New South Wales Supreme Court CITATION : Agricultural and Rural Finance Pty Limited & Anor v John Edward Atkinson & Ors [2010] NSWSC 635 HEARING DATE(S) : 6/4/10, 13/4/10 - 16/4/10, 19/4/10, 21/4/10, 22/4/10, 28/4/10, 29/4/10, 3/5/10 - 6/5/10, 10/05/10 - 12/05/10, 18/05/10, 19/05/10 JUDGMENT DATE : 17 June 2010 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Defendants Contract Review Act claims to be dismissed. Defendants punctuality cases to be dismissed CATCHWORDS : Contract – Unjust contracts - Proceedings constitute residue of test case having travelled through a decision at first instance (Agricultural and Rural Finance Pty Ltd v Atkinson and others) [2006] NSWSC 202, a decision before the New South Wales Court of Appeal (sub nom Gardiner v Agricultural and Rural Finance Pty Ltd) [2007] NSWCA 235 and the decision of the High Court of Australia (sub nom Agricultural and Rural Finance v Gardiner) (2008) 238 CLR 570 - Remaining issues concern defendants' Contracts Review Act and punctuality cases - Whether Act applies - Whether defendants entered into contracts in the course of or for the purpose of a trade, business or profession within the meaning of s 6(2) - Proper scope of that exclusion - Whether it covers investment contracts entered into as a matter of personal finance - Whether the farming exception contained in s 6(2) applies to the first defendant - Proper scope of that exception - Ellison v Vukicevic (1986) 7 NSWLR 104 at 111 applied - Relevant steps involved in applying s 7(1) of the Act - Framework for determining whether a contract is unjust within the meaning of s 7(1) - Point at which it is determined whether a contract is unjust - Whether the Court focuses on the particular contract or the overall transaction - Principles concerning meaning of 'unjust' under the Act - Factors contained in s 9(2) are not exhaustive - Whether, if it is established that provisions of one contract are unjust, it is possible to obtain relief in respect of a related contract - Public interest consideration under s 9(1) - Baltic Shipping Company v Dillon "Mikhail Lermontov" (1991) 22 NSWLR 1 applied - Provisions in question were not subject of negotiation, whether negotiation was reasonably practicable - Purpose of s 9(2)(b), 9(2)(c) - Whether provisions in question were particularly complex - Whether provisions in question reasonably necessary for protection of legitimate interests of second cross defendant, the indemnifier - Whether loss of indemnity was a grossly disproportionate consequence in the event of late payment of interest and principal payments - Contracts Review Act 1980 ss 4, 6, 7, 9,15, 16, Sch 1 - Onus of proof - Whether issue was decided in Gardiner Test Case – Defendants bear onus of proving punctual performance - Evidence - Probative value of evidence substantially outweighed by danger that evidence would if allowed by unfairly prejudicial to the plaintiff and/or be misleading or confusing and/or cause or result in undue waste of time - Evidence Act 1995 s 69(2) Acts Interpretation Act 1901 (Cth) Australian Postal Corporation (Performance Standards) Regulations 1998 (Cth) Cheques Act 1986 (Cth) Cheques and Payment Orders Act 1986 (Cth) LEGISLATION CITED : Cheques and Payment Orders Amendment Act 1998 (Cth) Contracts Review Act 1980 Corporations Law Evidence Act 1995 Income Tax Assessment Act 1936 (Cth) Trade Practices Act 1974 (Cth) CATEGORY : Principal judgment Agricultural and Rural Finance Pty Ltd v Atkinson and others [2006] NSWSC 202 Agricultural and Rural Finance Pty Ltd v John Edward Atkinson & Ors [2010] NSWSC 42 Agricultural and Rural Finance Pty Ltd v John Edward Atkinson & Ors [2010] NSWSC 311 Agricultural and Rural Finance Pty Ltd v John Edward Atkinson & Ors [2010] NSWSC 425 Agricultural and Rural Finance v Gardiner (2008) 238 CLR 570 Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1 Antonovic v Volker (1986) 7 NSWLR 151 Australian Guarantee Corporation Ltd v McClelland (1993) ASC 56-230 Baltic Shipping Company, The "Mikhail Lermontov" v Dillon (1991) 22 NSWLR 1 Beneficial Finance Corporation Ltd v Karavas (1991) 23 NSWLR 256 Borg-Warner Acceptance Corporation (Australia) Ltd v Diprose [1988] ANZ ConvR 57 Bridge Wholesale Acceptance (Australia) Ltd v GVS Associates Pty Ltd (1991) ASC 56-105 Broadlands International Finance Ltd v Sly [1987] ANZ ConvR 328 Central Commodities Services Pty Ltd v Hertzog (1989) ASC 55-706 Citicorp Australia Ltd v O'Brien (1996) 40 NSWLR 398 Collins v Parker (unreported, Lee J, 11 May 1984) Commercial Bank Co of Sydney Ltd v Pollard [1983] 1 NSWLR 74 Coombs v Bahama Palm Trading Pty Ltd (1991) ASC 56-097 Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296 CASES CITED : Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413 Ellison v Vukicevic (1986) 7 NSWLR 104 Ford (by his tutor Watkinson) v Perpetual Trustees Victoria Limited (2009) 257 ALR 658 Gardiner v Agricultural and Rural Finance Pty Ltd) [2007] NSWCA 235 Hogan v Howard Finance Limited (1987) ASC 55-594 Holman v Deol [1979] 1 NSWLR 640 Horniblow v Napier [1955] NZLR 104 King Mortgages v Satchithanantham; Cash King Pty Ltd v Satchithanantham [2006] NSWSC 1303 Kowalczuk v Accom Finance Pty Ltd (2008) 252 ALR 55 Lander v Trigger [1999] NSWSC 1253 Lowe v JW Ashmore Ltd [1971] Ch 545 Miller Associates (Aust) Pty Ltd v Bennington Pty Ltd [1975] 2 NSWLR 506 Nguyen v Taylor (1992) 27 NSWLR 48 Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 Riz v Perpetual Trustee Australia Ltd (2008) NSW ConvR 56-198; [2007] NSWSC 1153 Roach & Ors v Page & Ors (No. 15) [2003] NSWSC 939 Spina v Permanent Custodians Ltd (2009) 14 BPR 26,923 Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 West v AGC (Advances) Limited (1986) 5 NSWLR 610 Peden, The Law of Unjust Contracts (Butterworths, 1982) Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract (Lexis Nexis Butterworths, 9th Aus ed, 2008) TEXTS CITED : Zipser, 'Unjust Contracts and the Contracts Review Act 1980 (NSW)' (2001) 17 Journal of Contract Law 76 Odgers, Uniform Evidence Law, 5th ed New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 25 March 1980 Agricultural and Rural Finance Pty Limited (Plaintiff) John Edward Atkinson (1st Defendant) Peter Brakatselos (14th Defendant) Geoffrey Nevell Fredericksen (35th Defendant) Allan Patrick Holmes (52nd Defendant) Nicholas Charles Rowe (75th Defendant) Maria Francesca Russo (78th Defendant) PARTIES : David James Wardle (95th Defendant) Jennifer Dianne Wallace (124th Defendant) Franco Giannuzzi (149th Defendant) Gavin Winston Long (172nd Defendant) Maria Michael (177th Defendant) Maria Francesca Russo (189th Defendant) Christina Spyrakis (193rd Defendant) Oceania Agriculture Limited (Second Cross Defendant) FILE NUMBER(S) : SC 2003/0092819 Mr T Hale SC, Mr C Bevan, Mr B Katekar (Plaintiff) COUNSEL : Mr S Epstein SC, Ms A Tsekouras (1st, 14th, 35th, 52nd, 75th, 78th, 95th, 124th, 149th, 172nd, 177th, 189th, 193rd Defendants) Ms P Conway (Second Cross Defendant) Evangelos Patakas & Associates (Plaintiff) SOLICITORS : Abadee Dresdner Freeman ((1st, 14th, 35th, 52nd, 75th, 78th, 95th, 124th, 149th, 172nd, 177th, 189th, 193rd Defendants) Peter Condon & Associates (Second Cross Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Thursday 17 June 2010 2003/0092819 Agricultural and Rural Finance Pty Limited & Anor v John Edward Atkinson & Ors JUDGMENT Background 1 The proceedings presently before the Court constitute the residue of a test case which has already travelled through: i. a decision at first instance ( Agricultural and Rural Finance Pty Ltd v Atkinson and others [2006] NSWSC 202 before Young C J in Eq); ii. a decision before the Court of Appeal (sub nom Gardiner v Agricultural and Rural Finance Pty Ltd ) [2007] NSWCA 235 before Spigelman CJ, Basten JA and Handley AJA; iii. the decision of the High Court of Australia (sub nom Agricultural and Rural Finance v Gardiner ) (2008) 238 CLR 570 before Gummow, Hayne, Kiefel, Kirby and Heydon JJ. 2 The test case was ordered against a background where the plaintiff had commenced proceedings against 216 defendants to recover the balance of principal and interest advanced to those defendants under loan agreements in conjunction with investments made by each of the defendants in one or more of two prescribed interest projects known as the Port Macquarie Tea Tree Plantation Project No 1 and the Port Macquarie Tea Tree Plantation Project No 2. 3 Essentially the instant proceedings are constituted as follows: i. ARF claims the recovery of loans it provided, under loan agreements into which it entered with the current defendants, in conjunction with the current defendants' investment in the two prescribed interest projects; ii. The current active defendants rely on the Contracts Review Act by way of defence and cross claim, no such defence or cross claim having been the subject of the Gardiner test case. 4 Presently ARF has sued 206 defendants for the recovery of a total amount of $11,042,542 under loan agreements made in 1997, 1998 and 1999. Those debts were alleged to have fallen due on 4 January 2003, which was the date of cessation of business of an agricultural investment scheme managed by the second cross-defendant (OAL). 5 The great majority of the claims have been resolved. The course of the present trial 6 Even before the final hearing of these proceedings commenced two of the borrowers were successful: i. in obtaining orders discharging an earlier order which had extended by 4½ years that time for service of the summons upon those investors; ii. in obtaining consequential orders setting aside the service of the summons on each of those investors on the basis that the summons was served after the time for service had expired. [ Agricultural and Rural Finance Pty Ltd v John Edward Atkinson & Ors [2010 NSWSC 42] 7 During the trial two further significant judgments were handed down: i. Agricultural and Rural Finance Pty Ltd v John Edward Atkinson & Ors [2010] NSWSC 311 - the strike out motion; ii. Agricultural and Rural Finance Pty Ltd v John Edward Atkinson & Ors [2010] NSWSC 425 - the pleading motion. 8 Both the decision on the strike out motion as well as the decision on the pleading motion require to be closely examined in order for one to become conversant with what amounted to an emasculation of a deal of the defendants Contracts Review Act defences. As the reasons for both those decisions in fact repay that study, it seems to me unnecessary and inefficient to do otherwise than to regard the reader as having closely read both decisions. 9 The plaintiff contended that the defendants' final submissions had strayed outside the Contract Review Act case which they were permitted to argue in light of the interlocutory judgments which had confined the defendants' case: T765.16-18. The reasons which follow treat with the defendants' final submissions as they were made to the Court. However, that should not be taken as detracting in any way from the interlocutory judgments which confined the defendants' case. To the extent that the defendants final submissions – dealt with in these reasons – go beyond the case they were permitted to argue, those submissions are disregarded. 10 The net result of the plaintiff's successes on the strike out motion and the pleading motion leaves only two real issues for determination: The case and pursued by reference to the Contracts Review Act i. Whether any or all of the pleaded Contracts Review Act cases which survived the strike out motion have been made out; [it is appropriate to point out that whether or not the Contracts Review Act is engaged is itself a live issue] The punctuality case ii. The factual issue as to whether those defendants who gave evidence have discharged the onus which they bore of establishing punctual performance of their obligations to pay principal and interest as a condition precedent to their entitlement to indemnity for the repayment of their loans from OAL. 11 As will be apparent, were the defendants to succeed by dint of their Contracts Review Act defences, such that the Court was to set aside the loan agreements and the indemnity agreements or to rewrite them, this would likely trump the need to deal with the punctuality case. The onus of proof born by ARF 12 ARF bears the onus of proof of the following ingredients of its claim: i. the making of loans to the defendants and their amounts; ii. the termination of the Projects by virtue of which the loans became repayable and hence termination of the loans (subject to repayment); iii. the amount owing by each defendant on each loan at the date of termination – involving proof of the receipt of amounts paid in reduction of each loan – and therefore the borrower's liability on each loan at termination date; and iv. the amount of the interest which has accrued on each loan since termination up to the trial date and how that calculation was made. The onus of proof born by the defendants 13 This may be put in the following fashion: i. The defendants bear the onus of proving their entitlement to indemnity: see Young CJ in Eq at [43], [44] not appealed to the Court of Appeal but upheld by majority per in curiam by Spigelman CJ at [65]; and Handley AJA at [357]; (Basten JA dissenting at [214]-[217]; an attempt to reverse the finding in the High Court was by implication dismissed: Gardiner sought its reversal in his amended contention [8] in the High Court. ii. A condition precedent to indemnity is the requirement to establish punctual performance of the interest and principal obligations in the loan agreements under cl. 2.2(a) and 2.2(b): see Young CJ in Eq at [36] (reciting indemnity agreement cl. 2), [44] (the onus of proof is on Gardiner), [52], [53] (characterisation of punctual performance as borrower as a condition precedent to indemnity from OAL). iii. Hence the defendants bear the onus of establishing punctual performance of their obligations to pay principal and interest as a condition precedent to their entitlement to indemnity for the repayment of their loans from OAL. [It is appropriate to note that in final address before me, Mr Epstein took issue with the proposition that the defendants bore the onus of proving their entitlement to indemnity. The submission is rejected as clearly Young J made a finding on the issue of onus, after referring to the arguments, holding that to his mind the onus of proof was on Mr Gardiner. This could not be regarded as anything other than a positive finding on the issue of onus although he also indicated that he did not consider that it was likely that this was going to affect the result of the litigation. Mr Gardiner did not appeal from this finding as to the onus of proof which is the operative finding which binds all defendants who gave Test Case undertakings. This is why the Court of Appeal did not have to determine the issue. It was obiter in that Court. cf: (1) The judgment of the Chief Justice at [65]: "I proceed on the assumption that the appellant bore the onus in this respect"; (2) Handley AJA at [357]: "I am inclined to the view that the appellant bore the onus ... I will assume that this was the position"; (3) Basten JA, at [217], although addressing the issue of onus did not determine it and did not make findings based on who bore the onus. Furthermore the plaintiff had opened its case on the basis that the defendants bore the onus of proof. The plaintiff opened orally on that issue and conducted its case on the basis that the onus lay upon the defendants. The defendants did not appear to dispute this in their opening.] iv. Additionally and to the extent that the defendants did not withdraw disparate of their defences, they bear the onus of establishing causes of action they have pleaded in their cross claims in order to avoid liability to repay their loans. 14 Focusing on the defendants cross claim onus issues [and again subject to those areas which were not pressed by the defendants], the position which obtains may be regarded as follows: i. The defendants essentially raise two causes of action in their cross claims, namely: a) they claim relief under s. 7 of the Contracts Review Act based on the pleading of such relief in their defences by adopting the pleadings in their defences. The plaintiff submitted that this was originally done defectively in the case of some defendants who only partially adopted their defence pleadings of the Contracts Review Act in their cross claims, and other defendants who filed no cross claims and relied on their defences to claim relief under the Act. This point is dealt with by Commercial Bank Co of Sydney Ltd v Pollard [1983] 1 NSWLR 74 at 77F, 78E, which establishes that relief can be sought under the Act by way of defence to an action on the contract claimed to be unjust. b) they had also claimed relief under sections 52, 82 and 87 of the Trade Practices Act , 1974 (Cth) for misleading and deceptive conduct which either allege a failure to inform the defendants of the consequences under their indemnity agreements of their failure to perform their loans punctually (misleading and deceptive conduct by silence), or they adopted the same kinds of factual allegations that were made to support the waiver, election and estoppel defences (misleading and deceptive conduct based on representations about the lack of a requirement for punctuality by ARF and/or OAL).. [cf the judgments of April 2010 and May 2010 as to these claims] The relief sought by the defendants under the Contracts Review Act 15 Each of the defendants Messrs Atkinson, Michael, Rowe, Wallace, Brakatselos, Fredericksen, Giannuzzi, Holmes, Spyrakis, Wardle, Russo and Long seeks relief under the Contracts Review Act. 16 The relief for each claim is set out in paragraph 31 of Mr Atkinson's defence which is: "(a) Clauses 2(a) and (b) of the relevant indemnity agreement pursuant to section 7 of the Contracts Review Act by amending the provisions to read that prompt payment was satisfied where: i. The Borrower has paid the interest payable pursuant to Clauses 3.2 and 3.3(a) of the loan agreement which has been accepted by ARF; ii. The Borrower has paid the reductions of the Principal Sum set forth in Clause 4.1 of the loan agreement which has been accepted by ARF; and (b) Clause 7 of the corresponding loan agreement so as to provide that notwithstanding any other provision of Clause 7 the Lender acknowledges that the Borrower should have no liability to repay any part of the Principal Sum outstanding or any interest thereon if the indemnity agreement is held to be unjust as a result of the matters alleged in paragraphs 30 and 31 above." 17 In substance, the relief sought is that the indemnity agreement be varied so that clause 2 has the effect that the Indemnity is "effective and enforceable" if the Borrower has punctually paid the principal and interest or if paid unpunctually the late payments are accepted by the plaintiff. 18 It is now necessary to examine the Contracts Review Act issues that arise in determining whether the defendants are entitled to the relief claimed. Contracts Review Act issues 19 The relevant issues include: i. Whether the Act applies in the present case; ii. To what matters the Court should have regard in determining whether the contractual provisions in question are unjust and therefore what parts of the evidence led is relevant to this inquiry; iii. Whether the contractual provisions in question are unjust under the Act; iv. If yes to iii, whether relief should be granted under the Act; [Late in its final address the plaintiff was denied leave to plead the limitation issue provided for in section 16 of the Act]. Does the Act apply? 20 S 6(2) of the Act provides: A person may not be granted relief under this Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person or proposed to be carried on by the person, other than a farming undertaking (including, but not limited to, an agricultural, pastoral, horticultural, orcharding or viticultural undertaking) carried on by the person or proposed to be carried on by the person wholly or principally in New South Wales. The challenge to the plaintiff's right to dispute the defendants' standing under section 6(2) 21 During final addresses the defendants submitted that the plaintiff was unable to raise a standing to claim relief under s. 6(2) of the Contract Review Act because: i. it should have been pleaded (the first ground); and ii. the proviso to s.6(2) is "not engaged because there is no evidence to suggest that the defendants are not engaged in agriculture" (the second ground). 22 It does not seem to me appropriate to treat with this issue in terms of an onus argument. It is to the substance of the issue that the Court should turn: cf Ford (by his tutor Watkinson) v Perpetual Trustees Victoria Limited (2009) 257 ALR 658, discussed below per Allsop P and Young JA, Sackville AJA agreeing. 23 To my mind the initial enquiry is for the Court to satisfy itself that on a proper interpretation the Act applies. 