Business Finance Pty Ltd (in liq) v Casula Projects Pty Ltd

These proceedings have been brought by the first plaintiff, Business Finance Pty Ltd (Receiver and Manager Appointed), and the second plaintiff, Marcus William Ayres in his capacity as receiver and manager of Business Finance (Receiver), against the defendant, Casula Projects Pty Ltd (Receiver and Manager Appointed) as trustee for the GEM Family Trust.

These proceedings follow on from an ex tempore judgment delivered by Parker J on 29 August 2022 in earlier proceedings brought by Business Finance and the Receiver against Casula Projects (Earlier Proceedings), for which written reasons were subsequently published on 14 September 2022: Business Finance Pty Ltd v Casula Projects Pty Ltd [2022] NSWSC 1156 (Liability Judgment).

The basal facts underlying the dispute between the parties in these proceedings and the Earlier Proceedings as recited in the Liability Judgment are as follows:

On 1 July 2019, Business Finance went into receivership.

On 3 April 2023, Business Finance went into liquidation.

In the Liability Judgment, Parker J found that:

On 14 September 2022, on the basis of these findings in the Liability Judgment, Parker J made orders including a declaration that for the purposes of the Original Mortgage, the quantum of the “Secured Money”, including interest and fees, as at 31 May 2018 was $1,199,900, and a declaration that repayments of the “Secured Money” were made on the following dates:

Following the Liability Judgment, on 11 November 2022 a new mortgage over the Property was registered (New Mortgage).

On 24 November 2022, Parker J gave judgment regarding the costs of the Earlier Proceedings, ordering Casula Projects to pay the costs of Business Finance and the Receiver on the ordinary basis: Business Finance Pty Ltd v Casula Projects Pty Ltd (No 2) [2022] NSWSC 1608 (Costs Judgment).

After the Liability Judgment and the Costs Judgment, the parties still find themselves in dispute over the same events.

These proceedings were commenced by Business Finance and the Receiver by summons filed on 8 February 2023.

On 1 March 2023, Business Finance appointed the Receiver as the receiver and manager of the Property and any and all property or assets secured by the New Mortgage.

On 27 March 2023, Business Finance and the Receiver filed the statement of claim in these proceedings, setting out the basis for the claims now made against Casula Projects.

In the statement of claim, Business Finance alleges that the Liability Judgment did not determine the issue of the quantum of the full amount of the debt owing by Casula Projects to Business Finance pursuant to the loan agreement, and seeks the recovery of that debt calculated in the period from 1 June 2018 to the date of judgment in these proceedings.

Further, Business Finance alleges in the statement of claim that the terms of the loan agreement are contained in the New Mortgage, which comprise the terms contained in the Schedule, Schedule A and Schedule B of the New Mortgage and expressly incorporate the standard terms of the registered mortgage memorandum no. 718188316 (Memorandum). Business Finance alleges that these terms set out the obligations of Casula Projects to pay the “Secured Money” to Business Finance, which includes the “Principal Amount” of $1,199,000, “Interest” payable monthly in advance, “Outstanding Interest”, “Fees” (comprising the “Loan Management Fee” of $115 payable monthly, and the “Default Loan Management Fee” of $75 per day from the date of default, payable on demand), “Costs and Expenses”, and other amounts expressly set out in the definition of “Secured Money”.

Business Finance alleges that Casula Projects was obliged to pay all of the “Secured Money” and has failed to do so despite demand, resulting in “Events of Default” under the New Mortgage and the “Secured Money” being due and owing by Casula Projects to Business Finance.

On 1 June 2023, Casula Projects filed the defence to the statement of claim and the first cross-claim and statement of cross-claim against Business Finance.

On 27 July 2023, Business Finance and the Receiver filed a notice of motion seeking an order pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that particular parts of the defence be struck out, and an order pursuant to r 13.4(1) of the UCPR that the whole of the cross-claim be summarily dismissed, or alternatively an order pursuant to rule 14.28 of the UCPR that paragraphs 3 to 54 of the cross-claim be struck out (Strike Out Application).

On 4 August 2023, Casula Projects filed a notice of motion seeking leave to amend the cross-claim (Amendment Application).

On 7 September 2023, the hearing of the Strike Out Application and the Amendment Application took place before me. After the reading of affidavits and tendering of evidence, during the course of submissions at the hearing it became apparent that there were difficulties with the form of the defence and cross-claim. It was conceded by Casula Projects that these deficiencies needed to be addressed by the reformulation of the defence and cross-claim, including by no longer denying that Casula Projects was required to pay compounding interest at 24% per annum. Accordingly, I gave the parties a period of time within which to agree on the form of orders for the further conduct of the proceedings.

On 14 September 2023, I made the following consent orders in chambers (using the defined names of the parties and other relevant definitions set out above in square brackets):

On 25 September 2023, Casula Projects filed a notice of motion seeking leave to amend the defence, leave to amend the cross-claim and to strike out parts of the statement of claim.

