of the direct loan repayments from his CBA account. The defendant submitted that it was not sensible to interpret the power of attorney as conferring power on GSF to execute a loan deed with ABL as the lender in circumstances where the power of attorney was part of the finance application addressed to GSF. The defendant submitted that the plaintiff was asking this Court to find new and different facts from those the Magistrate found.

38. [63]

    In reply the plaintiff drew attention to clause 8.3 of the Loan Sale and Servicing Deed where the Servicer (defined relevantly as the Seller, GSF) undertook to collect all moneys under the Purchased Loans and the Originated Loans, and to arrange for persons in the position of the defendant to make payments by direct debit to the GSF Collections Account.

39. [64]

    In my opinion, these grounds largely allege mixed errors of fact and law. To the extent that they concern the authority of GFS to execute the loan deed in the form it was executed, questions of fact are involved, as I have held in relation to grounds 1 to 3. To the extent that they concern the proper construction of the Finance Application they may involve questions of law. However, in case I am wrong in considering that at least mixed questions of fact and law are involved, I will consider the grounds on the assumption that they involve questions of law alone.

40. [65]

    As to the defendant’s complaint about the plaintiff changing its case to assert that GSF approved the finance application as agent for ABL, it is difficult to see how the defendant is disadvantaged by that change. The result that the Magistrate reached was that ABL was bound by its deemed knowledge of the limitations on GSF’s authority. That was a finding in the defendant’s favour. The question is still, however, whether such a determination was correct, particularly in the light of clauses 5.1(c) and 5.2 of the Loan Sale and Servicing Deed.

41. [66]

    It follows, however, from my determination that the Magistrate’s decision in relation to Grounds 1 to 3 was correct; that the authority to GSF was only to execute a loan deed where GSF was the lender. If GSF considered that it would not lend for grovelots on the basis sought in the Finance Application (a 3 year interest-only loan followed by a principal-and-interest loan for 7 years), then no loan deed would have been executed.

42. [67]

    The plaintiff seeks to rely on cases that suggest an agent is protected if it acts in good faith on unclear instructions. In Thornley v Tilley (1925) 36 CLR 1, Isaacs J said (at 12):

43. [68]

    I do not consider that the three documents forwarded to GSF (the investment application, the Finance Application and the direct debit request) which formed the basis of the instructions to GSF, fall within the principles outlined in those cases. The instructions were such that no investment was possible within the terms of what was offered unless GSF was prepared to be the financier, contrary to what the documents stipulated. There was no ambiguity. The defendant sought what was not available. If recourse to the defendant was not possible because of the time limits (the cut-off date for the investment was the date the defendant lodged the application), then the application should have been rejected. It was no more allowable for GSF to select ABL as the financier than it would have been for it to allocate woodlots instead of grovelots to the defendant.

44. [69]

    Mr Flamer-Smith’s evidence was ultimately clear: the Finance Application here was approved by GSF on behalf of ABL. Her Honour’s conclusion that ABL as principal was on notice of the lack of authority of its agent, GSF, to execute a loan deed naming ABL as lender, is correct as a matter of law.

45. [70]

    Clauses 5.1(c) and 5.2 of the Loan Sale and Service Deed relevantly provide:

46. [71]

    In my opinion, ABL cannot rely, as against the defendant, on provisions in the Loan Sale and Servicing Deed, which it is entitled to rely on against GSF. GSF may well warrant to ABL under clause 5.1(c) that the loan it approved to the defendant is enforceable, but the defendant is not a party to that Deed. If GSF did not have the authority from the defendant to execute the loan deed naming ABL as the lender, ABL can be in no better position as against the defendant, who had only given authority for a power of attorney to GSF as the lender. ABL may well have a claim against GSF pursuant to clause 5.1(c) and possibly 5.2 where, as here, GSF acted beyond its authority from the defendant, but it does not thereby acquire rights against the defendant.

47. [72]

    In my opinion, the Magistrate’s determination on the authority given by the Power of Attorney was correct. The loan deed was not validly executed. These grounds should be rejected.

48. [73]

    The result must be that, even if the plaintiff establishes that ABL advanced the loan funds, the plaintiff’s claim will be statute-barred. The proceedings were not instituted until 2016 for a loan made in 2006, which went into default in 2009.

49. [74]

    The plaintiff submitted that even if GSF did not have authority to execute the loan deed on behalf of the defendant, the defendant could ratify and adopt the loan deed. The plaintiff relied on paragraph 6(f) of the Finance Application which provided that the defendant ratified all that had been done by GSF as appointor under the power of attorney. The plaintiff submitted that ratification was only necessary to adopt conduct that was outside the actual or ostensible authority of the attorney to procure, and perfect a loan to the defendant notwithstanding any lack of, or excess of, authority.

