Supreme Court New South Wales Medium Neutral Citation: Sutherland v Compton Lot Ten Pty Limited & Anor [2023] NSWSC 1472 Hearing dates: 7, 8, 16 November 2023 Date of orders: 30 November 2023 Decision date: 30 November 2023 Jurisdiction: Equity - Corporations List Before: Black J Decision: The proceedings are dismissed and the plaintiff to pay the defendants' costs of the proceedings as agreed or as assessed. Catchwords: MORTGAGES AND SECURITIES — Mortgages — Duties, rights and remedies of mortgagee — Foreclosure — Where plaintiff alleges it has been assigned the security rights of a mortgagee over a share in a company — Where not established that lender or plaintiff as assignee has extinguished the defendant's equity of redemption by a foreclosure action — Whether an order can be made under s 175 of the Corporations Act 2001 (Cth) to correct the register of members to record the plaintiff as the legal and beneficial owner of the share. Legislation Cited: - Civil Procedure Act 2005 (NSW), s 94 - Conveyancing Act 1919 (NSW), ss 12, 38 - Corporations Act 2001 (Cth), ss 135, 169, 175, 180, 181, 203C, 1071B - Evidence Act 1995 (NSW), s 136 - Personal Property Securities Act 2009 (Cth) Cases Cited: - Adelaide Building Co Pty Ltd (in liq) v ABC Investments Pty Ltd (1990) 8 ACLC 445 - Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168 - Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 - Bennell v Netlink Australia Pty Ltd (2002) 42 ACSR 680; [2002] NSWSC 822 - Elders Forestry Ltd v Bosi Security Services Ltd (2010) 242 FLR 360; 80 ACSR 122; [2010] SASC 223 - ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 - Harrold v Plenty [1901] 2 Ch 314 - Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 - Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 - Kuhl v Zurich Financial Services Ltd (2011) 243 CLR 361; [2011] HCA 11 - Mount Gilead Pty Ltd v Macarthur-Stanham (as executor of Estate of late Lee Macarthur-Onslow) [2023] NSWCA 37 - Musa v Alzreaiawi [2021] NSWCA 12 - Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 - Re Lorie Najjar & Sons Pty Ltd (in liq) (2013) 94 ACSR 561; [2013] NSWSC 798 - Re Motasea Pty Ltd (2014) 97 ACSR 589; [2014] NSWSC 69 - Re SRD Property Pty Limited [2023] NSWSC 441 - United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2002] NSWSC 1178 - Varma v Varma [2010] NSWSC 786 - Watson v Foxman (1995) 49 NSWLR 315 Texts Cited: - A Finch, 'Security over Shares' (1995) 13 Company and Securities Law Journal 292 - E L J Tyler et al, Fisher & Lightwood's Law of Mortgage (LexisNexis, 3rd ed, 2014) - E Sykes & S Walker, The Law of Securities (Law Book Company, 5th ed, 1993) - G Bigmore & M Galvin, 'Foreclosure' (1992) 66 Law Institute Journal 56 - J D Heydon, Heydon on Contract (Thomson Reuters, 2019) -N Seddon, Seddon on Deeds (Federation Press, 2nd ed, 2022) Category: Principal judgment Parties: James Sutherland (Plaintiff) Compton Lot Ten Pty Ltd (First Defendant) Andrea Young (Second Defendant) Representation: Counsel: S Philips (Plaintiff) S Cominos/A Horne (First and Second Defendant) Solicitors: McCullough Robertson (Plaintiff) Cordato Partners (First and Second Defendant) File Number(s): 2022/00375789 Judgment Nature of the proceedings 1. By his Amended Points of Claim ("APC") filed on 1 May 2023, the Plaintiff, Mr James Sutherland, claims the relief sought in prayers 6 – 10 of a Summons filed in these proceedings on 13 December 2022. Mr Sutherland seeks an order under s 175 of the Corporations Act 2001 (Cth) ("Act") that the First Defendant, Compton Lot Ten Pty Ltd ("Compton"), correct its register of members so as to record Mr Sutherland as the legal and beneficial owner of the one share issued in Compton. The Second Defendant, Ms Young, is the director and sole shareholder of Compton. Mr Sutherland also seeks an order, under s 203C of the Act, that the current directors of Compton be removed and a nominee of Mr Sutherland be appointed as a director of Compton. In the event of non-compliance by Compton with those orders, he seeks an order under s 94 of the Civil Procedure Act 2005 (NSW) that a Registrar of the Supreme Court of NSW be authorised to execute any such documents necessary for the purposes of those orders. The proceedings involve factual and legal issues as to dealings between Mr Sutherland, Ms Young and several other parties. It will be convenient first to set out the affidavit evidence and then address the chronology of events in dealing with the several issues to be determined. Affidavit evidence and questions of credit 1. Mr Sutherland largely relies on documentary evidence, although the authenticity of several documents is contested. Both Mr Sutherland and Ms Young also rely on their evidence of conversations that occurred many years ago, although Mr Sutherland was not cross-examined as to his evidence. 2. Turning now to the affidavit evidence, by his first affidavit dated 13 December 2022, Mr Sutherland sought to establish a right to security over the share in Compton arising from a loan purportedly made by another company with which he is or was associated, Hong Kong International Credit Ltd ("HKIC"), to Ms Young. It appears that claim is no longer pressed. By his second affidavit dated 4 April 2023, Mr Sutherland provides an account of events, which I largely address in dealing with the contested issues below. By a third affidavit dated 13 June 2023, Mr Sutherland responds to aspects of Ms Young's evidence and denies several matters raised in her affidavit evidence, which do not appear to be pressed by Ms Young as a defence to the relief sought by Mr Sutherland. He also there expands on the chronology of events and I address that evidence in dealing with disputed issues below. 3. Mr Sutherland also relies on the affidavit dated 2 November 2023 of Mr Thomas Spencer who is a solicitor with a firm of English solicitors ("Mackrell"). I address his evidence in dealing with the disputed issues below. 4. The Defendants rely on Ms Young's affidavit dated 3 February 2023 where she denies entry into a loan agreement with HKIC in the form addressed in Mr Sutherland's first affidavit, which it appears is no longer relied on by Mr Sutherland. By her second affidavit dated 29 May 2023, Ms Young refers to her interest in Compton and in Go Markets Pty Ltd ("GMPL") and her business dealings with Mr Stephen Wheatley and his companies and addresses the chronology of events, which I address in dealing with the disputed issues below (Young 29.5.23 [8]ff). I also address Ms Young's third affidavit dated 8 November 2023 in dealing with the disputed issues below. 5. The Defendants also rely on an affidavit dated 26 May 2023 of Dr Shane Healy, who was a director of Go Markets Management Ltd ("GMM") between July 2014 and April 2016. I address his evidence as to particular matters in dealing with the disputed issues below. 6. The Defendants also filed and served but did not read an affidavit dated 29 May 2023 of Mr Wheatley. Mr Philips, who appears for Mr Sutherland, submitted and I accept that the Court should draw a Jones v Dunkel inference with respect to Mr Wheatley. The rule in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8, as explained in Kuhl v Zurich Financial Services Ltd (2011) 243 CLR 361; [2011] HCA 11 at [63] and Musa v Alzreaiawi [2021] NSWCA 12 at [78], permits an inference that Mr Wheatley's evidence would not have assisted the Defendants and permits the Court to draw an inference unfavourable to the Defendants with greater confidence where Mr Wheatley's evidence which was not led could have cast light on that inference, and I proceed in that basis. 7. Mr Philips made extended submissions as to the evidence of the relevant witnesses and the factual findings which the Court should make. I have had regard to those submissions in dealing with the affidavit evidence and reaching the findings of fact that I set out below. In reaching findings by reference to the affidavit evidence, where it has been necessary to do so, I have regard to the principles applicable to an assessment of the witnesses' credit in assessing that evidence. 8. I have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318–319; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41]; Varma v Varma [2010] NSWSC 786 at [424]–[425]. I also have regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [10]. I also bear in mind the observations of Bell P (as the Chief Justice then was, with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [27]-[28]: "Whilst the quality and accuracy of oral recollection of actual conversations should be treated with care and caution given the fallibility of human memory (of which there has been a growing appreciation within the judiciary in recent decades), oral testimony may still be of value and importance, as was recognised in the nuanced observations of Leggatt J (as his Lordship then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560 at [22] (Gestmin): "the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth." (emphasis added) Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents." 1. I have here drawn on my summary of the applicable principles in Re SRD Property Pty Limited [2023] NSWSC 441 at [8]ff. Background to and issues as to the loan made by Petersham to Ms Young 1. It is largely convenient to deal with the chronology of events together with the contested legal issues that arise from them. The first issue between the parties relates to a loan purportedly made by Petersham to Ms Young, the benefit of which was purportedly later assigned to Mr Sutherland. 2. Before I turn to that issue, I should first address earlier events by way of background. It is common ground (APC [2]-[4]; POD [2]-[4]) that Compton is a proprietary company established and registered on 22 June 2011 and that the Second Defendant, Ms Young, has been a director and secretary of Compton since its establishment and was issued one ordinary share in Compton on its establishment. It is not in dispute that Compton owns a property in Compton Park Road in Berrima in New South Wales. 3. The parties appear to have had business connections through several companies over a considerable period. On 8 April 2008, Mr Sutherland purportedly retained Mr Jeffrey Revell-Reade, Ms Young's husband, as a corporate strategic consultant for GMPL (Ex J1,109). Ms Young's evidence is that, from at least June 2011, she was the beneficial owner of GMPL (Young 29.5.23 [12]). On 13 March 2013, Mr Sutherland sent an email, likely to Ms Young, that a corporate entity with which he was associated was "now acting as the beneficial owner" of GMPL (Ex J1,159), possibly in a nominee capacity. 4. Mr Sutherland contends (APC [5]) that on or about 1 May 2014, Ms Young and Petersham Enterprises Limited ("Petersham"), a company associated with Mr Wheatley, entered into a loan agreement ("Petersham Loan"). Mr Sutherland contends (APC [6]) that, pursuant to the Petersham Loan, Petersham loaned Ms Young £250,000. The Defendants deny that claim in their Points of Defence to the Amended Points of Claim ("POD") at [6]. There appears to be no dispute that the amount of £250,000 was paid to the English solicitors acting for Ms Young's husband in the criminal proceedings against him under a loan arrangement of some kind. 5. The parties address events surrounding the Petersham Loan in their affidavit evidence. In his third affidavit, Mr Sutherland refers to a payment of £250,000 into the account of solicitors in the United Kingdom in April or May 2014, as bail for a business associate of Ms Young's husband who was then facing trial for fraud in the United Kingdom (Sutherland 13.6.23 [22]). He does not explain how that payment, apparently made by Mr Sutherland personally, relates to the Petersham Loan, which other evidence indicates was made by that entity for a different purpose, namely the payment of legal fees. It is not necessary to address that discrepancy in order to determine this application. 