On 31 October 2023, pursuant to leave granted by me, Casula Projects filed an amended notice of motion seeking leave to amend the defence, leave to amend the cross-claim and to strike out the parts of the statement of claim which seek the “Loan Management Fee” and the “Default Loan Management Fee” (Second Amendment & Strike Out Application).

On 31 October 2023, I heard the Second Amendment & Strike Out Application, which was opposed by Business Finance and the Receiver.

This judgment determines the Second Amendment & Strike Out Application.

On 28 September 2023, I ordered by consent that the evidence received in respect of the Strike Out Application and the Amendment Application would be regarded as evidence in the Second Amendment & Strike Out Application.

In support of the Second Amendment & Strike Out Application, Casula Projects relied on the following evidence:

In opposition to the Second Amendment & Strike Out Application, Business Finance and the Receiver relied on the following evidence:

Mr S Ipp appeared for Business Finance and the Receiver, instructed by Corrs Chambers Westgarth. Mr S Della Marta of Pointon Partners appeared for Casula Projects.

Paragraph 3 of the Second Amendment & Strike Out Application seeks:

Although this paragraph speaks of striking out the relevant parts of the statement of claim, I have taken the references to r 13.4(1) of the UCPR or alternatively r 14.28 of the UCPR to indicate that Casula Projects is seeking the summary dismissal of the claim contained in paragraphs 21 to 29 of the statement of claim or, alternatively, the striking out of those paragraphs.

I recently summarised the relevant principles in relation to the court’s powers to summarily dismiss proceedings pursuant to rule 13.4 of the UCPR and strike out pleadings pursuant to rule 14.28 of the UCPR in Transport for NSW v Boensch (No 2) [2023] NSWSC 1354, relevantly stating at [40]–[55]: --

The basis on which Casula Projects seeks the summary dismissal or striking out of the claims made in paragraphs 21 to 29 of the statement of claim is that there is an Anshun estoppel which operates against the bringing of that claim.

An Anshun estoppel takes its name from Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. The Anshun principle has more recently been restated in Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 (and reinforced in Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212; [2016] HCA 44).

In Tomlinson, French CJ, Bell, Gageler, Keane and Nettle JJ explained the operation of Anshun estoppel in the context of the three forms of estoppel arising from a final judgment, saying at [22] (citations omitted):

In Tomlinson, the majority went on to explain the overlap and distinction between these estoppels and the wider notion of abuse of process, saying at [24]–[26]:

The above description of an Anshun estoppel in Tomlinson is reinforced in Timbercorp at [27], where French CJ, Kiefel, Keane and Nettle JJ said:

In Anshun, one of the matters to be taken into account in determining whether an Anshun estoppel arose was the likelihood of conflicting judgments. Gibbs CJ, Mason and Aickin JJ stated at 603–604:

Section 64 of the Civil Procedure Act 2005 (NSW) (CPA) provides:

Section 58 of the CPA relevantly provides:

As stated above, section 58(2) of the CPA refers to sections 56 and 57 of the CPA.

Section 56(1) provides that the overriding purpose of the CPA and the UCPR is ‘to facilitate the just, quick and cheap resolution of the real issues in the proceedings’. Section 56(2) mandates that the court must give effect to the overriding purpose when it exercises any power under the CPA or the UCPR, and when it interprets their provisions. Section 56(3) creates a duty for a party to assist the court to further the overriding purpose.

Section 57 of the CPA provides:

Business Finance and the Receiver argue that leave for Casula Projects to amend the defence and cross-claim should be refused on numerous grounds applicable to different parts thereof, principally on the basis of issue estoppel and Anshun estoppel (the principles of which are set out in Tomlinson above), and defects which render them liable to be struck out on the basis that they fail to disclose a reasonable cause of action and/or are embarrassing (the principles of which are set out in Boensch above).

Additional expressions of what is to be considered an embarrassing pleading in the context of allegations of unconscionable conduct are to be found in a number of decisions, including several of this court.

In Natwest Australia Bank Ltd v Boral Gerrard Strapping Systems Pty Ltd (1992) 111 ALR 631, French J (as the former Chief Justice then was) struck out a pleading of unconscionable conduct against Boral, saying at 638:

In Watiwat v Dixon [2017] NSWSC 360, Ward CJ in Eq (as the President then was) at [15]–[22] set out the relevant legal principles regarding the role of pleadings; namely, to state with clarity the case that must be met and define the issues for decision, and thereby minimise the risk of injustice resulting from surprise and reducing expense and delay, concluding at [22]:

In Watiwat, Ward CJ in Eq at [24]–[29] drew particular attention to the failure of the plaintiff in that case to plead the facts, matters and circumstances giving rise to the allegation of unconscionable conduct as the basis for her Honour’s finding that the pleading was embarrassing and should be struck out.