50. [75]

    The defendant submitted that it was logically unsound to suggest that the defendant, by making the Finance Application, ratified what was done by the attorney when it was outside the powers otherwise conferred by that instrument.

51. [76]

    Clause 6(f) of the Finance Application provides:

52. [77]

    This clause cannot be used to ratify any act done by GSF, because appointing ABL as lender was not a power given to GSF under the Power of Attorney. The ratification cannot effectively authorise the doing of an act inconsistent with the authority given. This is emphasised by clause 6(d) of the finance application which provides:

53. [78]

    There is no obligation on the defendant to show that the act done without authority had an adverse impact on the defendant before it can be held that no ratification is demonstrated.

54. [79]

    This ground should be rejected.

55. [80]

    The Magistrate referred to the evidence of Mr Flamer-Smith for the plaintiff who said that it was GSF that accepted and approved the defendant’s loan on behalf of ABL rather than ABL doing it itself.

56. [81]

    The plaintiff submitted that it was not relevant that the loan was approved by GSF on behalf of ABL. The plaintiff submitted that, in any event, ABL ratified any conduct by GSF as its agent by subsequently advancing the loan following its approval.

57. [82]

    The defendant submitted that the Magistrate made no such finding.

58. [83]

    The difficulty for the plaintiff in relation to this ground is that any finding about who approved the loan can only be a question of fact. No question of law is involved. In any event, Mr Flamer-Smith’s oral evidence was very clear that GSF approved the application. This ground must fail.

59. [84]

    These grounds concern the evidence of the advance of the loan funds by ABL. The defendant submits, and I accept, that this issue of the payment of funds is the threshold issue. If the plaintiff fails to show that ABL advanced the funds to the defendant, the plaintiff cannot succeed. If the matter raised by these grounds is not a question of law, the plaintiff cannot succeed because the Magistrate found that the plaintiff failed to prove that ABL advanced the funds.

60. [85]

    The allegation in the statement of claim that ABL advanced the loan funds was met by a plea of non-admission by the defendant. The plaintiff, therefore, had to prove the advance and the assignment. The defendant made no positive case that the advance was not made nor that it was made by some other party. However, the plaintiff’s overall claim is based on an assignment from ABL and no-one else.

61. [86]

    The Magistrate found that the plaintiff had not established on the balance of probabilities that ABL advanced the $24,490 to GSMAL for the purchase of the grovelots by way of loan on behalf of the defendant. Her Honour found that the documents showed that ABL would only advance if it accepted an offer by GSMAL to originate loans. The only evidence of an offer was one made on 22 June 2006 in a letter called the Origination Notice. There was no direct evidence that ABL accepted that offer or paid the purchase price for the originated loans.

62. [87]

    The Origination Notice addressed to ABL provided:

63. [88]

    Senior Counsel for the plaintiff put the matter in this way. He said that the documents show that Adelaide Bank put ABL in funds to satisfy the Origination Notice (the letter from Adelaide Bank to Great Southern Plantations of 23 June 2006) and then immediately became the equitable assignee of those debts under the terms of the undated letter (likely to be 22 or 23 June 2006) from ABL to Adelaide Bank. The letter of 23 June identifies a payment that will be made by that day to ABL Custodian Services Pty Ltd (almost certainly an error for ABL) of $4,615,073.00. Once that happened, Senior Counsel submitted, the Loan Sale and Servicing Deed operated to require the allocation of those moneys to the individual loans. He submitted that other documents pointed fairly clearly to that payment having been made to GSF, apparently at the direction of ABL. It can be fairly confidently accepted that the money was never intended for ABL Custodian Services Pty Ltd.

64. [89]

    Senior Counsel pointed to a number of documents from the records of Adelaide Bank, GSF and GSMAL to show how those funds were applied, in particular, in respect of the loan to the defendant. He submitted that there can be little doubt from those documents that the grovelots were allocated to the defendant and that the loan he obtained for those lots was included in the $4,615,073.00 that passed through various entities’ hands. There were, however, no documents from ABL, as counsel accepted both at the hearing before the Magistrate and at the hearing of the appeal, to show that it paid the funds for the defendant’s purchase to GSMAL or any other entity.

65. [90]

    The plaintiff submitted that an examination of the documents demonstrated as a matter of construction that ABL did advance those funds in respect of the defendant’s purchase. In that way, the question was one of law, and the Magistrate’s conclusion to the contrary was an error of law.

