Reported Decision : [2001] Aust Contract R 90-131 New South Wales Court of Appeal CITATION : C H Magill & 1 Or v National Australia Bank Limited [2001] NSWCA 221 revised - 13/08/2001 FILE NUMBER(S) : CA 40607/00 HEARING DATE(S) : 12/07/01, 13/07/01 JUDGMENT DATE : 13 August 2001 PARTIES : Colin Harold Magill & Deirdre Evelyn Magill v National Australia Bank Limited JUDGMENT OF : Meagher JA at 1; Heydon JA at 2; Ipp AJA at 4 LOWER COURT JURISDICTION : Supreme Court LOWER COURT 11011/96 FILE NUMBER(S) : LOWER COURT Master Harrison JUDICIAL OFFICER : COUNSEL : G K Burton (Appellants) J W Stevenson (Respondent) SOLICITORS : Leary & Company (Appellants) Mallesons Stephen Jaques (Respondent) CATCHWORDS : CONTRACT - Construction & Interpretation - Extrinsic evidence - Parol evidence rule - Ambiguity exception - Admissibility of prior negotiations to construe loan contract - Conduct of parties after contract made - Not admissible to aid construction or resolve ambiguity - Implied terms - Whether necessary for business efficacy - Term accelerating interest repayments not to be implied - No implied term to allow combination of loan and other accounts or capitalisation of interest. D Commercial Banking Company of Sydney Limited Merger Acts 1982 LEGISLATION CITED : Australian Rural Bank Act 1977 (Cth) Primary Industry Bank Act Codelfa Construction Pty Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 Hoyt's Pty Limited v Spencer (1919) 27 CLR 133 Hide & Skin Trading Pty Limited v Oceanic Meat Traders Limited (1990) 20 NSWLR 310 Spunwill Pty Limited v Bab Pty Limited (1994) 36 NSWLR 290 Sportsvision Australia Pty Limited v Tallglen Pty Limited (1998) 44 NSWLR 103 James Miller & Partners Limited v Whitworth Street Sales (Manchester) Limited [1970] AC 583 CASES CITED: FAI Traders Insurance Company Limited v Savoy Plaza Pty Limited [1993] 2 VR 343 Hamfray Carpets Australia Pty Limited v Hycraft Carpets Pty Limited (1996) ACLC 555 Winstonu Pty Ltd t/as Harvey Norman Electrics v Pitson [2001] FCA 541 L Schuler AG v Wickman Machine Tools Sales Limited [1974] AC 235 Deverell v Peter Johnson Earthmoving Pty Limited (1991) 32 FCR 268 National Bank of Greece SA v Pinios Shipping Company No 1 [1990] 1 AC 637 Liverpool City Council v Irwin [1977] AC 239 DECISION : (1) The appellants' appeal be upheld and the orders made by the Master set aside (2) The respondent's application to amend its Further Amended Statement of Claim be refused (3) The respondent file written submissions within 14 days hereof, setting out the notional PIBA account, drawn up as indicated and in accordance with the findings. The account should identify, by reference to paragraph and page numbers of the particular volumes of the appeal books, the evidence that supports each item in the account (4) The appellants file written submissions in like form and on the same basis within 14 days of receipt of the respondent's submissions (5) The parties, at the same time as filing the written submissions in orders 3 and 4, should file submissions as to the date by which a writ of possession should issue and as to any question of costs that might arise, and should file short minutes or orders that each contends should be made (6) The stay of execution is extended until further order. THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40607/00 SC 11011/96 MEAGHER JA HEYDON JA IPP AJA Monday 13 August 2001 COLIN HAROLD MAGILL & DEIRDRE EVELYN MAGILL v NATIONAL AUSTRALIA BANK LIMITED Facts: In 1978 the appellants carried on farming on two properties near Moree. One, "Arapiles" was owned by the appellants, the second, "The Gums" which they had undertaken to purchase. In order to satisfy their financial needs at that time the appellants decided to alter their banking arrangements. The appellants transferred their accounts from the ANZ bank to the Commercial Banking Corporation of Sydney Ltd (CBC). In doing so the appellants were able to operate a farming account and, relevantly, have access to loans specifically for rural land through the Primary Industry Bank of Australia Ltd (PIBA). The appellants took out loan monies of $150,000 with CBC, $90,000 of which was a PIBA loan, to enable them to purchase "The Gums". As part of these loan arrangements the appellants also granted mortgages to CBC over their two properties as security for all monies owed. The respondents became successors in title to the rights and liabilities of CBC by virtue of a merger. In 1987 the appellants defaulted in their repayments of the PIBA loan. As a result of this the respondent accelerated the repayment of that loan and combined it with others accounts subject to higher rates of interest. The respondent relied on the mortgage to bring an action claiming this amount and also sought an order for possession of "The Gums". Master Harrison found in favour of the respondent and ordered that the appellants pay $267,318.33. The appellants appeal from this decision. The main issues on appeal involved, first, a question as to the identity of the lender under the PIBA loan, second, whether the appellants had properly established a number of estoppels and third, whether an acceleration term was properly implied into the loan contract. HELD (i) Per Ipp AJA, Meagher JA and Heydon JA agreeing (a) The PIBA contract of loan consisted of a number of letters and application documents. One of those letters, dated 20 November 1978 was ambiguous and as a result recourse could be had admissible extrinsic material in construing the document, in particular evidence of the prior negotiations. ( Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1981) 149 CLR 337 applied) While evidence of prior negotiations is admissible, evidence of subsequent conduct as an aid to the construction of a contract is not. ( Sportsvision Australia Pty Limited v Tallglen Pty Limited (1998) 44 NSWLR 103; L Schuler AG v Wickman Machine Tools Sales Limited [1974] AC 235 followed) (b) In light of all of the evidence the Master was correct in finding that the lender under the contract of loan was CBC and not PIBA. (ii) Per Ipp AJA, Meagher JA and Heydon JA agreeing (a) The appellants argued a number of estoppels based on their reliance upon the representation that PIBA was the lender, which was allegedly contained in the letter of 20 November 1978. In light of the findings as to this letter and the identity of the lender these estoppels fail. (b) There was a further estoppel based on the respondents alleged wrongful acceleration of the monies payable and combination of the loan accounts, however the appellants were unable to adduce evidence of any detriment suffered as a result their reliance on the alleged representations. Therefore this estoppel also fails. (iii) Per Ipp AJA, Meagher JA and Heydon JA agreeing (a) It was unnecessary for the business efficacy of the contract for an acceleration term to be implied and as such the Master erred in this regard. ( Deverell v Peter Johnson Earthmoving Pty Limited (1991) 32 FCR 268 followed) (b) As a result of the finding as to acceleration the respondent was also in error in combining the accounts. (iv) Per Ipp AJA, Meagher JA and Heydon JA agreeing (a) Although not raised at trial the respondent's asserted a right to capitalise the interest payments at six monthly rests. This right was based on an implied term as to recognised usage between banker and customer, as found by the Master. The nature and purpose of the PIBA loan contract in this case was to facilitate long term loans to primary producers. The PIBA loan was not, therefore subject to the normal banker customer relationship which grounds the implication of a term permitting the capitalisation of interest. The Master erred in implying a term to that effect. ( National Bank of Greece SA v Pinios Shipping Company No 1 [1990] 1 AC 637 distinguished.) Legislation : Commercial Banking Company of Sydney Limited Merger Act 1982 Australian Rural Bank Act 1977 (Cth) Primary Industry Bank Act ORDERS 1. The appellants' appeal be upheld and the orders made by the Master set aside. 2. The respondent's application to amend its Further Amended Statement of Claim be refused. 3. The respondent file written submissions within 14 days hereof, setting out the notional PIBA account, drawn up as indicated and in accordance with the findings. The account should identify, by reference to paragraph and page numbers of the particular volumes of the appeal books, the evidence that supports each item in the account. 4. The appellants file written submissions in like form and on the same basis within 14 days of receipt of the respondent's submissions. 5. The parties, at the same time as filing the written submissions in orders 3 and 4, should file submissions as to the date by which a writ of possession should issue and as to any question of costs that might arise, and should file short minutes of orders that each contends should be made. 6. The stay of execution is extended until further order. ***** THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40607/00 SC 11011/96 MEAGHER JA HEYDON JA IPP AJA Monday 13 August 2001 COLIN HAROLD MAGILL & DEIRDRE EVELYN MAGILL v NATIONAL AUSTRALIA BANK LIMITED JUDGMENT 1 MEAGHER JA: I have read the judgments of both Ipp AJA and Heydon JA. I agree with them. I am depressed by the incompetence of the lending bank and by the borrowers' reluctance to repay moneys admittedly lent to them. 2 HEYDON JA: Banks enter enormous numbers of loan contracts every year. The procedures they employ in the making of these contracts and the documents used to embody the contracts are usually standardised and clear. However, those which the Commercial Banking Company of Sydney Limited employed in dealing with the appellants in 1978 were very far from clear. It has taken the parties and the court hours of oral argument in court and many more hours outside court to analyse whether that bank entered a contract of loan with the appellants as principal, or as agent for the Primary Industry Bank of Australia Ltd. The proposition that it entered a contract of loan as agent was an important part of the appellants' posture in this litigation. In a sense that proposition is unmeritorious, being employed by the appellants to postpone, perhaps forever, the day when they will have to repay sums of money that were unquestionably advanced to them. But it is a proposition which is far from outlandish. For example, it is a proposition to which on occasion over the years the respondent appeared to adhere. However, despite the difficulties created by the Commercial Banking Company of Sydney Limited, there is in the end no alternative to the view which Ipp AJA has come on the question of parties. 