In O’Brien v Supercheap Security Pty Ltd [2023] NSWSC 21, Ball J dealt with an application to summarily dismiss or strike out a pleading of statutory unconscionable conduct where multiple material facts had not been pleaded, only conclusions. Ball J said at [63]:

In paragraphs 21 to 29 of the statement of claim, Business Finance makes allegations regarding the failure of Casula Projects to pay the Loan Management Fee and the Default Loan Management Fee despite demands having been made by Business Finance, asserting that this failure is in breach of the obligation to pay the Secured Money as required in the Memorandum containing the terms of the Loan Agreement and the New Mortgage.

Paragraphs 21 to 29 of the statement of claim are in the following form (omitting the particulars):

Casula Projects says that in the Earlier Proceedings, before the Liability Judgment was given by Parker J on 29 August 2023, there was no claim by Business Finance for the Loan Management Fee or the Default Loan Management Fee as part of the amount said to be owing to Business Finance. Casula Projects drew attention to a spreadsheet calculation of the amount claimed by Business Finance attached to an affidavit of the Receiver affirmed 16 August 2022 (served in the Earlier Proceedings) which makes no reference to any Loan Management Fee or Default Loan Management Fee.

Instead, the first time a claim or assertion was made for any Loan Management Fee or Default Loan Management Fee was by Business Finance serving an affidavit of the Receiver affirmed 29 August 2022, which attached an amended spreadsheet calculation at the time that Parker J was in the course of delivering the ex tempore Liability Judgment. Subsequently, by updated versions of the spreadsheet calculation of the amount Business Finance claimed was owing by Casula Projects, as Parker J continued to deliver the Liability Judgment, the Loan Management Fee and the Default Loan Management Fee were claimed.

Business Finance and the Receiver candidly admit that each of the Loan Management Fee and the Default Loan Management Fee were not included in any calculation of the amount asserted to be owing by Casula Projects at any time prior to the delivery of the Liability Judgment but provide evidence to explain the circumstances. The Receiver has explained (in unchallenged evidence) that the failure to include the Loan Management Fee and the Default Loan Management Fee in the debt calculation which he prepared was an oversight by him in failing to look at the terms of the Original Mortgage in preparing a recalculation of the debt owing to Business Finance. The Receiver also says that it was only during the course of the recalculation that he discovered that the Loan Management Fee and Default Loan Management Fee had not been included in his calculations and at no time did he make a conscious decision not to seek the payment of them, not to include it, or to waive any right of Business Finance to payment of them.

Casula Projects says that the failure of Business Finance and the Receiver to raise the Loan Management Fee and Default Loan Management Fee is unreasonable such that an Anshun estoppel operates to preclude the claim for each of them being made in the statement of claim in these proceedings. Casula Projects also argues (at paragraphs 15–16 of its written submissions):

I reject the Anshun estoppel submissions by Casula Projects for the following reasons:

As a result, I dismiss paragraph 3 of the Second Amendment & Strike Out Application.

Business Finance and the Receiver take issue with the amendment of paragraphs 11 (first occurring), 11A, 11B–16 and 17 of the proposed amended defence. I will deal with each of these paragraphs in turn.

Paragraph 19 of the statement of claim is in the following terms:

Paragraph 11 of the proposed amended defence states (omitting the struck-through text proposed to be deleted):

Paragraph 11 of the defence previously had a set of particulars which contained the basis on which the proper construction of the Loan Agreement and New Mortgage was asserted. Those matters which were previously particulars to paragraph 11 of the defence have now become part of a new paragraph 11A of the proposed amended defence (the contested form of which is set out below).

Business Finance and the Receiver complain that the removal of these particulars from paragraph 11 has denuded it of any logic and meaning and that it now contains a half-stated conclusion and a bare denial. On this basis they say that paragraph 11 of the proposed amended defence is embarrassing within the meaning of rule 14.28(1)(b) of the UCPR and that leave to amend it should be refused.

In my opinion, there is force to this submission if the new paragraph 11A of the proposed amended defence is not permitted to stand. So long as paragraph 11 is accompanied by an allowable paragraph 11A, taken together, there would be a sufficient basis on which paragraph 11 of the proposed amended defence does not transgress the requirements of a permissible pleading.

During the hearing, Casula Projects conceded that paragraph 11 required amendment so that it would read (additional text underlined):

Subject to the matters raised in relation to paragraph 11A, which are dealt with below, Business Finance and the Receiver agreed that such a change would address the issues regarding paragraph 11 (T10.40-11.9).

I have, however, reached the conclusion that paragraph 11A should not be allowed for the reasons set out below. As a result, I consider that paragraph 11 of the proposed amended defence (even in the further amended form set out above) should not be permitted either, because without a reference to an allowable paragraph 11A, there is no logical meaning in paragraph 11.

Paragraph 11A of the proposed amended defence also responds to paragraph 19 of the statement of claim. The form of paragraph 11A(a)–(d) is as follows:

Business Finance and the Receiver make two principal complaints in relation to the form of paragraph 11A(a)–(d). The first of their principal complaints relates to subparagraphs 11A(a)–(c) and the second of their principal complaints relates to subparagraph 11(d). I will deal with each in turn.