66. [91]

    At the hearing before the Magistrate, the plaintiff relied on the acknowledgment in the loan deed of the loan advance having been made by ABL, but accepted that it could only rely on that acknowledgment if the loan deed was validly executed by the defendant’s attorney. Since the Magistrate found that the loan deed was not validly executed, the acknowledgment could not assist the plaintiff.

67. [92]

    In this Court, the plaintiff submitted that all the evidence was consistent with an advance having been made. Those matters were these:

68. [93]

    The defendant submitted that whether ABL advanced the funds was a question of fact not susceptible of review in an appeal as of right to this Court. The defendant submitted that, in any event, the Magistrate’s decision was undoubtedly correct on the evidence. There was no evidence from the books and financial records which ABL was obliged under s 286 of the Corporations Act 2001 (Cth) to keep and maintain. The defendant submitted that Mr Flamer-Smith, who commenced working for the plaintiff in 2009, had no direct knowledge of the advance of the funds.

69. [94]

    I accept the defendant’s submissions that these grounds raise only a question of fact. Whether a company makes an advance pursuant to a loan agreement cannot be a question of law. Its determination may require inferences to be drawn (or not as the case may be) from an examination of a number of documents, but that does not convert the exercise into one of construction. No document is being examined to ascertain its meaning (cf. the exercise in relation to grounds 1 to 3). Rather, the various documents are being examined to see what inferences can be drawn from the factual matrix they present. I have earlier referred (at [33]) to the authorities which make it clear that the drawing of inferences involves a question of fact.

70. [95]

    The plaintiff drew attention to what Mason CJ said in Bond at 355:

71. [96]

    However, when the passage from which those remarks are extracted is set out in full, it may be seen that the point being made is that it is a question of law whether there is any evidence at all to justify a finding of fact or the drawing of an inference. Beginning from the preceding paragraph at 355, Mason CJ said (Brennan J agreeing):

72. [97]

    A reading of the two principal authorities referred to by Mason CJ (Australian Gas Light Co v The Valuer-General (1940) 40 SR (NSW) 126 and Hope v Bathurst City Council (1980) 144 CLR 1) emphasises the point. For example, in Australian Gaslight Jordan CJ said (at 137-138):

73. [98]

    What Mason J (as his Honour then was) earlier said in Girlock at p 168 is entirely consistent with a reading of Bond that leads to the conclusion I have expressed at [94] above. His Honour there said:

74. [99]

    The Magistrate’s conclusion in this regard is amply supported by the evidence or lack of it with regard to what the plaintiff was required to prove.

75. [100]

    As far as the assertion at [92](c) is concerned, the defendant pleaded no positive case that ABL did not advance the funds. Rather, the defendant put the plaintiff to proof. It is difficult to see what proper basis counsel acting for the defendant would have had to put affirmatively that ABL did not advance the funds. In relation to the assertion at [92](d), the Magistrate expressly found that no such concession was made. That is a finding of fact not susceptible to review in this Court.

76. [101]

    None of the other matters put forward by the plaintiff at [92] above, with the possible exception of (b), proves anything other than that there was an agreement by ABL to make a loan and the defendant received loan funds in the sense that three grovelots were allocated to him. None of those matters proves from whence the funds came, and that is significant in the light of the controversy that arose from the choice by the defendant of GSF as the lender.

77. [102]

    As to paragraph (b), Mr Flamer-Smith was not in a position to give direct evidence of an advance from ABL. That could only be proved by financial records, ordinarily records of ABL. Anything else would be either hearsay or second-hand evidence. During submissions before the Magistrate, the following exchange occurred between the Magistrate and counsel for the plaintiff as follows:

78. [103]

    The business records of GSF, which was not a party to the intended arrangement that ABL would provide the funds to GSMAL by way of a loan to the defendant, were not proof that ABL had advanced the funds. Further, the evidence from the defendant’s records was that the monthly instalments were paid to GSF.

79. [104]

    Clause 8.3 of the Loan Sale and Servicing Deed relevantly provides:

80. [105]

    The defendant’s taxation returns showed only that deductions were claimed by reason of the arrangement. They did not prove that the loan was made by ABL. The defendant’s registration as an investor in GSMAL’s records did not show where the funds derived to bring that about. The plaintiff’s submissions appear to elide the matter of an advance of funds being made with an advance of funds by ABL. The latter is a crucial matter. In ordinary circumstances it might be possible to infer that the advance came from ABL where the defendant applied for a loan, funds were advanced and the defendant is shown to be the registered holder of three grovelots. However, where the defendant actually selected another lender on the Finance Application, the need to prove who advanced the funds, when that allegation was not admitted, is essential. It was the central issue in the proceedings.