24 In the application of s 6(2) there are two questions: i. are the plaintiff's within the ''trade business or profession' exclusion, ii. if so are they within the 'farming undertaking' exception to that exclusion. The ''trade business or profession" exclusion 25 The plaintiff's submission in relation to this point can be fairly summarised as: i. the contracts were entered into for the purpose of investment, or some other more precise purpose which would depend upon the nature of the defendants' income producing activities; ii. the defendants were each engaged in a business or profession (it was not clearly articulated how these businesses or professions related to the purpose in (i)); iii. therefore, the exclusion in s 6(2) was engaged. 26 The defendants' senior counsel appeared to assume during final address that the defendants were engaged in "a trade, business or profession" – insisting that the farming exception applied – however he did not give the matter a detailed treatment. 27 In Ellison v Vukicevic (1986) 7 NSWLR 104 at 111 Young J said that 'the words "trade, business or profession" are… very wide and cover the whole gamut of professional and commercial activity: see Holman v Deol [1979] 1 NSWLR 640. His Honour then approved the interpretation of Lee J in Collins v Parker (Lee J, 11 May 1984): "The expression 'for the purpose of' has the meaning that the contract under consideration is entered into as an ordinary incident of the carrying on of a particular trade, business or profession then being carried on or proposed to be carried on." 28 This interpretation of the Act has been subsequently approved: see, eg, Lander v Trigger [1999] NSWSC 1253 at [53], King Mortgages v Satchithanantham; Cash King v Satchithanantham [2006] NSWSC 1303 at [133] and Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 at p 400 (regarding a slightly different statutory context). Peden, The Law of Unjust Contracts (Butterworths, 1982) ('Peden') at 116 comments that the exclusion contained in s 6(2) 'applies to contracts with a mixed business and private purpose', giving the example of a motor vehicle used for the dual purpose of business and private use. 29 In the recent case of Ford v Perpetual Trustees, supra, Allsop P and Young JA, Sackville AJA agreeing, at [95] emphasised the need in applying subsection 6(2) to focus on the statutory language contained therein. At [98] their Honours said that '[t]he application of s 6(2) should be looked at as a matter of substance and not form'. 30 Of relevance to the present case is Central Commodities Services Pty Ltd v Hertzog (1989) ASC 55-706, where the contract in question was a mortgage entered into to secure a share in the Cypart Trust No 5, [a trust of an investment company]. At p 58, 372, Callaway AJ noted that 'although the defendant claimed that he wished to become a trader, this wish related to trading on his own account and did not relate to the investment in Cypart No 5'. Accordingly, the exclusion contained in s 6(2) did not apply. This decision provides some support for the proposition that where an investment contract is entered into as a matter of personal finance, rather than in the course of or for the purpose of a 'trade, business or profession' that relates to investing, s 6(2) will not apply. The commentary in Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract (Lexis Nexis Butterworths, 9th Aus ed, 2008) ('Cheshire') at 779 in relation to the case supports this view. 31 Ultimately, the question to be answered is whether the contracts in question were entered into in the course of or for the purpose of a trade, business or profession carried on by the defendant in question or proposed to be carried on by them. In my view the position is as follows: (a) With the exception of Mr Atkinson, the defendants' entry into the scheme was essentially part of their management of their personal finances, and did not occur either in the course of, or for the purpose of their particular 'trade business or profession'. See here the relevant details of the occupations of particular defendants in the part of these reasons dealing with the punctual payment case. i. A different position pertains in relation to Mr Atkinson. Mr Atkinson's evidence was that part of the business of his company, Structured Securities, was introducing potential subscribers to the scheme: T642.45-47. Mr Atkinson himself also subscribed to the scheme. Mr Atkinson deposed to conversations with Mr Lloyd, of OAL, where he discussed promoting the scheme and also noted that he would be personally subscribing. In my view Mr Atkinson entered the scheme in the course of, or for the purpose of (understood as 'an ordinary incident of'') the 'trade, business, or profession' he was carrying on. ii. Perhaps obviously, it does not follow that defendants who merely became aware of the scheme through work colleagues entered the scheme in the course of or for the purpose their professional undertakings. This analysis applies to Mr Long (see T600-601) and Mr Holmes. (b) The fact that the defendants produced the income which motivated them to enter the scheme through their particular 'trade, business or profession' does not mean that the contracts were made in the course of or for the purpose of (understood as 'an ordinary incident of'') that undertaking. Accordingly, in my view the evidence that many of the defendants had entered the scheme largely to obtain income tax benefits is not decisive of the present question. (c) Furthermore, the fact that the plaintiff was able to establish that some of the defendants worked in areas of the financial sector does not assist its case in this area. 32 In summary, only Mr Atkinson comes within the exclusion contained in s 6(2). 33 The above conclusion is consistent with the narrow interpretation that has repeatedly been given to s 6(2): see further Coombs v Bahama Palm Trading Pty Ltd (1991) ASC 56-097 at 57, 025; Zipser, 'Unjust Contracts and the Contracts Review Act 1980 (NSW)' (2001) 17 Journal of Contract Law 76 at 76 ('Zipser'); Cheshire at 778-779. 34 In relation to Mr Atkinson – and if the above be wrong and the s 6(2) exception applies to the other defendants - it is necessary to consider the farming exception. The farming exception 35 The question that must be answered under s 6(2) is whether the contracts were entered into in the course of or for the purpose of a farming undertaking proposed to be carried on by Mr Atkinson (and if I am wrong as to the application of the 'trade, business and profession' exclusion also the other active defendants). (It was uncontroversial that the defendants were not carrying on a farming undertaking at the time of contracting, and that the undertaking had occurred in NSW). The farming exception -'[c]onsistent with the narrow interpretation of s 6(2) – has been interpreted broadly: Zipser at 76-77. Young J considered the breadth of the exception in Ellison v Vukicevic supra at 111, commenting: Traditionally there is a trichotomy of expressions, farming, forestry and horticulture and farming is limited to pure agriculture: see, eg, Horniblow v Napier [1955] NZLR 104 at 105. However, here the words of the section make it quite clear that farming is to be used in a greatly extended sense. The point is, I think, covered by the defendant in Lowe v JW Ashmore Ltd [1971] Ch 545, where Megarry J held that profits by a farmer in selling the exclusive right to the turf were profits arising from his farming trade. 36 In that case Young J held that a landowner's granting of mining rights to a quarrying company was within the farming exception. 37 The plaintiff advanced detailed submissions to the effect that the contracts were not entered into for the purpose of carrying on a farming undertaking that was carried on by the defendants. The submissions were: i. Although the licence and management agreement (Orange Tab 1) described each investor as a "Farmer", in reality the defendants were merely investing in a farming business undertaken by OAL on their behalf (as their manager and licensor of the land (1 hectare allotments) on which the tea trees were growing) and deriving tax benefits from doing so. ii. The licence and management agreement makes it clear that the "farming undertaking" is to be undertaken exclusively by "the Manager", OAL, on behalf of each "Farmer": see clauses 15-18 and 22-25 of the licence and management agreement (Orange Tab 1 pages 13-20). iii. In particular, "the Manager" alone must perform the covenants to be performed by "the Farmer" under the agreement to farm the allotment: see cl. 25.1. The Manager farms the tea trees, critically, not as the Farmer's agent, but rather as a principal in consideration of the right to remuneration provided for in clause 19: see clause 15.2 of the licence and management agreement. 38 The plaintiff's submission in this area was essentially that since investors only had a mere license to their allotment(s), and all of the actual operations were carried out by OAL (the manager), there was no farming undertaking proposed to be carried on by the defendants. The plaintiff also contended that the defendants' were not covered by the policy reasons that underlay the farming exemption. As to the latter point, the relevant second reading speech does not decisively resolve the matter (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 25 March 1980 at 5860-5861). Furthermore, as outlined above, there is persuasive case law as to the scope of the exception. 39 The plaintiff's submissions in this area were not made in light of the relevant case law regarding the meaning of 'farming' under the Act. Vukicevic, extracted above, establishes that a landowner granting mining rights to a quarrying company will come within the expanded definition of 'farming' under the Act. Relevantly, there is nothing in that judgment which indicates that the landowner herself needed to engage in any activity on the land in order to come within the exception. This undercuts much of the plaintiff's submissions, which were made from the premise that the defendants, as licensees of the land who did not engage in any activity on the land themselves, could not come within the farming exception. Furthermore, in Vukicevic the relevant activity on the land was not being carried on by an agent of the landowner. Therefore, the fact that in the present case the manager was not an agent of the farmer does not have the significance contended for by the plaintiff in establishing that the farming exception does not apply. 40 In determining whether Mr Atkinson was engaged in a farming undertaking it is relevant to consider the nature of the interest that he gained upon investing in the project, bearing in mind that the relevant case law concerns a landowner granting rights to her land. The plaintiff made its final submissions (against application of the farming exception) on the basis that the defendants gained a mere license to their allotments. This follows from clause 2.1 of the license and management agreement. Other clauses of the agreement that are relevant to the present issue are as follows: (a) Under cl 8 the farmer is to peaceably surrender and yield up the allotment to the licensor at the termination date or sooner determination of the agreement. (b) Under cl 10.1, subject to the agreement, and the farmer paying the license fee and duly and punctually observing his or her covenants, a right of quiet enjoyment to the allotment is granted to the farmer. (c) Under cl 11(a), the farmer has full title to the allotment produce (the tea tree oil produced from the allotment) and the right to have it sold for his or her benefit. This is subject to clause 9 (relating to default and termination) and clause 19.3 (under which in paragraph (c) a charge is granted to the Manager over the income of the Farmer's business to the extent required to pay fees due to the manager under the agreement). The farmer's title to the oil is also subject to clause 18.3 under which the manager may pool the produce from allotments and divide the proceeds pro rata. Additionally, clause 11(b) serves to restrict the farmer's title to only the oil produced by the trees. (d) Under cl 18.2 the farmer could elect to take in kind the oil attributable to the farmer's business. (e) Under cl 13 the farmer appointed the manager to manage the farmer's business (defined as the long term commercial tea tree oil production business of the farmer). (f) Under cl 25.1 the manager (OAL) was to perform all of the farmer's covenants, other than in relation to license and management fees. 41 See also: i. The decision of Basten JA in the Gardiner Test Case at [178] where his Honour explained the way in which cl 19.3 of the license and management agreement operated so that, after the initial period, investors would only be liable contingently for license and management fees to the extent that the income from the project attributable to the investor allowed for such payment. ii. The judgment of Young CJ in Eq at first instance in the Gardiner Test Case at [38] where his Honour dealt with the right of the investor to enter the property and work the allotment. 42 In my view the above is consistent with a characterisation that investors, by entering the scheme, gained the right to the tea tree oil produced on their allotment(s) and accordingly the resulting proceeds. In one sense this is the converse of Vukicevic where the landowner was selling the right to mine for sand and sandstone on her land. In my view the present case has an equally strong connection to the definition of farming under the Act. The finding is that Mr Atkinson is within the farming exception. 43 Accordingly, the position is that the Act applies to all of the active defendants. Turning to the substantive application of the Contracts Review Act 44 It is first necessary to examine the relevant principles which inform the application of the Act. The relevant steps in applying section 7(1) of the Act 45 As the plaintiff contended the critical provision of the Act is s 7(1). That section provides: "Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following … [subsections (7)(1)(a)-(d) then outline the various powers available to the Court where a contract is found to be unjust, see also Schedule 1 regarding Ancillary relief]. 46 As Campbell JA, Hodgson JA and McColl JA agreeing, said in Kowalczuk v Accom Finance Pty Ltd (2008) 252 ALR 55 at [87[, 'in applying the Contracts Review Act, two distinct steps are involved'. Cambell JA then approved the following useful summary by Brereton J in Riz v Perpetual Trustee Australia Ltd (2008) NSW ConvR 56-198; [2007] NSWSC 1153 at [51]: The first is whether the contract was unjust in the circumstances in which it was made, having regard to the factors referred to in s 9. This is a conclusion of fact, albeit one of ultimate fact involving a broadly based value judgment [ Antonovic v Volker (1986) 7 NSWLR 151 at 154–155 (Samuels JA, Kirby P agreeing); Beneficial Finance Corporation Ltd v Karavas (1991) 23 NSWLR 256 at 270E (Samuels JA); Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 at [34]–[40] (Spigelman CJ), at [106]–[111] (Basten JA)]. The second, which arises only if the first is resolved in the affirmative, is whether any and if so what relief should be granted; this involves the exercise of a judicial discretion [ Khoshaba at [34]–[36] (Spigelman CJ), at [109] (Basten JA)]. The framework for determining whether a contract was unjust in the circumstances in which it was made 47 In Kowalczuk v Accom Finance Pty Ltd (2008) 252 ALR 55 at [70] Campbell JA, Hodgson JA and McColl JA agreeing, outlined the framework of the Act with regard to the question of a contract is unjust: [70] Section 4(1) provides a non-exhaustive definition of "unjust": unjust includes unconscionable, harsh or oppressive, and injustice shall be construed in a corresponding manner. [71] Other assistance in ascertaining the intended content of "unjust" is derived from s 9: (1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract. (2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following: (a) whether or not there was any material inequality in bargaining power between the parties to the contract, (b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation, (c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract, (d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract, (e) whether or not: (i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or (ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented, because of his or her age or the state of his or her physical or mental capacity, (f) the relative economic circumstances, educational background and literacy of: (i) the parties to the contract (other than a corporation), and (ii) any person who represented any of the parties to the contract, (g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed, (h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act, (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect, (j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act: (i) by any other party to the contract, (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or (iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract, (k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and (l) the commercial or other setting, purpose and effect of the contract. (3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made. (4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made. (5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made. The point at which it is determined whether a contract is unjust 48 The parties have advanced various submissions concerning factors to which the Court was to have regard in determining whether a contract was unjust within the meaning of the Act. In this context, a debate arose as to whether it was legitimate to have regard to post-contract date conduct. 49 The words in s. 7(1), "in the circumstances relating to the contract at the time it was made" make it clear that the standpoint in determining whether the contract is unjust is the time at which the contract was made. This is reinforced by the terms of 9(1) – set out above - under which the Court must look to the consequences or results "in the event" of the matters referred to in (a) and (b). This is looked at from the standpoint of foresight. S 9(4) – which prevents the Court from having regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made – also reinforces the conclusion. 50 Furthermore, the words of s 9(5) – set out above – make clear that the parties' conduct after the contract was made is only to be considered at the second stage of analysis, that is in considering whether it is just to grant relief in respect of contract or provision of a contract that is found to be unjust. 51 In West v AGC Advances Ltd (1986) 5 NSWLR 610 at 620 McHugh JA held that: In my opinion the effect of s 9(1), 9(2) and 9(4) is that the Court may have regard to any circumstance existing at the time of the contract whether or not a party was aware of that circumstance. But the Court cannot have regard to any injustice arising from a circumstance that was not reasonably foreseeable at the time when the contract was made. 52 The above construction is consistent with authorities that have addressed this discrete point. In Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296, Mahoney P at 297 noted 'The central question to be addressed in any application under the Act is whether the contract or a provision of it … was, at the relevant time, unjust'. The analysis engaged in by Mahoney P at 298-299 and Handley JA at 309-310 bears out this approach. See also Sheller JA in Nguyen v Taylor (1992) 27 NSWLR 48 at 71 and Peden at 122. Does the Court focus on the particular contract or the overall transaction? 53 The authorities have considered this question at some length. Mention has already been made of West v AGC, which was certainly an early and extensive treatment of the Act. McHugh JA at 621 noted that the Act 'regulates contracts not investments': West v AGC Advances Ltd (1986) 5 NSWLR 610 at 621, approved in Citicorp Australia Ltd v O'Brien (1996) 40 NSWLR 398 at 419 (Sheller JA, Meagher JA and Abadee AJA agreeing) and Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296 at 304-305 (Meagher JA). See also Cheshire at 781. 54 However, it is necessary to read McHugh JA's statement in West in light of the recent decision in Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41, where it was held that the purpose for a which a loan is obtained is a relevant circumstance in applying ss 7 and 9 of the Act. In that case, Spigelman CJ said: [67] Nothing McHugh JA said in West suggests that the purpose for which a loan is obtained is not one of the relevant "circumstances". His Honour was drawing attention to the fact that the ultimate focal point of consideration under s 7(1) must be the contract sought to be set aside or varied. [68] In my opinion, the purpose for which a loan is advanced is a relevant circumstance. This is confirmed by s 9(2)(l) which includes, amongst the matters to which a Court shall have regard in determining whether a contract is unjust: "The commercial or other setting, purpose and effect of the contract." … [76] Plainly, the conduct, whether by act or omission, of the party resisting a finding of unjustness under the Act is highly relevant, and will often be determinative. However, the scope of relevant circumstances is not confined to what the person resisting an order under s 7(1) did or did not do and knew or ought to have known. ... 55 Basten JA likewise agreed that the wider transaction may be a relevant consideration: [122] While it is true, as McHugh JA stated in West at p 621E, that the Act "regulates contracts not investments", nevertheless, the transaction or investment which constitutes the purpose for which the loan is obtained may be relevant in a number of respects …Thus, as noted above, s 9(1) requires that the Court have regard to all the circumstances of the case including the consequences which may arise in the event of compliance or non-compliance with, or a contravention of, the contract. Where there is a security, the fact that failure to meet a repayment instalment may lead to sale of the security, is therefore a relevant consideration. Principles concerning the meaning of 'unjust' under the Act 56 In Kowalczuk v Accom Finance Pty Ltd (2008) 252 ALR 55 Campbell JA, Hodgson JA and McColl JA agreeing, provided the following useful summary of the overarching principles which inform whether a contract is unjust within the meaning of the Act: [85] Comparatively early in the life of the Contracts Review Act, McHugh JA in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 recognised, at 621, that the Act: … is revolutionary legislation whose evident purpose is to overcome the common law's failure to provide a comprehensive doctrinal framework to deal with "unjust" contracts. [86] McHugh JA recognised, at 620, that a contract can be unjust "because of the way it operates in relation to the claimant or because of the way in which it was made or both." He recognised that a contract could be unjust because it contained "substantive injustice" — which arises "because its terms, consequences or effects are unjust", or because of "procedural injustice" — which arises "because of the unfairness of the methods used to make it" — or both. He recognised, at 621, that a contract can be "unjust" even if it is not unconscionable, harsh or oppressive. 57 At [88] Campbell JA continued: Thus, if the contract is found unjust by reason of circumstances not known to one of the contracting parties, it does not automatically follow that relief will be given to remedy that injustice. 58 In its final submissions the plaintiff emphasised the following comments of McHugh JA in West: i. "If a defendant has not been engaged in conduct depriving the claimant of a real or informed choice to enter into a contract and the terms of the contract are reasonable as between the parties, I do not see how that contract can be considered unjust simply because it was not in the interest of the claimant to make the contract or because she had no independent advice." At 621G ii. "A contract will not be unjust as against a party unless the contract or one of its provisions is the product of unfair conduct on his part either in the terms which he has imposed or in the means which he has employed to make the contract. In this respect it [the Act] stands in marked contrast with the provisions of the Industrial Arbitration Act, 1940, s.88F, which provides, inter alia, that the Industrial Commission may declare certain types of contract or arrangements void on the ground that they are 'unfair'". At 622B. 59 In this area it is necessary to bear in mind the point made by Spigelman CJ in Perpetual Trustee v Khoshaba supra at [73]: Where the Court has to apply a standard as general as what is "unjust", it cannot be confined by such reasons as if they were rules. I do not understand McHugh JA to have put forward these observations as rules. Rather, the observations are to be understood, correctly, as identifying relevant considerations entitled to significant weight. The factors contained in s 9(2) of the Act are not exhaustive 60 Recently in Spina v Permanent Custodians Ltd (2009) 14 BPR 26,923, Young JA, Tobias and Campbell JJA agreeing, noted at [80] that '… in making its decision, s 9(1) of the Contracts Review Act mandates the Court have regard to the public interest and to all the circumstances of the case. Subsection (2) is merely a list of the major factors to be considered'. See further Cheshire at 779 where the s 9(2) cases are described as 'a guide rather than an exhaustive definition', citing substantial authority. 61 Notwithstanding this, analogous situations are a useful guide in determining whether a contract is unjust, and in maintaining consistency in the application of the Act: Spina at [105]. 62 It is also necessary to remember that the mere fact that a party to a contract can point to circumstances that fall within the words of one or more paragraphs in s 9(2) of the Act does not mean that there is an arguable case for relief under the Act: Hogan v Howard Finance Limited (1987) ASC 55-594 at 57, 539 (Hope JA, Street CJ agreeing); Australian Guarantee Corporation v McClelland (1993) ASC 56-230 at 58, 389. The "agreements" in respect of which relief is sought and their operation 63 In this part of the case it is necessary to bear in mind the precise contractual provisions in respect of which relief is sought. The defendants plead that each of clauses 2(a) and 2(b) of the indemnity agreement was "a provision of a contract" which was unjust at the time it was made within the meaning of s. 7(1). Relief is also sought with respect to clause 7 of the loan agreement (Atkinson defence [31(b)]. 64 It is instructive to review how the relevant provisions operated. Using the loan agreement of Mr Atkinson dated 26 June 1997 as an example, Orange Tab 5, it can be seen that: i. Clause 3.2 made provision for the payment of the first year's interest on the Principal sum upon execution of the agreement. ii. Clause 3.3(a)(i) made provision for the payment of interest in the second year of the agreement, providing that the borrower would pay on or before 30 th June 1998 interest for 12 months in advance on the principal sum then outstanding. iii. Clause 4.1 made provision for the payment of principal. Relevantly it provided: "The Borrower will repay to the Lender the sum of $8,750 per Allotment in respect of the Principal Sum on or before 31 October 1997 or, if this agreement is executed after 31 October 1997, the date which is three calendar months after the date of such execution." 65 Clauses 3.2, 3.3 and 4.1 in the loan agreement executed by Mr Atkinson in respect of Project No. 2 on 10 May 1999 (Orange Tab 8) are in similar terms. The amount of the payment and date of payment is clearly stated. 66 Clause 7 of the loan agreements was in these terms: "The Lender acknowledges and agrees that the Borrower shall have no liability to repay any part of the Principal Sum outstanding or any interest thereon if the indemnity granted under the indemnity agreement as defined in the Project Deed is effective and enforceable in accordance with clause 2 of the indemnity agreement in respect of that Principal Sum." 67 Clause 7 is clear in its terms. The Borrower shall have no liability to repay the sums if the indemnity agreement "is effective and enforceable in accordance with clause 2 of the indemnity agreement". The indemnity agreement executed by Mr Atkinson on 26 June 1997 is at Orange Tab 6. Clause 2 is in the same terms in each indemnity agreement signed by the defendants. It provides: "The Indemnity referred to in Clause 1 shall be effective and enforceable if: (a) The Borrower has punctually paid the interest payable pursuant to clauses 3.2 and 3.3(a) of the loan agreement; and (b) The Borrower has punctually paid reductions of the Principal Sum set forth in clause 4.1 of the loan agreement… 68 Clauses 2(a) and (b) are clear in their terms and provide that the indemnity is only "effective and enforceable if the Borrower has 'punctually paid' the interest and reductions of principal pursuant to Clauses 3.2, 3.3(a) and 4.1 of the loan agreement". 69 If this occurred the indemnity agreement would be "effective and enforceable", and accordingly, under Clause 7 of the loan agreement, the Borrower would have no liability to repay any outstanding principal or interest. Conversely, if the relevant payments were not 'punctually paid' the indemnity would not be 'effective and enforceable'. 70 I accept the plaintiff's submission that while the detail of Projects 1 and 2 might have some complexity attached to them, there was nothing particularly complex about clauses 2(a) and (b) of the indemnity agreement and clauses 3.2, 3.3, 4.1 and 7 of the loan agreement. 71 The plaintiff submitted that although it was not pleaded, the defendants' case involved an implicit contention that clauses 3.2, 3.3(a), 4.1 and 7 of the loan agreement were, in combination with clause 2(a) and 2(b) of the indemnity agreement, also unjust at the time the loan agreement was made. The real issue here appears to be that the defendants only pleaded that clauses 2(a) and 2(b) of the indemnity agreement were unjust, but then sought relief in respect of clause 7 of the loan agreement. It would ordinarily seem proper for the defendants to plead that all the provisions in respect of which they sought relief were unjust (that finding being a pre-requisite to the gaining of relief). The fact that, as these reasons outline, it is permissible to have regard to the wider transaction in determining whether a provision of a contract is unjust, does not alter this position. Furthermore, on one reading of s 15 of the Act, which allows the Court to have regard to other contracts which in combination with the impugned contract constitute an arrangement, it is still necessary to plead the specific contract(s) in respect of which an application for relief under the Act is made. Against this, it may be possible to grant relief in respect of one contract where another contract has been held unjust under the ancillary powers available under s 8 and Sch 1, paragraph 1, of the Act: see Peden at 147-148. It is this possibility that the defendants' case – contending that the indemnity and loan agreements should both be rewritten because clauses 2(a) and 2(b) of the indemnity agreement are unjust- seems to rely on. 72 However, ultimately this issue does not affect the final result, since even on the broadest possible reach of the defendants pleadings, it has not been established that any of the provisions in question were unjust. The Contracts Review Act case as pleaded 73 Of course the active defendants were selective in determining which of the matters identified in section 9 of the Act were relied upon. These matters were carefully chronicled in the 10 May reasons [at 15 and following]. 74 Additionally the defendants' final submissions on a number of occasions blithely eschewed the fact that a large number of those submissions in relation to the Contracts Review Act were simply outside the scope of the pleading and were contrary to the rulings of 21 April and 10 May. An example is to be seen in the section entitled 'the Penal Operation of the scheme', at paragraph 216-and following. 75 Dealing with the permissible pleaded defences it seems clear enough that they were only reliant on the matters in ss. 9(1)(b), 9(2)(b), (c), (d), (g) and (l) of the Contracts Review Act. Application of the relevant parts of s 9 in the facts of the present case 76 I now turn to examine the relevant considerations under s 9 in light of the facts of the present case in order to determine whether the provisions in question were unjust. The public interest: Section 9(1) 77 In relation to the requirement under s 9(1) for the Court to have regard to the public interest in determining whether the relevant provisions are unjust, the plaintiff made its final submissions on the basis that this was fairly within the defendants' pleaded case: T710.40-711.10. Accordingly, I proceed on that basis. 78 The plaintiff's essential submission in this area was that the relevant parameter for the public interest was to hold sophisticated, high-income investors to their obligations to repay the monies which generated the tax benefits. Here, the plaintiff drew on the comment of Spigelman CJ in the Gardiner Test Case at [140]. 79 The defendants' essential submission in this area was that the relevant public interest parameter was investor protection. 80 It is instructive to note the interpretation of the public interest concept in Baltic Shipping Company v Dillon "Mikhail Lermontov" (1991) 22 NSWLR 1. At 20 Kirby P noted: The Court is plainly required to consider the relevance of the public interest that parties should generally be kept to agreements entered between them. Obviously, the Act contemplates that they should not be kept to agreements which are "unjust" [within the meaning of the Act] … 81 Similarly, Gleeson CJ, at p 9 said: 'The general policy of the law is that people should honour their contracts. That policy forms part of our idea of what is just'. [See further Cheshire at 780 and Peden at 122-123]. 82 As these reasons make clear, I do not accept that the provisions in question were unjust upon a proper application of the Act. Accordingly, the public interest parameter requires that the defendants be kept to their agreements. 83 The remainder of the Contracts Review Act analysis is organised by reference to the relevant paragraphs of Mr Atkinson's defence. As was made clear in the interlocutory judgments, the defendants Contracts Review Act defences were generic, the defences of each of the defendants being almost identical. For that reason it is convenient to use Mr Atkinson's relevant defence as an example. Sub paragraph 30(a) 84 Paragraph (a) pleads that clauses 2(a) and 2(b) of the indemnity agreement were unjust in the circumstances at the time it was made for the reason that: The provisions were not the subject of negotiation, and it was not reasonably practicable for the defendants to negotiate the alteration. 85 This sub paragraph relies upon the terms of s. 9(2)(b) and (c) of the Act. 86 In relation to this issue, the plaintiff's essential submission was that due to the relevant regulatory requirements – such as registration of the prospectus with ASC (as ASIC then was), and complying with the ATO product ruling - it was not possible to individually negotiate the terms of the contracts in question. Potential investors either subscribed to the scheme in the terms offered or they did not. The defendants each chose to subscribe to it on the terms offered. In my view this submission is of substance. 87 The cases relevant to this provide little support to the defendants' contentions as they are very fact specific. Although there are cases where the indicia under ss 9(2)(b) and 9(2)(c) were present and contributed to a finding that a contract was unjust, those cases involved other substantial factors contributing to a finding of unjustness, such as that the parties seeking relief were not able to protect their interests: Broadlands International Finance Ltd v Sly [1987] ANZ ConvR 328; Borg-Warner Acceptance Corp (Australia) Ltd v Diprose [1988] ANZ ConvR 57. The further cases cited in Zipser at 82 likewise do not assist the defendants. 88 It is useful in understanding the purpose of ss 9(2)(b) and 9(2)(c) to again consider Professor Peden's work. At 126 the learned Professor noted: It is trite to point out that since a contract requires the free exercise of each party's mind and intent to create the necessary consensus ad idem the party seeking relief could always reject all or any of the provisions of the contract. This demonstrates the significance of the words "reasonably practicable", which appear to presuppose an element of necessity requiring the party seeking relief to enter into the contract on some terms, and thereby focussing attention upon the capacity to conduct meaningful negotiations. 89 The contractual terms in this case were by the plaintiff's own admission essentially dictated to the defendants on a take it or leave it basis. However, they do not truly fit the mischief to which s 9(2)(b) and 9(2)(c) are directed. Fundamentally, the contracts were entered into for taxation or other personal financial benefits by investors who were able to protect their own interests. There was no necessity or other factor compelling them to enter the project, such that they did not have a real choice as to whether to contract. 90 As the plaintiff contended, there is no basis for the defendants' allegation of procedural injustice in relation to this issue. Sub paragraph 30(b) 91 Paragraph 30(b) of the defence pleads that: "The provisions are part of a complex agricultural investment scheme having the following features." Those features are set out in sub paragraphs (i)- (vi). 92 Those features were set out at paragraph 15(v)-(x) of the judgment of 10 May 2010. 93 This part of the pleading raises subsections 9(2)(g) and 9(2)(l) of the Act. In my view there is substance in the plaintiff's submission that while the scheme as a whole may have been complex, there was nothing particularly complex about the provisions relevant to this case (being clauses 2(a) and (b) of the indemnity agreement and clauses 3.2, 3.3(a), 4.1 and 7 of the loan agreement, as outlined above). 94 Furthermore, Bridge Wholesale Acceptance (Australia) Ltd v GVS Associates Pty Ltd (1991) ASC 56-105 – which involved a contract of significant complexity, the meaning of which was unintelligible to a lay person (see 57, 121)– does not assist the defendants' case in this area. 95 Furthermore, none of the defendants pleaded that they did not understand the provisions of the contract and their affect within the meaning of s. 9(2)(i). Accordingly, in the interlocutory judgment on the pleading motion at paragraph 26(vi)-(vii), the defendants were prevented from leading evidence regarding the extent of any explanation of the legal and practical effect of the contracts and whether or not the defendants understood the provisions and their effect. Sub paragraphs 30(c), (d) and (e) 96 Each of these sub paragraphs are grouped under the heading: "Provisions not reasonably necessary for protection of legitimate interest of OAL." 97 In pleading sub paragraphs (c), (d) and (e) the pleader is relying upon the second part of subsection 9(2)(d). 98 The defendants contended that the interests of OAL and ARF could have been legitimately protected by a requirement that the defendant paying late where ARF accepted such late payment and did not terminate the loan agreement should pay interest on any late payment but otherwise the indemnity should apply. 99 Relevant here is the High Court's judgment in the Gardiner Test Case at [37]. In that paragraph, the High Court accepted that OAL had a direct financial interest in punctuality on the basis that this determined whether it was liable on the indemnity, and therefore whether or not it had a contingent liability on its balance sheet. 100 The High Court was not considering the present issue as required by s 9(2)(d) of the Act. However, in light of the High Court's finding, it is appropriate to regard one of OAL's legitimate interests – when applying s 9(2)(d) of the Act - as whether it remained liable on the indemnity. To protect this interest OAL needed to set criteria by which its liability under the indemnity would be determined. On one view, the chosen criteria of the indemnity being conditional on punctual payment was reasonably necessary for the protection of OAL's legitimate interest in ensuring certainty as to its contingent liabilities. As the plaintiff contended, under the alternative way in which the defendants suggested the indemnity could have operated, OAL's contingent liabilities would be determined by ARF's discretion. 101 It is useful here to consider Peden who notes at 128 that 'the [s 9(2)(d)] criterion contemplates a balancing of the protection of the legitimate interests of all parties to the contract'. He further notes that conditions which may be not reasonably necessary included 'penalty provisions which impose additional obligations upon a party for breach which are wholly disproportionate to the loss or damage caused by the breach'. 102 As outlined above, the defendants pleaded that ARF and OAL's interests could have been legitimately protected if the borrower paid interest for the period in which a payment was late, and the indemnity remained enforceable. Implicitly, this was a contention that arrangement would be more proportionate to the loss suffered by OAL and ARF (which was characterised as being out of funds for the relevant period). 103 The defendants' contentions give no weight to the legitimate interest of OAL in whether it remained contingently liable under the indemnity. Ultimately, it cannot be said that the relevant provisions were not reasonably necessary for the protection of the legitimate interests of OAL. 104 Furthermore, it seems straightforward that both OAL and ARF and the investors had a legitimate interest in the scheme being tax deductible. The plaintiff essentially submitted that the structure of the indemnity agreement as interpreted in the Gardiner Test Case – which meant that the loans were not 'non-recourse' - was necessary in order to protect this interest. 105 On the issue of tax deductibility in the Gardiner Test Case the High Court at [38] left Spigelman CJ's observations in place. At [89] Spigelman CJ noted that the characterisation of the loans as 'non-recourse' would increase the risk of rejection of tax deductibility but would not be determinative. However, the observations of Spigelman CJ at [81] make clear that the characterisation as 'non-recourse' did not simply turn on whether the investors could be held personally liable for repayment of the loans. Accordingly, this point does not appear to assist the plaintiff's case in this area. In any case, it does not alter the overall conclusion in relation to this part of the pleading. Sub paragraphs 30(f) and (g) 106 Here it was pleaded that in the event of non-compliance with the clauses (2)(a) and/or (b) of the indemnity agreement, the loss of the indemnity was a grossly disproportionate consequence to OAL's detriment. The defendants' contended that OAL's only legitimate detriment was that it was out of the funds that ought to have been paid to it by ARF pursuant to its back-to-back loan arrangement during the late payment. 107 This part of the pleading relies on subsections 9(1)(b) and 9(2)(d) of the Act. (Subsection 9(1)(b) being directed to the results arising in the event of non-compliance with contractual provisions, and Subsection 9(2)(d), as outlined above, involving an inherent concept of proportionality). 108 In my view the defendants' argument in this area fails because the relevant contractual provisions cannot be said to be unnecessary for the protection of OAL's legitimate interest as indemnifier. 109 For all of the above reasons, the defendants have failed to establish the Contracts Review Act defence put forward. It is now necessary to deal with the punctuality defence contended for by some defendants. Evidentiary issues regarding the punctual payment case 110 As outlined above the defendants have the onus of establishing that they were punctual in their payments. In regard to the punctual payment case there were various categories of evidence with which the Court had to deal. The plaintiff's evidence was made up of its business records contained in exhibits VAE1 and VAE2, and the evidence of Ms Vanessa Edwards. The evidence sought to be adduced by the defendants was multifaceted: i. The defendants sought to lead various evidence that was referred to as the Australia Post material; ii. The defendants sought to drawn an inference regarding the plaintiff's collection of post; iii. Individual defendants gave evidence of either their recollection of the disputed payments or their system for making the disputed payments. 111 The ultimate point of the defendants' evidence was to support a finding that the plaintiff's records, which showed them as not paying punctually, were unreliable. 112 The various evidentiary matters are addressed below. The plaintiff's borrower payments recording system 113 The plaintiff contended that Ms Vanessa Edwards was responsible for the maintenance of the plaintiff's borrower records. 114 Ms Edwards was employed on a casual basis from 1993 to 1997 by the company known as Gerard Cassegrain and Co: T322.50. This was while she was studying for her degrees of Master of Letters and Master of Arts from the University of New England: T323. In August 1997 she was made a permanent employee. She was employed by Gerard Cassegrain and Co. She continued in that employment until 21 June 1999 when she was employed by OAL after Gerard Cassegrain and Co was placed into receivership by the Commonwealth Development Bank of Australia. 115 Exhibit VAE1 contains borrower files for certain of the defendants in the proceedings. Although employed by Gerard Cassegrain and Co. and later OAL, Ms Edwards maintained the borrower files and accounting records of the plaintiff. 116 Ms Edwards deposed that when working for the plaintiff she was given no direction on a day-to-day basis and held a reasonably autonomous role in maintaining its borrower records and receipting and banking payments from borrowers. 117 In regard to the spreadsheets, Ms Edwards' evidence was that: i. The primary accounting record was the electronic record kept in the Excel Spreadsheet of when payments were received by the plaintiff from borrowers and the date and the manner of those payments; ii. She created the Excel Spreadsheet and recorded the dates on which the plaintiff received payment from borrowers; iii. On occasions when payments by borrowers were made by direct deposit she obtained some assistance from Mark Stoker to marry-up those payments from borrowers as recorded in the plaintiff's ANZ bank statements which needed to be allocated on the Excel Spreadsheet to the specific borrowers who had made those direct payments; iv. When cheques were received in the post their receipt was recorded on the day the cheque was received. 118 A copy of the Excel Spreadsheet on which Ms Edwards created and maintained in respect of both Project No. 1 and Project No. 2 is Exhibit VAE2. As the plaintiff submitted, this is the primary evidence of the date on which cheques posted by defendants were received by the plaintiff. This primary record is supported by secondary records such as copies of either cheques or letters which have been stamped by the plaintiff's staff with a date received stamp or recorded with a notation of the date of receipt. 119 On Ms Edwards' evidence, the usual procedure for the collection of post and the recording of borrowers' cheques in the records was as follows: (a) Ms Edwards lived at Port Macquarie. The plaintiff had a Post Office box in Port Macquarie. Ms Edwards usually collected the mail on a daily basis on her way to work. If she was unavailable then Robert Henry would collect the mail: Edwards affidavit (sworn 26 March 2010) [22], T392.15, T394.05; (b) she usually did not open the mail. She delivered it to the receptionist's desk: Edwards affidavit [23], T392.20-.35, 394.09; (c) the mail was opened and date stamped and then distributed: Edwards affidavit [24] T366.20, T394.12; (d) ARF cheques and correspondence were always given to Ms Edwards: T392.41, T394.18; If people had queries about where mail was to be distributed they would have come and asked her: 392.45; (e) cheques received from borrowers were then recorded in the Excel Spreadsheet as having been received that day: [20], Edwards affidavit [23], [28], T393.05, T393.30, T394.35-.40; (f) Ms Edwards invariably recorded the receipt of payments in the Excel Spreadsheet: Edwards affidavit [28]. It was rare that any other people entered information onto the Spreadsheet: T393.09; (g) After recording payment on the Excel Spreadsheet a receipt was prepared to confirm the receipt of payment. This was usually done the same day, although sometimes the following day. Some receipts were written by Ms Edwards. Others were written by Mr Henry or Lisa O'Neill: [26], T394.45; The cheques and accompanying correspondence would then have been given back to the administrative staff who would have photocopied both the cheque and the receipt for filing in the relevant file; (h) The cheques were then placed in the deposit book for banking: Edwards affidavit [27] T394.45-395.04; (i) The banking was usually done by Robert Henry or Lisa O'Neill. Vanessa Edwards did not do the banking: Edwards affidavit [27], T395.10; (j) the banking was done regularly but not necessarily on a daily basis: Edwards affidavit [27], T395.15; (k) the administrative staff would usually photocopy the receipt and the cheque: T394.45; (l) the bank deposit records and receipts were only "secondary records": Edwards affidavit [20]. 120 In her affidavit at [29] Ms Edwards deposed that: "The only errors I have been able to find in the Excel Spreadsheet on a recent review of it are typographical errors. These arose from the Excel program stating US dates (months/day/year) as a default program and my not noticing it in order to manually reverse the transposition of dates (day/months/year)". In relation to this evidence, the defendants submitted that Ms Edwards would not have had any occasion or ability to detect errors given the manner in which she prepared the document. The defendants drew on the absence of any occasion to check the document contemporaneously or any means of identifying errors beyond the contents of the document itself. As these reasons make plain, the defendants' attack on the spreadsheet document and the evidence of Ms Edwards is rejected. The evidence of Mr Lloyd 121 Mr Lloyd gave evidence about the procedures in recording information on the Excel Spreadsheet. Mr Lloyd agreed upon the importance of the Excel Spreadsheet as an accounting record. 122 Mr Lloyd's evidence differed from Ms Edwards' evidence in several respects. There were two differences which appeared of substance: a. Ms Edwards deposed that she created the Excel Spreadsheets (she was not cross-examined on this), whereas Mr Lloyd deposed that he set it up, and he maintained this in cross-examination: T640. b. In regard to the collection of the mail, Mr Lloyd deposed (contrary to Ms Edwards' evidence) that the mail was sometimes not collected until mid-morning. He further deposed that whoever collected the mail usually opened it. 123 In regard to difference b) Mr Lloyd conceded under cross-examination that the mail was only not collected until mid-morning on days when Ms Edwards was not at work. Ultimately, difference b) is not relevant because these reasons reject the inference the defendants sought to draw regarding the plaintiff's collection of post. 124 Difference (a) is of substance as it goes to the production of the spreadsheets upon which the plaintiff relies. Mr Lloyd deposed that he set up and maintained the schedule, that he later instructed Lisa O'Neil (an administrative assistant) on how to make entries into it, and after a while it was maintained at the reception computer by Lisa or Vanessa. Under cross-examination, Mr Lloyd denied the suggestion that Ms Edwards had set up the spreadsheets, responding that he had the only computer in the office when ARF began. He rejected the suggestion that this was wrong. The plaintiff contended that Mr Lloyd was unable to say he had the requisite computer skills which Ms Edwards had. 125 A further difference between Mr Lloyd and Ms Edwards' evidence concerned Ms Edwards' location. Ms Edwards deposed that she had an office (see annexure C to her affidavit), whereas Mr Lloyd testified that Ms Edwards spent most of her time at reception T639.12-.19. The relevance of this point was not made clear but it appeared to go to establishing whether Ms Edwards performed the role regarding the spreadsheets that she claimed. Dealing with the differences between Ms Edwards' evidence and that of Mr Lloyd 126 The plaintiff contended that Ms Edwards evidence should be preferred because: i. She was the person primarily responsible for the maintenance of the ARF records; ii. Mr Lloyd accepts he was in error on a number of matters or he had insufficient knowledge to be able to give the evidence. For example he was wrong when he said that Lisa collected the mail: T639.45. He had deposed that Ms Edwards was employed by OAL and had been hired by Claude Cassegrain in 1996 (both of which were incorrect). At T638.30-639.06 he accepted he had little knowledge of the basis of her employment. Mr Lloyd deposed that Lisa or Vanessa did the banking (Ms Edwards deposed that she did not). At T639.50-T640.5 he appears to accept that he may have been wrong. 127 The plaintiff also submitted that Ms Edwards was unlikely to be wrong as to the matters concerned because she was so specific. 128 Ultimately, the plaintiff's submissions in this area are of substance. Ms Edwards, who, as outlined in these reasons, is accepted as a witness of credit, gave detailed evidence. In contrast, Mr Lloyd's evidence was brief, he had to admit he was wrong in certain respects and he was often unable to recall. Decision regarding the reliability of the evidence of Ms Edward 129 It has to be recalled that Ms Edwards was cross-examined in relation to matters which had taken place approximately 10 years ago. 130 Ms Edwards was taxed by the cross examiner taking her to a large number of specific circumstances relating to individual investors. Particular documents were put to her and she was often asked to recollect the specifics in relation to what had happened qua a particular investor. Very often as would be expected, she had no almost no recall of events which took place so very long ago. 131 Whilst I accept that Ms Edwards' recollections were from time to time somewhat hazy and that from time to time she had to correct an inaccuracy in her affidavits, by and large she impressed me as a witness of truth. In my view she endeavoured to fairly answer the questions put to her and generally gave evidence consistent with the documentary material before the Court. Where she could not recall a particular event or circumstance she said so. The defendants' attack on Ms Edwards' credibility 132 In final address the defendants attacked the credit of Ms Edwards in a manner which was intended to establish that her evidence about the reliability of the records should not be accepted. The attack was multifaceted, the most important point being that: "in numerous respects Ms Edwards' oral evidence demonstrated the inaccuracy of her written evidence in a way clearly demonstrating her remoteness from the authorship of that written evidence. She took no proper care to satisfy herself of the accuracy of what she was asked to swear to and her credibility in giving non-partisan evidence from her personal knowledge alone was thereby fatally compromised". 133 This was a serious allegation, suggesting Ms Edwards was not the real author of the affidavit but merely went along with the person who drafted the affidavit. 134 The plaintiff objected to the defendants' attack on Ms Edwards on the basis that it had not been put to her in cross-examination. In my view, this submission has some real substance, which is apparent from a comparison of the final attack and the cross-examination (as occurs in these reasons). However, in one sense this is beside the point since these reasons, bearing in mind the defendants final attack, accept Ms Edwards as a witness of credit. 135 The defendants' contention that Ms Edwards was not the author of her own affidavit but merely went along with the person who drafted the affidavit was not squarely put to her and should have been. See Odgers Uniform Evidence Law, 5th ed at [1.2.4440]; Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 at 23. The defendants did in several instances put to Ms Edwards that she was careless in the preparation of her affidavit: 387.44-48, T391.21, but this differs substantially from an allegation that she was not the author of it. 136 A second related point in the defendants' final attack was that Ms Edwards chose to, or was induced to, exaggerate in her affidavit evidence. The basis of the submission was her use of the word "invariably", in relation to her entry of receipt of payments in the Excel spreadsheet on the same day that payments were received by ARF. The defendants drew on the fact that Ms Edwards was forced to concede that the word "invariable" was an overstatement (transcript page 393, lines 33-5) and that it was actually a matter of "usual practice" (transcript page 393, lines 37-8). 137 Furthermore, the defendants submitted that the proposition as to the "invariable" practice was obviously unsustainable, since Ms Edwards was not at work for OAL on every single day during the relevant period. In cross-examination the defendants pursued this contention, and it was established that Ms Edwards was a full time employee of OAL from August 1997 to March 2001. She worked continuously other than annual leave or sick leave, and did not always take four weeks annual leave in every calendar year (not all her annual leave was used up by the end of her employment in March 2001, and was instead paid as part of her severance). She did take sick leave: 326.34-49. She was not often away for any length of time: 393.17. 138 In my view nothing in the defendants' attack relating to the fact that Ms Edwards only gave evidence of a 'usual procedure' alters the finding that, as a witness of credit, her evidence supports the plaintiff's records being correct unless shown otherwise. It can be noted here that the plaintiff did not put its final case higher than a 'usual procedure'. 139 Another point in the defendants' final attack was that Ms Edwards' evidence – principally here they seemed to be referring to alleged concessions under cross examination - showed the following: (a) that her system was inconsistent and lax in its operation; (b) that the system was infected by human error; (c) there was in fact merely a general practice which was sometimes applied and sometimes not applied. 140 Although various alleged mistakes were put to Ms Edwards during cross-examination, a suggestion as strong as this – essentially that the plaintiff's records may or may not have been correct and could not in their entirety be trusted – was not squarely put to her. In any case, these reasons reject this suggestion from the defendants. 141 The defendants raised other alleged shortcomings in the evidence of Ms Edwards which were as follows: 154. … For example her carelessness in dating receipts (see transcript page 376, lines 30-7), in issuing letters when receipts had already been issued (see transcript page 371, 43 and ff to page 372, lines 1-27), … 162. Ms Edwards displayed a lack of understanding of the administrative procedures she claimed to have had control of on behalf of ARF and OAL. She was asked in cross-examination (see transcript page 329, line 8 and ff – page 331, line 6) about her functions as the compliance officer of OAL. A fair summary of her responses was that she relied entirely upon Mr Stoker, the company's accountant, to provide her with the information for which she was responsible as compliance officer. 163. Indeed, initially, she firmly denied being present at any of the board meetings, at which OAL's cash position was routinely discussed –that being the non-compliance with the conditions of OAL's dealer's licence which eventually precipitated the collapse of the scheme – until she was shown the various company minutes (transcript page 329, line 21 and ff - page 332, line 27). 164. Given that Ms Edwards' recollection was so strikingly faulty in failing to remember her attendance at board meetings, it is scarcely likely to be any more reliable with respect to procedures concerning the mundane matter of entering repayment data into a spreadsheet. 165. Similarly, her evidence was faulty with respect to the procedures for opening the investor files, which served as the investor/borrower records of OAL/ARF (transcript page 360, line 19 – page 362, line 45). 166. At paragraph 14 of her affidavit, she had said that her involvement with 'borrowers" commenced when they made their "initial principal repayment on the making of their loans". 167. In cross-examination, it was pointed out that the initial payments which accompanied the investors' applications under the prospectuses had nothing to do with any "initial principal repayment". She could only say: "I probably didn't recall it and I would've used that term in error. I acknowledge that is probably an error" (transcript page 388, lines 5 6) 168. The picture which emerges from this evidence is that Ms Edwards' superiors in the organisation, who had the necessary understanding of how the scheme worked, set up the procedures, which Ms Edwards and others followed, in performing the necessary clerical tasks on behalf of OAL and ARF, for the scheme's record-keeping. 169. A further example is her evidence about the "approval" of loans by ARF: "I could not comment on the process itself" (transcript page 362, line 46) even though in her affidavit she had said of this: "ARF made a decision about approving loan applications and informed OAL of that decision by a letter to OAL" ([16]). 170. It is evident that Ms Edwards swore her affidavit, without any regard to the accuracy of its contents. Perhaps most strikingly this was the case with respect to the evidence which she had given in the Gardiner Test Case – the 3 May 2005 statement, forming annexure "B" to the affidavit sworn 26 March 2010 and read in this part of the proceedings. 171. In swearing her affidavit on 26 March 2010, she had said: "I adhere to what I said in my 3 May 2005 witness statement and make the observation that it was made in relation to discrete issues which were raised by Mr Gardiner in his affidavit and which called for a response from me." ([6]) 172. She was asked in cross-examination: "… is that still your position, what paragraph 6 says?" She answered, "That's correct. Yes." (transcript page 354, line 40) 173. She was then asked about her "practice" and her "standard response" in responding to phone calls from "investors who failed to pay on time", which had been the subject of her evidence in para.6 of the witness statement. (transcript page 355, line 20 – page 356, line 34). 174. Her evidence at this hearing, was that the words she had set out in quotes in her witness statement as her "standard response", were not to her recollection in fact ever used by her, in any conversation she actually had with a borrower/investor. Rather, it was: "…what I would've said if that situation had occurred" 175. When asked for the reason why her evidence had not correctly stated her position, her reply was that it was: "Probably only due to the fact that I prepared the affidavit in a hurry" (transcript page 356, lines 24-34) 176. She then went on to claim that her evidence at the hearing before Young CJ in Eq had been the subject of correction, or qualification, with respect to paragraph 6 of the statement (transcript page 356, line 39 – page 357, line 20). There has not been any attempt made to corroborate what she said in that respect, which would have been a simple matter if the transcript of proceedings before Young CJ in Eq had contained any such statement. 177. In any event, it is quite destructive of Ms Edwards' creditworthiness in these proceedings, that she repeatedly and in unqualified terms, swore to the accuracy of her 3 May 2005 witness statement, when she knew (if one assumes this part of her evidence to be true), that a very significant correction to that evidence was necessary and had in fact been undertaken at the hearing before Young CJ in Eq. 178. It is also of note that even what Ms Edwards now says she "would've said" – in paragraph 6(a) of the witness statement – is faulty (see also transcript page 363, lines 32-9). The consequence of non-punctual payment was not that "the full amount becomes payable". That was only so, in accordance with the text of the loan agreement, in the event ARF made that election: which in no case, so far as the evidence goes, it ever did. Rather, as was held in the Gardiner Test Case, the full amount of the loan became payable (where the indemnity was inapplicable) upon the Farmer ceasing to carry on the Business. 179. In the Gardiner Test Case, when it suited ARF's purposes for her to say so, Ms Edwards was content to disclose what was undoubtedly the true position that, in the administration of ARF's loan portfolio, she regarded Mr Lloyd (her employer company's managing director) as her superior in the chain of command: paragraph 6(d) of the witness statement. 180. In her affidavit evidence in chief in the present part of the case, her role with respect to ARF had become "reasonably autonomous" and no reference was made to Mr Lloyd's role ([12] of her affidavit). 181. In cross-examination however, Ms Edwards recognised that Mr Lloyd "was managing the whole of the investment scheme, the subject of the prospectus" (transcript page 358, lines 34-6). 182. In like fashion, her affidavit evidence had elevated Mr Sarks (Junior) to the status of "managing director" of ARF; a position which could not be sustained by Ms Edwards in cross examination (transcript page 380, line 14 – page 381, line 29). 142 In my view none of these alleged shortcomings undermine the overall credit finding in relation to Ms Edwards, and therefore the reliability of the plaintiff's records, as outlined in these reasons. 143 The defendants further relied on alleged errors in Ms Edwards' evidence in relation to specific borrowers. Again, these are not regarded as undermining the essential finding as to Ms Edwards' credit and the reliability of the plaintiff's records. These specific points and relevant analysis is as follows: a. In relation to Mr Atkinson, the defendants relied on the fact that loan 077 was recorded in VAE2 as received on 10 November 1997. The circumstances of Mr Atkinson's payment were very unusual. The sum of $9,100 of what was owing in respect of loans TT007 and TT077 was to be paid out of sales commission owing to him by OAL. Mr Atkinson's cheque for the balance owing in relation to TT077, $379.17, was received on 10 November (VAE1 page 26). The total payment was recorded on the spreadsheet as having been paid, with Ms Edwards appearing to assume that the balance of the amount owing by Mr Atkinson had been paid by OAL by 10 November 1997. (Relevant here is a file note of VAE1 Vol 1 page 27, where Ms Edwards recorded 'see R Henry for more details' regarding the amount to be paid by OAL on Mr Atkinson's behalf. The plaintiff contended for an inference from this document that Ms Edwards had been told that the amount had been so paid). In any case, Mr Atkinson's punctuality defence in relation to loan 077 is not successful since on an examination of the evidence it is clear that the balance to be paid by OAL on his behalf was only paid after the relevant due date (see further the detailed part of these reasons dealing with this loan). b. In relation to Dr and Mrs Wallace, the defendants submitted that the plaintiff's record keeping was lax because of the lapse of time between receipt of a cheque and its banking. However, as the plaintiff submitted Ms Edwards explained that the banking of cheques did not occur every day. Furthermore, the delay in banking cheques is irrelevant to the question of whether the cheque was received on the date recorded in the Excel spreadsheet. c. In relation to Mr Holmes, his counsel drew on the fact that VAE2 records the cheque in question as having been received on 24 October 1997. Essentially, as is explained elsewhere in these reasons, the plaintiff sought to bank the cheque on that date but the ANZ Bank would not accept the deposit. Accordingly, the cheque was sent back to Mr Holmes with a relevant form, and only received by the plaintiff in a valid form, that it could bank, after the relevant due date. The defendants counsel highlighted that Ms Edwards deposed that she treated Mr Holmes' payment as having been non-punctual once she became aware of this sequence of events, but in re-examination could not explain why the entry in the spreadsheet had been left as 24 October 1997 (see T400.3). Similarly, in a letter dated 13 November 1997 (at VAE1 page 380) Ms Edwards had given Mr Holmes confirmation that his cheque was received on 24 October 1997, and the conditions of his loan agreement had been complied with. These errors are not accepted as undermining the general finding that Ms Edwards is a witness of credit. Furthermore, as these reasons outline elsewhere, ARF only received a valid cheque from Mr Holmes after the due date, and he therefore does not have a valid punctuality defence. 144 As has been made plain, the defendants' attack on the credibility of Ms Edwards - and therefore the reliability of the plaintiff's records – is rejected. Ms Edwards is accepted as a witness of credit, and the plaintiff's records are accepted as reliable unless shown otherwise. The defendants' evidence Australia Post material 145 Very late in the proceedings the active defendants sought to tender material produced by Australia Post pursuant to a subpoenas issued by the plaintiff. The plaintiff objected to this material being admitted into evidence. The Court heard both parties on the issue and made plain that a decision would be made and in due course announced when the final judgment was handed down. 146 I am firmly of the view that the Australia Post material should not be permitted into evidence for a number of reasons: i. The covering letter from the legal officer to the exhibits office cannot be a business record. That letter could not have been for the purpose of carrying on that particular business of Australia Post. Indeed Mr Epstein seemed to accept as much; ii. The issue of admissibility is whether the representations in the tables produced on subpoena admissible under section 69 (2) of the Evidence Act notwithstanding that they are hearsay; iii. The tables are not admissible as it is not established that they are business records of Australia Post within the meaning of section 69 (1) (a) namely that they form "part of the records belonging to or kept by Australia Post in the course of, or for the purposes of, a business" or did so at some other time; iv. Next the provenance of the document is unknown otherwise than the fact that Australia Post had a copy and that it appears to relate to postal deliveries; v. The source of the table is described in the bottom left-hand corner of the documents as "Source: Network Service Performance". It is not known whether this was an independent survey arranged by a third-party or if it was commissioned by Australia Post itself. It is not known whether this document was accessed "on line" from this source by Australia Post in order to comply with the subpoena to it. The circumstances and reliability of the survey are not disclosed; vi. In Roach & Ors v Page & Ors (No. 15) [2003] NSWSC 939, Sperling J said: "[4] The document did not satisfy the provisions of s 69(1)(a)(i). It was not a record, nor did it form part of the records belonging to or kept in the course of, or for the purposes of, a business." [5] The records of a business are the documents (or other means of holding information) by which activities of the business are recorded. Business activities so recorded will typically include business operations so recorded, internal communications, and communications between the business and third parties. [6] On the other hand, where it is a function of a business to publish books, newspapers, magazines, journals (including specialised professional, trade or industry journals), such publications are not records of the business. They are the product of the business, not a record of its business activities. Similarly, publications kept by a business, such as journals or manuals (say, for reference purposes) are not records of the business." vii. On the face of it this survey, apparently prepared by third-party or "sourced" from the third party, does not appear to fulfil the requirements of s 69(1) as explained by Sperling J in Roach (No. 15). viii. Secondly, the requirements of s 69(2)(a) or (b) do not appear to have been established. ix. Thirdly, under s 69(2) it is the representation that is admitted. In the absence of the totality of the document it is not possible to establish with any clarity what the representation is. These particular extracts of the document when read in context might qualify the representation or even give it a slightly different meaning. x. Fourthly, the document does not identify when mail deliveries are made to the Port Macquarie Post Office. Nor is it clear what the "day of posting" precisely means. It is a variable, as demonstrated in Regulation 6(4) of the Australian Postal Corporation (Performance Standards) Regulations 1998, which defines "day of posting" as meaning "the period of 24 hours ending, for a mail lodgement point mentioned in Regulation 8, at the time notified as the latest time each day for posting at that lodgement point". xi. What is that latest time each day in respect of each lodgement point from which each defendant posted the cheques? This is an unknown variable on the available evidence. xii. Fifthly, this statistical analysis is sought to be used in conjunction with the rather vague evidence of the defendants about the date of posting to suggest that the plaintiff's records are wrong. Having regard to all of the assumptions that must be built into this statistical survey necessary to give it any relevance, the document would not be admitted into evidence pursuant to ss 135 and 136 of the Evidence Act . As has been pointed out, this appears to be an extract of a document. Its provenance is not known nor its reliability. In those circumstances it should not be admitted into evidence. xiii. The defendants rely upon the Australian Postal Corporation (Performance Standards) Regulations 1998. Clause 6(2) establishes that the standards with which Australia Post seeks to comply is that in the case of letter posted to Port Macquarie from Sydney in 94% of cases they will be delivered "two business days after day of posting". From anther capital city (e.g. Adelaide) "three business days after day of posting". xiv. It is difficult to know what to make of the supposed statistical evidence if it is received. xv. The phrase "two business days after posting" does not include the day of posting. The defendants in their final submissions, for example, at DFS [59], suggest that the delivery times that Australia Post aims to fulfil under the Regulation includes the date of posting. This subtraction of one day for posting assuming that this regulation is performed by Australia Post is fatal to those defendants who allege posting within three business days of the due date. xvi. Australia Post aims to deliver the letters in two business days from the date of posting, so that three business days after posting appears to be accepted although it intends to deliver 94% within two days in the metropolitan area (which Port Macquarie is not within). In any event, it does not follow that if 94% of mail is delivered to Port Macquarie within three days of posting from Sydney (and longer for interstate defendants) that on the balance of probabilities a particular cheque posted in Sydney has reached Port Macquarie in the requisite three business day period. 147 Ultimately it seems plain that the probative value of the evidence is substantially outweighed by the danger that the evidence would if allowed: (a) be unfairly prejudicial to the plaintiff and/or (b) the misleading or confusing and/or (c) cause or result in undue waste of time The defendants' attempted inference regarding collection of the post by the plaintiff 148 As outlined elsewhere in these reasons the onus is on the defendants to establish that the cheques were received by the due date. Ms Edwards gave evidence of collecting the post on a daily basis. In final submissions, the defendants contended for an inference that when Ms Edwards collected the mail each day she did so before mail was sorted and delivered into the post office box. That is, that each day she was collecting the previous day's mail. The point of this submission was to establish that the plaintiff's records could not be taken as proof of the date at which payments reached the plaintiff's post box (and therefore should be taken as received). Rather the records were said to only be evidence of the date on which the payments were collected from the post box and processed by the plaintiff. This submission was never put to Ms Edwards. It was never suggested that each morning she was collecting the previous day's mail or that she was unable to see that that morning's mail had been sorted through the open back of the post box as she emptied it. 149 The defendants bear the onus to establish when the mail was delivered. They led no evidence of when (in terms of the time of day) deliveries are made to Port Macquarie and when the mail is placed in the post office box. Had the defendants sought to cross-examine to support the contention they now raise it may have been apparent that there is no substance in this contention. 150 Moreover the Court has been asked to speculate about when the post was sorted at the Port Macquarie Post Office when this was a matter for proof by the defendants. The inference suggested by the defendants is rejected. The evidence in relation to particular defendants John Edward Atkinson - 1st defendant 151 Mr Atkinson is an accountant and has been in practice for 19 years. He has a Bachelor of Economics and a Bachelor of Laws. He had both qualifications in 1997. Part of his professional practice is the preparation of clients' tax returns and the giving of taxation advice: T642. 152 Mr Atkinson was responsible for his own introduction to the Port Macquarie Tea Tree Projects. He was a tax accountant who introduced a number of his clients to the Projects and was also a person authorised to market the scheme for OAL as he was an authorised representative of OAL in respect of these prescribed interests schemes under the Corporations Law. 153 He introduced a large number of his clients to Projects 1 & 2. He gave advice and certain recommendations to his clients with respect to that scheme. An example of that advice is in Exhibit MM1 to Ms Michael's affidavit. Exhibit P14 contained three faxed documents identifying certain clients of Mr Atkinson who subscribed to the scheme and in respect of which Mr Atkinson received commissions. Mr Atkinson gave evidence that he provided to each of the investors introduced by him to the Projects a letter of advice in the form of Exhibit MM1: T643.20. Mr Atkinson accepted that he had an incentive to recommend Projects 1 & 2 to his clients due to the commissions that he would receive: T644.7-644.15. 154 Mr Atkinson established the Farmers' Action Group in about 2001: T644.25. He had a coordinating role with defendants: T645.05. On 21 May 2008 the Court directed that each defendant who contended that they had punctually paid the amounts referred to in clause 2 of their indemnity agreement should on or before 9 September 2008 file and serve an affidavit in support of that contention. Mr Atkinson filed no affidavit as to punctuality in 2008. His first affidavit was sworn 5 March 2009. 155 The plaintiff alleged that Mr Atkinson did not fulfil his punctuality obligations under the following loans entered into on the following dates: (a) loan agreement entered into on 26 June 1997 (No TT007); (b) loan agreement entered into on 3 October 1997 (No TT077); (c) First loan agreement entered into on 30 June 1998 (No TT159); and (d) Second loan agreement entered into on 30 June 1998 (No TT189). 156 The plaintiff claimed repayment from Mr Atkinson of the outstanding principal and interest accrued on the above loans in the amounts set out in Annexure B to its closing submissions, namely, as at 1 May 2010 the following: (a) Loan TT007 the sums of $15,854 principal and $28, 329.89 interest; (b) Loan TT077 the sums of $15,854 principal and $27,180.04 interest; (c) Loan TT159 the sums of $15,858 principal and $ 24,152.83 interest; (d) Loan TT189 the sums of $31,716 principal and $48,305.65 interest. 157 The total sum claimed is $207,250.40. 158 The plaintiff alleged the following payment were not made punctually by Mr Atkinson: Principal instalment of $8,750 under loan TT007 Date Due: 31 October 1997 Received by ARF: 6 March 1998 (126 days late) 1st principal instalment of $729.17 under loan TT077 Date Due: 30 November 1997 Received by ARF: 6 March 1998 (96 days late) Principal instalment of $9,800 under loan TT159 Date Due: 30 October 1998 Received by ARF: 2 November 1998 (2 days late) Principal instalment of $9,800 under loan TT189 Date Due: 30 October 1998 Received by ARF: 2 November 1998 (2 days late) Loan T007 159 Mr Atkinson did not contend that he had a punctuality defence in relation to this loan. Loan TT077 160 In relation to Loan TT077 the plaintiff was granted leave to withdraw its concession that it would not seek recovery of this loan made in its letter of 29 April 2010: (unreported, Einstein J, 12 May 2010 ex tempore, revised 13 May 2010). 161 Under TT077 Mr Atkinson had elected to make payments of principal monthly. $729.17 was payable on the last business day of each month commencing on 30 November 1997. The parties had mistakenly thought the first payment was due on 31 October 1997 (VAE1 p. 25). Payments of principal under TT007 were due on 31 October 1997. 162 Mr Atkinson sought to make the payment of the $729.17 principal instalment on loan TT077 partly by cheque for $379.17 by him dated 29 October 1997 received by ARF on 10 November 1997 and the balance of $350 out of the commissions owing to Structured Securities (his company) by OAL, claimed to be in the sum of $9,100. The balance of the $9,100 in commissions from OAL to Structured Securities, namely, the sum of $8,750, was directed by Mr Atkinson to be applied by OAL to meet Mr Atkinson's principal instalment obligation under TT007 which was due on 31 October 1997. 163 The Excel spreadsheet (Ex VAE2) records the payment of $729.17 as having been paid on 10 November 1997. However, the plaintiff contended – as outlined below - that only the part of the payment which Mr Atkinson paid by cheque had been received on that date, and the balance of the payment had only been paid on 6 March 1998. 164 Mr Atkinson made the second and following instalments in respect of Loan TT077 by way of a direct debit system, by which Mr Atkinson's counsel submitted that he had paid those instalments a month early. Accordingly, it was asserted that all of these payments were punctual. However, I did not understand Mr Atkinson's counsel to suggest that the direct debit arrangement had any bearing on the punctuality of the first instalment due on 30 November 1997. Instead Mr Atkinson's counsel contended that OAL had paid the relevant amount on Mr Atkinson's behalf before this due date, and the documentation in March 1998 was merely created to record what had already occurred: T739.35-45. 165 Both parties made their submissions in relation to loan TT077 by reference to the relevant correspondence, which was as follows. Mr Atkinson had sent a cheque dated 29 October 1997 and a short note to Mr Rob Henry, which reflected the payment arrangement outlined above, whereby Mr Atkinson would pay the amounts owing to ARF partly by cheque and the remainder from commission fees owing to his company, Structured Securities, by OAL. ARF's records show this was received on 10 November 1997. 166 By letter of 6 March 1998 (Exhibit P17) Mr Rob Henry of OAL requested Mr Atkinson put a form of words supplied by Mr Henry on Mr Atkinson's letterhead and date it 29/10/97 (reflecting the date of Mr Atkinson's original direction as to payment). Mr Henry stated that the purpose of the request was 'to finalise our [ie OAL's] records' regarding Mr Atkinson's direction of 29 October 1997. The form of words supplied by Mr Henry were a formal way of stating the payment arrangement that Mr Atkinson had earlier agreed with OAL, as outlined above. 167 Mr Atkinson duly replied to Mr Henry by letter – containing the suggested form of words - dated 29 October 1997 but faxed on 6 March 1998 (VAE1 p. 28). Mr Atkinson agreed, as is perhaps obvious, that the faxed letter he sent Mr Henry on 6 March 1998 had been sent as a result of Mr Henry's letter of 6 March 1998. 168 By letter dated 12 March 1998 Mr Henry informed Mr Atkinson 'The commission[s] listed above have been paid and allocated to the principal reductions of your farms as requested'. 169 Additionally, the document at VAEI p58 entitled 'Commission Agents, agent 001', which appears to form part of OAL's records, records that Mr Atkinson's commissions were paid to a third party (namely ARF), consistently with Mr Atkinson's request, on 6/3/98. 170 The parties disagreed as to how the above outlined correspondence was to be interpreted. The plaintiff contended that it reflected that Mr Atkinson had only paid the full instalment in relation to TT077 due on 30 November in March 1998. Mr Atkinson's counsel suggested that the March 1998 documentation was created simply to record what had occurred before the due date: 739.35-45. 171 The plaintiff sought to drawn on an alleged concession, where under cross-examination Mr Atkinson stated that he presumed by 6 March 1998 OAL had not paid the sum it was to pay on his behalf: T650.20. However, the totality of Mr Atkinson's cross-examination indicates that he maintained the position that the payment had been made by OAL on time and the later correspondence was merely recording what had occurred. 172 Furthermore, the plaintiff contended that Mr Atkinson's counsel had put in cross examination of Ms Edwards that the sum of $350 of the principal instalment due on 30 November 1997 was not paid on 10 November 1997 but on 6 March 1998: T378.31. A close examination of the transcript and the documents being referred to reveals that Mr Atkinson's counsel was in fact referring to the principal payment of $8,750 due in respect of loan TT007. Admittedly, that payment and the $350 in respect of loan TT077 were jointly the subject of Mr Atkinson's direction for OAL to pay commissions owing to him to ARF. In any case, this point does not alter the conclusion reached below on all of the evidence. 173 In the plaintiff's Tender Bundle in reply at p228 there appears a deposit slip of the plaintiff, dated 9 March 1998, which records the deposit of two cheques by OAL with a combined total of $9,100. The description in the plaintiff's deposit book for one cheque, for the sum of $8,750, was "OAL – Principal Loan Reduction TT007". The description for the second cheque, for the sum of $350, was "OAL – Part Pay (1st) TT077". 174 Furthermore, a review of the relevant copies of the plaintiff's deposit book in its Tender Bundle in reply shows that there was no cheque for $9,100 paid on or about 10 November 1997 by OAL. The only relevant cheque which appears is that of Mr Atkinson for $379.17 on the plaintiff's deposit slip of 11 November 1997. 175 Ultimately, the plaintiff's deposit slips, in the context of the other evidence, enable it to establish that OAL only paid ARF on behalf of Mr Atkinson (for the sum referable to his commissions) in March 1998. Therefore, in respect of the instalment due for Loan TT077 on 30 November 1997 Mr Atkinson was not punctual. His punctuality defence in respect of that loan fails. Loans TT159 & TT189 176 Loans TT159 and 189 required the payment of principal on or before Friday, 30 October 1998, namely the sum of $9,800 due under loan TT159 and $19,600 (two farms) due under TT189, being a total of $29,400. Mr Atkinson sought to make these payments by directing OAL to pay to ARF the sum of $29,400 from commissions due from OAL to Structured Securities (Mr Atkinson's company). 177 Under cross-examination, Mr Atkinson acknowledged that the cheque by OAL for payment of the sum of $29,400 was not drawn by OAL until 2 November 1998: 647.35-37. The payments were due on 30 October 1998, and therefore Mr Atkinson's punctuality defence with respect to these two loans fails. 178 The receipt by ARF of the cheque from OAL in the sum of $29,400 in respect of the principal repayments due for loans TT159 and TT189 are recorded as being received that day in the Excel Spreadsheet (Ex VAE2 pp. 13-14), namely, 2 November 1998 and also recorded in the ARF receipt dated 2 October 1998 a copy of which is at pages 92 and 113 of Exhibit VAE1 (Ms Edwards testified that the receipt should have read 2 November 1998, which is consistent with Mr Atkinson's evidence). There is nothing to suggest that this cheque was processed otherwise than in accordance with the normal procedure of which Ms Edwards gave evidence. The evidence of Mr Atkinson cannot be said to cast doubt upon the accuracy of the plaintiff's records. Peter Brakatselos - 14th defendant 179 ARF alleged that Mr Brakatselos did not fulfil his punctuality obligations under the loan agreement entered into on 24 November 1997 (TT082) in respect of two farms. 180 The plaintiff claimed repayment from Mr Brakatselos of the outstanding principal and interest accrued on loan TT082 in the amounts set out in Annexure B to the plaintiff's final submissions, namely, as at 1 May 2010 the sums of $31,708 principal and $53,779.78 interest. Accountant/Introducer and Occupation 181 Mr Atkinson's company, Structured Securities, introduced Mr Brakatselos to Project 1 in respect of which he borrowed the monies from the plaintiff which are the subject of Loan TT082. 182 Mr Brakatselos has identified his occupation as follows: (a) in his loan and investment application form: "Sales and Marketing - Computer Software" (VAE1 pp. 150-153); (b) in his affidavit sworn 9 September 2008: "Business development Manger, IT Services"; and (c) in his affidavit sworn 18 March 2010: "Information Technology Sales executive".' 183 Mr Brakatselos was advised by both Mr Atkinson and Mr Craig Gore (a business associate of Mr Atkinson) about the advantages of the investment: T540.40-541.20. Loan TT082 184 Under his loan agreement TT082, Mr Brakatselos was required to pay a principal instalment of $17,500. Pursuant to the option given to him under his loan agreement to pay this principal instalment in quarterly instalments, which he took up Mr Brakatselos was required to punctually pay four principal instalment payments of $4,375 and an interest instalment payment of $2,696. 185 The plaintiff says that Mr Brakatselos failed to pay the following instalment payment punctually: 2nd principal instalment of $4,375 under loan TT082 Date Due: Sunday, 31 May 1998 Received by ARF: Monday, 1 June 1998 (1 day late). 186 Mr Brakatselos elected to pay his principal instalment by way of four quarterly payments of $4,375 each. At issue is the payment of $4,375 which was due on 31 May 1998 but received by the plaintiff on 1 June 1998. The Excel Spreadsheet (Ex VAE2) records the plaintiff's receipt of that payment on 1 June 1998. Further, the receipt by the plaintiff of the cheque was also recorded by a handwritten note made by one of the plaintiff's staff on a copy of the schedule provided to Mr Brakatselos: VAE1 pp 177. 187 The 31 May 1998 due date was a Sunday. The payment was, therefore, due on Friday, 29 May 1998. 188 On 2 December 1997 (VAE1 Vol 1 p. 174) the plaintiff wrote to Mr Brakatselos reminding him that he had elected to pay the principal reduction of $17,500 on his loan of $45,000 by quarterly instalments of $4,375. A schedule was attached showing the due date for payment. It showed that the second quarterly payment was due on 31 May 1998. 189 At VAE1 p. 77 there is a copy of that schedule with the second quarterly payment highlighted. The inference is that Mr Brakatselos sent his cheque with that photocopy of the schedule. On the photocopy was recorded a handwritten notation "cheque received 1/6" and "banked 2/6". There is no suggestion or any evidence that this notation was anything other than in the ordinary course of business and contemporaneous. 190 This is the same date that the Excel Spreadsheet records that this instalment payment was received by the plaintiff. The plaintiff's bank deposit book (PTB4 p 978) and bank statements (PTB4 p. 1028) show that the cheque was banked on 2 June 1998. 191 In his punctuality affidavit of 9 September 2008, Mr Brakatselos did not depose to loan TT082 as being a loan in respect of which he had made punctual payment. The affidavit referred only to loans TT073 and TT188. 192 It was not until his affidavit of 22 September 2008 that he filed a punctuality affidavit with respect to loan TT082. At paragraph 6 of that affidavit he said that, on 27 May 1998, he "sent to the plaintiff by post a cheque in favour of ARF for the amount of $4,375 being payment for my second instalment of principal". A copy of that cheque butt is annexed to this affidavit and marked annexure "A". The cheque butt is dated 27 May 1998, which was a Wednesday. Mr Brakatselos, therefore, contends that he posted the cheque on Wednesday 27 May 1998 and that it, therefore, should have arrived on the due date, two days later, namely Friday 29 May 1998. 193 In fact, Mr Brakatselos drew two cheques that day. He did not refer to this in his affidavit of 22 September 2008. He did so, however, in his affidavit of 18 March 2010. The cheque that he drew in favour of the plaintiff was drawn on his personal account. There were insufficient funds to meet the cheque. He, therefore, drew a cheque on his joint business account to be paid into his personal account in order to cover the cheque in favour of the plaintiff (affidavit 18/3/10 [11], T156.35-547.22). 194 Mr Brakatselos does not suggest that he has a clear recollection of writing the cheque. His evidence that he posted the cheque on 27 May 1998 is based upon the date on the cheque butt and his usual practice (T545.30-546.10). Understandably he does not recall what time of day he wrote the cheque: T548.14. He was employed by Microsoft, where Mr Brakatselos asserts mail was cleared by Microsoft staff from an internal mail tray at 3 o'clock in the afternoon (T539.15). There is no evidence that he placed the cheques in the post before 3.00 pm. 195 Whether or not the cheque was placed in the mail tray for collection before 3 o'clock on Wednesday, 27 May 1998 or after, the fact remains that on the evidence before the Court, the cheque was not received in the post by the plaintiff until Monday, 1 June 1998. 196 The plaintiff suggested it may also have been the fact that Mr Brakatselos posted the covering cheque prior to sending the cheque to the plaintiff: T547.31. He denied this. Mr Brakatselos' counsel submitted that this was an impermissible inference since if his motive in issuing the "covering cheque" was to ensure that additional cleared funds were actually in the account from which the cheque to ARF was paid, it would naturally be expected that he would have to wait a number of days before writing the second cheque. If Mr Brakatselos had wanted to ensure additional cleared funds were available in his account before he wrote the cheque to ARF, certainly the delay in receipt of the cheque by ARF would have been greater than one day. 197 In any event that controversy can be put to one side. Mr Brakatselos' submission really rested on acceptance of a) the contention that he posted the letter on Wednesday 27 May 1998 and b) an inference which his counsel sought to draw as to the usual course of post, based on the inadmissible Australia Post material and c) an inference sought to be drawn about when post was delivered to and sorted at Port Macquarie (which these reasons reject for reasons outlined elsewhere). As regards the first factor, there were significant doubts raised about Mr Brakatselos' recollection, outlined below. 198 Under cross-examination Mr Brakatselos pointed out that he had evidence which showed 'the covering cheque' was paid out of one of his accounts and into another account from which the cheque to ARF was to be drawn on 29 May 1998. However, this evidence does not assist his overall contention that the cheque posted to ARF was received by 29 May 1998. It only provides inferential support for the finding that, if as he contended both cheques were posted together, the cheque to ARF was posted on 27 May 1998. Even if this is accepted, it does not undermine the plaintiff's contention that on the evidence of its records, the cheque was only received on Monday 1 June 1998. The reminder letters 199 In its reminder letter of 16 July 1998 (VAE1 pp. 179-180), the plaintiff attached a schedule showing that the payment due on 31 May 1998 was received on 1 June 1998. Mr Brakatselos did not dispute the accuracy of this record. 200 Again, in its reminder letter of 27 October 1998 (VAE1 pp. 185-186) the plaintiff attached a schedule which again showed the 31 May 1998 payment was made one day late. Mr Brakatselos did not dispute this either. 201 Mr Brakatselos said that he would have picked up such a discrepancy in the course of preparing his tax returns and that, whilst he focused on the due date of the next payment, he either ignored or cannot remember seeing the entry immediately above it which identified the plaintiff's receipt of the principal instalment on 1 June 1998 (which was late). The plaintiff drew on Mr Brakatselos' evidence under cross-examination at T549.30-551.31, contending that his answers cast serious doubt over his recollection of events and his belief and knowledge of his claim to being punctual in respect of this late payment. This submission is of some substance. Essentially, Mr Brakatselos' repeatedly asserted that he was particularly careful in ensuring punctual payment, however he could not explain how he had not noticed the entry recording him as non-punctual, for example when reviewing the schedule to prepare tax returns. 202 The receipt of the cheque was recorded in the handwritten note by an ARF staff member referred to above as received on "1 June 1998". It was recorded as having been received in the Excel Spreadsheet that day. There is nothing to suggest that this cheque was processed otherwise than in accordance with the normal procedure of which Ms Edwards gave evidence. Ultimately, the evidence of Mr Brakatselos cannot be said to cast doubt upon the accuracy of the plaintiff's records. Geoffrey Fredericksen - 35th defendant 203 Mr Fredericksen was in 1998 working for a consulting company called Intelligroup Australia. It was an IT consulting company. He now works as an information technology executive manager with Westpac Banking Corporation (T425-426). 204 In 1998 his accountant was Mr Giannuzzi. Mr Gianuzzi prepared his tax returns and gave tax advice. It was in his capacity of providing tax advice that Mr Gianuzzi recommended that Mr Fredericksen attend the seminar conducted by OAL at the Ernst & Young building in 1998. It was the attraction of the tax advantages that led Mr Fredericksen to go to the seminar. He subsequently received advice from Mr Giannuzzi which led him to subscribe to the scheme (T426-427). 205 Mr Atkinson's company, Structured Securities, introduced Mr Fredericksen to Project 1 in respect of which he borrowed the monies from the plaintiff which are the subject of Loan TT173. 206 The plaintiff says that Mr Fredericksen did not pay the following payment punctually: Principal instalment of $9,800 under loan TT173 Date Due: Friday, 30 October 1998 Received by ARF: Tuesday, 3 November 1998 (4 days late). 207 On 12 October 1998 Mr Fredericksen was sent a reminder letter by ARF informing him that the payment of $9,800 was due on 30 October 1998 (Ex VAE1 p. 341). It is clear from VAE1 p. 342 that he sent the plaintiff a cheque with a copy of the letter of 12 October 1998. That letter was stamped with a date received stamp dated "3 November 1998", which was a Tuesday (VAE2 p 322). This was the same date recorded in the Excel Spreadsheet for the receipt by the plaintiff of this payment. The reminder letter by the plaintiff to Mr Fredricksen dated 2 June 1999 confirmed in the schedule which was attached to it that the plaintiff recorded receipt of this payment on 3 November 1998: (VAE1 p344 – 345). 208 Mr Fredericksen had no recollection of sending the cheque attached to the copy of the letter of 12 October 1998: T433.20. He could only rely upon his recollection of his usual practice at that time: T433. The cheque he sent was dated 28 October 1998 (Ex VAE1 p. 343). 209 Mr Fredricksen testified that his usual practice was to pay bills and post them at Avalon Post Office on his way to work in the morning: T434.49. The plaintiff attempted to infer that if Mr Fredricksen drew the cheque on the evening of 28 October 1998, it is likely that he posted the cheque on Thursday, 29 October 1998. In that case it was said there would be little chance of the cheque being received on Friday, 30 October 1998, by the plaintiff in Port Macquarie. This attempted inference involves impermissible speculation as to the usual course of post. 210 The plaintiff drew on the fact that the cheque butt showed a date of 30 October 1998, submitting that the likelihood was that this was the date the cheque was drawn and a different date was recorded on the cheque itself. 211 In cross-examination it was put to Mr Fredericksen that he actually wrote the cheque on 30 October 1998 (see transcript page 443, lines 24-33). He emphatically denied this and gave evidence of his practice of writing the due date for a bill on the cheque butt (see transcript page 45, lines 1-28). 212 Mr Fredericksen's counsel submitted that his evidence of the practice of writing the due date on cheque butts was corroborated by the other documentary evidence regarding the payment of interest on his loan which was due on 30 June 1999, (which payment is not alleged to be unpunctual). At page 2 of Exhibit GNF-1 to the affidavit sworn by Mr Fredericksen on 1 September 2008, there is a copy of a cheque butt for the relevant amount which is dated 30 June 1999, the due date for this payment. Accordingly, it was said to be convincingly corroborated that the date on the cheque butt said by ARF to show the late payment of principal (due on 30 October 1998) signifies the due date for the payment, not the date when the cheque was written. 213 Ultimately, even if Mr Fredericksen's submission regarding the practice of writing the due date on cheque butts were accepted, the burden of proving punctuality is not discharged. At best, Mr Fredericksen's testimony proves that the cheque was posted on 28 October 1998. Even if that be true, Mr Fredericksen's submission that the cheque would then have been received by 30 October is reliant on the inadmissible Australia Post material. Without that material, the Court is being asked to speculate as to the usual course of post. There is also nothing to suggest that the cheque from Mr Fredericksen was processed by the plaintiff otherwise than in accordance with the normal procedure of which Ms Edwards gave evidence, that evidence having been accepted. Gavin Winston Long - 172nd defendant 214 Mr Long was in 1997/98 a stockbroker with Ord Minnett. He was involved with capital raising, IPOs and understood prospectuses: T600-601. 215 Mr Long was advised of the scheme by Mr David Stewart who was a colleague of Mr Long's at Ord Minett: T601.20. Mr Stewart had been advised of the scheme by Mr Atkinson who passed on this advice to Mr Long: T601.15-.30. 216 The plaintiff contended that Mr Long did not fulfil his punctuality obligations under the following loans entered into on the following dates: i. loan agreement entered into on 30 June 1998 (TT181); and ii. loan agreement entered into on 3 June 1999 (TT264). 217 Mr Long also entered into loan agreement TT033. However, the plaintiff did not claim that he was unpunctual in respect of his payment obligations under that loan. 218 The plaintiff claims repayment from Mr Long of the outstanding principal and interest accrued on loan TT181 and TT264 in the amounts set out in Annexure B to the plaintiff's Closing Submissions, namely, as at 1 May 2010: i. Loan 181 the sums of $31,716 principal and $48,305.63 interest; and ii. Loan 265 the sums of $28,216 principal and $42,290.50 interest. 219 The plaintiff said that Mr Long did not pay the following payments punctually, details of which are: Interest instalment of $2,458 under loan TT181 Date Due: Wednesday, 30 June 1999 Received by ARF: Friday, 2 July 1999 (2 days late) Principal instalment of $19,600 under loan TT264 Date Due: 30 September 1999 Received by ARF: 15 May 2000 (228 days late) Interest instalment of $2,458 under loan TT264 Date Due: Wednesday, 31 May 2000 Received by ARF: Friday, 2 June 2000 (2 days late) 220 Mr Long's counsel indicated in final submissions that he only contended for a punctuality defence in respect of the interest instalment due for loan TT181. Accordingly, Mr Long's only potential defence for loan TT264 was that pleaded under the Contracts Review Act. Loan TT181 221 On 26 September 2008 Mr Long swore a punctuality affidavit pursuant to the orders of the Court of 21 May 2008, in which he claimed to have been punctual in only in respect of his loan, TT033, and his joint loan with Mr Stewart, TT054 (the plaintiff was not pursuing these loans in the current proceedings). Mr Long made no claim in this affidavit of punctual payment in respect of loans TT181 or TT264. 222 On 23 March 2010 Mr Long swore an affidavit as to punctuality with respect to TT181. 223 Under loan TT181 a payment of interest was due on Wednesday, 30 June 1999 for the sum of $2,458. The Excel Spreadsheet (Ex VAE2) shows this payment was received by the plaintiff on 2 July 1999, which was a Friday. 224 Mr Long contends in his affidavit sworn 23 March 20010 that he paid this instalment by way of cheque, which he claims he posted to the plaintiff on 28 June 1999: [11]. 225 The plaintiff contends that this payment was received by it on 2 July 1999 by way of a direct deposit by Mr Long of his cheque into the plaintiff's bank account. This mode of payment was one of the options proposed by the plaintiff to Mr Long in the plaintiff's letter to him dated 30 July 1999 (VAE1 pp. 1081-1082), namely, by its nomination and provision of details of its ANZ bank account. The plaintiff contends that this direct deposit was consistent with his prior course of conduct in respect of his principal instalment of $19,600 which was due and paid on 30 October 1998: see the plaintiff's receipt number 28 dated 30 October 1998 (VAE1 p. 1084). 226 The plaintiff supported its claim that the interest instalment payment due on 30 June 1999 was received by it by direct deposit on 2 July 1999 from its records, namely, the following: (a) on 7 July 1999 the plaintiff issued a letter to Mr Long advising that he was late in this payment (VAE1 pp. 1088- 1089); (b) after 30 July 1999 the plaintiff received a bank statement from the ANZ bank which showed a deposit of the sum of $2,458; (c) there is no record in the plaintiff's deposit book between about 28 June to 2 July 1999 of any deposit by the plaintiff of a cheque from Mr Long for this amount: see the plaintiff's Bundle in Reply pp. 316-321; and (d) the plaintiff's primary record of receipt of payment, the Excel Spreadsheet (Ex VAE2) shows the receipt of this interest payment from Mr Long on 2 July 1999. 227 Under cross-examination Mr Long testified that at the time of his punctuality affidavit sworn 26 September 2008, he believed he was punctual in respect of loan TT181 and 264 but did not have the documentation to prove it so he did not make a claim alleging punctuality in that affidavit in respect of those loans: T604.17–31. 228 Mr Long conceded under cross-examination that he was not aware which account he had paid the amount from until he discovered the cheque butt dated 28 June 1999 (although he contended that he had a recollection he had paid the amounts). He had no memory of actually writing the cheque. These concessions support the plaintiff's contention that Mr Long had little recollection of the circumstances in which he made the payment due on 30 June 1999. 229 Mr Long further testified that he did not remember ever depositing directly into the plaintiff's account, and would have either posted the cheque or given it to David Steward at Ord Minnett. He conceded the latter was a possibility. 230 It is true that as Mr Long's counsel submitted, there is an apparent tension between the plaintiff's letter of 7 July 1999 recording the amount as unpaid, and the fact that the plaintiff's record showed that the amount had been despotised five days earlier. However, this may well have reflected that the plaintiff was not aware the deposit had occurred as at 7 July 1999. The apparent inconsistency by itself is not sufficient to cast doubt on the prima facie validity of the plaintiff's records. 231 Ultimately, Mr Long had the burden of proving punctuality. His evidence requires the Court to engage in impermissible speculation: i. as to whether the cheque was posted - as opposed to given to his colleague and then deposited directly into the plaintiff's bank account on 2 July 1999 (as the plaintiff's records suggest). ii. as to the usual course of post (assuming (i) is accepted). 232 Mr Long did not discharge this burden. Nicholas Charles Rowe - 75th defendant 233 In 1997/1998 Mr Rowe was a director in a stockbroking firm in which he primarily looked "after the corporate affairs clients, principally on capital raising, securities and paperwork associated therewith": T521.10-12. 234 Mr Atkinson was Mr Rowe's accountant at the time. He prepared Mr Rowe's tax returns and gave him tax advice from time to time. It was in the course of giving that tax advice that Mr Atkinson suggested that Mr Rowe attend a seminar to discuss the Port Macquarie Tea Tree Plantation Projects and Mr Atkinson provided Mr Rowe with a prospectus: T521.15-.40. Mr Atkinson's company, Structured Securities, introduced Mr Rowe to the Projects in respect of which he borrowed the monies from the plaintiff which are the subject of loan TT060: see Mr Rowe's loan application forms for these loans (VAE1 p 542). 235 The plaintiff contended Mr Rowe did not fulfil his punctuality obligations under a loan agreement entered into on 30 June 1997 (TT060). 236 The plaintiff claims repayment from Mr Rowe of the outstanding principal and interest accrued on loan TT060 in the amounts set out in Annexure B to plaintiff's closing submissions,, namely, as at 1 May 2010, the sums of $31,708 for principal and $56,659.78 for interest. 237 The plaintiff says that Mr Rowe did not pay the following payment punctually, details of which are: Principal instalment of $17,500 under loan TT060 Date Due: Friday, 31 October 1997 Received by ARF: Tuesday, 4 November 1997 (4 days late). 238 Mr Rowe was required to make a payment of principal of $17,500 ($8750 x 2) on Friday, 31 October 1997. The Excel Spreadsheet (Exhibit VAE2) records that amount being paid on 4 November 1997, which is a Tuesday. 239 On 2 October 1997, Mr Rowe received the letter from the plaintiff reminding Mr Rowe that a payment of $17,500 was due and payable on or before 31 October. Mr Rowe could not recall whether he sent his cheque for $17,500 with a copy of the letter of 2 October 1997, although he testified that it would not be unusual for him to append the cheque to the letter: T523.45-524.10. In fact, the plaintiff's records show that Mr Rowe did send his cheque with a copy of the letter of 2 October 1997. 240 Mr Rowe's cheque was dated 28 October 1997. 241 The crux of Mr Rowe's evidence under cross-examination was that he could remember writing out the particular cheque in question but could not remember anything else from that day: 525.20-526.20. 242 Mr Rowe testified that he did not post the cheque but put it in the office mail delivery system at a time he could not recall: T526.25-30. 243 The receipt of Mr Rowe's cheque for this payment has been stamped with a date received stamp dated "4 November 1997". It was also recorded as having been received that day in the Excel Spreadsheet (Exhibit VAE2). 244 Mr Rowe has not discharged the burden of proving punctuality. His case, based as it is on the cheque being written and posted on a particular day, requires the Court to speculate in an impermissible manner about the usual course of post. 245 There is nothing to suggest that this cheque was processed by the plaintiff otherwise than in accordance with the normal procedure of which Ms Edwards gave evidence, (that evidence having been accepted). The evidence of Mr Rowe cannot be said to cast doubt upon the accuracy of the plaintiff's records. Maria Russo – 78th/189th defendant 246 Ms Russo has identified her occupation as follows: (a) in her loan and investment application form as: "Sales Manager" (VAE1 pp. 572); (b) in her affidavit sworn 22 March 2010 as: "Business Owner". 247 In 1998 Mr Atkinson had been Ms Russo's accountant for a number of years. He had prepared her tax returns as well as Mr Gregory Thompson's (Ms Russo's partner at the time). He gave them accounting advice. It was Mr Atkinson who suggested that she might attend an investment seminar because there may very well be tax advantages in subscribing to the scheme under consideration. She had been told of the tax rulings with respect to the particular scheme. After the seminar she asked Mr Atkinson further questions about the tax implications of the scheme and how it might work. He did so in his capacity as a tax advisor to her: T450-51. 248 The plaintiff alleged that Ms Russo did not fulfil her punctuality obligations under the loan agreement entered into on 30 June 1997 (TT068). 249 The plaintiff claimed repayment from Ms Russo of the outstanding principal and interest accrued on loan TT068 in the also set out in Annexure B to its closing submissions, namely, as at 1 May 2010 the sums of $31,708 for principal and $56,657.49 for interest. 250 The plaintiff says that Ms Russo did not pay the following payment punctually, details of which are: Interest instalment of $2,696 under loan TT068 Date Due: Tuesday, 30 June 1998 Received by ARF: Wednesday, 1 July 1998 (1 day late). 251 Ms Russo was required to pay interest of $2,696 ($1,348 per farm) on or before 30 June 1998. 252 The Excel Spreadsheet (Exhibit VAE2) records the date of receipt by ARF of that payment as 1 July 1998. 253 On 18 June 1998 the plaintiff wrote to Ms Russo and her then partner, Mr Thompson, reminding them that the payment of interest of $2,696 was due and payable on or before 30 June 1998. 30 June 1998 was a Tuesday. 254 At VAE1 p. 596 is a copy of the letter by ARF to Ms Russo of 18 June 1998 bearing a date received stamp of "1 July 1998", which was stamped by the plaintiff's staff to record that it was received on that day. Ms Russo did not know whether the cheque was sent with the letter: T452.50. However, she admitted that would be in her ordinary course of practice. Therefore, it obviously was so sent. 255 The plaintiff issued a receipt for this payment dated 1 July 1998: VAE1 p. 598. 256 The cheque was dated 26 June 1998 which was a Friday. Payment was due on Tuesday, 30 June. 257 In her affidavit of 4 September 2008 Ms Russo said that, "On or about 26 June 1998 I sent by post" the cheque to the plaintiff. 258 During the initial part of Ms Russo's cross-examination on 3 May 2010 she produced the reminder letter of 18 June 1998 with the notation "Posted 26-6-98". The letter was released upon request into the custody of Senior Counsel for the plaintiff, and he informed the Court that it never left his custody. From this the active defendants' counsel sought to drawn an inference that the letter was authentic and contemporaneous (the possibility of forensic testing having been mooted by the plaintiff). The Court does not need to enter into these matters since as is made plain below, with or without the letter Ms Russo's case relies on impermissible speculation regarding the course of post. 259 There was further controversy between the parties regarding when Ms Russo first became aware that the letter with the notation had not been included in her affidavits. She testified that she became so aware when preparing to give evidence on 3 May 2010. Ms Russo's then deposed in her affidavit of 6 May 2010 at paragraph 11 that she sent a copy of the letter of 18 June 1998 with the notation on it to Clayton Utz (her former solicitors) with the faxed cover sheet which was at Annexure "C" to her affidavit. The plaintiff pointed out that this statement was wrong, as is revealed in her affidavit of 11 May 2010. The plaintiff's contended that the error was detected only after it contacted Clayton Utz. Again, for reasons outlined below, these arguments need not be resolved by the Court. 260 Mr Russo testified in cross-examination that it was Mr Thompson, her former partner, who wrote out the cheque and signed it: Mr Thomson had also written the words" "Posted 26.6.98" on the letter: T 625. Ms Russo further testified that she would interpret the word "Posted" as indicating that the posting had already been undertaken when the word was written: T625.49. 261 On this basis, the plaintiff contended that, sometime after he wrote the cheque, Mr Thompson wrote the "Posted" notation on the letter. There was no evidence as to when this occurred or in what circumstances. Mr Thompson was not called to give evidence. Ms Russo agreed that it would not be "terribly difficult" for Mr Thompson to swear an affidavit in the proceedings: T629.11. He would have been available to come to Sydney if necessary: T629.30. 262 Ultimately, as touched on above, the controversy regarding the letter can be put to one side. Ms Russo's attempt to discharge the burden of proving punctuality relies on the Court making an inference as to the usual course of post. That inference would be speculative and impermissible. The plaintiff has extensive documentary evidence that has been accepted as reliable, including a date received stamp on the covering letter, the entry in the Excel Spreadsheet and the receipt all dated 1 July 1998. Jennifer Wallace – 124th defendant 263 Mr Atkinson's company, Structured Securities, introduced Ms Wallace to the Projects in respect of which Ms Wallace borrowed the monies from the plaintiff which are the subject of loan TT276. 264 Ms Wallace identified her occupation as "company secretary". 265 Dr Wallace testified that he was the driving force behind the investments made by himself and his wife and that she was a "completely passive investor and had no direct knowledge" of the arrangements: T472.16-18. Mrs Wallace's counsel therefore submitted that it was entirely consistent with this position that Dr Wallace dealt with the two investments at the same time and essentially as one transaction. In particular, this submission was relevant to Dr Wallace's contention, outlined below, that he posted he and his wife's cheques together in relation to both payments in issue. 266 The plaintiff contended that Ms Wallace did not fulfil her punctuality obligations under the loan agreement entered into on 3 June 1999 (TT276). 267 The plaintiff claims repayment from Ms Wallace of the outstanding principal and interest accrued on loan TT276 in the amounts set out in Annexure B of its closing submissions, namely, as at 1 May 2010 the sums of $14,108 for principal and $21,145.25 for interest. 268 The plaintiff says that Ms Wallace did not pay the following payments punctually, details of which are: Principal instalment of $9,800 under loan TT276 Date Due: Thursday, 30 September 1999 Received by ARF: Wednesday, 6 October 1999 (6 days late) Interest instalment of $1,229 under loan TT276 Date Due: Wednesday, 31 May 2000 Received by ARF: Thursday, 1 June 2000 (1 day late) 269 Ms Wallace did not read an affidavit of her own, but read two affidavits sworn by Dr Wallace, her husband. Dr Wallace gave evidence in defence of the claim against his wife. 270 In regard to Ms Wallace's loan (TT276), an instalment payment of principal of $9,800 was due on Thursday, 30 September 1998. 271 The Excel Spreadsheet, VAE2 records the payment of that principal as received on Wednesday, 6 October 1999, namely, 6 days late. Monday, 4 October was a Labour Day holiday in South Australia, ACT and NSW. 272 The payment of the interest instalment of $1,229 was due on Wednesday, 31 May 2000. 273 The Excel Spreadsheet, VAE2, records the date of receipt by the plaintiff of payment of that interest instalment on Thursday, 1 June 2000, namely, one day late. 274 Dr Wallace had entered into loan agreement TT277 on the same date as Mrs Wallace, namely, 3 June 1999. His payments of principal and interest were due on the same day as Mrs Wallace, namely, 30 September 1999 and 31 May 2000. Dr Wallace's payments were recorded as being received on or before the due date. 275 In his affidavit of 15 September 2008 at [15]-[16] he swore that the cheques in respect of both his own loan and his wife's loan were sent by his wife. Mrs Wallace did not give evidence of having posted the cheques for her and Dr Wallace's' loans. 276 In his affidavit of 5 May 2010 Dr Wallace changed his evidence in this regard and said at [4] and [6] that it was he who posted the letter. 277 At T470 he said that, in swearing his affidavit of 15 September 2008, he "understood at the time of the significance of an affidavit": T470.06. Given his understanding of an affidavit, he "read over the affidavit carefully" when swearing it T470.18. The draft affidavit was prepared by his solicitors, Clayton Utz, and he had a number of discussions with them in the preparation of the affidavit: T470.20.40. 278 Dr Wallace's explanation for the inconsistency between his affidavit of 15 September 2008 and his affidavit of 5 May 2010 was that, in fact, he had not carefully checked the affidavit: T471.20. 279 The plaintiff submitted that the likelihood was that Dr Wallace's affidavit of 15 September 2008 accurately recorded his belief at the time and that on 5 May 2010, served on the day he came to be cross examined, he had come to a different view. 280 Dr Wallace's counsel submitted that he was candid as to his failure to pay the requisite attention to the details of paragraph 15 of his earlier affidavit and in particular his explanation that he believed that the error was corrected because after he discovered the error in the affidavit of 15 September 2008, he sought to have that error corrected through the medium of the defences which were then being prepared, not appreciating the necessity to swear an additional affidavit T473.45-474.09. Furthermore, it was submitted that in re-examination this matter was further explored and by reference to the defence which had been prepared, it was made manifest that the earlier error had been corrected: T487, lines 9-35; Exhibit D5). 281 The cheque to pay the instalment of interest of $9,800 due to be paid by Mrs Wallace was dated 29 September 1999. The plaintiff relied on the fact that its records showed Ms Wallace's cheque and three others were all received on 6 October 1999 and were shown in the plaintiff's deposit slip to all have been entered into the deposit book on the same date and then banked the following day. 282 The plaintiff further relied on the fact that the first of the cheques in this group was that of Mr Gardiner which was held in the Gardiner Test Case to have been received on 6 October 1999 and, therefore, late. The possibilities in relation to Dr Wallace's behaviour 283 Under cross-examination, Dr Wallace contended that since his cheques were recorded as being received on time, Mrs Wallace's cheques must also have been received on time because he claimed that they had been posted together. Accordingly, Dr Wallace suggested that the plaintiff had received the cheques in question together but then banked them on different dates. The active defendants' counsel took this position in their final submissions, contending that it should be accepted that the cheques were posted together and had both arrived on time. 284 Dr Wallace accepted that another logically possible explanation was that he may have sent the cheques relating to his loan first and the cheques relating to his wife's loan later. However, he rejected the suggestion he had in fact done this in relation to the two payments in question: T481.16. He further rejected the related suggestion that he had drawn the cheque relating to his own payment of principal at a different time to the cheque relating to his wife's payment of principal: T476.5ff. Mrs Wallace's counsel refuted the proposition that the cheques were posted separately in two ways: i. Firstly, it was submitted that it would be illogical and improbable for Dr Wallace to have done this given that the payments had the same due date, were drawn from the same account, and made using consecutive cheques. Here the active defendants' counsel referred to the dates of the cheques and cheque butts, and the plaintiff's counsel did likewise in their submissions, both parties contending for various inferences as to when the relevant cheques were drawn and therefore posted. It can be noted here that the cheque drawn to pay the principal owed by Mrs Wallace was dated 29 September 1999 but the cheque butt bore the date 30 September 1999. Dr Wallace's cross-examination travelled through the possible explanations for this difference. ii. Secondly, it was submitted that the dates relied on by the plaintiff as being when Mrs Wallace's cheques were likely posted and when they were received were much further apart than was probable given the usual course of post. 285 The second point relies on an impermissible inference as to the usual course of post (and was based on the rejected Australia Post material). 286 Dr Wallace appeared to further accept that a third possible explanation was that the he and his wife's cheques were received together after the due date, meaning his own payments had been wrongly recorded as punctual: T481.29-32, 482.30. 287 The first and third mentioned explanations, if correct, potentially call into question ARF's records upon which its case was conducted. However, there is an insufficient basis for the Court to accept that ARF's records were so badly kept as is suggested. Mrs Wallace's counsel utilised Dr Wallace's evidence, in combination with the documentary evidence, in contending that ARF's records were unreliable. It should be remembered that Dr Wallace conceded he gave his evidence from the standpoint of his usual practice rather than actual recollection of the events in question: T482.10. The possibility that Dr Wallace posted the cheques separately remained open on his own case (although Dr Wallace denied doing this and it was said to be improbable). Furthermore, it must be remembered that the plaintiff's records were supported by the detailed evidence of Ms Edwards, a witness of credit. In all the circumstances, Mrs Wallace has not discharged the burden of proving punctuality. David James Wardle – 95th defendant 288 Although in his application for TT308, exhibit VAE1 p. 714, Mr Wardle described himself as an investor he did so because he was investing in the project: T534.03. He conceded that this was not an accurate description of his occupation. At the time of the investment Mr Wardle was a consultant in the computer software company. Mr Wardle is and was clearly a man of substantial means. In TT125 he subscribed to 25 farms and in TT308 ten farms. He read the application before signing it: T534. 289 Mr Giannuzzi was Mr Wardle's accountant at the relevant time: T533.50-534.16. Mr Atkinson's company, Structured Securities, introduced Mr Wardle to the Projects in respect of which he borrowed the monies from the plaintiff which are the subject of loan TT125 and 308. 290 The plaintiff contended that Mr Wardle did not fulfil his punctuality obligations under the following loans entered into on the following dates: (a) loan agreement entered into on 25 June 1998 (TT125) in respect of his investment in 25 farms; and b) loan agreement entered into on 29 June 1999 (TT308) in respect of his investment in 10 farms. 291 The plaintiff claimed repayment from Mr Wardle of the outstanding principal and interest accrued on loan TT125 and TT308 in the amounts set out in Annexure B to its closing submissions, namely, as at 1 May 2010: (a) for loan TT125, the sums of $396,450 for principal and $603,820.63 for interest; and (b) for loan TT308, the sums of $141,080 for principal and $214,874.55 for interest. 292 The plaintiff says that Mr Wardle did not pay the following payments punctually, details of which are: Principal instalment of $245,000 under loan TT125 Date Due: 30 October 1998 Received by ARF: 3 November 1998 (4 days late) Principal instalment of $98,000 under loan TT308 Date Due: 30 September 1999 Received by ARF: 12 October 1999 (12 days late) 293 Mr Wardle does not put in issue that the relevant instalment payment obligations in loans TT125 and TT308 were not punctually paid by him and as such his defence relies only upon the Contracts Review Act. 294 The receipt by the plaintiff of Mr Wardle's late instalments for principal in respect of each of the above loans is set out in the Excel Spreadsheet (Ex VAE2). The plaintiff's secondary records which are in Exhibit VAE1 show that: (a) the principal instalment payment of $245,000 in respect of loan TT125 was transferred by funds transfer from Wardle's account into the plaintiff's bank account on 2 November 1998; (b) the principal instalment payment of $98,000 in respect of loan TT308 was paid by way of AGC cheque which the plaintiff deposited on 12 October 1999. Franco Giannuzzi – 149th defendant 295 Mr Giannuzzi has identified his occupation as "Chartered Accountant". 296 Mr Atkinson's company, Structured Securities, introduced Mr Giannuzzi to the Projects in respect of which he borrowed the monies from the plaintiff which are the subject of loans TT123 and TT245. 297 The plaintiff alleged that Mr Giannuzzi did not fulfil his punctuality obligations under the following loans entered into on the following dates: i. loan agreement entered into on 25 June 1998 (TT123); and ii. loan agreement entered into on 3 June 1999 (TT245). 298 The plaintiff claimed repayment from Mr Giannuzzi of the outstanding principal and interest accrued on loan TT123 and TT245 in the amounts set out in Annexure B to its closing submissions, namely, as at 1 May 2010 the following: (a) for loan TT123, the sums of $15,858 for principal and $24,152.81 for interest; and (b) for loan TT245, the sums of $28,216 for principal and $42,974.91 for interest. 299 The plaintiff says that Mr Giannuzzi did not pay the following payments punctually, details of which are: Principal instalment of $9,800 under loan TT123 Date Due: 30 October 1998 Received by ARF: 17 November 1998 (18 days late) Interest instalment of $1,229 under loan TT123 Date Due: 30 June 1999 Received by ARF: 19 July 1999 (19 days late) Principal instalment of $19,600 under loan TT245 Date Due: 30 September 1999 Received by ARF: 6 October 1999 (6 days late) 300 Mr Giannuzzi does not put in issue that his instalment payment obligations in loans TT123 and TT245 were not punctually paid by him and as such his defence relies only upon the Contracts Review Act. 301 The receipt by the plaintiff of Mr Giannuzzi's late instalments for principal in respect of each of the above loans is set out in the Excel Spreadsheet (Ex VAE2). The plaintiff's secondary records, which are in Exhibit VAE1, show that: (a) the principal instalment payment of $9,800 in respect of loan TT123 due on 30 October 1998 was paid by him by way of a cheque dated 12 November 1998 (VAE1 p. 916) which received on 17 November 1998; (b) the principal instalment payment of $19,600 in respect of loan TT245 which was due on 30 September 1999 was paid by cheque dated 30 September 1999 (VAE1 p. 944) which was received by the plaintiff on 6 October 1999; (c) The receipt of the cheque for the interest instalment for TT123 was handwritten "RECEIVED 19/7/99" on a copy of the plaintiff's letter dated 7 July 1999 (VAE1 p. 921). 302 All the above payments were recorded as having been received in the Excel Spreadsheet after the respective payments' due dates. There is nothing to suggest that this cheque was processed otherwise than in accordance with the normal procedure of which Ms Edwards gave evidence. Mr Holmes 303 Insofar as the circumstances concerning Mr Holmes are concerned, an issue not otherwise raised in relation to other of the defendants becomes of importance. i. Mr Holmes read his affidavit sworn 4 September 2008 (punctuality). ii. Paragraphs 5 to 16 of Mr Holmes's affidavit sworn 4 September 2008 relate to the punctuality of his unpunctual loan TT006. iii. Mr Holmes gave evidence on 4 May 2010 at T411-421. Loan TT006 304 Mr Holmes entered into loan agreement TT006 on 26 June 1997 for one farm. 305 The loan agreement required that there be a repayment of principal of $8,750 on or before 31 October 1997. 306 The Excel Spreadsheet (Ex VAE2) shows that a cheque was received by the plaintiff on 24 October 1997. That, however, is the date of the receipt of a bank cheque which when the plaintiff sought to deposit it into its ANZ bank account was not capable of being paid into that account without an authority by Mr Holmes. 307 The circumstances are unusual and are as follows: i. Mr Holmes obtained a Westpac Banking Corporation bank cheque dated 20 October 1997 which was drawn in favour of "AP & AM Holmes or bearer". ii. On the back of the cheque were the words "Please pay into the account of Agricultural and Rural Finance Pty Limited". Under those words appear the signatures of Mr and Mrs Holmes. There were no other endorsements on the cheque. iii. In her affidavit of 26 March 2010 at paras. 31, 32 and 33, Ms Edwards explained that the plaintiff received the cheque on 24 October 1997: ie prior to the punctual date for the payment, and on that day she made arrangements for the cheque to be banked with other borrowers with the ANZ Bank Port Macquarie. However in the events narrated below the payment was treated by the plaintiff as being late. iv. A few days later the ANZ Bank returned the cheque "because the bank cheque had been endorsed by Mr Holmes and his wife in the way it had and ANZ would not accept the cheque for payment into ARF's account". The bank provided the plaintiff with a form which is at VAE1 p. 377. v. As a result of this on Monday, 27 October 1997 the plaintiff wrote to Mr Holmes on these terms: "We acknowledge receipt of your cheque for $8,750 being a principal reduction payment. Unfortunately this bank cheque has been drawn in favour of AP and AM Holmes and we are unable to deposit the bunds into our own account without further authorisation from yourselves. We have enclosed an ANZ bank form which needs to be completed, signed and returned to us in the enclosed envelope. Please note that the form must be completed by both persons (AP and AM Holmes). Attached to the letter was the authorisation form. The letter and authorisation is at VAE1 p. 376-377." vi. The 27 October was a Monday Mr Holmes agrees that if the letter was posted on 27 October he would have received it at home by the Thursday: T415.40-.46. vii. At VAE1 p. 379 is the authority signed by Mr and Mrs Holmes. The form is dated "2.11.97". The 2 nd November 1997 was a Sunday. He clearly had received the letter of the 27 th October 1997 before the weekend. The likelihood is that he received the letter by Thursday 30 October 1997. Mr Holmes does not dispute the fact that he received the letter by the Thursday. viii. It was not until Monday 3 November 1997 that he returned the authority to the plaintiff. He sent a faxed copy of the authority to the plaintiff on Monday 3 November 1997. He faxed it from his office at Legal & General: T415.09-.15. He also sent the authority by mail. This is why it bears a received stamp VAE1 p. 379. Having received the signed authority on 3 November 1997 the cheque was banked that day: see Ms Edwards' affidavit at [35]-[36]. Mr Holmes conceded that he could have faxed the authority on the Friday. Had he done so the cheque would have been deposited by the due date. ix. At T416 is the following evidence: "Q: Yes, so it was apparent to you on Monday 3 November 1997 that you could send this authority to Mr Henry by fax. Agreed? A: Well it was my decision to send it by fax. Q: Yes: A: As well as post the original. Q: Yes, and it was apparent isn't it, that you could equally have faxed the authority on the Friday? A: Yes. Q: And you chose not to do it. A: It wasn't faxed on Friday. That's true sir. Q: Yes, and you chose not to return the authority on the Friday either by fax or by letter agreed. A: Well that's – yes. Yes, your right" x. After the cheque was received and banked the plaintiff by letter (13 November 1997) wrote confirming that the cheque was received on 24 October 1997, VAE1 p. 380. The issue which separates the parties 308 The plaintiff contends that in the above-described circumstances, payment had not been made by the due date. Their proposition is that had Mr Holmes faxed the signed authority to the plaintiff by Friday, 31 October 1997 the payment would have been punctually made. They contend that in fact it was not paid until the plaintiff was able to bank it upon receipt of the signed authority which he did on Monday 3 November 1997. The propositions put forward by the plaintiff 309 As already made clear the plaintiff contends that the cheque was not punctually paid. 310 The plaintiff categorises the defendant's argument as flying in the face of that which was said to constitute punctual payment by reference to the ultimate finding in the test case. 311 The plaintiff thumbnail sketches the defendants' argument as attributing no relevance to the ANZ's rejection of the purported endorsement. The propositions put forward by Mr Holmes 312 Mr Holmes submits that an error was made by the ANZ Bank and that it was entitled to receive the proceeds of the cheque. 313 Mr Holmes puts forward inter alia the following propositions: i. It is irrelevant that ARF's own bank, the ANZ, imposed procedural requirements for verification of the Holmes' indorsement, as a pre-condition to its willingness to act as the collecting bank on behalf of ARF for the funds which the Westpac bank cheque represented. The ANZ Bank would obviously need to have standard procedures, designed to protect its own position, whether or not those procedures were particularly apt for the specific circumstances of the Westpac bank cheque furnished by Mr Holmes. ii. Ms Edwards' affidavit attributed the ANZ Bank's request for the completion of the authorisation form to the proposition that the cheque had not been "properly endorsed" (affidavit sworn 26 March 2010 [33] and [36]). This did not correctly characterise the position (see transcript page 389, lines 1-31) and is yet another example of Ms Edwards having taken up an untenable position in her evidence in chief. iii. "Payment" , in the manner which the law recognises (when made by the tender of a cheque for which there are available funds for payment), was made "punctually" , at the time of Mr Holmes' sending of the cheque to ARF (see Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 (esp per Dixon J at 532-3 and Kitto J at 535)). iv. It is beyond doubt that, prior to the date for the "punctual" payment required from Mr Holmes, ARF had in its possession and had acquired immediate rights under the bank cheque which Westpac had provided, for the necessary payment by Mr Holmes. As the holder and indorsee of the cheque it could sue (Westpac) on the cheque in its own name (section 49(1) Cheques Act 1986) and could further negotiate the cheque to another transferee (section 39(1)). v. The ARF submissions do not take account of the fact that the heading to s.23 derives from the original s.23(1), to what was then the Cheques and Payment Orders Act. The sub-section was repealed in 1998 – Cheques and Payment Orders Amendment Act 1998: Schedule 2. The repeal had the effect of restoring the pre-1986 position, that a bearer cheque could not be converted into an order cheque by being indorsed: Miller Associates (Aust) Pty Ltd v Bennington Pty Ltd [1975] 2 NSWLR 506. vi. The obsolete heading to s.23 is not part of the Act: s.13(3) Acts Interpretation Act 1901. vii. The cheque, because it was "expressed to be payable to bearer" never changed from being a bearer cheque: Cheques Act s.3(1A) (definition of the expression "to or to the order of" ), sections 20, 21 and 22. viii. In cross examination it was suggested that Mr Holmes had brought his present problems on himself by having "sat on" the authorisation form which may have been received on a Thursday or Friday (30 or 31 October 1997), until the following Monday (3 November, 1997) (see transcript page 415, line 9- page 416, line 35). It was suggested that if Mr Holmes had sent the authorisation form on Friday 31 October 1997, it may have been possible to regard the payment as having been made on that date, which was the due date. ix. This criticism is incapable of affecting the legal position, as stated above, with respect to the date of payment. Decision 314 The problem faced by Mr Holmes inheres in the fact that an intermediate step was necessary before the bank cheque could be of utility to ARF. It was necessary for Mr and Mrs Holmes to further satisfy the ANZ and New Zealand Banking group that the cheque payable to them could be deposited into the account of the plaintiff. 315 In short it seems clear that prior to the date for the "punctual" payment required from Mr Holmes, ARF did not have in its possession [and had not acquired] immediate rights under the Bank cheque which Westpac had provided, for the necessary payment by Mr Holmes. 316 For those reasons the finding is that with respect to the above-described loan agreement relating to Mr Holmes, he is not seen to have been punctual. Maria Michael – 177th defendant Accountant/Introducer and Occupation 317 Mr Atkinson's company, Structured Securities, introduced Ms Michael to the Projects in respect of which she borrowed the monies from the plaintiff which are the subject of loan TT327: see Ms Michael's loan application form (VAE1 pp 1112). 318 Ms Michael has identified his occupation as follows: (a) In her loan and investment application form in respect of TT327 as: "Marketing Manager" (VAE1 pp. 1113); (b) in her affidavit sworn 18 March 2010 as a "Bank Executive". 319 The plaintiff alleged Ms Michael did not fulfil her punctuality obligations under a loan agreement entered into on 30 June 1999 (TT327). 320 The plaintiff claimed repayment from Ms Michael of the outstanding principal and interest accrued on loan TT327 in the amounts set out in Annexure B to its closing submissions, namely, the sums of $42,324 for principal and $64,462.36 for interest. 321 The plaintiff said that Ms Michael did not pay the following payment punctually, details of which are: Principal instalment of $29,400 under loan TT327 Date Due: 30 September 1999 Received by ARF: 2 November 1999 (33 days late). 322 Ms Michael did not put in issue that her instalment payment obligations in loans TT327 were not punctually paid by her and as such her defence relies only upon the Contracts Review Act. 323 The receipt of the cheque from Ms Michael in respect of her principal instalment is recorded in the Excel Spreadsheet (Ex VAE2) to have occurred on 2 November 1999, namely, 33 days after the due date. There is also a copy of a letter from the plaintiff to Ms Michael in the plaintiff's borrower file (Ex VAE1 p 1133) with a handwritten notation: "Apologies for the delay Regards Maria". 324 There is nothing to suggest that this cheque was processed otherwise than in accordance with the normal procedure of which Ms Edwards gave evidence. The evidence of Ms Michael cannot be said to cast doubt upon the accuracy of the plaintiff's records. Christina Spyrakis – 193rd defendant 325 Mr Atkinson's company, Structured Securities, introduced Ms Spyrakis to the Projects in respect of which she borrowed the monies from the plaintiff which are the subject of loan TT079 and TT298. 326 Ms Spyrakis has identified her occupation as follows: In her loan and investment application forms in respect of TT079 and TT298 as: "Accountant" (VAE1 pp. 1164 and 1196); 327 The plaintiff alleged that Ms Spyrakis did not fulfil her punctuality obligations under the following loans entered into on the following dates: a) loan agreement entered into on 15 October 1997 (TT079); and (b) loan agreement entered into on 3 June 1999 (TT298). 328 The plaintiff claimed repayment from Ms Spyrakis of the outstanding principal and interest accrued on loan TT079 and TT298 in the amounts set out in Annexure B to its closing submissions, namely, as at 1 May 2010 the following: (a) for loan TT079, the sums of $15,854 for principal and $27,178.93 for interest; and (b) for loan TT298, the sums of $28,216 for principal and $42,290.50 for interest. 329 The plaintiff said that Ms Spyrakis did not pay the following payments punctually, details of which are: 1st principal instalment of $2,187.50 under loan TT079 Date Due: 31 January 1998 Received by ARF: 11 February 1998 (11 days late) 3rd principal instalment of $2,187.50 under loan TT079 Date Due: 31 July 1998 Received by ARF: 6 August 1998 (6 days late) 4th principal instalment of $2,187.50 under loan TT079 Date Due: 31 October 1998 Received by ARF: 4 November 1998 (4 days late) Interest instalment of $1,348 under loan TT079 Date Due: 15 October 1998 Received by ARF: 4 November 1998 (20 days late) Principal instalment of $19,600 under loan TT298 Date Due: 30 September 1999 Received by ARF: 11 October 1999 (11 days late) Interest instalment of $2,458 under loan TT298 Date Due: 31 May 2000 Received by ARF: 5 June 2000 (5 days late) 330 Ms Spyrakis did not put in issue that her instalment payment obligations under these loans were not punctually paid by her and, as such, her defence relies only upon the Contracts Review Act. 331 The receipt of the cheques from Ms Spyrakis in respect of her instalment payments are recorded in the Excel Spreadsheet (Ex VAE2) to have occurred after the due dates for each payment listed above and there are other secondary documents in the plaintiff's borrow files which is exhibit VAE1 to support this record. There is nothing to suggest that Ms Spyrakis' payment cheques were processed otherwise than in accordance with the normal procedure of which Ms Edwards gave evidence. The overall result 332 In the event, the defendants' cases - based on the Contracts Review Act and claims of punctuality - are dismissed. Short minutes of order 333 The parties are directed to bring in short minutes of order to give effect to these reasons. The parties will be given an opportunity to address in relation to costs. ************ 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.