First, they submit that subparagraphs 11A(a)–(c) fail to disclose a reasonable defence because although Casula Projects pleads that the terms of the Loan Management Fee and the Default Loan Management Fee are not defined in the Memorandum, it has failed to state what it contends is the effect of that pleading and, on that basis, it is embarrassing. They also say that in any event, the definition of Fees in the Memorandum is as follows:

The definition of “Schedule B” is Schedule B to the Memorandum which forms part of the New Mortgage. Both the Loan Management Fee and the Default Loan Management Fee appear in Schedule B, respectively stated as follows:

Casula Projects say that there is a disconnect between the Memorandum and the New Mortgage because there is no Schedule B to the Memorandum, only a Schedule B to the New Mortgage.

While I am very conscious of not curtailing issues concerning the proper construction of the Memorandum and the New Mortgage which might be raised by Casula Projects at the trial, I agree with Business Finance and the Receiver that subparagraphs 11A(a)–(c) fail to disclose a reasonable defence and are also embarrassing. They cannot be sustained in light of the plain provisions of the Memorandum and the New Mortgage. The New Mortgage states:

It is pellucidly clear that the “standard terms document 718188316” is the Memorandum, which is to be read with the New Mortgage, including Schedule B to the New Mortgage.

As a result, allowing subparagraphs 11A(a)–(c) to form part of the amended defence and create an issue in the proceedings when there is no reasonably arguable basis for them would not adhere to the dictates of justice in line with s 58 of the CPA, which include facilitating the just, quick and cheap resolution of the real issues in the proceedings as stated in s 56 of the CPA.

Second, Business Finance and the Receiver submit that subparagraph 11A(d) fails to disclose a reasonable defence because Casula Projects makes no attempt to plead what it contends is the legal effect of the Indicative Letter of Offer in circumstances where it was superseded by the Original Mortgage and then the New Mortgage, and where the express terms of the Indicative Letter of Offer demonstrate with clarity that its terms are to be supplanted by any loan facility into which the parties enter, being the following:

I agree that subparagraph 11A(d) fails to disclose a reasonable defence and is also embarrassing because it does not state with any reasonable clarity what the effect of the Indicative Letter of Offer is, and how it is that the express terms of it could provide a defence based on a proper construction that is put forward by Casula Projects. It should not be permitted to form part of the amended defence when it is not reasonably arguable, and so does not accord with the dictates of justice in s 58 of the CPA, including by not facilitating the just, quick and cheap resolution of the real issues in the proceedings as per s 56 of the CPA.

Paragraph 11A(e)–(f) of the proposed amended defence also responds to paragraph 19 of the statement of claim and states (additions underlined):

These paragraphs plead an allegation of unconscionability. Casula Projects conceded that the matters contained in the particulars should really be in the pleading proper and that what had been attempted to be stated was a claim of unconscionable conduct in equity (T15.37–16.23). But the problem is that the allegations in both the pleading and the particulars are absent any material facts. As the decisions in Natwest, Watiwat and O’Brien remind me, allegations of unconscionable conduct must be founded on a set of material facts and not be expressed with opaque generality or as a set of conclusions.

As a matter of fairness to Business Finance and the Receiver, the purpose of providing material facts in the pleading is to give reasonable clarity of the case that is required to be met. The form of the pleading set out in paragraph 11A(e)–(f) does not provide such clarity and cannot be allowed to stand. For that reason alone, it is embarrassing and cannot be permitted as an amendment to the defence in its current form. Allowing it in its current form does not accord with the dictates of justice in s 58 of the CPA, including by not facilitating the just, quick and cheap resolution of the real issues in the proceedings as stated in s 56 of the CPA.

Business Finance and the Receiver also say that an Anshun estoppel applies to a claim of unconscionability regarding the entry into the Original Mortgage. Business Finance and Receiver assert that from three out of the four witnesses for Casula Projects who gave evidence at the trial in the Earlier Proceedings regarding the circumstances of Casula Projects’ entry into the Original Mortgage, it appears Casula Projects intends to introduce that factual issue into these proceedings and it should not be permitted to do so because of a resulting prejudice to Business Finance and the Receiver. Because of the view that I have formed that the pleading in paragraph 11A(e)–(f) should not be permitted, it is not necessary for me to express any view about that complaint.

In the circumstances, if Casula Projects wishes to replead the defence based on unconscionable conduct, it will need to make an appropriate application for leave to do so.

Paragraphs 20–26 of the statement of claim are as follows:

Paragraphs 11B–17 of the proposed amended defence (starting from what appears at page 4 of the document as the mistaken second occurring paragraph 11, but which Casula Projects submitted should be renumbered as paragraph 11B) respond to paragraphs 19–26 of the statement of claim. They are in the following terms (omitting the struck-through text proposed to be deleted):

In light of the view that I have formed that paragraph 11A of the proposed amended defence cannot be permitted, paragraphs 11B–16 of the proposed amended defence cannot be permitted either because each of them contains a pleading which cross-references to paragraph 11A. Paragraph 17 of the proposed amended defence is in a different category as it is an admission without cross-reference to any disallowed part of the proposed amended defence.