81. [106]

    I would reject these grounds of appeal. The Magistrate’s finding, which I have held was correct, that the plaintiff did not prove that ABL advanced the funds, is determinative of the whole claim because the loan to the defendant cannot form part of what was purportedly assigned first to Adelaide Bank and then to the plaintiff.

82. [107]

    These grounds concern the assignment to Adelaide Bank. There is no issue that, if the loan was assigned to Adelaide Bank, it was transferred statutorily to the plaintiff as a result of the merger of the two banks.

83. [108]

    Mr Flamer-Smith, in his affidavit of 6 January 2017, said that the assignment of ABL’s rights under the defendant’s loan and the loan deed to Adelaide Bank took place pursuant to the terms of a letter from ABL to Adelaide Bank dated 14 June 2006 and a collateral Sale Notice dated on 22 or 23 June 2006. The letter of 14 June commences by saying this:

84. [109]

    The letter defined “loan” as meaning:

85. [110]

    The plaintiff maintained before the Magistrate, and on the appeal, that the loan was an originated loan and not a purchased loan.

86. [111]

    Originated Loan was defined in the Loan Sale and Servicing Deed as meaning:

87. [112]

    The undated Sale Notice from ABL to Adelaide Bank, which must have been signed on either 22 or 23 June 2006 (by deduction from dates within it), relevantly provided:

88. [113]

    The Magistrate was not satisfied that the plaintiff had established that the defendant’s loan was an originated loan in accordance with the Loan Sale and Servicing Deed. Nor was her Honour satisfied that the plaintiff had discharged its onus of establishing that ABL accepted the offer in the Origination notice or paid the purchase price for the loans to be originated of $21,182,262.23 to GSMAL. Accordingly, her Honour was not satisfied that ABL held the right to the defendant’s loan to be able to assign it to Adelaide Bank.

89. [114]

    The plaintiff submitted that the evidence of Mr Flamer-Smith established that ABL sold its interest in the loan to Adelaide Bank. The plaintiff also submitted that the Magistrate erred in finding that evidence of books and records were not relevant to determining the onus, and that, accordingly, the onus was not met.

90. [115]

    The defendant submitted that the Magistrate was correct in finding that the plaintiff failed to establish that the loan was an Originated Loan under that deed. The defendant submitted that this was a question of fact or, at best for the plaintiff, a mixed question of fact and law not susceptible of review.

91. [116]

    The defendant submitted that the assignment suffered from further fatal flaws. To operate as a legal assignment there must be compliance with s 12 of the Conveyancing Act 1912 (NSW). There was no writing under the hand of the assignor, merely offers to assign. The notice requirements under s 12 were not complied with because the notice must be accurate in its material particulars. The notice given wrongly stated the assignee as the plaintiff rather than Adelaide Bank, and wrongly stated the date of the assignment. Accordingly, the assignment was one in equity only. However, ABL was not a party to the present proceedings so no claim could be made against the defendant.

92. [117]

    I have found that the plaintiff’s grounds asserting that ABL advanced the funds to the defendant are not made out. I have also found that no loan deed was validly executed, with the result that any claim by the plaintiff is statute-barred. Accordingly, the issue of any assignment of the loan to Adelaide Bank does not really arise. However, in case I am wrong in relation to the earlier issues, I will deal with the question of assignment.

93. [118]

    At best for the plaintiff, the Magistrate’s finding is a mixed question of fact and law but I am inclined to think that it was a finding of fact on the evidence led by the plaintiff. This is because the finding of an assignment depended on a finding, first, that ABL paid the amount of $21,182,262.23 to GSMAL (referred to in the Origination Notice), and then on a finding (from the Sale Notice) that Adelaide Bank had paid the purchase price of $4,615,073.00 for the assignment.

94. [119]

    It cannot be said that the Magistrate’s finding, that there was no evidence that ABL accepted the offer in the Origination Notice and paid $21,182,262.23, was not properly open to her given that the plaintiff bore the onus on these matters. What the documents show is that Adelaide Bank paid $4,615,073.00 to ABL for ABL’s (purported) assignment of that portion of its loans, but there is no evidence of the payment in the first instance by ABL to Adelaide Bank of $21,182,262.23 by way of acceptance of the offer in the Origination Notice.