3 I agree with the orders proposed by Ipp AJA and the reasons he has advanced for those proposed orders. 4 IPP AJA: The issues in dispute 5 In 1978 the appellants carried on farming operations on farm properties in Moree. One of the properties was known as "Arapiles", which the appellants owned. The other was known as "The Gums" which the appellants were then leasing and had undertaken to purchase. They needed to borrow funds for that purchase. 6 At the time, the appellants banked with the ANZ Bank but they were considering making a change. Towards the end of 1978, the first appellant, Mr Magill, had discussions with Mr John Munro, the manager of the Moree branch of the Commercial Banking Corporation of Sydney Limited ("CBC"). Mr Munro said that if the appellants conducted their farming account with CBC they would have access to loans available through the new Primary Industry Bank of Australia Limited ("PIBA"). He encouraged the appellants to transfer their business to CBC, and the appellants did so. 7 Thereafter, in November 1978, the appellants obtained loan facilities of $150,000 through CBC. These included what was described as a "PIBA loan" of $90,000. The appellants utilised these facilities to purchase The Gums. 8 By mortgage dated 16 January 1979, Mr Magill mortgaged to CBC his interest in Arapiles to secure all moneys owing by him to CBC "on any account whatsoever". Also, by another mortgage of the same date, the appellants mortgaged to CBC all their interest in The Gums to secure all moneys owing by them to CBC "on any account whatsoever". 9 By the Commercial Banking Company of Sydney Limited Merger Acts 1982 the respondent became successor in title to the rights and liabilities of CBC. The respondent contends that CBC entered into a contract with the appellants whereby it lent and advanced the PIBA loan to them. 10 The appellants failed to pay an instalment due on 31 March 1987 in respect of the PIBA loan. The respondent contended that it was an implied term of the contract of loan that, upon such a failure, the full amount owing under the PIBA loan became due and payable. On that basis, it proceeded to treat the PIBA loan as if the full amount thereof had become due and payable. 11 The respondent thereupon combined the PIBA loan account with two other accounts which the appellants had with it, namely, the appellants' overdraft facility account and a fully drawn advance account (the "FDA account"). The three accounts were then treated as an FDA account in the books of the respondent. This had the consequence that the amount owing under the PIBA loan was subject to a higher rate of interest than was payable under the PIBA loan contract. 12 The respondent brought proceedings against the appellants. It claimed the full amount owing under the PIBA loan, including interest capitalised at six month rests, and, in reliance on the relevant mortgage, claimed an order for possession of the Gums. It claimed related relief as well. 13 Master Harrison upheld the contentions of the respondent. She found that the appellants owed the respondent $267,318.33 in respect of capital and interest under the PIBA loan, and granted the respondent an order for possession of The Gums and other, related relief. 14 The principal defence of the appellants at the trial was that the lender under the contract of loan was PIBA itself. On that basis they contended that they owed nothing to the respondent under the PIBA loan. Master Harrison rejected the appellants' contentions and the identity of the lender under the PIBA loan is one of the main issues in the appeal. 15 The appellants contended at trial that the respondent was estopped on various grounds from claiming the amount due under the PIBA loan. They were unsuccessful in these contentions before the Master and have raised them again in the appeal. 16 The appellants contend, in the alternative, that should it be found that the respondent was the lender under the PIBA loan, and should the respondent not be estopped from claiming the amount due under the PIBA loan, the Master erred in finding that the contract of loan was subject to an implied term accelerating the amount owing on breach, and erred in finding that the respondent was entitled to combine the accounts. They dispute that the amount owing is as found by the Master. These matters give rise to additional issues in the appeal. The PIBA loan contract: the relevant evidentiary material 17 Paragraph 2 of the statement of claim alleged: "The Commercial Banking Company of Sydney Limited ("CBC") provided to the defendants a Primary Industry Bank of Australia Limited refinance loan of $90,000 ("PIBA loan") on the terms set out in the letter from CBC to the [appellants] dated 20 November 1978 as varied by a letter from CBC to the [appellants] dated 13 September 1982". 18 The statement of claim did not allege, precisely, what constituted the contract pursuant to which the PIBA loan was made and how that contract was arrived at. The most that can be said is that, according to the statement of claim, the letter of 20 November 1978 contained the terms of the contract of loan. The appellants did not admit the allegations made by the respondent as to the terms of the contract of loan. 19 Mr Stevenson, counsel for the respondent, initially sought to persuade the Court that CBC was the lender by reference to material of which the appellants were ignorant. This material related to the authority of PIBA to lend to the public, the contractual relationship between PIBA and CBC and the source of the moneys advanced to the appellants. Use of this material offends against the principles expressed in Codelfa Construction Pty Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 and there is no need to say more about this argument. I set out below the evidentiary material which was at least known to both the respondent and the appellants and which, arguably, could be said to be relevant to the construction of the contract whereby the PIBA loan was advanced. 20 The events that led to the letter of 20 November 1978 commenced with a conversation between Mr Munro and Mr Magill. The evidence does not reveal when this conversation took place. In an affidavit signed by him, Mr Magill stated that "some months" prior to 20 November 1978 he discussed with Mr Magill the transfer of his farming account to CBC. After some "initial discussions" Mr Munro inspected The Gums and Mr Magill supplied certain financial information to him. According to Mr Magill's affidavit, Mr Munro then said to him: "If you and Deirdre split your loan between PIBA and the CBC you will be able to keep the interest rate down because neither loan will be over $100,000.00 which attracts a higher interest rate". Mr Munro then went on to say: If you have say, a $90,000.00 loan with PIBA and the balance with the CBC Bank you are left with the latitude to have some excess on those debts and still be well under the $100,000.00 and so maintain a lower interest rate". And: "The CBC at this stage is very short of funds for new borrowers, but now that the CBC is an agent for PIBA we are able to take on a lot more rural clients and help the Bank tremendously in their lending in the rural community". And, further: "The Review Board of PIBA has two farmer representatives to consider loans and loan deferments. They help the Bank to understand rural problems and keep the Board aware of seasonal conditions". And, finally: "PIBA's loan has a basic rate of interest and you pay 1.something% on top of that for the CBC's commission for which the CBC has to guarantee the loan to PIBA and repayments of that loan". 21 A form of application to CBC, said to be by the appellants for loan facilities, was put into evidence at the trial. The document is dated 27 October 1978, is unsigned and appears to be a form completed by a bank official. The application form relates to "total assistance requested" of $150,000. The $150,000 is made up as follows: "a) Overdraft limit on S.T. & O. basis $ 20,000 b) F.D. Loan over 10 years - $ 40,000 repayable $2,000 per half-year to commence February 1980. c) P.I.B.A. Long term loan - 25 years $ 90,000 repayable $3,600 per annum _______ $150,000 ________" The application form also sets out "security held and/or offered", namely, Arapiles and The Gums, which are referred to as being properties offered for mortgage to secure the facilities sought of $150,000. 22 On 1 November 1978 the appellants signed a letter to CBC authorising them "upon the written request of the Primary Industry Bank of Australia Limited" to "supply to that bank any information sought relating to my/our accounts with your Bank …" The heading of the letter referred to "Application for refinance in the name of [the appellants]". It referred to information that might be required by PIBA "to support an application for refinance". The letter concluded: "This authority is to be a continuing authority and remain in full force and effect until all loans which have been re-financed by the Primary Industry Bank of Australia Limited are repaid in full". 