If Casula Projects wishes to apply to replead paragraph 11A in permissible form, then the reference to it in each of paragraphs 11B–16 might also form part of that application.

Business Finance and the Receiver also take issue with paragraphs 3–31, 35–36 and 39–54 of the proposed amended cross-claim and consequently paragraphs 5, 6, and 7A–7D of the relief sought in the proposed amended cross-claim.

By the Strike Out Application, Business Finance and the Receiver applied for the whole of the cross-claim to be summarily dismissed or, alternatively, an order pursuant to rule 14.28 of the UCPR that paragraphs 3 to 54 of the cross-claim be struck out. Many of the problems with the cross-claim to which Business Finance and the Receiver drew attention at the hearing of the Strike Out Application persist in the proposed amended cross-claim. For this reason, where paragraphs of the proposed amended cross-claim are in exactly the same form as they appeared in the cross-claim that has been filed and are the subject of challenge by Business Finance and the Receiver in opposition to the Second Amendment & Strike Out Application, I will deal with those paragraphs on the basis that there is an application by Business Finance and the Receiver to strike them out of the cross-claim as well as not permit them to remain in the proposed amended cross-claim.

I will deal with each of the disputed paragraphs in turn.

Business Finance and the Receiver assert that the pleading in paragraphs 3–31 of the proposed amended cross-claim is defective. Those paragraphs are in the following terms (additions underlined, grammatical errors left uncorrected and particulars excluded unless relevant):

Although it is by no means clear, it appears that paragraphs 5 and 6 of the relief claimed in the proposed amended cross-claim are said to arise out of the conclusionary pleading of unconscionable conduct in paragraph 31 of the proposed amended cross-claim. Paragraphs 5 and 6 of the relief claimed are in the following form:

Business Finance and the Receiver submit that paragraphs 3 to 31 and paragraphs 5 and 6 of the relief claimed are defective for the following reasons:

Casula Projects says that the factual matters establishing the background to it entering into the loan with Business Finance are critical to the claims for relief for unconscionable conduct that are made by Casula Projects in the cross-claim, including by setting up the relationship between the parties. Casula Projects also says that the purpose of pleading all of the matters contained in paragraphs 3 to 30 of the cross-claim is not to attempt to try and subvert what was decided by Parker J in the Earlier Proceedings, particularly the declaration that the quantum of the “Secured Money”, including interest and fees, as at 31 May 2018 was $1,199,900.

Applying the principles in Natwest, Watiwat and O’Brien, in my view paragraphs 3 to 31 of the proposed amended cross-claim are deficient because they fail to link the factual matters that are expressed in paragraphs 3 to 30 to the pleading of unconscionability that appears in paragraph 31. It is incumbent on Casula Projects to state clearly the case it is making and to set out the substratum of material facts on which it relies for the claim that Business Finance is not entitled to claim the Loan Management Fee or the Default Loan Management Fee because it would be unconscionable conduct for it to do so. In addition, material facts cannot reside in the particulars in the form that they are set out in paragraph 31 of the proposed amended cross-claim. All of those failings mean that the pleading does not accord with the dictates of justice per s 58 of the CPA, including by its failure to facilitate the just, quick and cheap resolution of the real issues in the proceedings as stated in s 56 of the CPA.

Casula Projects conceded that the pleading was missing the necessary link between the matters contained in paragraphs 24 to 30 and the conclusion expressed in paragraph 31 and indicated that a new paragraph 30A was required to plead that link (T24.49-25).

My conclusion is that paragraphs 3 to 31 of the proposed amended cross-claim are embarrassing and cannot be permitted in their current form. Unless supported by an appropriately drafted claim, paragraphs 5 and 6 of the relief claimed do not disclose a reasonable cause of action, are embarrassing, and cannot be permitted.

I do not think that either an issue estoppel or an Anshun estoppel arises in relation to the claim of unconscionability that is made. The unconscionable conduct that is identified in paragraph 31 (albeit in impermissible form) is limited to the entitlement to the Loan Management Fee and the Default Loan Management Fee. Although the particulars to paragraph 31 would suggest that the claim being made is that the entry into the loan agreement was unconscionable conduct, the form of paragraph 31 itself is more confined. Business Finance and the Receiver readily concede that they have not previously made a claim for the Loan Management Fee or the Default Loan Management Fee. For the reasons expressed above, I have found that no Anshun estoppel operates to prevent them making the claim for those fees.