6. Ms Young also gives evidence of the circumstances of the Petersham Loan and acknowledges that Mr Sutherland then paid £250,000 to Mackrell's account in respect of outstanding legal fees owed by her husband (Young 29.5.23 [22]ff). Her evidence is that, in late April or early May 2014, her husband was on trial in the Southwark Crown Court in London (Young 29.5.23 [23]). She refers to a conversation with Mr Wheatley, during that trial, about the need for £250,000 to pay her husband's legal costs; her suggestion that Petersham could lend the funds to her and would get the monies back through the profits of GMPL within a year; and that she would give security over the Berrima land owned through a corporate entity, implicitly Compton, which she said was worth at least $500,000 and was unencumbered (Young 29.5.23 [25]). Her evidence is that there was no discussion of interest and no loan agreement was signed (Young 29.5.23 [26]). Ms Young's evidence is that in "follow up discussions", the topic of an accountant, Dr Healy, becoming a director of Compton was discussed but never actioned (Young 29.5.23 [27]). Ms Young's evidence does not support her pleaded claim that the Petersham Loan would be repaid by GMPL and not by her, as distinct from, at the highest, an expectation that the Petersham Loan could be repaid from GMPL's profits and she would not have to do so; and does not establish that there was no interest payable on the loan, or that interest was payable at any agreed rate on the loan. 7. Ms Young's evidence is also that the amounts advanced by Petersham in respect of her husband's legal and personal expenses related to back-to-back loans facilitated with Zetland, the company with which Mr Sutherland is associated, in respect of payments for her husband's legal and personal expenses (Young 29.5.23 [56]). I understand the reference to "back-to back loans" to suggest that Ms Young or her husband had lent the funds to Zetland that Zetland or Mr Sutherland then lent to her. Ms Young does not elaborate on those arrangements or how she or her husband funded them. Her evidence in that respect is no more than a bare assertion and I do not accept it. 8. In his affidavit dated 25 May 2023, Dr Healy's evidence is that he attended a meeting in May 2014 to discuss the need for funds to pay the legal representatives acting for Ms Young's husband in the criminal proceedings in the United Kingdom, and he suggests that an agreement was then reached for £250,000 to be lent from an entity associated with Mr Wheatley to Ms Young to fund her husband's legal fees (Healy 26.5.23 [6]). He sets out his account of the words spoken, to the best of his recollection, of a conversation that occurred nine years ago (Healy 26.5.23 [7]). Dr Healy's evidence is that he does not recall any discussion regarding interest being paid on the loan, the term of the loan or provision of a share transfer for a share in Compton (Healy 26.5.23 [9]). 9. Mr Sutherland's Amended Points of Claim do not make clear whether the Petersham Loan was said to be formed orally or in writing, or by conduct, or by elements of each. In her initial Points of Defence dated 5 January 2023 (at [12]) which Ms Young had filed while acting for herself, she admitted that, in or about May 2014, Petersham loaned her £250,000 and contended that the term of the loan was one year and advanced a defence (now abandoned) that that loan was fully repaid by November 2015. She there admitted (at [13]) that it was a term of the loan that Petersham "could call for security over Compton in the event of default" but contended that Petersham did not call for such security. 10. The Defendants contend (POD [5]) that there existed an oral loan agreement that had terms that: "a. The loan would be repaid by [GMPL] making distributions to [Pyx Financial Group Ltd ("PYX")] (a company controlled by Stephen Wheatley); b. the loan was repayable on demand; c. In the alternative to para b. above, the loan was repayable within a year of the funds having been advanced by [Petersham]; d. Petersham was entitled to call for security for the loan over [Compton] or, in the alternative, was entitled to appoint Shane Healy as a director of [Compton]; e. There was no interest payable on the loan." 1. At the hearing, Mr Sutherland relied on a written document which is annexed to the affidavit dated 2 November 2023 of Mr Spencer ("Petersham Loan Agreement") (Ex J1, 704). That document is not executed by Petersham and is incomplete, omitting the large part of clause 7 which deal with events of default and a significant part of clause 8, which deals with a topic that is not apparent, where the heading of that clause and the introductory parts of the clause are not produced. There are also, oddly, two execution pages to the Petersham Loan Agreement in the form annexed to Mr Spencer's affidavit, both of which show execution by Ms Young but not by Petersham, and there is no witness to Ms Young's signature. By her third affidavit dated 8 November 2023, Ms Young denied signing the Petersham Loan Agreement in the form annexed to Mr Spencer's affidavit (Young 8.11.23 [5]). Ms Young there refers to differences in the signature which appears on that agreement to support her claim that she did not sign it (Young 8.11.23 [6]ff). I give little weight to that matter, where it was apparent from documents to which she was taken in cross-examination that there are significant variations in the form of her signature over time and even within the same document (T84ff). 2. Clause 3 of the Petersham Loan Agreement provided for the basis on which interest was payable by Ms Young to Petersham at a "Higher Rate" specified as 5% per annum or, absent default, at a "Base Rate" calculated by reference to the Bank of England interest rate. Mr Sutherland does not calculate the amount of interest payable by Ms Young over the period for which the Petersham Loan has been on foot, so as to allow a determination of the total amount of the principal and interest that would be due by her under the Petersham Loan. Clause 16 of the Petersham Loan Agreement provides that the agreement is governed by the law of the British Virgin Islands, and no evidence was led as to the law of that jurisdiction. 3. Clause 17 of the Petersham Loan Agreement provides for the provision of security over the loan, and provides that: "The Borrower [Ms Young] confirms that they are the sole beneficial owner of all shares in and control [Compton]. The borrower agrees that in the event of default all shares held in [Compton] will be forfeited to [Petersham]. The borrower further confirms that [Compton] is the owner of a rural property situated at [address], Berrima, NSW Australia. The borrower confirms that the value of this property is between $750,000 and $900,000 Australian Dollars. The also confirms [sic] that asset is owned solely by [Compton] and the property is unencumbered." I pause to note that Ms Young did not raise, in her Points of Defence, any contention that this clause is a penalty. It has not been necessary to determine whether this clause is a penalty, at general law or in equity, if it has the consequence of forfeiture of the secured property irrespective of the nature of any relevant default, and I recognise that the law of the British Virgin Islands in respect of that question (which was not addressed by evidence) may well reflect English law and be inconsistent with Australian law as to the approach to penalties in law and in equity. 1. As I noted above, the first issue in the proceedings is the status of the Petersham Loan Agreement. In his opening submissions, Mr Philips referred to the Petersham Loan but did not address how its terms were to be derived from an incomplete loan agreement which was not, on its face, executed by Petersham as lender. In his closing submissions, Mr Philips submits that the Court should find that Petersham and Ms Young entered into the Petersham Loan Agreement as annexed to Mr Spencer's affidavit on or about 1 May 2014. He submits that terms of that written loan agreement are consistent with the evidence as to what was discussed in the meeting on 1 May 2014. It seems to me that the terms of the written loan agreement, including, for example, the specified rates of interest at the base rate and higher rate travel beyond the evidence of that discussion. Mr Philips submits that it is inherently probable, given the amount of funds advanced, that the terms of the loan were reduced to writing. I do not accept that submission, where the evidence indicates that the parties had substantial business relationships which were not of a particularly formal or transparent character. I cannot assume that the parties would here have documented all their business dealings, or that documented arrangements which might at one point have been considered or proposed were completed rather than later abandoned. I also do not accept Mr Philip's submission that it is inherently improbable that the Petersham Loan was merely oral, as Ms Young claims, for the same reasons. 2. In closing submissions, Mr Philips also relied on cl X(B) of the Loan Agreement between Deal Investments Limited ("DIL") and PYX ("DIL Loan Agreement") (Ex J1, 176) (which I address below) to support the proposition that the Petersham Loan was written rather than oral, but that clause does not address that question. I accept that a later Assignment of Loan dated 18 January 2016 between Petersham and GMM (which I also address below) tends to suggest, in its recitals, that there existed a written loan agreement dated 1 May 2014 between Petersham and GMM, although I also recognise that cl 3.1 of that Assignment of Loan recorded that Petersham made no representation or warranty and assumed no responsibility to GMM for "the legality, validity, effectiveness, adequacy or enforceability of the Loan Agreement". I recognise that, as Mr Philips points out, the solicitor acting for Mr Wheatley and his associated entities expressed the view, in an email dated 12 January 2016 which I address below, that she was not aware of any reason why the Petersham Loan Agreement was not enforceable, in response to Mr Spencer's question as to its enforceability (Ex J1, 699), although the weight to be given to that observation may be qualified by the fact that, on its face, the copy of the Petersham Loan Agreement that she had sent to Mr Spencer was not executed by Petersham and Ms Young's signature to it was not witnessed. 