23 By letter dated 17 November 1978 CBC advised the appellants that the bank had approved the overdraft limit of $20,000, a Farm Development Loan of $40,000, and the PIBA refinance loan of $90,000, all against the security of first mortgages over Arapiles and The Gums. 24 CBC then wrote the letter of 20 November 1978 to the appellants. That letter was in the following terms: " The Commercial Banking Company of Sydney Limited Moree NSW 20 November 1978 Mr & Mrs C H Magill, Boonery Road, MOREE NSW Dear Mr & Mrs Magill, PRIMARY INDUSTRY BANK OF AUSTRALIA LIMITED We are pleased to inform you that your application for a refinance loan of $90,000 from the Primary Industry Bank of Australia Limited has been approved. The loan is for a term of 25.5 years and is subject to the conditions set out hereunder. (1) The loan is to be repaid by equal half-yearly instalments of principal and interest combined payable on 30th June and 31st December each year. The half-yearly instalments is $4,929.91 and the rate of interest 10% per annum. The first repayment is due on 31 December 1979. Interest is payable 30/6/79, $4,500. (2) Loans may be prepaid in whole or in part at any time upon giving three months written notice. In the absence of the required notice the Primary Industry Bank of Australia Limited reserves the right to charge three months premium interest. It will therefore be necessary for you to notify us well in advance should you wish to exercise this option, so that the necessary formalities may be completed. It is preferable that any partial prepayments be in multiples of $1,000 with a minimum of $5,000. Any early repayments will be permanent reductions in the loan. (3) The rate of interest will be at rates determined by the Primary Industry Bank of Australia Limited from time to time. In the event of an interest change, it is preferred that the original loan instalments be maintained and the term adjusted. Interest will be payable from the date the loan is drawn until the commencement of the period covered by the fist repayment. The interest will be calculated on a daily basis for any broken period and on a half-yearly basis for a full half-yearly period. (4) In the event of adverse circumstances which seriously affect income during the currency of the loan, a rearrangement of the agreed repayment programme may be submitted to this Bank for consideration by the Primary Industry Bank of Australia Limited. Pending a decision being made the existing repayments must be met on the due date. (5) The loan funds must be utilised for the purpose sanctioned. As evidence that you fully understand the foregoing conditions, we wish you to sign the duplicate of this letter where provided and return it to us at your earliest convenience. Yours faithfully Signature " The appellants signed the letter of 20 November 1978 under the words "Received the original letter of which this is a copy". 25 On 16 January 1979 first mortgages in favour of CBC were registered over Arapiles and The Gums. Mr Magill testified in this regard: "When Deirdre and I attended the Bank to sign the mortgage documents I was surprised to see that the mortgage was only to the CBC and I said to Munro: 'Why is the mortgage only to the CBC? Does this only cover the CBC loan? What about the PIBA loan?' He said: 'It (the mortgage) also covers the PIBA loan because as guarantors for the loan we are then able to cover it with one mortgage'. Munro also said: 'During the term of the PIBA loan you can have up to four (4) years where, if you have difficulties making repayments as a result of seasonal problems, then you can apply to PIBA to have the repayments deferred.'" 26 On 13 September 1982 CBC wrote a letter to the appellants in the following terms: "The Commercial Banking Company of Sydney Limited Established 1834 MOREE , NSW 13th September 1982 Mr & Mrs C H Magill, 'Arapiles', CROOBLE. NSW. 2419 Dear Mr & Mrs Magill, RE: PIBA REFINANCE LOAN # 05200001 IN THE NAME OF M & D Magil (sic) You will be aware that this Bank and the National Bank have merged, and will be commencing operations as National Commercial Banking Corporation of Australia Limited in the near future. To meet PIBA's and the merged banks' accounting requirements it is now necessary to vary the due dates of the instalments on your PIBA Refinanced Loan from 30th June and 31st December to 31st March and 30th September each year. To enable this to be effected, the half-yearly instalment of principal and interest due on your loan as at 31st December 1982 will be deferred to 31st March 1983, and an interim payment of interest only of approximately $3,287.40 will be charged and paid to PIBA on 30th September, 1982. Unless there are any changes to the interest rates presently charged on your loan, the current half-yearly instalment amount will remain undisturbed. The ultimate date for final repayment of your loan will now be extended by 3 months. Should you have any queries on these proposals, please do not hesitate to contact me. Yours faithfully, Signature Manager" The PIBA loan contract: discussion 27 Counsel for both parties accepted that the respondent's case was conducted on the basis that the contract of loan consisted of the letter of 20 November 1978. Mr Burton, counsel for the appellants, submitted (as his main argument) that the terms set out in the letter were certain, and, properly construed, the letter constituted a contract between the appellants and CBC acting as agent for PIBA. Mr Stevenson submitted that the letter was ambiguous, but, when read with the admissible material, it constituted a contract between the respondent (as a principal) and the appellants. 28 Mr Burton, without much enthusiasm, submitted in the alternative that the contract was partly oral and partly in writing and the oral part was constituted by the discussions between Mr Magill and Mr Munro to which I have referred above (the written part being the letter of 20 November 1978). Mr Stevenson accepted that it was open for Mr Burton to advance this argument, but submitted, in effect, that the parties intended the only contractual document to be the letter of 20 November 1978. He argued that the proposition that the contract was partly oral and partly in writing should be rejected. 29 The letter of 20 November 1978 provided that the loan was "subject to the conditions set out hereunder". It is manifest from the letter that it was intended to be the conclusive record of the terms of the agreement. There is no evidence to the contrary. Accordingly "no oral evidence can be admitted to alter or qualify it" (per Hoyt's Pty Limited v Spencer (1919) 27 CLR 133 at 143 per Isaacs J). 30 I proceed, therefore, on the basis that the letter of 20 November 1978 was intended to contain all the terms of the contract between the parties. That is to say, the terms of the contract were entirely in writing and the contract was not partly oral and partly in writing. 31 In my opinion, the letter of 20 November 1978 is ambiguous. The ambiguity arises from the opening sentence, "We are pleased to inform you that your application for a refinance loan of $90,000 from the Primary Industry Bank of Australia Limited has been approved". In my opinion, the words "refinance" and "from" are ambiguous. A "refinance loan," in the context of the letter, is capable of meaning a loan that is refinanced by PIBA, but made by CBC. It is also capable of meaning a loan by which the appellants were to refinance their own obligations to the ANZ Bank. The word "from" in this context could mean that the initial source of the finds to be advanced was to be PIBA (with CBC as the lender), or it could mean that the loan was to be made by PIBA. Accordingly, the opening sentence of the letter is capable of meaning either that the appellants' application for a loan from CBC, to be refinanced by PIBA, had been approved, or, that the appellants' application for a loan from PIBA, through the agency of CBC, had been approved. 32 Everything that follows after the opening sentence of the letter is consistent with either construction. It is therefore necessary to refer to the admissible extrinsic material for the purposes of resolving the ambiguity. In this regard the well known passage from the judgment of Mason J in Codelfa Construction Pty Limited at 352 is relevant. In discussing the use that can be made of the evidence of prior negotiations his Honour observed: "Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But insofar as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification". 33 The first step is to determine, by the application of the principles in Codelfa, what parts of the conversation between Mr Magill and Mr Munro, referred to in para 17 above, are admissible for the purposes of resolving the ambiguity. 34 In my opinion, in consequence of that conversation, the following facts were known to both Mr Magill and Mr Munro: (a) If the appellants split their loan "between PIBA and the CBC" so that each loan was lower than $100,000, the interest rate on each loan would be lower. (b) It was possible for the appellants to obtain a $90,000 loan "with" PIBA. (c) CBC was an "agent" of PIBA and could accordingly take on a lot more rural clients and thereby help PIBA in its lending in the rural community. (d) PIBA was constituted so as to have a special understanding of rural problems. (e) The arrangements between CBC and PIBA were such that the interest rate payable to CBC was between one and two per cent per annum which was CBC's commission for having to guarantee to PIBA the loan made by PIBA to CBC's customers. 35 While these facts are relevant to the construction issue, none is determinative. Underlying the information so given by Mr Munro to Mr Magill was a lack of precision and clarity as to what was intended by a "PIBA loan" (as opposed to a CBC loan), a loan "with" PIBA, and the fact that CBC was an "agent" for PIBA. The phrase "a PIBA loan" suffers from the same ambiguity as the letter of 20 November 1978 itself, as does the phrase "loan with PIBA". The word "agent" is inherently ambiguous. It may mean an agent in a commercial sense only or in a legal sense. In any event, the fact that, generally, CBC might have been an "agent" of PIBA does not mean that in any particular transaction CBC acted as the agent of PIBA, with PIBA as the principal. The information as to the arrangements concerning interest and CBC's role as a guarantor is of greater value in understanding what was later meant in the letter of 20 November 1978, but its probative force must depend on subsequent communications between the parties and the terms of the letter of 20 November 1978 itself. It must also be borne in mind that the conversation in question seems to have occurred some considerable time (apparently, some weeks) before 20 November 1978 and was of general import only. 36 Both counsel dealt with the application form of 27 October 1978 on the basis that the information contained within it was known to both CBC and the appellants and constituted, in effect, part of the appellants' "application for a refinance loan" referred to in cl 1 of the letter of 20 November 1978. 37 It is apparent from the 27 October 1978 form that the appellants were applying for overall facilities of $150,000 of which the PIBA loan constituted $90,000. The amount of the latter loan was the same as that discussed in the earlier conversation between Mr Magill and Mr Munro. The balance of $60,000 constituted facilities which were undoubtedly to be advanced by CBC to the appellants. According to the form, as security for the facilities of $150,000, the appellants "offered" mortgages over Arapiles and The Gums. The mortgages were offered as securities in respect of the aggregate advance to be made. 38 There was no attempt in the form to distinguish between the treatment of the PIBA loan and the other two loans that were to be made by CBC itself. Moreover, it would be unusual for a borrower to be required to register a mortgage in favour of the guarantor bank and not the lending bank (particularly where the guarantor bank is acting as the lending bank's agent). To this extent, the material contained in the application form adds some support to the argument that the PIBA loan was to be made by CBC. 39 The reference in the heading of the letter of 1 November 1978 to the appellants' "application for refinance", and the similar reference in the body of the letter, link the letter directly with the phrase "application for a refinance loan" in the first sentence of the letter of 20 November 1978. Accordingly, the letter of 1 November 1978 should be regarded as part of the appellants' application for a PIBA loan. 40 The last paragraph of the letter of 1 November 1978 makes it plain that the contemplated PIBA loan was to be a loan "refinanced by the Primary Industry Bank of Australia Limited". The letter indicates therefore that the refinancing was to be a refinancing by PIBA of a loan made by CBC, and not a refinancing by the appellants of the obligations they owed to the ANZ Bank. 41 The letter of 17 November 1978 records that the PIBA loan, the overdraft, and the Farm Development Loan were to be secured by the same first mortgages over Arapiles and The Gums. As was the case with the application form of 27 October 1978, no distinction was made between the treatment of the PIBA loan and the other two loans that were to be made by CBC itself. Accordingly, the letter of 17 November 1978 carries with it the same implications as those that arise from the application form and tends to support the inference that the lender under the contract of loan was CBC. 42 I now turn to the terms contained in the letter of 20 November 1978 which fall to be considered against the background of the appellants' known desire to transfer their banking arrangements from the ANZ Bank to CBC, the relevant and admissible parts of the conversation between Mr Magill and Mr Munro, the relevant material contained in the application form of 27 October 1978, and the letters of 1 November and 17 November 1978. 43 Significantly, the letter of 20 November 1978, which was written by CBC itself, makes no mention of CBC acting as the agent of PIBA. The letter also makes no mention of CBC guaranteeing a loan to be made by PIBA. 44 The critical part of the letter of 20 November 1978 is the words in the first sentence thereof, "your application for a refinance loan of $90,000". In my opinion, the letter of 1 November 1978 is of overriding importance in construing this sentence. This letter was written a relatively short time before the letter of 20 November 1978 and was part of the appellants' application for a PIBA loan. It reveals with clarity that the parties then understood that the loan refinancing was to be undertaken by PIBA. 45 Taking all the extrinsic material into account, I conclude that the words, "your application for a refinance loan of $90,000", in the first sentence of the letter of 20 November 1978, mean "your application for a loan of $90,000 to be made by CBC and refinanced by PIBA". 46 Once PIBA was to effect the refinancing of the loan, it could not be the lender. In my opinion, the reference in the letter of 20 November 1978 to a loan of $90,000 "from" PIBA was a reference to a loan to be made by CBC with funds derived from PIBA. 47 Seen in this light, PIBA's interest and role in the transaction as set out in cls (2), (3) and (4) of the letter of 20 November 1978 are entirely consistent with the loan being made by CBC and refinanced by PIBA. 48 Both counsel accepted that the letter of 13 September 1982 took the matter no further and did not assist in the construction issue. 49 It remains to consider the effect of the conversation between Mr Magill and Mr Munro on 16 January 1979 when the first mortgages in favour of CBC were registered over Arapiles and The Gums. It will be recalled that Mr Magill asked why there was only a mortgage in favour of CBC and not one in favour of PIBA. Mr Munro replied that the mortgage covered the PIBA loan "because as guarantors for the loan we are then able to cover it with one mortgage". 50 The admissibility of subsequent conduct as an aid to the construction of a contract remains to be authoritatively resolved. It is sufficient to point to the differing views flowing from Hide & Skin Trading Pty Limited v Oceanic Meat Traders Limited (1990) 20 NSWLR 310 expressed by Santow J in Spunwill Pty Limited v Bab Pty Limited (1994) 36 NSWLR 290 (where subsequent conduct was held to be potentially admissible) and by Bryson J in Sportsvision Australia Pty Limited v Tallglen Pty Limited (1998) 44 NSWLR 103 (where the contrary was held). 51 In my respectful opinion the views expressed in Sportsvision Australia Pty Limited v Tallglen Pty Limited are to be preferred. Like Bryson J, I consider the reasoning of Lord Reid in James Miller & Partners Limited v Whitworth Street Estates (Manchester) Limited [1970] AC 583 at 603 to be unanswerable. His Lordship there said: "I must say that I had thought that it is now well settled that it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made. Otherwise one might have the result that a contract meant one thing the day it was signed, but by reason of subsequent events meant something different a month or year later". 52 The force of these remarks is well illustrated by the present case. I have come to the conclusion that, as at 20 November 1978, upon a construction of the written record of the contract of loan constituted by the letter of that date, CBC was the lender of the loan to be made thereunder, and not PIBA. In theory, were it to be permissible to have regard to the conversation nearly two months later between Mr Magill and Mr Munro, the contract of loan might then be differently construed, with PIBA and not CBC being held to be the lender. On this basis, CBC would be held to be the lender for nearly two months and PIBA the lender thereafter. This would be a situation of incongruity that the law could not tolerate. 53 Other intermediate courts of appeal have concluded that subsequent conduct is not admissible for the purposes of construing a contract: see FAI Traders Insurance Company Limited v Savoy Plaza Pty Limited [1993] 2 VR 343; Hamfray Carpets Australia Pty Limited v Hycraft Carpets Pty Limited (1996) ACLC 555; Winstonu Pty Ltd t/as Harvey Norman Electrics v Pitson [2001] FCA 541. This is the law of England: L Schuler AG v Wickman Machine Tools Sales Limited [1974] AC 235. I would adopt this rule. 54 In any event, I should say that I do not regard the conversation of 16 January 1979 as being of any significant weight. The gist of Mr Magill's evidence in this respect is that he was told by Mr Munro that the "mortgage" was a mortgage in favour of CBC, and not PIBA, because CBC required the mortgage to be registered in its favour as it was a guarantor to PIBA for the loan made by PIBA to the appellants. It may be thought (as, apparently, the Master did) that it was improbable that CBC would register a mortgage for the purpose allegedly suggested by Mr Munro when PIBA (which, on Mr Munro's alleged hypothesis, must be taken to have been represented in the transaction by CBC as its agent) did not require the loan made by it to be secured by a mortgage. The Master viewed this evidence with scepticism, although it was not contradicted by Mr Munro himself. In my view, there was some justification for her view. In any event, I do not think that the views (which may or may not have been correct) expressed on a somewhat tangential issue by the branch manager should be regarded as affecting the proper construction of a contract entered into nearly two months previously. 55 Accordingly, I consider that the Master correctly held that the lender under the contract of loan was CBC and not PIBA. The estoppels raised by the appellants 56 The appellants raised three different estoppels to the respondent's claim. These were rejected by the Master. Mr Burton sought to rely on them before this Court, but with some reservation. And understandably so. 57 The first estoppel relied upon is based on a representation said to have been made in the letter of 20 November 1978 to the effect that the loan was a loan from PIBA. In the light of my conclusion that the letter of 20 November 1978 is ambiguous and, when read with the admissible evidence, is to be construed as meaning that the loan was a loan from CBC, this estoppel fails. 58 The second estoppel is merely an extension of the first. The appellants claim that as from 20 November 1978 CBC represented (and continued thereafter to represent) that the loan was a loan from PIBA and that the appellants relied on that representation to their detriment. The allegations in regard to the continuing nature of the representation rest largely on the conversation between Mr Magill and Mr Munro on 16 January 1979. For the reasons I have expressed, I do not think that the representation alleged was established to the requisite degree of certainty. Accordingly, the appellants' argument concerning this estoppel cannot be upheld. 59 Thirdly, the appellants contend that the respondent represented to them, falsely, that the full amount owing under the PIBA loan had become due and payable and that it was entitled to combine the PIBA loan with the accounts conducted by the respondent in respect of the appellants' overdraft facility and the FDA account. The appellants contend that the amounts represented by the respondent as being owing from time to time under the FDA account were incorrectly stated. The appellants assert that they believed that the representations in question were true and, in consequence, by reason of the substantial amount of their supposed indebtedness, took no steps to obtain additional finance from the respondent or some other bank. As a result, they were not able to develop their farm and undertake profitable farming operations that they would have been able to carry out had they been able to obtain other financial assistance. Accordingly, the appellants contend, the respondent is estopped from recovering the money now owing. 60 This third estoppel, in summary, is based on the argument that the respondent should have told the appellants that it was wrongly claiming that the full amount of the PIBA loan was due and payable, that it had wrongly combined the accounts and that the amounts it was claiming were wrong. The next link in the appellants' argument is that, had the appellants known that the respondent's contentions were wrong in the respects stated, they would have been able to persuade the respondent to lend them "more carry on finance" or they would have been able to obtain such additional finance elsewhere. The respondent's present conduct in resisting the appellants' contentions, however, is ample testimony that the appellants would not have been able to persuade it that its contentions were incorrect. Moreover, the documents in evidence establish that at the relevant time the respondent, in any event, did not regard the appellants' credit standing as being sufficient to justify advancing them any more funds. There was no evidence that any other bank or lending institution would have come to a different view. Accordingly, the appellants have failed to establish an essential element of this estoppel and their contentions in this respect must fail. The acceleration of the PIBA loan 61 The conditions contained in the letter of 20 November 1978 say nothing about the consequences that follow should the appellants not pay the half yearly instalments on due date. 62 Master Harrison held that: "To give the contract business efficacy, if there is a default in the loan repayment, the whole of the loan should become due and payable. Otherwise the [respondent] could only sue for an instalment payment and if that payment and the next one is paid the [respondent] would have to continue to sue for the first missed payment and then sue for the second missed payment and so on. Although the loan is of long duration, having an acceleration clause is reasonable and equitable, capable of clear expression and does not contradict any express term of the contract". 63 I do not agree, with respect, with the Master's approach. The fact that the respondent may have to sue for each instalment as and when it falls due does not make the contract less efficacious. It may make it less advantageous to the respondent, but that is a different matter. The contract works perfectly well on the basis of its expressed terms. It is not for the Court to write in terms which have been omitted, merely because such terms are ordinarily found in a contract of the kind in question. It was open to CBC to include such a term, expressly, in the contract. It did not and the respondent must bear the consequences. 64 In Deverell v Peter Johnson Earthmoving Pty Limited (1991) 32 FCR at 268 at 273 the Full Court of the Federal Court said: "There is no rule that an implication must be made, in a contract for payment of a debt by instalments, that, in default of any payment, the balance becomes due immediately. In some circumstances, a contention might be open that a right of acceleration is necessarily implicit …" There is nothing in this case which, in my view, justifies a departure from the general rule. In my view, the Master erred in finding to the contrary. 65 Accordingly, there was no implied term in the contract of loan to the effect that should the appellants commit a breach thereof by failing to pay instalments on due date the full amount would become due and payable. 66 Mr Stevenson submitted further that it was implicit in the contract that should the appellants fail on more than one occasion to pay instalments on the due date the full amount would become due and payable. He applied to amend the statement of claim by incorporating an allegation that the contract was subject to such an implied term. In my view, for the reasons already expressed, such a term is not to be implied. The mere fact that there might be more than one breach of the obligation to pay instalments does not alter the efficacy of the contract in its existing form. It remains open to the respondent to sue for payment of each instalment that is not paid on due date. I would not grant the amendment sought. The combination of accounts 67 In 1978 and 1979 the appellants maintained a current account with CBC and thereafter maintained a current account with the respondent. 68 On 5 July 1985 the respondent agreed to provide financial accommodation to the appellants in the form of a fully drawn advance in the sum of $250,000. This facility was the FDA. 69 The appellants failed to pay the respondent the instalment due on 31 March 1987 under the PIBA loan and, according to the respondent, had made various defaults under the FDA account. 70 On 14 May 1987 the respondent demanded payment of the then entire balance of the PIBA loan, the FDA account and the current account which totalled some $412,000. Of that sum, about $118,500 was said to be owing in respect of the PIBA loan and the balance was owing in respect of the other accounts. The appellants did not respond to the demand. 71 On 5 June 1987 the respondent closed the PIBA loan account by debiting the amount owing thereunder to the FDA account. The effect was to add about $116,000 to the FDA account (the amount in question was in dispute and is dealt with more fully below). 72 At about this time the appellants sold The Gums and the proceeds of the sale, totalling $285,633.78, were paid into the FDA account. This left a balance of more than $120,000 which the respondent contended was owing by the appellants to it under the FDA account. 73 On 4 September 1995 the respondent demanded payment from the appellants of the sum of $165,118.81 being the amount the respondent contended was then owing under the FDA account (and which, according to the respondent, represented the balance owing under the PIBA loan). The appellants made no payment in response. 74 In October 1999 the respondent commenced proceedings against the appellants claiming judgment in the sum of $267,318.33 together with compound interest. The respondent alleged that this sum represented the capital and interest owing under the FDA account. 75 The appellants assert that the respondent was not entitled to combine the PIBA loan with the FDA account and the current account. 76 In combining the accounts the respondent sought to rely on clause 12 of the FDA agreement which provided: "The Bank has authority at any time after demand has been served under paragraph 11 hereof to combine the Loan Account with all or any of the other accounts standing in your name, whether existing at the date hereof or to be subsequently opened with the Bank to treat the Loan Account and all or any of the other accounts as one account and to appropriate any credit standing in any other account in your name towards payment of the indebtedness outstanding on the Loan Account together with all other interest, fees and charges then accrued and unpaid without notice to you". 77 Mr Stevenson correctly and properly conceded that the respondent's right to combine the PIBA account with the FDA account was dependent on the full amount of the PIBA loan becoming due and payable. Were that not the case, the conditions applicable to the two loan accounts would be different and cl 12 of the FDA agreement, properly construed, does not entitle the respondent to combine or consolidate accounts subject to different conditions. 78 Accordingly, in the light of my finding that the full amount of the PIBA loan did not become due and payable, the respondent was not entitled to combine the PIBA account with the FIDA and the current accounts. The capitalisation of interest 79 It is necessary to calculate, in the light of the above findings, what amount was owing by the appellants under the PIBA account at 11 July 2000, that being the date on which the appellants' indebtedness was calculated by the Master for the purposes of determining the judgment sum. There are a number of additional disputed issues that need to be resolved before the amount in question can be determined. The first of these is the respondent's claimed right to capitalise interest on the basis of six monthly rests. 80 Although nothing appears in the statement of claim concerning the respondent's alleged right to capitalise, this was an issue that was dealt with by Master Harrison. In her reasons she stated: "There is an implied right to capitalise interest despite the fact that the PIBA account is not a current account". She relied for this proposition on National Bank of Greece SA v Pinios Shipping Company No 1 [1990] 1 AC 637. 81 Notwithstanding the fact that the matter was so dealt with at the trial, in the course of argument on the appeal Mr Stevenson applied to amend the statement of claim by inserting the allegation that: "It was a term of the PIBA loan that, each six months, any unpaid interest on the loan could, at the [respondent's] election be capitalised and added to the principal". The particulars to this allegation state that: "The term is to be implied from the custom and usage of bankers". 82 In Pinios Lord Goff (with whom the other members of the House of Lords agreed) held that English law recognised a usage between bankers and customers that, when customers borrow from a bank and do not pay the interest as it accrues, the bank is entitled to capitalise the interest (see at 683 to 684). Lord Goff held that the bank's entitlement on the basis of this usage to capitalise interest was not limited to an "ordinary mercantile current account". 83 The usage so found did not depend on evidence and was dealt with as if it applied by operation of law to contracts of loan between banker and customer: cf Liverpool City Council v Irwin [1977] AC 239. In this sense, the usage is the foundation for an implied term in contracts between bankers and customers. 84 It is not necessary to decide whether Pinios should be followed. Even assuming that the usage upheld by Lord Goff is part of the law in Australia, I do not think that it would apply to the PIBA account. 85 The implied term derived from the usage in question, like all implied terms, must depend for its existence on the contract as a whole, and particularly the express terms thereof. That is to say, if the tenor of the contract as a whole, or particular terms thereof, indicate that the parties did not intend such an implied term, then it will not be held to be part of the contract concerned. In my opinion, for the reasons set out below, the nature of the contract whereby the PIBA loan was advanced, and the express terms thereof, exclude such an implied term. 86 PIBA was established by the Australian Rural Bank Act 1977 (Cth) to which assent was given on 10 January 1977. The purpose of PIBA was to assist in the financing of primary production. Section 7 of the Act provided that the Treasurer on behalf of the Commonwealth could make grants or loans to PIBA on "such terms and conditions as he determines". Such terms and conditions were stipulated to include arrangements for the provision of finance by PIBA to banks to enable them to make loans on terms more favourable to the borrowers than would otherwise be practicable. According to an operating instruction of PIBA, PIBA was to "facilitate the provision of long term loans to primary producers". By agreement between PIBA and CBC, although the interest rate as between the lender bank and the borrower was a matter of negotiation between them, the lender bank could not charge more than the rate charged by PIBA plus an agreed margin. 87 It follows from these matters that PIBA loans were generally made in consequence of government intervention aimed at providing financial assistance to farmers on more favourable terms than would be available on the ordinary banking market. This, indeed, is the gist of what Mr Munro told Mr Magill before the PIBA loan contract was entered into. 88 I now turn to the express terms of the PIBA contract (which are contained in the letter of 20 November 1978). Clause 3 is of particular significance. This provided that the rate of interest would be determined by PIBA from time to time. Clause 4 must also be noted. Consistently with the policy underlying PIBA loans, it provided that, in the event of adverse circumstances which seriously affected the income of the borrower during the currency of the loan, "a rearrangement of the agreed repayment programme may be submitted to [CBC] for consideration by [PIBA]". It was implicit that should PIBA approve the agreed repayment programme (which might well govern payment of both principal and interest) the terms upon which the borrower would be required to repay the loan would be altered. 89 Clauses 3 and 4 indicate that PIBA (and not CBC) was to maintain overriding control over the amount of interest that was to accrue under the loan (see also cl 2 in this regard), and over the way in which capital and interest was to be repaid to CBC. This control is consistent with the objective of a PIBA loan which, as I have said, was to provide finance to those involved in the primary industry on more favourable terms than would be available on the ordinary banking market. 90 Accordingly, the PIBA loan was not governed by the ordinary market factors applicable to the usual commercial relationships between bankers and customers. The purpose of the loan was to assist the appellants as farmers. CBC did not have unbridled control over the interest it could charge on the loan. The interest rates applicable were to be less than the ordinary market rate. The transaction was a special one, governed by singular considerations that took it outside the usual ambit of the banker customer relationship. 91 I would also observe that the conditions applicable to the loan itself were several and were recorded in writing in a letter written by CBC. There was no mention in the conditions of the interest on the loan being capitalised, when CBC had every opportunity to make this consequence clear, had it intended it to apply. In my view, this omission supports the view that the parties did not intend all the terms that usually govern the relationship between bankers and customers to be part of the contract. 92 Accordingly, I would not allow the amendment sought by the respondent in this respect. 93 Additionally, the respondent applied to amend the statement of claim by incorporating an allegation that it was an express term of the first mortgage over Arapiles that: "Each six months any unpaid interest on any amount secured by the first mortgage could, at the [respondent's] election be capitalised and added to the principal owing in respect of that amount". 94 The Arapiles mortgage, in condition 1 thereof, referred to interest on "all moneys" that might be due or unpaid. Condition 1 stipulated that "such interest to be deemed to accrue from day to day and to be computed from the time or respective times when the same moneys ... shall be or have been advanced or paid or charged or become due or payable". The condition went on to provide: "And at or about the end of every half year ending on the last day of June and December or at such other periods as the Bank may elect the Bank may without the necessity of giving notice to the Mortgagor and/or the Borrower as from such date as the Bank shall determine capitalise and add to the principal all or any interest on which interest shall have become so payable and any such accumulations by way of compound interest or addition to principal may be continued and made notwithstanding that as between the Bank and the Mortgagor and/or the Borrower the relation of banker and customer may have ceased and notwithstanding any other matter or thing whatsoever until the moneys hereby secured shall have been paid and satisfied". 95 The claim now sought to be made by the amendment, based on the Arapiles mortgage, has never previously been made. Indeed, the respondent never sought to exercise its right of capitalisation under the mortgage. The respondent in fact sought to exercise a different right to capitalise. That is, a right which it believed (wrongly, as I have held) was implicit under the PIBA loan contract and flowed from the acceleration of the entire debt which the respondent (again, wrongly, as I have held), believed it was entitled to effect. 96 Although the letter of 20 November 1978 provided for payment of instalments on 30 June and 31 December each year, the parties at an early stage in their relationship agreed that the instalments would be paid on 31 March and 30 September each year. Relying on its perceived right under the PIBA loan contract as so varied to capitalise interest, the respondent capitalised interest at six monthly rests at the end of September and March each year. Further, when the respondent combined the PIBA account with the FDA account, it capitalised in accordance with the conditions of the FDA account. As I have pointed out, that was not permissible. 97 The question whether the respondent was entitled to capitalise interest in reliance on the provisions of the Arapiles mortgage (when it had never previously sought to exercise such a right) was not investigated at the trial. Mr Stevenson applied to amend in this respect towards the close of his argument on the second day of the appeal. In my opinion it is now too late for the respondent to attempt to base a case on the mortgage provision. I would not allow the amendment. The deferment of instalments 98 In terms of cl 4 of the letter of 20 November 1978, the appellants applied for deferment of the payment of the instalments due on 31 March 1983, 30 September 1983 and 30 September 1986. PIBA agreed that payment of these instalments should be deferred. 99 I accept that PIBA's consent to the deferment does not mean that payment of the deferred instalments is deferred for ever. But some act (and I need not decide what kind of act) has to be performed by PIBA or the respondent (and I need not decide which) before they become payable. No case has been made out by the respondent in this regard and the respondent is not now entitled to claim payment of these instalments. 100 A dispute exists between the parties as to whether the instalment due on 31 March 1987 was deferred. On the evidence CBC applied to PIBA for a deferral of this instalment and PIBA agreed. There is no evidence that the appellants applied for such a deferment. 101 In my opinion, in the absence of evidence to the contrary, it is to be inferred that PIBA decided to defer payment of the 31 March 1987 instalment in response to an application by the appellants. It would not be in the usual course of things for a bank to apply of its own volition for deferment. The onus is on the respondent to prove the amount owing and, in the circumstances, where there is some evidence that an instalment has been deferred, there is an evidentiary onus on it to rebut that evidence. The respondent has not done so. 102 Accordingly, in my view, the respondent is not now entitled to claim payment of the instalment that would otherwise have been due on 31 March 1987. The approach that has to be adopted in regard to the determination of the appellants' indebtedness under the PIBA account 103 I have held that: (a) CBC was the lender under the PIBA loan. (b) The estoppels claimed by the appellants fail. (c) Despite the fact that the appellants defaulted in the payment of more than one instalment under the loan, no acceleration clause is to be implied in the contract and the respondent is only entitled to claim the instalments as and when each falls due. (d) The respondent was not entitled to combine the PIBA account with the FDA account. (e) The respondent is not entitled to capitalise the interest payments. (f) Four payments of instalments were deferred. 104 The resolution of these matters does not alone enable the amount owing by the appellants in respect of the PIBA account to be calculated. There are several other matters that are relevant to this exercise, but in the end what is required is the reconstruction of a notional PIBA account with a balance being struck at the relevant date. 105 The notional account would contain a debit and a credit column. The debit column would show all the instalments payable under the PIBA contract by the appellants from its inception to 18 July 2000, save for the four instalments that were deferred. It would also show interest on the capital amount of overdue instalments. The amount of the instalments payable during the relevant period and the interest calculations must be dealt with in accordance with the comments made below in regard to them. The credit column would show all payments made by the appellants and credits to which they are otherwise entitled in respect of the PIBA account, from its inception to 18 July 2000. The balance then struck would be the sum in which judgment should be granted in favour of the respondent. 106 The case before the Master was conducted by both parties on the basis of assumptions entirely different to the findings that I have made. There was no attempt by any of the parties at the trial to establish a notional PIBA account on the basis of those findings. As between the appellants and the respondent, no such account was maintained. Master Harrison was not called upon to make and did not make factual findings that would enable such a notional account to be prepared. 107 A notional account prepared on the basis of the findings made on appeal is, however, necessary to establish the amount owing by the appellants to the respondent at the relevant date. There is, however, no readily discernible source in the evidence from which every item to be entered in such a notional account may be ascertained. In the course of argument on appeal, counsel did not refer the court to the relevant material in adequate detail. This, no doubt, was because the permutations of possible findings were many and the findings set out above were not anticipated. In the result, I am not satisfied that this Court is in a position reliably to ascertain the correct figures from the evidence. 108 In my opinion, it would not be appropriate to order the taking of accounts in order to determine the amount owing (as was mooted, in the course of argument). The way in which the respondent's claim is pleaded does not allow for such relief. It was for the respondent to prove the amount owing at the trial. If it fails to do so, its claim must be dismissed. For that reason, I also consider that no further evidence should be allowed (and there was no application for the leading of new evidence). 109 My understanding of the evidence, however, is that it is likely to contain material, including concessions by the appellants, that would enable the respondent to prove the amount owing by the appellants for the purposes of determining the judgment sum. For the reasons I have explained, I do not think that the Court is presently able to make a reliable judgment on some of the matters that have to be considered in determining the amount owing. I consider therefore that the respondent should be given a further opportunity by way of written submissions to indicate what it contends is the amount in which judgment should be ordered and on what grounds this submission rests. Of course, the appellants should be given a full opportunity to make counter submissions. I shall propose that orders be made accordingly. 110 The submissions should be based entirely on the findings made in these reasons. I would emphasise that there is no implicit invitation in this approach for any issue to be re-argued. That should not occur. 111 It may be necessary for arithmetical calculations to be made, especially in regard to the interest that may be payable. Those calculations should be set out in detail in the submissions, so that it is made clear how particular sums asserted to be of application are arrived at. 112 I shall set out my findings in regard to all other matters that seem to me to be relevant to the calculation of the appellants' indebtedness. The amount owing as at 5 June 1987 and the treatment of the deferred instalments 113 At the trial, the respondent sought to establish the amount owing by the appellants by the evidence of one of its officers, Mr Cope, who attempted to reconstruct an appropriate account of the appellants' indebtedness. Mr Cope attempted to show the appellants' indebtedness as at 30 September 1999. The appellants, in turn relied on a report of Mr Ketibian, a forensic accountant who undertook a similar exercise. As I understand Mr Ketibian's report, he attempted to show the appellants' indebtedness as at 1 September 1998. As mentioned, neither Mr Cope nor Mr Ketibian reconstructed the account in accordance with the findings referred to above. In response to an order made by the Master, the respondent filed an affidavit calculating the appellants' indebtedness from 30 September 1999 to 11 July 2000. This affidavit, too, does not reflect calculations made in accordance with the findings now made. 114 Mr Ketibian, in his evidence, was instructed to assume, in effect, that on 5 June 1987 $119,906.55 was owing under the PIBA account. Whether this takes into account the deferred instalments is not clear. Mr Cope's testimony was that $116,447 was so owing on that date. He was not challenged by cross-examination in that respect. Further, subject to the impact of the deferred instalments which remained in issue, I did not understand Mr Burton to challenge this piece of evidence. Subject to the question of the deferred instalments, Mr Cope's figure should be accepted. 115 I should say that, if there is no satisfactory and adequate evidence (and I am unable to determine whether there is) that the amount of $116,447 takes into account the deferred instalments, the deferred instalments should be deducted from that amount in calculating the appellants' indebtedness to the respondent for the purposes of determining the judgment sum to be awarded. That is the necessary result of the onus being upon the respondent to prove the amount of the appellants' indebtedness. If the evidence on the issue is unsatisfactory or inadequate, the issue as to the account that must be taken of the deferred instalments must be resolved against the respondent. These are matters that should be dealt with in the written submissions. The determination of the amounts of the instalments payable 116 According to cl 1 of the letter of 20 November 1978, the loan was to be repaid by "equal half yearly instalments of principal and interest combined". Clause 1 provided that the half yearly instalment amount was $4,929.91 and the rate of interest was 10% per annum. Further, it provided that the "first repayment" was due on 31 December 1979 and interest of $4500 was payable on 30 June 1979. As I understand these provisions, as from 31 December 1979, the appellants were to pay half yearly instalments of $9429.91 in respect of capital and interest (no payment of capital being required on 30 June 1979 - the reference to the "first repayment" being, by inference, to the first repayment of both capital and interest). 117 Clause 3 of the letter of 20 November 1978 provided that the rate of interest was to be determined by PIBA from time to time. The clause also provided that: "In the event of an interest change, it is preferred that the original loan instalments be maintained and the term adjusted". Thus, until there was an adjustment of the amount of the loan instalments (and, in my view, that could only occur consensually) they remained at $9429.91. 118 As mentioned, the interest rate did change and the question arises whether such changes resulted in changes to the original amount of the loan instalments payable under cl 1. 