In those circumstances, I cannot see how an issue estoppel arises to prevent Casula Projects from defending itself to a claim for those fees on the basis that it would be unconscionable for Business Finance and the Receiver to do so. As expressed in Tomlinson at [22], an issue estoppel operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. There is no such ultimate issue which was necessarily resolved as a step in reaching the Liability Judgment because there was no claim for the Loan Management Fee or the Default Loan Management Fee in the Earlier Proceedings. If Casula Projects was seeking to set aside the entry into the loan agreement and the Original Mortgage on the basis that they were the result of unconscionable conduct by Business Finance, clearly there would be an issue estoppel because the whole of the Liability Judgment is predicated on the validity of those arrangements.

Similarly, I consider that an Anshun estoppel has not arisen to prevent Casula Projects from defending itself to a claim for the Loan Management Fee and the Default Loan Management Fee on the basis of unconscionable conduct by Business Finance, so long as that defence does not seek to set aside the loan agreement or the Original Mortgage. As expressed in Tomlinson at [22], an Anshun estoppel arises where a claim or issue is so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. The lack of any claim for the Loan Management Fee or the Default Loan Management Fee in the Earlier Proceedings means that it is not unreasonable for Casula Projects to assert that the claim for them in these proceedings is unconscionable.

If Casula Projects wishes to replead the defence based on unconscionable conduct, it will need to make an appropriate application for leave to do so.

Paragraph 36 of the proposed amended cross-claim states:

Business Finance and the Receiver object to paragraph 36 on the basis that it pleads matters relating to the higher interest rate of 24% and that Casula Projects conceded at the hearing of the Strike Out Application that it was not permitted to make such a claim.

In my opinion, paragraph 36 raises a matter concerning the interest rate of 24% which is not the subject of challenge in these proceedings, as indicated by order 2 of the consent orders made on 14 September 2023. In those circumstances, paragraph 36 of the proposed amended cross-claim is not permitted.

Paragraphs 35 and 39 of the proposed amended cross-claim state:

These paragraphs are in exactly the same form and Casula Projects concedes that only paragraph 35 should remain, with paragraph 39 omitted (T26.32–34).

Business Finance and the Receiver assert that they are defective on the basis that the facts pleaded in those paragraphs have no apparent relevance to an issue in these proceedings; that it is unclear what is alleged against Business Finance; and that they are, therefore, embarrassing. Casula Projects submits that the facts in these paragraphs form a background but accepts there is no claim against Business Finance in relation to them. During submissions, the following exchange took place (T26.18–30):

I consider that the pleading of facts which on their face are irrelevant to any claim that might be made is embarrassing. The pleading of irrelevant matters is not in keeping with the dictates of justice in s 58 of the CPA, nor does it facilitate the just, quick and cheap resolution of the real issues in the proceedings as stated in s 56 of the CPA. Accordingly, I do not permit paragraphs 35 and 39 of the proposed amended cross-claim.

Paragraphs 40–46 and 53 of the proposed amended cross-claim are as follows (particulars omitted and grammatical errors left uncorrected):

Business Finance and the Receiver submit that these paragraphs are:

Casula Projects submit that these facts are, again, “background”. But it is entirely unclear what claim they support. They are bereft of connection with any claim expressed in the proposed amended cross-claim. They certainly cannot support a claim that might seek to cavil with the finding in the Liability Judgment that the quantum of the “Secured Money”, including interest and fees, as at 31 May 2018 was $1,199,900 because there is an issue estoppel in respect of that finding and it would be an abuse of process for that finding to be challenged in any way in these proceedings. For these reasons, they cannot be permitted because they do not meet the dictates of justice in s 58 of the CPA, including by their failure to facilitate the just, quick and cheap resolution of the real issues in the proceedings as stated in s 56 of the CPA.

Paragraphs 47–52 of the proposed amended cross claim state:

Business Finance and the Receiver complain that paragraphs 47, 48, 51 and 52 of the proposed amended cross-claim repeat verbatim paragraphs 4, 5, 7 and 8 of the statement of claim without any indication of what is intended to be alleged by the repetition of those facts, which makes the paragraphs embarrassing.

Business Finance and the Receiver submit that paragraph 49 of the proposed amended cross-claim is defective because it is difficult to understand as it mixes a pleading of what Parker J is said to have found in the Liability Judgment (without referring to particular paragraphs of the Liability Judgement) with references to evidence and then makes an allegation regarding a payment of $35,000 which is not expressly referred to in the Liability Judgment.

They further complain that in any event paragraph 49 of the proposed amended cross-claim is erroneous because Parker J did not make a finding that the debt amount was $1,195,000 as at 31 May 2018, but that the finding in the Liability Judgment was that the principal amount owing as at 31 May 2018 was $1,199,900 and that the interest and fees needed to be recalculated.

At the hearing, Casula Projects conceded that paragraph 49 of the proposed amended cross-claim would be removed (T32.28–47).

Business Finance and the Receiver contend that paragraph 50 of the proposed amended cross-claim is defective because although it pleads the effect of the orders made on 14 September 2022 arising from the Liability Judgment, it is unclear what is being alleged against Business Finance and it does not otherwise assist Casula Projects in obtaining the relief sought in the proposed amended cross-claim.