95. [120]

    Although Senior Counsel for the plaintiff explained the transactions in the way set out at [88] and [89] above, the documents (including the letter from Adelaide Bank to the Chief Financial Officer of Great Southern Plantations Ltd dated 23 June 2006, and the Adelaide Bank ledger at p 413 of the Court Book) do not disclose the payment by ABL of $21,182,262.23. Even accepting in that letter of 23 June 2006 that the reference to ABL Custodians is a mistaken reference to ABL and, thereby, that the payments totalling $4,615,073.00 were directed by ABL to be paid to GSF, there is no evidence why the balance of the funds apparently payable to Adelaide Bank Ltd are directed to GSF also. That letter and the ledger do not appear, without other evidence, to be consistent with payment of the whole of the amount in the Origination notice to Adelaide Bank by ABL.

96. [121]

    Whilst these are all matters of fact, the Magistrate’s finding cannot be said not to be open to her on the state of the evidence when the plaintiff bore the onus. In Russo v Aiello (2003) 215 CLR 643; [2003] HCA 53 Gleeson CJ said at [11]:

97. [122]

    The absence of further evidence, whether from the books and records of ABL or otherwise, which (in the absence of explanation) it must have been within the power of the plaintiff to produce, means that the plaintiff did not discharge the onus.

98. [123]

    In those circumstances, the argument raised by the defendant for the first time on appeal concerning an invalid notice under s 12 of the Conveyancing Act 1912 (NSW) can be dealt with briefly.

99. [124]

    The defendant submitted that the notice of assignment constituted by a letter of 30 April 2009 was not valid because it was not accurate in its material particulars. The date of the assignment was mis-stated and the assignee was wrongly described. In that way, the assignment was not properly completed under section 12.

100. [125]

     The letter of 30 April 2009 from Bendigo and Adelaide Bank to the defendant relevantly said:

101. [126]

     It can be observed that the defendant’s complaints about the letter are well-founded; the date the plaintiff acquired the rights was 1 December 2008, not 30 April 2009; the assignment to Adelaide Bank took place on 23 June 2006, and that assignment is not mentioned in the letter. There is strong authority that for the notice to be valid under the section, the date of the assignment must be correctly stated: International Leasing Corporation Ltd v Aiken [1967] 2 NSWR 427 at 450; Westgold Resources NL v St George Bank Limited (1998) 29 ACSR 396 at 436.

102. [127]

     However, even if the present assignment is not valid at law, it is effective in equity. Strictly speaking, the assignor (ABL and possibly Adelaide Bank) ought to be joined as parties to the proceedings, but the defendant has not sought that the proceedings be stayed until that was done. In any event, the rule is one of procedure which can be dispensed with: Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512 at 11,517-11,518; see also Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [78]. It is not suggested in the present case that the defendant is at any risk of separate proceedings being brought by ABL or Adelaide Bank, and I am entitled to take notice of the relationship between the plaintiff and those entities in any event.

103. [128]

     The defendant did not raise this argument before the Magistrate. He now seeks to raise it by way of a Notice of Contention. The Notice of Contention was handed up in court without consideration of the time limitation for such in r 50.11(3) Uniform Civil Procedure Rules 2005 (NSW). Under the rule the Court has the power to extend time. The plaintiff has provided detailed submissions in answer to the point. I do not consider, therefore, that the plaintiff is prejudiced by the late filing. Leave to file the Notice of Contention is granted.

104. [129]

     However, for the reasons I have given, I do not consider that the defendant demonstrates that no assignment has occurred by reason of a failure to comply with s 12 or by reason of want of parties. The ground in the Notice of Contention is rejected.

105. [130]

     Nevertheless, for reasons earlier given, I consider that these grounds of appeal concerning the assignment by ABL to Adelaide Bank are not made out.

106. [131]

     These grounds are described in the plaintiff’s submissions as consequential findings. No particular submissions are made about them by the plaintiff. Rather, it is simply asserted that the Magistrate erred in not finding:

107. [132]

     The defendant submitted that grounds 20 to 22 were simply a restatement of earlier alleged errors which were only questions of fact. As to ground 23, the defendant submitted that this does not arise because her Honour held the opposite, namely, that the claim on the deed was not statute-barred.

108. [133]

     The matters in these grounds are raised in earlier grounds of appeal. I have determined that the issues raised by those grounds were correctly found against the plaintiff or that they did not involve question of law alone.

Conclusion

1. [134]

   I make the following orders:

   1. (1)

      Summons dismissed.

   2. (2)

      The plaintiff is to pay the defendant’s costs.