3. In opening submissions, Mr Cominos, with whom Mr Horne appears for the Defendants, pointed to the fact that Mr Sutherland had not pleaded the terms of the Petersham Loan other than the principal sum and had not pleaded any terms relating to any security relating to that loan. Mr Cominos also submitted that there was insufficient admissible evidence that there was any valid or enforceable written loan agreement between Petersham and Ms Young. In closing submissions, Mr Cominos submitted that the Petersham Loan Agreement contemplated execution by both parties, although it permitted execution by counterpart, and pointed to the fact that no counterpart signed by Petersham was in evidence. He submitted that: "The [Petersham] Loan Agreement contains bilateral obligations beyond the point of advancing funds (see clause 4.3 and 1.1 in relation to notice to be provided to borrower of demand for repayment on due date). Clause 15.7 stipulates that "[e]ach party may enter into this Agreement by executing a counterpart." No counterpart signed by the lender, Petersham, is in evidence in the proceedings. While the counterparts clause does not stipulate that the lender must sign the [Petersham] Loan Agreement and simply enables execution of a counterpart, it is clear from that clause that execution by both parties to the agreement was clearly intended. Further, clause 15.2 requires that any 'variation or waiver' of the terms of the Agreement would not be 'binding unless set out in writing, expressed to amend this Agreement and signed by or on behalf of each of the Parties' [Ex J1, 711]. It would give rise to an absurdity [if] the terms of an agreement that was not signed by both parties could only be varied or waived if such variation or waiver was in writing and signed by both parties. Accordingly, it is submitted that the [Petersham Loan Agreement] is not binding on the parties to it as a result of the failure of Petersham to execute the [Petersham] Loan Agreement purportedly signed by [Ms Young] or a counterpart to that document." 1. I recognise that, on the assumption that the law of the British Virgin Islands is the same as Australian law, the Petersham Loan Agreement could not take effect as a deed, in accordance with its terms, where it did not comply with the requirement under s 38(1) of the Conveyancing Act 1919 (NSW) ("Conveyancing Act") that each signature to a deed be attested by a witness who is not party to the deed, since Ms Young's signature was not witnessed. However, a document executed as a deed may take effect as a contractual agreement: see N Seddon, Seddon on Deeds (Federation Press, 2nd ed, 2022) at 149. I also bear in mind that execution of an agreement is one matter to be taken into account in determining whether parties intend to be legally bound by that agreement but that contracts can be binding without a signature: Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168 at [50]; J D Heydon, Heydon on Contract (Thomson Reuters, 2019) at [4.360]. 2. On balance, I am inclined to think that the later references to a written loan agreement in documents to which Petersham was party, including in documents assigning the benefit of that loan agreement, are sufficient to support an inference that the Petersham Loan Agreement had been executed by the parties to it, or at least that Petersham had accepted its obligations under the agreement in that form, although a copy executed by both parties or counterparties executed by each party has not been tendered. I assume, without deciding, that the Petersham Loan Agreement had operative effect, although it is not necessary to determine that question given the conclusions that I reach on other grounds. 3. If I had not proceeded on that assumption, I would have accepted that the Petersham Loan was at least made under an informal loan agreement between the parties, formed orally and possibly by additional conduct, which at least had terms (some of which are admitted by the Defendants) that the amount of the loan was £250,000; the loan was repayable on demand and Petersham was to be secured over Ms Young's share in Compton at the time the loan was made, allowing it access to the Berrima property to secure the loan. I would have held that that the security obligation existed at the time the Petersham Loan was made, and not only at the point of default as Mr Cominos contended, because both Petersham and Ms Young would have understood that a mere promise to provide security after default had occurred would likely not be performed and would not provide any real security for the Petersham Loan. That finding is consistent with the fact that Petersham was given possession of the original share certificate and the incomplete and undated share transfer signed by Ms Young by which she transferred her one ordinary share in Compton to Mr Sutherland for consideration of $1.00 ("Share Transfer"), consistent with giving an equitable mortgage over the share in Compton, so as later to make that share certificate and Share Transfer available to PYX and through it to Mr Sutherland. 4. Mr Cominos also submitted that Ms Young had not signed the Petersham Loan Agreement and made detailed submissions as to the character of her signature, unsupported by expert evidence. It is not necessary to decide that question given the findings that I reach on other grounds, and it is preferable that I do not do so where it implicitly raises an allegation of forgery, and the difficulty in determining that allegation is exacerbated by the absence of a witness to Ms Young's signature, the fact that Mr Wheatley did not give evidence and the lack of expert evidence led by either party as to the authenticity of Ms Young's signature. Mr Sutherland's claim to have acquired rights under the Petersham Loan Agreement by assignment 1. I now turn to the series of dealings by which Mr Sutherland now claims to have acquired rights under the Petersham Loan . By a share purchase agreement dated 12 May 2014, Mr Sutherland sold a share in a Seychelles company, My First Investments Ltd ("MFIL"), to PYX (Ex J1, 169-171). Also on 12 May 2014, Mr Sutherland sent an email to Mr Nigel Rowley of Mackrell indicating it is "now OK for you to release the GBP 250K you are holding since Stephen Wheatley has agreed to a deal with [Ms Young's husband] and will reimburse me directly" (Ex J1, 172). That email suggests that Mr Sutherland was then looking to Mr Wheatley rather than Ms Young for repayment of that amount, if it is the same amount as was to be paid under the Petersham Loan. 2. By an email dated 10 February 2015, likely in anticipation of the transactions to which I refer below, Mr Sutherland requested Dr Healy to confirm that he had control of a company with a similar name to Compton, as the sole director, and that he held share certificates with blank transfer forms and requested copies (Ex J1, 175). By an email dated 12 May 2015 (Ex J1, 193), Dr Healey advised Mr Sutherland that he was the "sole director" of Compton but was "having great difficulty" getting control of Compton. 3. On 16 February 2015, DIL and PYX purportedly entered into the DIL Loan Agreement by which DIL lent PYX USD$2.5 million. The copy of that agreement which was tendered (Ex J1, 176) was not executed by DIL or PYX, but only by Mr Wheatley, and it is not necessary to form any view as to its efficacy, where it is relevant only as background to later transactions involving Compton and Mr Sutherland. The second tranche of the amount to be lent under that agreement was to be disbursed upon the receipt of documentation specified in, inter alia, cl X of the DIL Loan Agreement. That clause referred to "security" and provided, in cl X(B), that: "[PYX] confirms that it has the shares in and control of [Compton]. [PYX] agrees that in the event of default all shares held in [Compton] will be forfeited to [DIL]. [PYX] further confirms that [Compton] is the owner of a rural property situated at [address], Berrima, NSW Australia. [PYX] confirms that the value of this property is between $750,000 and $900,000 Australian Dollars. [PYX] agrees to deposit share certificates and blank transfer forms with [DIL]." That clause is in broadly similar terms to cl 17 of the Petersham Loan Agreement to which I referred above. For completeness, cl XIII to the DIL Loan Agreement provided that PYX authorised DIL to assign its interest in the agreement to a third party. That agreement was governed by the laws of the Hong Kong Special Administrative Region and no evidence was led as to the law of that jurisdiction. 1. In his second affidavit dated 4 April 2023, Mr Sutherland refers to his involvement with two other companies, Zetland Fiduciary Group ("Zetland") and DIL and to a loan of USD$2.5 million made by DIL to PYX (Sutherland 4.4.23 [7], [12]ff). Ms Young's evidence is that she had no knowledge of the DIL Loan Agreement at the time but later became aware that a loan had been made from DIL to fund a liquidity shortfall in GMPL and understood the approximate amount of the loan to be USD$2 million (Young 29.5.23 [21]). Her evidence is also that she had not given a share transfer form for a share in Compton to Dr Healy, Mr Wheatley, PYX or anyone else relating to the DIL Loan Agreement. It is not necessary that Ms Young had knowledge of the DIL Loan Agreement, where that is no more than background to the subsequent settlement between DIL and PYX, under which entities associated with Mr Sutherland claim to have taken the assignment of Petersham's rights under the Petersham Loan, which did not require Ms Young's consent. Ms Young's claim that she had not given the Share Transfer signed by her to any of the specified persons has the difficulty that an email from Mr Wheatley's solicitor, at the time of the settlement, indicates that Mr Sutherland had that document by the time of the DIL Loan Agreement (Ex J1, 715), as outlined below, so as to make it available to DIL and it is plain that Mr Sutherland in fact has the original Share Transfer, which was tendered in the proceedings (Ex P2). 2. In her second affidavit dated 29 May 2023, Ms Young also addressed disputes which appear to have arisen with Mr Wheatley in late 2015, which it is not necessary to address in order to determine these proceedings (Young 29.5.23 [31]ff). By a later email dated 10 December 2015 to Mr Sutherland (Ex J1, 201), Ms Young contended that GMPL had paid PYX roughly £500,000 and that Mr Wheatley had received the "the first 500K GBP which releases me from any liability to him, and therefore means that I control my own asset and am not indebted to him". It seems to me likely that the reference to Ms Young's "own asset" in that email refers, inter alia, to the share in Compton and the Berrima property, although it may also refer to a Spanish property that was then held in a Spanish company controlled by Ms Young. That proposition would reflect the defence initially put by Ms Young that the loan had been repaid, which is no longer pressed. 3. Mr Sutherland next contends (APC [7]), and the Defendants do not admit (POD [7]), that, on or about 11 January 2016, Mr Sutherland entered into a Settlement Deed ("DIL Settlement Deed") between DIL, PYX, Mr Wheatley, Mr Sumner, GMM, Go Markets Group Limited ("GMG"), GMPL, Dr Healy and Petersham (Ex J1, 210). Mr Sutherland contends (APC [9]) and the Defendants partly deny and partly do not admit (POD [9]) that, pursuant to the terms of the DIL Settlement Deed, Petersham agreed to assign to GMM, DIL, Mr Sutherland or his nominee the benefit of the Petersham Loan and the security provided in that agreement to secure repayment of the Petersham Loan, namely the right to forfeit Ms Young's shares in Compton. 4. The Defendants respond (POD [9]), in a somewhat discursive pleading, that: "b. further, or in the alternative, any purported assignment of [the Petersham] Loan … was not effective in assigning any rights in the loan from [Petersham] to [Ms Young] or any rights in respect of that loan; and c. in any event, more than six years has elapsed since the loan was advanced to [Ms Young] or, alternatively, since the loan fell due for repayment and [GMM] is barred from maintaining any action in respect of repayment of the loan or enforcing any security it held in respect of the loan (which is denied) and, therefore, [Mr Sutherland] cannot maintain any action in respect of the repayment of the loan or enforcing any security it held or holds in respect of the loan (noting that [Mr Sutherland] does not claim to have even acquired any rights in the loan or to the alleged security for the loan but to a share in [Compton] itself which [GMM] had no right to assign as at 19 February 2016)." A defence previously raised by Ms Young that the loan had been repaid by this time is not pressed. 1. In his second affidavit dated 4 April 2023, Mr Sutherland refers to a settlement of disputes between Mr Wheatley and himself and their associated companies, by the DIL Settlement Deed (Sutherland 4.4.23 [23]). His evidence is that in late 2015, he attended a meeting with Mr Wheatley in London during which Mr Wheatley told him that a loan made by Petersham to Ms Young had not been repaid (Sutherland 4.4.23 [24]). Mr Sutherland's evidence is also that, in early January 2016, at a meeting at Mackrell's offices, the parties entered the DIL Settlement Deed and cl 1.2(i) of the DIL Settlement Deed required Petersham to assign the benefit of the Petersham Loan and its underlying security to GMM, DIL, Mr Sutherland or his nominee. In response to Mr Wheatley's evidence (in an affidavit that was not read) that Mr Wheatley had attended Mackrell's office to sign the DIL Settlement Deed on 5 January 2016, Mr Sutherland responds that it is possible that the meeting occurred on this date (Sutherland 13.12.22 [22]; Sutherland 4.4.23 [25]ff; Sutherland 13.6.23 [28]ff; Ex J1, 216ff). Mr Sutherland also gave evidence (not in admissible form, which was admitted with a limiting order under s 136 of the Evidence Act 1995 (NSW) as submission), by way of a summary of what occurred in respect to the settlement. It is not apparent to me that this evidence (or, more precisely, submission) has any great significance for the issues that are disputed in the proceedings, which do not appear to involve whether the DIL Settlement Deed was executed, but the underlying matters to which it related and its legal effect. 2. Dr Healy denies signing the DIL Settlement Deed dated 11 January 2016 on that date but acknowledges that he attended a meeting in which a settlement deed was executed on 5 January 2016 (Healy 26.5.23 [27]). He claimed in cross-examination that the version of the DIL Settlement Deed on which Mr Sutherland relies is not the final version of that agreement, which was executed on a later date (T69-70). I prefer Mr Spencer's evidence as to the execution of that agreement to Dr Healy's evidence in that regard. Ms Young's second affidavit also addresses (Young 29.5.23 [37]ff) the DIL Settlement Deed although she was not party to that settlement and does not appear to have attended the relevant meetings. 3. The DIL Settlement Deed in turn referred, in Recitals A and C, to earlier transactions, namely the share sale agreement between PYX and Mr Sutherland in respect of the share in MFIL and the DIL Loan Agreement for USD$2 million between PYX and DIL (although I note that the DIL Loan Agreement tendered at J1, 176 appears to indicate that the DIL Loan Agreement amount was USD$2.5 million) and to disputes which had arisen in respect of both of those arrangements. Clause 1.2(i) of the DIL Settlement Deed provided that: "On the Closing Date, Petersham will assign to [GMM], DIL, Mr Sutherland or his nominee the benefit of [the Petersham Loan Agreement] and the security underlying that loan, namely the right to forfeit [Ms Young's] shares in [Compton] which are currently held by DIL as security under the DIL Loan Agreement…" That clause makes clear that, as at that date, Ms Young's share in Compton was still held as security under the Petersham Loan and Petersham had not then obtained absolute ownership of the share, by any foreclosure action or otherwise. 1. Correspondence also took place between Mr Spencer, who was acting as a solicitor for Mr Sutherland and his associated companies and Ms Higgs, a solicitor acting for Mr Wheatley and his associated companies, in respect of the execution of the DIL Settlement Deed and associated documents. By an email dated 13 January 2016 (Ex J1, 716) from Mr Spencer to Ms Higgs, he noted that the Petersham Loan Agreement was governed by the law of the British Virgin Islands and that his firm was not in a position to pass any comment on its enforceability. By her reply dated 13 January 2016 (Ex J1, 715), Ms Higgs referred to the "recent signing", suggesting that at least some of the documents dated 18 January 2016, noted below, were executed prior to that date. Ms Higgs also observes that: "As regards the Loan Agreement between Petersham and [Ms Young], Mr Wheatley has reminded me that the security for that loan (Ms Youngs' [sic] interest in [Compton] and the underlying property interest – see clause 17 of the Loan Agreement) was passed to [DIL] as part of the security for the loan to [PYX]. Zetland therefore already holds a signed stock transfer form in relation to those shares." That observation likely explains how Mr Sutherland, who was associated with DIL, had by then obtained the Share Transfer and the share certificate in Compton, as noted above. 1. Mr Sutherland then claims (APC [10]) that, on or about 18 January 2016, Petersham and GMM executed a deed, or in the alternative, entered into an agreement by which Petersham agreed to assign to GMM all of its legal and beneficial interests in the Petersham Loan ("Assignment of Loan"). He claims (APC [11]) that, pursuant to the terms of the Assignment of Loan, Petersham agreed to assign to GMM all of Petersham's rights, title, interest and benefits in and to the Petersham Loan with effect from 18 January 2016 (cl 2.1) and GMM agreed to accept the assignment (cl 2.2). The Defendants respond (POD [10]-[11]) by repeating their defence in POD [9] and denying the paragraph. 2. The Assignment of Loan dated 18 January 2016 (Ex J1, 225) recorded in Recitals A – C that: "[Petersham] is the Assignor under a GBP£250,000 Loan Agreement with [Ms Young] dated 1 May 2014 ("Loan Agreement"). [Petersham] has advanced monies to [Ms Young] under the Loan Agreement in the amount of the Debt. … [Petersham] has agreed to assign all its legal and beneficial right, title and interest in the Debt and the Loan Agreement to [GMM] on the terms and conditions set out in this Agreement." The term "Debt" was there defined as any present or future liability (actual or contingent) payable or owing by Ms Young to Petersham or in connection with the Petersham Loan. Clause 2.1 of the Assignment of Loan provided for Petersham to assign to GMM all of its right, title, interest and benefits in and to the Debt and the Petersham Loan with effect from the Assignment Date, defined as the date of the Assignment of Loan (being 18 January 2016) or any later date agreed in writing by the parties to the Assignment of Loan. The Assignment of Loan did not purport to assign the share in Compton to GMM, where Petersham was not then the registered owner of that share. Clause 4.1 of the Assignment of Loan provided for Petersham and GMM to give Ms Young notice of assignment in the form set out in a schedule within 7 days of the date of the Assignment of Loan. 1. Mr Sutherland's affidavit evidence refers to the entry into the Assignment of Loan by which, he says, Petersham assigned its rights under the Petersham Loan to GMM (Sutherland 4.4.23 [28]ff). His evidence is that he signed a schedule to the Assignment of Loan which was a notice of assignment (Sutherland 4.4.23 [31]), which I also address below. Mr Sutherland there corrects a statement made in his first affidavit that Ms Young provided him with documentation in relation to the Share Transfer and he instead says that Mr Wheatley handed him the Share Transfer and share certificate for Compton and that he then observed that the Share Transfer was signed by Ms Young and witnessed by a solicitor, the name of the transferee was left blank and the transfer was not dated, and that he gave Mr Wheatley £1 in cash (Sutherland 4.4.23 [32]ff). 2. Mr Sutherland contends (APC [12]) that, on or about 18 January 2016, Petersham and GMM sent a written notice to Ms Young of the assignment of the Petersham Loan from Petersham to GMM. The Notice of Assignment dated 18 January 2016 (Ex J1, 232) recorded that Petersham had assigned GMM all its rights, title, interest and benefits in and to the Petersham Loan and the "Debt" and requested Ms Young to acknowledge that notice by returning an attached acknowledgement to Petersham and GMM. By an email dated also 18 January 2016 which stated "you need to sign the attached" (Ex J1, 235), Mr Sutherland sent Ms Young a copy of the Assignment of Loan, attaching the notice of assignment and form of acknowledgement of notice of assignment, possibly in an unexecuted form. 3. There is a dispute as to whether Ms Young had returned the acknowledgement of the assignment in a form that appears to bear her signature (Ex J1, 233). In her initial Points of Defence at [23], filed when she was self-represented, Ms Young admitted notice of the assignment was given to her, although not on 18 January 2016 but at a later date, and, in her second affidavit (Young 29.5.23 [40]), Ms Young refers to that admission. No application was made to withdraw that admission although the Defendants' Points of Defence to the Amended Points of Claim proceed (POD [12]) on a different basis, by repeating their defence in POD [9] and denying that any valid or effective notice of the assignment was sent to Ms Young. I am satisfied, given Ms Young's initial admission and the correspondence that followed, that GMM, Mr Sutherland or both had given notice of the assignment to Ms Young. 4. Mr Sutherland also contends (APC [12]) that Ms Young signed a waiver letter by which, in consideration of the assignment of the Petersham Loan by Petersham to Mr Sutherland, she released Mr Wheatley and PYX from all existing or purported claims she may have had against them. The Defendants repeat (POD [12]) their defence in POD [9] and deny that Ms Young signed the waiver letter. 5. Mr Sutherland's evidence is that, on the evening of 18 January 2016, he sent an email to Ms Young (Sutherland 4.4.23 [35], Ex J1, 246) and he says that he received a waiver signed by Ms Young on about 18 January 2016 (Sutherland 4.4.23 [36]). Ms Young's evidence is that she can find no record of having sent a signed form of the acknowledgement of notice of assignment to Mr Sutherland, and does not recall signing that document. Little turns upon that, where she also accepted in cross-examination that she had received the email containing notice of the assignment as well as the acknowledgement document (T102-103). The waiver letter dated 18 January 2016, which is on its face also signed by Ms Young (Ex J1, 247), refers to the assignment of the Petersham Loan to Mr Sutherland or his nominee. Ms Young's evidence is that she does not recall signing the waiver letter and can find no record of doing so (Young 29.5.23 [41]). 6. Mr Sutherland claims (APC [13]-[14]) and the Defendants deny (POD [13]-[14]) that, on or about 18 January 2016, Mr Wheatley provided Mr Sutherland with the Share Transfer and the original share certificate; and, on or around 18 January 2016, Mr Sutherland paid to Mr Wheatley the consideration for the Share Transfer. Mr Sutherland's evidence is that, on around 18 January 2016, he attended a further meeting at Mackrell's office and that Mr Wheatley then handed him the Share Transfer and share certificate; Mr Sutherland observed that the Share Transfer was signed by Ms Young and witnessed by her solicitor and that sections were left blank; and Mr Sutherland rolled a £1 coin to Mr Wheatley who picked it up and put it in his pocket (Sutherland 4.4.23 [33]; Sutherland 13.6.23 [33]). An affidavit of Mr Wheatley denying the events of 18 January as set out in Mr Sutherland's evidence was not read by the Defendants and I infer that his evidence would not have assisted them. Ms Young's solicitor, whose firm still acts for her, did not lead evidence to deny the authenticity of his signature witnessing the Share Transfer, and I infer that his evidence would not have assisted the Defendants, and Ms Young did not explain why she signed the Share Transfer in blank, if not for the common purpose of creating an equitable mortgage over the share. However, these events plainly did not then have the effect that Mr Sutherland acquired ownership of the share in Compton by Petersham transferring that share to him, because Petersham was not then the legal owner of the share so as to transfer it to Mr Sutherland; Ms Young then still had an equity of redemption in respect of the loan and the share; and the transaction as at 18 January was structured as an assignment of the loan to GMM and not yet to Mr Sutherland. 7. Mr Sutherland also contends (APC [14A]) that, on around 19 January 2016, GMM assigned the one ordinary share in Compton to Mr Sutherland, relying on a Deed of Assignment dated 19 January 2016 between GMM and Mr Sutherland (Ex J1, 248). The Defendants again rely (POD [14A]) on POD [9], deny the paragraph and also respond that: "there was no valid or effective assignment of a share in [Compton] to [Mr Sutherland] as: a. [not pressed]; b. further, or in the alternative, no right had arisen pursuant to the terms of loan or otherwise that permitted [GMM] to complete any transfer of a share in [Compton] to [GMM]; c. further, or in the alternative, [GMM] was not the holder of any share in [Compton] on 19 February 2016 or at any other time; d. further, or in the alternative, the purported assignment document was not legally effective in transferring or assignment a share [sic] in [Compton] to [Mr Sutherland]." 1. Mr Sutherland's evidence is that, on 19 January 2016, he executed a Deed of Assignment between GMM and himself and his daughter executed that deed on behalf of GMM (Sutherland 4.4.23 [37]). He offers no explanation as to why, shortly after the relevant rights were assigned by Petersham to GMM, they were then assigned by GMM to Mr Sutherland personally. That Deed of Assignment (Ex J1, 248) recited that: "A. [GMM] shall be dissolved and its affairs wound up. B. [GMM] holds one share ("Share") in an Australian company [Compton] as security for a loan. C. [GMM] has agreed to assign its Share to [Mr Sutherland] and [Mr Sutherland] has agreed to accept such assignment. Upon the assignment of the Share, [GMM] will hold 100% sign of the Share." 1. The second recital that GMM then held a share in Compton was plainly not correct, at least so far as legal title to the share was concerned, where GMM had not been entered on the share register as owner of the share. That recital also indicates that any interest in the share then held by GMM was held as security for a loan, rather than as absolute owner. The assignment clause (cl 1) was somewhat wider than the recitals, extending not only to GMM's rights, interest, title, claims and benefits of and in the share in Compton but also to the related loan. 2. Mr Sutherland's daughter consented to act as a director of Compton on 21 January 2016 (Ex J1, 263), although Mr Sutherland was not then the registered shareholder in Compton so as to appoint her as a director of Compton. 3. Mr Sutherland claims (APC [15]) and Ms Young (but not Compton) denies (POD [15]) that, on or about 23 January 2016, Ms Young sent Petersham and GMM the written acknowledgement of notice of the assignment of the Petersham Loan from Petersham to GMM. 4. Mr Sutherland then contends (APC [15A]) and Ms Young denies (POD [15A]) that, on around 8 February 2016, GMM notified Ms Young in writing of the assignment of the Petersham Loan and the security in Compton (being the one ordinary share in Compton) from GMM to Mr Sutherland. In particularising the notification to Ms Young of assignment of the Petersham Loan to Mr Sutherland, Mr Sutherland relies on an unsigned letter dated 8 February 2016 (Ex J1, 264) from GMM to Ms Young stating that GMM was going to be deregistered and the security in Compton had been assigned to Mr Sutherland, effective from 19 January 2016. Ms Young denies receiving that letter (Young 29.5.23 [45]). 5. Mr Sutherland also contends (APC [15B]) and the Defendants deny (POD [15B]) that, in around February 2016, Mr Sutherland completed the Share Transfer by inserting his name on the Share Transfer and dated the document 20 January 2016. Mr Sutherland's evidence is that he inserted his name on the Share Transfer in February 2016 and he inserted the date 20 January 2016, because he incorrectly recalled having been provided the Share Transfer by Mr Wheatley on that date (Sutherland 4.4.23 [41]). He does not explain the basis on which Petersham then had any right to transfer the share in Compton to GMM or GMM had any right to transfer that share to Mr Sutherland, unless to take a legal mortgage of the share, and he does not say the transfer took place for that purpose. He identifies no default for the purposes of the Petersham Loan at that point and no step which had been taken to extinguish Ms Young's equity of redemption in respect of the security over the share in Compton. There is no suggestion that Petersham, GMM or he had by then brought foreclosure proceedings in respect of the Petersham Loan, so as to extinguish that equity of redemption or permit the transfer of the share in Compton to Mr Sutherland free of that equity of redemption. 6. There is also a dispute as to whether these transactions gave rise to an effective assignment of Petersham's rights under the Petersham Loan (again assuming it had operative effect) to Mr Sutherland. Mr Philips referred to the principles applicable to an assignment of Petersham's rights under the Petersham Loan under s 12 of the Conveyancing Act or in equity and there appears to be no dispute as to those principles. In opening submissions, Mr Cominos responded that the assignments on which Mr Sutherland relied were limited to rights arising from a written loan agreement and did not extend to rights arising under any oral loan agreement between Petersham and Ms Young. That is a somewhat technical point, and I would not have accepted it had it been necessary to determine the status of rights arising under an oral loan agreement. 7. The more substantial issue in dispute appears ultimately to be whether notice of the assignment was given to Ms Young as required by s 12 of the Conveyancing Act 1919 (NSW) which provides that: "Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor …" 1. I have reviewed the events relied on to establish the relevant assignments above. On balance, despite the difficulties that again arise from the tender of documents that are not executed by all the parties to them, I would find that the assignments by each of Petersham and GMM likely complied with the requirement in s 12 of the Conveyancing Act that the assignment be executed in writing under the hand of the assignor. Section 12 of the Conveyancing Act does not require that notice in writing be given to the debtor by the assignor, but only that that the assignment be in writing under the hand of the assignor and that such notice be given by someone: Bennell v Netlink Australia Pty Ltd (2002) 42 ACSR 680; [2002] NSWSC 822 at [41]; Re Lorie Najjar & Sons Pty Ltd (in liq) (2013) 94 ACSR 561; [2013] NSWSC 798 at [86]. There now appears to be no real dispute that Mr Sutherland had given notice to Ms Young of the assignment by Petersham to GMM, irrespective of the dispute as to whether she had signed and returned the document acknowledging the first of those assignments. 2. On balance, I would also find that GMM had given notice of the later assignment by GMM to Mr Sutherland, where Ms Young subsequently dealt with Mr Sutherland on the basis that the debt owed under the Petersham Loan was owed to him. Again, with hesitation arising from the tender of unsigned documents, I would therefore find that the assignments of Petersham's rights under the Petersham Loan (again assuming it had operative effect) by Petersham to GMM and by GMM to Mr Sutherland were effective under s 12 of the Conveyancing Act. It is therefore not necessary to address the question of whether the assignments could take effect in equity, if they did not take effect under s 12 of the Conveyancing Act. I note, for completeness, that Mr Sutherland did not seek to explain the basis on which he could bring these proceedings or seek relief under s 175 of the Act in his own name, and without joining Petersham and GMM as defendants, if he was only an equitable assignee of Petersham's rights under the Petersham Loan. Subsequent events and the question of default under the Petersham Loan 1. Mr Sutherland's evidence is that, on 11 April 2016, he and Ms Young had a telephone conversation in which Mr Sutherland told Ms Young that he had been assigned the debt under the Petersham Loan and held the one share in Compton; Ms Young said "yes" and asked Mr Sutherland to pay Compton's fees and for a personal loan; and Mr Sutherland agreed to pay the fees and provide a loan (Sutherland 4.4.23 [44]). Mr Sutherland was not cross-examined as to his evidence of that conversation although I recognise that his recollection of it may have weakened in the seven years since it occurred. Ms Young denies this conversation took place (Young 29.5.23 [52]). There is some documentary support for Mr Sutherland's account since, on 11 April 2016, Ms Young emailed him requesting payment of funds to satisfy Compton's renewal fees, Council fees and legal costs relating to the management of the property owned by Compton (Sutherland 4.4.23 [45]ff; Ex J1, 277-280). However, Mr Sutherland's claim in that conversation that he then held the share in Compton was plainly not correct, since neither he nor previous lenders had then brought a foreclosure action to extinguish Ms Young's equity of redemption in respect of the security over that share; no step had been taken to transfer that share to him in accordance with the requirements for such a transfer under s 1071B of the Act; and Ms Young remained the owner of that share as recorded in Compton's share register. 2. On 29 September 2016, Ms Young sent Mr Sutherland a letter requesting that he defer repayment of various loans until 2021 and referring to the loans as being secured by various properties including "the farm" (Sutherland 4.4.23 [48]; Ex J1, 283). Ms Young there confirmed that Mr Sutherland had facilitated payments and made loans to her for the purpose of paying legal fees relating to her husband's trial in 2014 and her husband's personal family obligations, including payments to specified persons, and stated that: "The loans are due to be repaid when and as I can repay them and they are secured by [a Spanish property] and the farm." 1. Ms Young also there referred to a claim brought by her husband against his English solicitors and indicated that she did not have funds to give to Mr Sutherland but proposed a repayment plan after "we settle the outstanding issues" (Ex J1, 283). In cross-examination, Ms Young acknowledged that the reference to "the farm" may be to the Berrima property, which is rural land (T110). She contended that the letter was drafted by her solicitors (T110), but it is not apparent why that would reduce its weight, where it is signed by her. She also contended that it referred to the "back-to-back" loan arrangements that she contended existed, implicitly that she or her husband had lent the funds to Zetland that Zetland or Mr Sutherland then lent to her (T110-111). There is no evidence that sufficiently establishes the existence of those back-to-back arrangements, beyond Ms Young's assertion, unsupported by any contemporaneous document. I accept that this letter suggests that Ms Young then knew the relevant debt was owed to Mr Sutherland, but nothing turns on this given the findings which I reach below. 