Casula Projects submitted that all of paragraphs 47 to 52 (excluding paragraph 49, which is to be removed) of the proposed amended cross-claim were required to make the pleading comprehensible and understandable, and if they were to be removed then anyone reading the pleading would not understand what was going on.

While there is no problem per se with Casula Projects repeating verbatim in its own pleading material facts which are stated in the pleading against it by Business Finance and the Receiver, the real vice with the form of paragraphs 47 to 52 of the proposed amended cross-claim is that they do not identify any connection between the matters stated in them and any cause of action which is alleged. Business Finance and the Receiver are entitled to have that connection identified so that they can understand the case that they are required to meet. The failure to do so makes this form of pleading embarrassing because it does not adhere to the dictates of justice in s 58 of the CPA, including including insofar as it does not facilitate the just, quick and cheap resolution of the real issues in the proceedings as stated in s 56 of the CPA.

For these reasons, paragraphs 47 to 52 cannot be permitted.

Paragraphs 52A of the proposed amended cross-claim states:

Business Finance and the Receiver complain that the pleading of statutory unconscionable conduct is defective for the same reasons as that the pleading of unconscionable conduct in subparagraphs 11A(a)–(f) of the proposed amended defence is defective, which is that it expresses a legal conclusion without setting out any of the material facts on which that conclusion is based.

Casula Projects conceded at the hearing that the same problems exist with paragraph 52A (T33.40–49).

Applying the principles in Natwest, Watiwat and O’Brien, allegations of unconscionable conduct must be founded on a set of material facts and not be expressed with opaque generality or as a set of conclusions. Accordingly, the form of paragraph 52A is embarrassing for failing to set out the case to be met, does not meet the dictates of justice in s 58 of the CPA, including by its failure to facilitate the just, quick and cheap resolution of the real issues in the proceedings as stated in s 56 of the CPA, and cannot be permitted.

Paragraphs 52B of the proposed amended cross-claim states:

Business Finance and the Receiver submit that paragraph 52B is defective because no attempt is made to connect the pleaded facts with any cause of action, the repetition of these paragraphs has no apparent relevance to an issue in these proceedings, and it is unclear what is alleged against Business Finance.

Casula Projects submits that it is seeking to tie those facts into the claim which appears in paragraph 52D of the proposed amended cross-claim (dealt with below).

In my view, paragraph 52B is embarrassing and cannot be permitted. If it is proposed that the facts stated in paragraph 52B are to be tied into the pleading in paragraph 52D, then this must be explicitly stated. Failure to do so means that the pleading in its current form lacks sufficient clarity so as to enable Business Finance to know the case that it has to meet. It does not adhere to the dictates of justice in s 58 of the CPA, including by its failure to facilitate the just, quick and cheap resolution of the real issues in the proceedings as stated in s 56 of the CPA.

Paragraph 52C of the proposed amended cross-claim is as follows:

Business Finance and the Receiver contended that paragraph 52C appears to repeat the particulars to paragraph 52A and attempts to plead elements of unconscionability but is defective because it contains a series of conclusions without alleging any material facts which might justify the conclusions. There is also no actual allegation of unconscionability alleged in the paragraph, making its relevance to any pleaded claim and what is alleged against Business Finance unclear.

Casula Projects did not attempt to support paragraph 52C in submissions.

In any event, it suffers from the same problems that I have identified above in relation to paragraph 52A and therefore cannot be permitted.

Paragraphs 52D to 52J are in the following form:

Paragraph 52D of the proposed amended cross-claim is the commencement of allegations made in the pleading in relation to the operation of the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act) and attempts to set up the jurisdictional prerequisite to the matters contained in paragraphs 52E to 52J. I am satisfied that if the allegations made in paragraph 52D are to be struck out, then all of paragraphs 52E to 52J must also be struck out.

Business Finance and the Receiver contend that paragraph 52D contains a conclusion without alleging any material facts to justify the conclusion contained in it and also makes no attempt to plead the statutory provisions of the NCCP Act that enlivens the requirement to hold an Australian credit licence, and should not be allowed because it is embarrassing.

The principal submission made by Business Finance and the Receiver, however, is that all of these paragraphs fail to disclose a reasonable cause of action because the terms of the NCCP Act do not apply to the New Mortgage for the following reasons:

Casula Projects submits that the “debtor” under the loan agreement and the Original Mortgage was Mr Al Jayoush, pointing to an unregistered form of the Original Mortgage which was executed by Mr Al Jayoush in his stated capacity as sole director and sole secretary of “Casula Projects Pty Ltd ACN 618821837 in its corporate capacity and as Trustee for GEM Family Trust” as the “Borrower/Debtor/Mortgagor” on 26 September 2017, and witnessed by Paul Kaperonis. In Schedule A to that document, the “Debtor(s)” are listed as “Casula Projects Pty Ltd ACN 618821837 in its corporate capacity and as Trustee for GEM Family Trust Nick Houman Al Jayoush” and the “Guarantor” is listed as “Nick Houman Al Jayoush”.