119 It is to be borne in mind, however, that once it is accepted that $116,447 (subject to the deferred instalments) was owing in respect of the PIBA account as at 5 June 1987 regard only has to be had to instalments due after that date. 120 The respondent did not plead that the original loan instalments of $9429.91 were adjusted, as provided by cl 3 of the letter of 20 November 1978, after 5 June 1987 (or, indeed, at all). It did not conduct its case on this basis. Nevertheless, if there is satisfactory evidence (and, again, I am unable to determine whether there is) that the instalments prior to that date were, by agreement, increased from $9429.91, the amount of the last instalment prior to that date should be taken to be the amount of the instalments payable thereafter. 121 In this regard, I would infer that, if an increased instalment was taken into account in arriving at the sum of $116,447, the appellants should be taken to have agreed to the increase (as I have inferred that, subject to the deferred instalments, they accept that that amount was owing at 5 June 1987). If there is no such satisfactory evidence as to an agreed increase in the amount of the instalments, then, having regard to the way in which the respondent's case was pleaded and conducted, the instalments due and payable after 5 June 1987 should be taken to be of the amount of $9429.91 each. Again, the written submissions should deal with these matters to the extent that there is uncertainty as I have mentioned. The rates of interest payable 122 Clause 1 of the letter of 20 November 1978 provided that the commencing rate of interest on the PIBA loan was to be 10% per annum. Clause 3 provided, however, that: "The rate of interest will be at rates determined by [PIBA] from time to time. In the event of an interest change, it is preferred that the original loan instalments be maintained and the term adjusted. Interest will be payable from the date the loan is drawn until the commencement of the period covered by the first repayment. The interest will be calculated on a daily basis for any broken period and on a half yearly basis for a full half yearly period". 123 For a period from the inception of the loan, PIBA determined the rate of interest from time to time and the interest increased from 10% per annum. 124 On 30 June 1987, however, the situation changed. On that date the shares in PIBA were sold to the banks which had participated in the PIBA arrangements and on 8 November 1987, the Primary Industry Bank Act was repealed. 125 The appellants contended before the Master that due to the purchase of the shares in PIBA by the participating banks, further performance of the PIBA loan was frustrated. The Master held against the appellants in this respect and there is no appeal against this finding. 126 Nevertheless, there has been a change in the character of the ownership of PIBA and PIBA has not determined the rate of interest for the purposes of cl 3 of the letter of 20 November 1978 since the change of ownership on 30 June 1987. 127 Since 30 June 1987 interest rates have fallen substantially. The respondent does not claim the interest rate last determined by PIBA but has claimed lower interest rates set according to its own practice. 128 In my view, the letter of 20 November 1978 entitled the respondent to claim the last rate of interest determined by PIBA. That is to say, accepting that there has been no frustration, the last rate determined by PIBA continues to apply. Accordingly, I consider that the respondent is entitled to the lesser rate claimed by it. In the light of my finding that the respondent is not entitled to capitalise interest, it is entitled to charge simple interest alone on the capital sum lent and advanced. 129 Simple interest will be payable on the capital amount of instalments that have not been paid on due date. If the respondent seeks to assert that such interest is payable, it will have to identify the evidence that indicates what the capital amount in question is, or how it is arrived at (a process of arithmetic may be utilised). Of course, should a claim for such interest be made, the submissions must show (by reference to the evidence) the date by which each particular instalment, of which the capital amount in question formed part, became due. 130 What is stated in the preceding paragraph is of particular importance to any claim for interest that may be made on instalments that were due before 5 June 1987. It will not be permissible for the respondent to claim interest on any amount forming part of the sum of $116,447 (which I have been held to be owing at that date) without identifying the particular capital portion of any instalment that fell due for payment before that date, and the date on which it fell due. Without these details it will not be possible to calculate simple interest on the capital sum due and owing. Payments made by the appellants and credits to which they are entitled, after 5 June 1987 131 Both counsel, in my understanding, accepted that, in reconstructing a notional PIBA account for the purposes of establishing the appellants' indebtedness to the respondent, one should commence with the debit balance in the PIBA account as at 5 June 1987, which I have found to be $116,447. They also accepted that all payments and credits after that date should be attributed to the appellants' accounts with the respondent that attracted the highest interest rates. These were the FDA account and the overdraft account. Mr Ketibian was of the opinion that the appellants' overdraft was reduced to nil by March 1988. Mr Cope considered that this occurred in September 1988. By March 1988, the FDA account had been discharged. On the material available it is not possible for this Court to resolve this conflict except by holding that, the onus being on the respondent to prove the appellants' indebtedness, the view propounded by Mr Ketibian should be accepted (he not having been cross-examined). 132 It follows that all payments made by the appellants and credits to which they are entitled after March 1988 are to be offset against their indebtedness in respect of instalments due under the PIBA account. I am not able to discern from the evidence the amounts of such payments and credits. Disputed credits (other than payments) 133 The extent to which there are disputes between the parties as to credits to which the appellants are entitled (that is, apart from payments made) is not clear from the submissions made to this Court. There were no findings by the Master in regard to such disputes, presumably because there was no issue in regard to them before her. 134 As I understood Mr Burton, however, Mr Ketibian's report sets out the appellants' contentions in regard to all credits (other than those in respect of payments made) to which they say they are entitled. 135 As I have repeatedly stated, the onus was on the respondent to prove the overall amount owing. It was therefore incumbent upon the respondent to prove the credits to which the appellants were entitled. Because of the way the trial was conducted, the respondent did not do this. Accordingly, the appellants' contentions as set out in Mr Ketibian's report in respect of such credits should be regarded as being correct. 136 In particular, there was a dispute between Mr Ketibian and Mr Cope as to the way in which a payment made by the appellants for a certain plough was to be treated. For the reasons I have set out, Mr Ketibian's report should be accepted in this respect. Other matters relating to the calculation of the amount of the PIBA debt 137 There was some suggestion made in the course of argument that demand by the respondent was necessary to make individual instalments due and payable. That is not so. The letter of 20 November 1978 makes plain that instalments fall due on the dates set out therein (30 June and 31 December, each year) which were varied by agreement between the parties. 138 As regards the relevant date for the purposes of calculating the judgment amount, the parties accepted before the Master that the respondent was entitled to claim the amount owing by the appellants under the PIBA loan as at 18 July 2000 (despite the fact that the original statement of claim is dated 1 March 1996). If there is evidence that establishes the amount owing as at 18 July 2000 in accordance with the findings made, that should be dealt with in the written submissions. If not, the appellant should fix upon an earlier date at which the indebtedness can so be determined. The order for possession 139 The Master held that, under the mortgage, the respondent was entitled to possession of Arapiles. When delivering judgment on 11 July 2000, she stood the matter over for argument as to the date on which the writ of possession should issue. Having heard argument she ordered that the writ of possession should issue not before 15 January 2001. 140 If it is established, after the filing of written submissions, that the appellants are indebted to the respondent in respect of the PIBA loan, the respondent will, similarly, be entitled to a writ of possession. The written submissions should address the date on which the writ should issue. Orders 141 I propose the following orders: (a) The appellants' appeal be upheld and the orders made by the Master be set aside. (b) The respondent's application to amend its Further Amended Statement of Claim be refused. (c) The respondent file written submissions within 14 days hereof, setting out the notional PIBA account, drawn up as I have indicated and in accordance with the findings I have made. The account should identify, by reference to paragraph and page numbers of the particular volumes of the appeal books, the evidence that supports each item in the account. (d) The appellants file written submissions in like form and on the same basis within 14 days of receipt of the respondent's submissions. (e) The parties, at the same time, as filing the written submissions in (c) and (d), should file submissions as to the date by which a writ of possession should issue and as to any question of costs that might arise, and should file short minutes of orders that each contends should be made. (f) The stay of execution is extended until further order. ********** 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.