2. It is common ground (APC [16]-[19]; POD [16]-[19]) that Compton was deregistered on around 13 November 2016. On 14 November 2016, Ms Young emailed Mr Sutherland requesting various funds (Ex J1, 285-286) and Mr Sutherland responded, on 15 November 2016, indicating that he was willing to advance further funds by way of a loan but it would be dependent, inter alia, on Compton being sold and her providing necessary assistance for that to occur (Ex J1, 284). 3. By an email dated 5 January 2017 (Ex J1, 289), Mr Sutherland referred to Zetland's appointment of lawyers in Spain to sell a Spanish property owned by a company associated with Ms Young; indicated that Zetland would not accept instructions from Ms Young until she paid outstanding fees and repaid loans in full with interest and advised that: "On realisation of the property any surplus (which is unlikely) after loan principal, interest, outstanding fees and legal costs will be returned to you The same comments also apply to [Compton]." That email suggests that Mr Sutherland may then have recognised an obligation to account to Ms Young for any surplus on the sale of the share in Compton or the Berrima property, while denying that such a surplus would exist, but that does not assist him given the findings that I reach below. Mr Sutherland could not then take steps to deal with Compton's assets without reinstating it, which he did not then apply to do. 1. Compton was reinstated on around 3 November 2021 (APC [17]; POD [17]); on around 12 April 2022, Compton granted (or purported to grant) a mortgage over certain land to Keystone Capital Limited (APC [18]; POD [18]) and Mr Sutherland was not informed of and did not consent to the grant of that mortgage (APC [19]; POD [19]) (Ex J1, 319-372; 373-416). Mr Sutherland also pleads (APC [20]ff) subsequent steps which he claims he took to seek correction of Compton's share register. A defence of laches or delay (POD [32]) is not pressed by Ms Young. 2. In her second affidavit dated 29 May 2023, Ms Young denies that she received a demand for repayment of the Petersham Loan from GMM or Mr Sutherland (Young 29.5.23 [44]) and denies that Mr Sutherland paid personal expenses for her or in relation to property or that he sought further information from her as to Compton until October 2022 (Young 29.5.23 [53]). By her letter dated 11 November 2022 (Ex J1, 439), Ms Young comprehensively denied Mr Sutherland's claim in respect of the share in Compton, observing, inter alia, that: "You are not, and have never been, a shareholder in Compton. You have no interest in the company in any capacity. No entitlement to an interest in the company. Nor was there ever any agreement between us that you would have an interest in the company, whether as my nominee, fiduciary or otherwise, as you well know. The share transfer document you enclosed is invalid. That document is not genuine, as no share transfer was ever made for the purpose of transferring any interest in Compton to you or to anyone else; nor were you authorised to complete the handwritten details inserted in the same, which is written in the same pen and penmanship as the envelope addressed to me enclosing your letter. Should you interfere with ASIC or any such regulatory authorities with any action, I will oppose it as you have no claims against me, rather I do against you for breach of your fiduciary duties. You only ever acted as my fiduciary and nominee for me, and as such you have failed to account for your dealings with my assets." 1. I should, in this context, also address Mr Cominos' submissions as to whether default under the Petersham Loan occurred and whether Mr Sutherland has demanded repayment of the loan. Mr Cominos submits that Mr Sutherland must prove that a default had occurred for the purpose of cl 17 of the Petersham Loan Agreement and that the term "default" is not defined in that agreement, although he recognises that Mr Sutherland likely proceeds on the basis that at least a failure to repay the principal of the loan amounts to a default. Mr Cominos submits that cl 4.3 of the Petersham Loan Agreement contemplates that the lender must have made a written demand for payment and notified the borrower of the account into which the payments are made, before the borrower is required to make payments of principal and interest under the loan. Mr Cominos also submits that there is an ambiguity between cll 4.1 and 4.3 of the Petersham Loan Agreement which must be resolved by reference to ordinary principles of contractual construction. He submits that there has been no default under the Petersham Loan Agreement; that Mr Sutherland has not made a written demand for payment; and that Mr Sutherland had no right to insist on a foreclosure of Ms Young's shares in Compton. 2. On balance, I am satisfied that a default has occurred under the Petersham Loan Agreement, on the assumption that I made above that it governs the relationship between the parties, and that Mr Sutherland has demanded repayment of the loan. I accept Mr Cominos' submission that Mr Sutherland would need to have made a demand for repayment under the Petersham Loan Agreement, where the loan appears to have been left on foot beyond the scheduled "Repayment Date" of 30 April 2015, referred to in cl 4.1 of the Petersham Loan Agreement. That conclusion is reinforced, at least after that date, by the definition of "Due Date" in that agreement as "the date the Lender demands the repayment of the Loan in writing". I recognise that, as Mr Cominos points out, cl 4.1 of the Petersham Loan Agreement is subject to cl 6.3, but that clause takes matters no further where it appears only to be an acceleration provision. I do not accept Mr Cominos' further submission that cl 4.3 of the Petersham Loan Agreement also requires that Mr Sutherland make a demand for payment, where that clause seems to me to be directed to the mechanical step of the lender advising the borrower of the account to which repayment should be made. 3. On balance, I am inclined to think that Mr Sutherland's email dated 5 January 2017 to Ms Young (Ex J1, 289) amounted to a sufficient demand for repayment of the Petersham Loan, where Mr Cominos accepted that it had that character in respect of a loan secured against a Spanish property, and the email makes the "same comments" in respect of Compton (T145). Issues as to foreclosure and Mr Sutherland's claim for an order under s 175 of the Act 1. The primary relief sought by Mr Sutherland is an order rectifying Compton's share register to show him as registered owner of the share in Compton now held by Ms Young. Mr Sutherland pleads (APC [25]-[28]) that he is the sole legal and beneficial owner of the one and only share in Compton; that Compton's directors (including Ms Young) have not acted carefully, diligently or reasonably or in good faith in the best interests of the corporation and for a proper purpose and have thereby breached their obligations pursuant to ss 169, 180(1) and 181 of the Act by failing to register the Share Transfer and failing to issue a share certificate in Compton to Mr Sutherland; that Mr Sutherland's sole beneficial ownership of the one share in Compton has been omitted from Compton's register of members; and that the Court should make an order under s 175 of the Act that Compton and, or in the alternative, Ms Young, correct Compton's member's register so as to record Mr Sutherland as the legal and beneficial owner of the one share issued in Compton and notify the Australian Securities & Investments Commission ("ASIC") accordingly. 2. In his opening submissions, Mr Philips referred to the principles which apply to the rectification of a share register under s 175 of the Act, but did not address the basis on which Mr Sutherland, as Petersham's assignee, had obtained a right to legal and absolute ownership of the share in Compton without Petersham, GMM or him taking any foreclosure action so as to extinguish Ms Young's equity of redemption. He also addressed a defence of delay in laches which was then put by Ms Young but is no longer pressed by her. In closing submissions and for the first time, Mr Philips also acknowledged the steps which were necessary in a foreclosure application, referred to observations of Campbell J in United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2002] NSWSC 1178 at [134], and submitted that an equitable mortgage of shares (by deposit of the share certificate with the mortgagee) entitles the equitable mortgagee to obtain an absolute title to the share, unfettered by any equity of redemption, by going through the procedures appropriate to foreclosure. Mr Philips also acknowledged that, ordinarily, the procedure for foreclosure involves the court making an order nisi which gives the mortgagor further time to repay the mortgage debt, and if such payment is not made, an order absolute is made. 3. I first address the issue as to foreclosure of any security interest held by Mr Sutherland in the share in Compton before turning to the scope of s 175 of the Act. The principles applicable to a mortgage of shares are fully summarised in E L J Tyler et al, Fisher & Lightwood's Law of Mortgage, (LexisNexis, 3rd ed, 2014) at 256ff. The authors there refer (at 256-257) to s 1071A of the Act, dealing with the nature of a share, and note that s 1071A makes clear that the ordinary principles of law and equity apply to shares as personal property and that they may be dealt with accordingly. They note (at 257-258) that a mortgage of shares is commonly created by a deposit of the share certificate with the mortgagee accompanied by a memorandum of deposit and (at 258) that that "effects a true equitable mortgage entitling the mortgagee to foreclosure". The authors also refer (at 566) to the scope of a foreclosure order and observe that foreclosure is available upon non-payment of a debt when due or on earlier default and where that occurs: "the mortgagee may commence an action asking that the equity of redemption of the mortgagor and all persons claiming through him, including subsequent encumbrancers may be extinguished so as to vest the mortgaged property absolutely in the mortgagee. Such an action is called a foreclosure action, and the relief sought, foreclosure. If the relief is granted, the mortgagee is said to be foreclosed." They note (at 566) that the effect of foreclosure is that: "The conveyance or assignment to the mortgagee of the legal estate in property becomes absolute, and freed from the right of the mortgagor, upon repayment, to have the property reconveyed or reassigned to him." They also note (at 567) that the right to seek an order for foreclosure extends to every security in the nature of a "mortgage" and to equitable as well as legal mortgages. 1. Mr Sutherland did not here obtain a legal mortgage over the share in Compton, where he was not recorded on the share register as its owner and, even if he had done so, he could only have foreclosed after default by a court action for foreclosure: E Sykes & S Walker, The Law of Securities (Law Book Company, 5th ed, 1993) ("Sykes"), 788-789; G Bigmore & M Galvin, 'Foreclosure' (1992) 66 Law Institute Journal 56, 56; A Finch, 'Security over Shares' (1995) 13 Company and Securities Law Journal 292 ("Finch") at 297. It appears that, taking Mr Sutherland's case at its highest, the security rights which were assigned to Mr Sutherland were in the nature of an equitable mortgage over the shares in Compton in favour of Mr Sutherland, arising from the agreement to give that security or the provision of the share certificate and the Share Transfer to Petersham and then to Mr Sutherland: Sykes at 789. Ms Young would also have an equity of redemption in respect of the mortgage, and a right to have the security discharged on repayment of, broadly, the Petersham Loan, as now assigned to Mr Sutherland. Mr Sutherland would not be entitled to take ownership of the share in Compton while that equity of redemption subsists and, in order to discharge it, he would have needed to bring a foreclosure action in the same manner as in respect of a legal mortgage of the share: Harrold v Plenty [1901] 2 Ch 314; Sykes at 769, 790; Finch at 302. 2. Mr Philips also relied on Adelaide Building Co Pty Ltd (in liq) v ABC Investments Pty Ltd (1990) 8 ACLC 445 ("Adelaide Building") where the plaintiff had sought an order for rectification of the register to record it as the holder of the secured shares, without expressly seeking an order for foreclosure. King CJ there observed (at 450) that the Master made a foreclosure order to transfer the legal title to the shares by ordering rectification of the register, rather than directing the relevant defendant to execute a transfer; and also noted (at 450) that there "may have been good reasons" for that course and held that the order should be upheld in the particular circumstances. Mr Philips submits that that decision is authority that, although the mortgagee there did not bring a foreclosure application, the Court may make a declaration that the mortgagee holds a mortgage security over shares which have been deposited with it and may order that the company's share register be rectified by replacing the name of the mortgagor with that of the mortgagee, without making an order nisi or first allowing an opportunity for repayment by the mortgagor. I do not accept that submission. Although the Court of Appeal did not there overturn the decision of a Master who had taken that approach, it seems to me it only did so because counsel for the mortgagor expressly took no point that the appropriate procedure for foreclosure had not been followed, as King CJ noted (at 448) and Legoe J also noted (at 455). I do not understand that decision to be authority that the Court could or would make a final order in the nature of foreclosure, without the mortgagee having first satisfied the Court that that was a proper exercise of the Court's judicial discretion, by reference, inter alia, to the amount of the debt owing to the mortgagee and the value of the property that was secured by the mortgage, to expose whether a foreclosure would allow a windfall gain to the mortgagee by the appropriation of any surplus value in the property. 3. In Adelaide Building at 448, King CJ (with whom Cox J agreed) distinguished between the implied power of sale in respect of an equitable mortgage of shares and the remedy of foreclosure and observed that: "Foreclosure is effected by order of the Court. Its effect is to extinguish the mortgagor's equity of redemption and to vest the entire beneficial ownership in the mortgagee. Any subsequent sale by the mortgagee will ordinarily be made in his capacity as beneficial owner, and not as mortgagee exercising the power of sale under the mortgage, Mortgages and Securities 3rd ed Francis and Thomas at 155." 1. The Chief Justice went on to describe (at 448-449) the effect of foreclosure, as follows: "Foreclosure operates to extinguish the mortgagor's equity of redemption. In the case of a legal mortgage it vests the mortgagor's estate and interest in the mortgaged property, both legal and equitable, in the mortgagee. In the case of an equitable mortgage the order of the court can vest the equitable interest in the mortgagee. More is needed, however, to vest the legal estate in the mortgagee. The judgment of foreclosure on an equitable mortgage directs an assignment or conveyance of the legal estate in order to complete the mortgagee's title, Marshall v Shrewsbury 1875 10 Ch App 250; Mortgages and Securities, 3rd ed Francis and Thomas at 154. The legal title to shares depends upon registration on the company's share register, Re Copal Varnish Co Ltd 1916-17 All ER 914. Until such registration takes place the mortgagee of shares in whose favour an order of foreclosure has been made remains equitable owner only. The legal title remains in the mortgagor." 1. His Honour also noted (at 449) that any transfer of the shares, to give effect to a foreclosure, was subject to any restrictions on such a transfer contained in a company's articles of association, a matter which has not been addressed in evidence here, and observed that: "The mortgagee can receive no more as security than the mortgagor has to transfer. In the present case the property transferred by way of security were the shares, subject to the restrictions on transferability which are an incident of those shares. The restrictions on transferability are as binding on the mortgagee as they are on the mortgagor … [f]oreclosure of an equitable mortgage extinguishes the equity of redemption and vests the total equitable interest in the mortgagee but it cannot of itself affect the legal estate. The vesting of the legal estate is achieved by directing a transfer of it to the mortgagee. In the case of shares there must be a transfer of the shares by the mortgagor to the mortgagee and the same must be registered, s 183 Companies Code [which corresponds to s 1071A of the Act]. That involves compliance with the provisions of the Articles as to transfer. The power to order rectification under [Companies Code] s 259(1) [which corresponds to s 175 of the Act] arises in such a case only if there is an error or defect in the register because of a failure in the mechanism for transfer mandated by [Companies Code] s 183 [which corresponds to s 1071A of the Act]. It cannot be used as a device to circumvent the requirements of that section or of the articles applicable to transfer of shares. It follows that the registration of the subject shares in the name of the respondent can only be achieved by compliance with the articles." 1. Legoe J (at 459-460) characterised a mortgage arising from a deposit of share certificates as an equitable mortgage and described the effect of a foreclosure proceeding as follows: "Foreclosure means no more than … that the conveyance or assignment to the mortgagee of the legal estate in property becomes absolute, and freed from the right of the mortgagor, upon repayment, to have the property reconveyed to him. … Where the mortgage is equitable, a judgment on a foreclosure application is prefaced by a declaration of charge, and it directs a conveyance or assignment of the legal estate in order to complete the mortgagee's title … In my judgment the authorities have clearly established that the remedy of the equitable mortgagee holding shares as collateral security pursuant to a document executed by the mortgagor, is to foreclose." Legoe J, in the minority, differed to the view expressed by King CJ in holding that a Court order to foreclose was not a transfer by a member that was restricted by the company's articles of association. 1. In Elders Forestry Ltd v Bosi Security Services Ltd (2010) 242 FLR 360; 80 ACSR 122; [2010] SASC 223 at [147], Kourakis J (as the Chief Justice of the Supreme Court of South Australia then was) followed Adelaide Building and distinguished between an equitable mortgagee's power of sale and a foreclosure action, observing that: "An equitable mortgagee of shares has an implied power of sale on default. The exercise of such a power does not involve the vesting of the shares in the mortgagee prior to sale. A mortgagee must, in exercising the power of sale, comply with the procedures prescribed by the company's constitution. An equitable mortgagee is also entitled to foreclosure which is effected by order of the court. The effect is to extinguish the mortgagor's equity of redemption and to vest the entire beneficial ownership in the mortgagee. Any subsequent sale by the mortgagee will be in his capacity as a beneficial owner. Foreclosure operates to vest only the equitable interest. The legal title to shares depends upon registration on the company's share register. The entitlement of the mortgagee to registration and legal title is subject to restrictions on transferability in the constitution of the company." 1. In closing submissions, Mr Philips attempted to fill the evidentiary gap as to the value of the Berrima property, as a step in the valuation of the share in Compton owned by Ms Young. He pointed to Ms Young's affidavit evidence that the land owned by Compton was subject to a registered mortgage in favour of a third party, which secures an outstanding debt of $1,750,000 (Young 3.2.23 [32]) and to a business purposes declaration in that loan agreement (Ex J1, 416) which was consistent with that reference to the amount lent, and sought to draw an inference that the value of land is likely to exceed the amount lent under that loan agreement (T147). He also pointed to an attempt made by Ms Young to sell the land, with a sale guide of $3 million (T147), although an incomplete sale of a property says little as to its value: Mount Gilead Pty Ltd v Macarthur-Stanham (as executor of Estate of late Lee Macarthur-Onslow) [2023] NSWCA 37 at [107]-[110]. I also bear in mind that the value of the share in Compton may or may not fully reflect the value of the land it owns, where the position in that respect is further complicated by the existence of a registered mortgage in favour of the third party lender noted above and the complexities of valuation of shares in proprietary companies which were not addressed by evidence or submissions. 2. Mr Philips also submitted that: "Mr Sutherland therefore has a right of foreclosure because he has been assigned the interest of an equitable mortgagee, and in any event, is an equitable mortgagee in his own right, as the recipient of the share in Compton (and a signed share transfer) as security for an (unpaid) loan. He has taken the steps necessary to undertake a foreclosure in that he informed Ms Young that the loan had been assigned to him and that he held the security in Compton, afforded Ms Young an opportunity to repay the debt, demanded that the register of Compton be rectified (in circumstances where he had been the sole shareholder of Compton since 2016) and, by bringing these proceedings (seeking an or rectifying the register), has sought an order (in effect) for foreclosure. The present case bears some analogy to the circumstances pertaining to the Adelaide Building case. In that case, the subject company admitted that its principal was indebted to the mortgagee, held the subject shares and that those shares had been lodged with the mortgage as collateral security to secure repayment of the subject debt: see 451 per Legoe J. That was sufficient, in and of itself, for the mortgagee company to be entitled to a declaration as to the ownership of the shares and an order for foreclosure in its favour. The same outcome should apply in the present case." 1. In closing submissions, Mr Cominos also referred to the steps involved in an action for foreclosure, and particularly the importance of taking an account before a final order for foreclosure is made, and submitted that: "In Fisher and Lightwood's Law of Mortgage [(LexisNexis, 3rd ed, 2014) Tyler, Young & Croft at [22.12], 592] the learned authors state at [22.12] that "[w]here the mortgagee is suing for foreclosure only, the claim is that an account may be taken of what is due to him on the mortgage, which must be specifically described, for principal, interest and costs, and that the mortgage may be enforced by foreclosure". Later, at [22.14] it is stated that "once accounts have been certified, a period of three months will be allowed for redemption which is effected by paying the amount certified plus costs" [[22.14], 593]. In National Bank of Australasia Ltd v Cohen [(1896) 22 VLR 269], in relation to a claim seeking payment of certain moneys due to a mortgagee, or in default foreclosure, A'Beckett J stated that "the taking of an account is necessary before a final order for foreclosure is made" [at 270]. In Manton v Parabolic Pty Ltd [(1985) 2 NSWLR 361], Young J referred to … "the usual order in a redemption suit or a foreclosure suit is that the matter be referred to the master to certify what is owing under the mortgage and unless within a period of three months after certification the mortgagor pays that sum, he is forever foreclosed, or if he pays that sum, he may redeem the land" [at 379-80]. [Mr Sutherland] has not sought to exercise any implied power of sale that an equitable mortgagee may have available to him. There is also no pleading to the effect that the loan giving rise to the equitable mortgage is in default and setting out the amount outstanding under the loan (whether principal, interest or costs) and [Mr Sutherland's] [S]ummons contains no prayers for relief in the nature of an order that an account be taken of the amount outstanding under the [Petersham] Loan Agreement (whether as a prelude to orders in the nature of a foreclosure or at all). Instead, [Mr Sutherland] seeks to bypass any of those requirements and be elevated to the status of a legal owner of the shares without undertaking the "usual" procedure which would have the effect of extinguishing [Ms Young's] equity of redemption." 1. I do not accept that Mr Sutherland has established the basis for an order for foreclosure on a final basis, where he has not put evidence before the Court that would allow a determination whether the amount of the Petersham Loan including interest and costs exceeds the value of Ms Young's share in Compton, such that Ms Young's equity of redemption should be extinguished and a foreclosure ordered so as to extinguish her ownership of that share. Here, there is no evidence that Petersham, or GMM as (briefly) the assignee of mortgagee rights under the Petersham Loan or Mr Sutherland extinguished Ms Young's equity of redemption by a foreclosure action. Even if this proceeding were treated as such an action, the evidence led by Mr Sutherland does not establish that the value of Ms Young's share in Compton does not exceed the value of the principal of the Petersham Loan, or principal and interest (if a right to interest at either the base rate or the higher rate had been established) or the principal, interest and costs he has incurred. Plainly, the appropriation of a secured asset by a lender, where its value potentially exceeds the amount due under the loan, is conduct that the equity of redemption and the requirement for a foreclosure action are directed to preventing. For completeness, Mr Philips also submitted that the Court may make such further or other order as it sees fit and that Mr Sutherland is not constrained to seeking only the relief identified in his Summons. While I broadly accept that proposition, subject to the need to allow procedural fairness to Ms Young, it does not assist Mr Sutherland where he has not established the basis for an order for foreclosure on its merits. 2. In closing submissions, Mr Philips also advanced a claim for alternate relief for the first time, which was subsequently documented by a form of orders submitted to the Court, which provided for an account to be taken for the amount payable by Ms Young under the Petersham Loan; an order for foreclosure to be made in favour of Mr Sutherland over Ms Young's share in Compton, with that order to be stayed to allow the account to be taken and to allow Ms Young an opportunity to exercise any equity of redemption which may be available to her; and, subject to those matters and the payment of any stamp duty payable on the transfer of the share to Mr Sutherland, orders that the share be vested "forthwith" in Mr Sutherland; for rectification of Compton's share register; and that the directors of Compton be removed and a nominee of Mr Sutherland appointed as director. The alternative relief sought is closer to the traditional form of the action for forfeiture, since it would at least allow an account to be undertaken for the amount payable by Ms Young and for the foreclosure to be stayed to allow Ms Young an opportunity to repay the amount due under the loan, which Mr Sutherland did not seek to quantify in these proceedings. 3. However, it seems to me that Mr Sutherland's retreat to that alternate relief does not address the fundamental difficulty with his claim; that he has not established that the amount of the debt, interest and costs owing by Ms Young exceeds the value of her share in Compton, so as to establish that it is appropriate that Ms Young's equity of redemption be extinguished and an order for foreclosure be made. Where the basis of that order is not established, the proper result is that the order should not be made, rather than that it should be made and then stayed against the possibility that the account (and some future valuation of the share) might show it had been properly made. 4. Mr Philips also addressed a limitation defence, which I do not understand to be pressed by Ms Young, and the fact that no stamp duty has been paid on the share transfer to Mr Sutherland. It is not necessary to address those matters given the findings I reach on other grounds. For completeness, I have also not addressed any question as to whether cl 17 of the Petersham Loan Agreement would be a penalty at law or in equity, because that issue was not raised in the Points of Defence to the Amended Points of Claim. I have also not addressed any potential application of the Personal Property Securities Act 2009 (Cth) ("PPSA") where the parties did not address that issue and there is no reason to think it would have affected the result. 5. Returning now to Mr Sutherland's claim for relief under s 175 of the Act, I addressed the scope of that section in Re Motasea Pty Ltd (2014) 97 ACSR 589; [2014] NSWSC 69 at [47] as follows: "Section 175 of the [Act] provides, relevantly, that a person aggrieved may apply to the court to have a register kept by a company corrected and, if the court orders that company to correct the register, it may also order that company to compensate a party to the application for loss or damage suffered and to lodge notice of the correction with ASIC. That section replaced s 212 of the Corporations Law and it confers a continuing power to correct the register where, for example, an entry is omitted from it: Bon McArthur Transport Pty Ltd (in liq) (recs & mgrs. Apptd) v Lange [2007] NSWSC 1371. That section operates in parallel to, and arguably assumes the existence of, the court's equitable jurisdiction to rectify a register: Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 at 51; Peninsula Gold Pty Ltd v Sunbeam Victa Holdings Ltd (1996) 20 ACSR 553 at 558–559. The authorities recognise that the applicant for rectification must show a personal equity that the court will protect; prima facie, such an equity is shown if a person's name is wrongly omitted from the register; however, the court has a broad discretion whether to order the correction of the register of members and may decline to order rectification if there is some reason why that should not occur: Grant above at 51. I summarised the relevant principles in Re Mogul Stud Pty Ltd [2012] NSWSC 1639 at [7] as follows: … That section does not itself confer a power to create a register, but assumes that the Court already has such a power at general law: Peninsula Gold Pty Ltd v Sunbeam Victa Holdings Ltd (1966) 20 ACSR 553; 14 ACLC 1089 at 1094. In the well known decision of Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 at 51, Fullagar J pointed to the discretionary character of the power to order rectification of the register and to the fact that in equity warranty rectification would prima facie be established if a person's name was wrongly included or omitted from the register; the same principle is plainly applicable where, rather than the person's name being omitted, the number of shares attributed to that person is incorrectly recorded, so as to impose a disadvantage on that person or on other shareholders. The principles of rectification at general law are relevant, and those draw attention to where the position as recorded in a document reflects the common subjective intention of the parties: Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at [444] and following." 1. I am not persuaded that I can make the order under s 175 of the Act that is sought by Mr Sutherland, where I have held that Mr Sutherland has not established that the order for foreclosure that he first sought in closing submissions should be made in his favour. To put that another way, where Mr Sutherland has not established a legal or equitable right to become the registered owner of the share in Compton, by a foreclosure action, he cannot succeed in his claim for relief under s 175 of the Act. That conclusion largely does not depend on the resolution of the factual issues in dispute between the parties. Further orders sought by Mr Sutherland 1. Mr Sutherland pleads that he, being the sole legal and beneficial owner of the one share in Compton, and in accordance with its constitution and, or in the alternative, s 203C of the Act, wishes to remove the current directors of Compton. He seeks an order under 203C of the Act that the current director(s) of Compton be removed and his nominee be appointed as a director of Compton. Section 203C, which is a replaceable rule for the purposes of s 135 of the Act, provides that a proprietary company may by resolution remove a director from office and may by resolution appoint another person as director instead. It is not apparent how the order sought by Mr Sutherland could be made under that section. In any event, Mr Sutherland has not established any right to be registered as the shareholder of Compton so as to support that order in his favour. 2. In the event of non-compliance by Compton with the orders sought under ss 175 and 203C of the Act, Mr Sutherland seeks an order under s 94 of the Civil Procedure Act 2005 (NSW) that a Registrar of the Supreme Court of NSW be authorised to execute any such documents necessary for the purposes of those orders. That question does not arise where I have not made the orders he seeks. Orders 1. For these reasons, the proceedings are dismissed and Mr Sutherland must pay Ms Young's costs of the proceedings as agreed or as assessed. Subject to any estoppels that may arise from the manner in which this case was conducted, nothing in this judgment necessarily prevents Mr Sutherland pursuing a claim against Ms Young under the Petersham Loan, to the extent Petersham's rights were assigned to him, or exercising any implied power of sale of Ms Young's share in Compton as equitable mortgagee or taking steps that may be available to him to appoint a receiver to the share which may exercise any available power of sale over the share. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 December 2023