In response to this argument, Business Finance and the Receiver say that there is no evidence that the form of the Original Mortgage signed by Mr Al Jayoush (in which his name appears as one of the “Debtor(s)” and as the “Guarantor” in Schedule A) was ever signed by Business Finance. They also say that neither the Original Mortgage (which was registered and signed by Business Finance and Casula Projects) nor the New Mortgage (which was registered and signed by Business Finance) contain any such mention of Mr Al Jayoush.

I have looked closely at the registered Original Mortgage (dealing number 718326158, registered 11 October 2017) and the registered New Mortgage (dealing number 722101942, registered 11 November 2022). As I have mentioned above, they are signed by both parties.

The mortgagor in the Original Mortgage is listed as “Casula Projects Pty Ltd ACN 618 821 837 in its corporate capacity as Trustee for GEM Family Trust”. The mortgagor in the New Mortgage is listed as “Casula Projects Pty Ltd ACN 618 821 837 as Trustee for GEM Family Trust”. The Original Mortgage is signed by Mr Al Jayoush as sole director and sole company secretary of Casula Projects on 26 September 2017. The New Mortgage is signed by Hanan Mokdad as sole director and sole company secretary of Casula Projects on 3 November 2022.

The Original Mortgage is signed by Samantha Parsons for Business Finance on 29 September 2017. The New Mortgage is signed by the Receiver for Business Finance on 8 November 2022.

There is absolutely no mention of Mr Al Jayoush being a debtor or guarantor in either the Original Mortgage or the New Mortgage. I cannot put any reliance on the unregistered form of the Original Document which refers to Mr Al Jayoush as the debtor and guarantor. Nor is there any evidentiary value in the letter dated 17 October 2017 from Summer Lawyers to Business Finance which refers to Mr Al Jayoush as the “Guarantor” and extends the “Portfolio Obligor” to include him in that capacity by reference to some unidentified document. The director’s certificate dated 9 October 2017 does not advance the submission put by Casula Projects either.

In these circumstances, I agree with the analysis provided by Business Finance and the Receiver that the NCCP Act has no application to the loan agreement, the Original Mortgage, or the New Mortgage. As a result, I consider that paragraphs 52D to 52J of the proposed amended cross-claim do not disclose a reasonable cause of action and should not be permitted. Allowing those paragraphs to remain would not adhere to the dictates of justice in s 58 of the CPA, including by not facilitating the just, quick and cheap resolution of the real issues in the proceedings as stated in s 56 of the CPA.

Even if I had not reached that view, I consider that there are separate bases on which paragraphs 52D to 52J of the proposed amended cross-claim should not be permitted as was submitted by Business Finance and the Receiver. These are:

Paragraph 53 of the proposed amended cross-claim states:

Business Finance and the Receiver submit that there is no attempt in paragraph 53 to explain how those allegations have any relevance to the issues in dispute in these proceedings. Moreover, it is unclear what is being alleged against Business Finance. For those reasons, this paragraph is embarrassing.

During the hearing, I repeatedly pressed Casula Projects to identify what relevance the matters pleaded in paragraph 53 had to any claim made in the proposed amended cross-claim, but it was unable to do so (T47.39–48.41).

In my view, paragraph 53 is untethered to any cause of action contained in the proposed amended cross-claim and is therefore embarrassing and not in accordance with the dictates of justice in s 58 of the CPA, including by its failure to facilitate the just, quick and cheap determination of the real issues in the proceedings as expressed in s 56 of the CPA. Accordingly, it should not be permitted.

Paragraph 54 of the proposed amended cross-claim is as follows (omitting the struck-through text proposed to be deleted):

Business Finance and the Receiver submit that paragraph 54 is defective because there is an issue estoppel which prohibits Casula Projects from relitigating the amount of the debt as at 31 May 2018; there are no material facts which could be said to justify the debt figure alleged to be owed; and there is a failure to plead any material facts as to how and why the debt figure is to be further reduced by unspecified “rental payments on the Property received by Business Finance” and by some process described as “calculated as part of the settlement of the sale of the Property”. They say that for these reasons, paragraph 54 is embarrassing.

During the hearing, I also repeatedly pressed Casula Projects to identify what relevance the matters pleaded in paragraph 54 had to any claim made in the proposed amended cross-claim, but it was unable to do so (T47.39–48.41).

I am satisfied that paragraph 54 should not be permitted because it is embarrassing for the reasons given by Business Finance and the Receiver, although I express no view on the submission that there is an issue estoppel because it is not clear to me when the unspecified payments were made.

Paragraphs 7A to 7D of the relief sought in the proposed amended cross-claim are as follows (additions underlined):

As all of the causes of action on which the relief claimed in paragraphs 7A to 7D are not permitted, those paragraphs must also fall from the proposed amended cross-claim. Accordingly, paragraphs 7A to 7D are also not permitted.

In summary, I have concluded that:

Based on my conclusions, I make the following orders: