Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Wardle v Agricultural and Rural Finance Pty Ltd; Agricultural and Rural Finance Pty Limited v Brakatselos [2012] NSWCA 107 Hearing dates: 14-17 February 2012 Decision date: 26 April 2012 Before: Campbell JA at [1] Barrett JA at [371] Sackville AJA at [372] Decision: (1) Appeal allowed. (2) Set aside the judgments in the court below against each Appellant. (3) Enter judgment for Mr Holmes, with costs of the hearing at first instance. (4) Grant leave to Mr Wardle and Mr Gianuzzi to replead paras [28]-[31] of the Further Amended Defence by inserting into those paragraphs the particulars that had previously been in [27] of the Further Amended Defence, modified to make clear that Mr Lloyd is alleged to have been acting on behalf of both ARF and OAL. (5) Cross-appeal dismissed with costs. (6) Remit to the Equity Division for further hearing ARF's claim against each of the Appellants other than Mr Holmes (7) Reserve further consideration of what other orders should be made to give effect to these reasons for judgment. (8) Direct the parties within 14 days after delivery of these reasons for judgment to file short minutes of the orders that they agree are required to give effect to these reasons for judgment, and as to the costs of the appeal and the first instance hearing. (9) To the extent that the parties do not agree upon such orders, direct the Appellants within 21 days from the date of delivery of these reasons for judgment to file short minutes of the further orders they submit are required to give effect to these reasons for judgment, together with their submissions not exceeding four pages in length on the reasons why those orders are appropriate. (10) In the event that the parties do not agree upon orders pursuant to order 8, direct the Respondents within 35 days of the date of delivery of these reasons for judgment to file short minutes of the further orders they submit are required to give effect to these reasons for judgment, together with their submissions not exceeding four pages in length on the reasons why those orders are appropriate. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: CONTRACTS - performance - general principles - payment placed in post before due date for payment - posted payment arriving after due date for payment - whether "postal rule" requires that payment is made on posting the payment - "postal rule" not a legal principle of general application - passing of risk or making of payment by posting payment depends on terms of contract and surrounding circumstances - postal acceptance rule not wide enough to encompass "postal rule" in this sense - circumstances of agreement and communications regarding individual payments did not imply that posting a cheque was only form of making payment, nor that posting was payment in itself CONTRACTS - construction of terms - loan contract for investment in tea tree plantation business - loan contract provided discounted rate of interest on repayments of principle in consideration for the borrower paying interest one year in advance as a lump sum - interest payments need only be paid if business producing net income - business not producing net income - consequently no payment of interest made by borrowers beyond second year - actual payment of interest not required, as adequate consideration in exchange of promises to discount rate and pay interest in advance (when it is payable) - discounted rate of interest to apply until termination CONTRACTS - performance - general principles - payment placed in post before due date for payment - posted payment arriving at postal box of creditor before due date for payment - endorse bank cheque crossed "Not Negotiable" - creditor's bank unwilling to accept cheque without authorisation from payee of cheque - authorisation sent and cheque banked after due date for payment - whether payment "punctual" - creditor accepted cheque as payment on date of receipt conditional on it being met at presentation and payee completing bank authorisation form - conditions satisfied - payment was punctual CONTRACTS - performance - where indemnity agreement provided that indemnity effective and enforceable if borrower "punctually" paid amounts under related loan agreement - appellants made payments by cheque in post - where cheques posted before due date for payment, but arrived after that date - appellant argued for existence of "postal rule" whereby posting of payment would equate to actual performance of payment obligation - cases distinguished - no general "postal rule" exists CONTRACTS - performance - where contract requires payment to be made "punctually" - whether creditor or debtor bears onus of proving punctuality of payment - Vines v Djordjevitch (1955) 91 CLR 512 considered - debtor obliged to prove enforceability of indemnity if in the form of an exculpation or exclusion - indemnity in this case was in the form of an exclusion - no error by primary judge in assuming debtor bore onus PRACTICE - general principles - test cases - undertakings given to Court at first instance by sundry defendants agreeing to be bound on common questions by findings in test case - test case proceedings heard at first instance, by the New South Wales Court of Appeal and ultimately by the High Court of Australia - certain arguments struck out by primary judge as being precluded by undertakings in relation to test case - whether applicants' undertaking to be bound by findings of test case on common questions precluded the bringing of certain claims - anticipation of significant overlap between issues raised by test case and proceedings below - yet test defendant only defendant who had filed defence or cross claim at time of giving undertakings - failure to have parties agree in advance what common questions would be - appellants argue "postal rule" defence not raised in test case - "common questions" does not preclude defendants from raising a defence on an issue not decided in the test case- appellants bound to the extent that findings of fact in test case could not be disputed - "postal rule" defence concerned not with the time of payment, but what acts count as payment - primary judge struck out defence for incorrect reason - but conclusion of Court of Appeal on "postal rule" mean it was correct to strike the defences out as the particulars disclosed no arguable case PRACTICE - general principles - undertakings to be bound by findings of test case - whether abuse of process to use evidence advanced in failed prospectus liability claim in claim under Contracts Review Act 1988 - primary judge decided litigants were changing form of the proceedings to set up the same case again - primary judge in error - provided appellants observed findings of fact of test case litigation, particulars were being put to a substantially different purpose PRACTICE - general principles - undertakings to be bound by findings of test case - appellants argued that a Mr Lloyd had made certain representations on behalf of the respondents and that the respondents should be estopped from contradicting these representations - findings made in test case about authority of Mr Lloyd to act for respondents - findings should be read in context to refer to authority of Mr Lloyd in relation to particular representations, not in general - appellants not to be precluded from arguing Mr Lloyd had authority to make certain other representations - estoppel argument to be repleaded PRECEDENT - whether a decision of the Full Court of the New South Wales Supreme Court, which has been affirmed in the High Court, for reasons different to those adopted by the Full Court, is binding as a matter of law on the New South Wales Court of Appeal PRECEDENT - general principles - authority of reasons for decision of higher court where that decision was affirmed on other grounds Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth) Bills of Exchange Act 1882 (Imp) Bills of Exchange Act 1909 (Cth) Contracts Review Act 1980 Corporations Law Equal Pay Act 1970 Suitors' Fund Act 1951 Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules, 51.53(1) Cases Cited: Abalos v Australian Postal Commission (1990) 171 CLR 167 Acraman v South Australian Gas Company [1910] SALR 59 Adams v Lindsell (1818) 1 B & Ald 681; 106 ER 250 Agricultural & Rural Finance Pty Ltd v Atkinson [2010] NSWSC 1396 Agricultural & Rural Finance Pty Ltd v Atkinson [2010] NSWSC 311 Agricultural & Rural Finance Pty Ltd v Atkinson [2010] NSWSC 425 Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 635 Agricultural and Rural Finance Pty Ltd v Atkinson [2006] NSWSC 202 Agricultural and Rural Finance Pty Ltd v Atkinson [2011] NSWSC 555 Agricultural and Rural Finance Pty Ltd v Brakatselos [2012] NSWCA 17 Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 Alexander v Steinhardt, Walker & Co [1903] 2 KB 208 Andrews v Calori (1907) 38 SCR 588 Ashmore v British Coal Corporation Ashmore v British Coal Corporation [1990] 2 QB 338 Australian Mutual Provident Society v Derham (1979) 25 ACTR 3 Baker v Lipton (Limited) (1899) 15 TLR 435 Balabel v Air-India [1988] 1 Ch 317 Beevers v Mason (1978) 37 P & CR 452 Blackmore v Browne; Kara Kar Holdings Pty Ltd v Blackmore [2011] NSWCA 114 Blair v Curran (1939) 62 CLR 464 Blumberg v Life Interests and Reversionary Securities Corp [1897] 1 Ch 171 Blumberg v Life Interests and Reversionary Securities Corp [1898] 1 Ch 27 Brewer v Brewer (1953) 88 CLR 1 Channon v English, Scottish & Australian Bank (1918) 18 SR (NSW) 30 Comber v Leyland [1898] AC 524 D & J Fowler Limited v French [1914] SALR 254 Dunlop v Higgins (1848) 1 HLC 381; 9 ER 805 Eaglehill Ltd v J Needham Builders Ltd [1973] AC 992 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Ex parte Cote; in re Deveze (1873) LR 9 Ch App 27 Fox v Percy (2003) 214 CLR 118 Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 George v Cluning (1979) 28 ALR 57 Hannaford v Smallacombe (1993) 69 P & CR 399 Head v Kelk (1963) 63 SR (NSW) 340 Henthorn v Fraser [1892] 2 Ch 27 Holwell Securities Ltd v Hughes [1973] 1 WLR 757 Household Insurance Co v Grant (1879) LR 4 ExD 216 Hunter v Chief Constable [1982] AC 529 In re Imperial Land Co of Marseilles (Harris' Case) (1872) LR 7 Ch App 587 In re Imperial Land Co of Marseilles (Wall's Case) (1872) LR 15 Eq Cas 18 In Re National Savings Bank Association (Hebb's Case) (1867) LR 4 Eq 9 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Johnston v Boyes [1899] 2 Ch 73 Kendall v London Bank of Australia Ltd (1918) 18 SR (NSW) 394 Kendall v London Bank of Australia Ltd (1920) 28 CLR 401 Kirkpatrick v Kotis [2004] NSWSC 1265; (2004) 62 NSWLR 567 Lahoud v Lahoud [2011] NSWSC 994 Lindholdt v Merritt Madden Printing Pty Ltd [2002] FCA 260 Luttges v Sherwood (1895) 11 TLR 233 Marreco v Richardson [1908] 2 KB 584 Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234 McCann v Switzerland Insurance Australia Limited [2000] 203 CLR 579 Mid-City Skin Cancer & Laser Centre Pty Ltd v Zahedi-Anarak [2006] NSWSC 844; (2006) 67 NSWLR 569 Mitchell-Henry v Norwich Union Life Insurance Society Ltd [1918] 1 KB 123 Mitchell-Henry v Norwich Union Life Insurance Society Ltd [1918] 2 KB 67 Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 National Australia Bank Ltd v KDS Construction Services Pty Ltd (1987) 163 CLR 668 Norman v FCT (1963) 109 CLR 9 Norman v Ricketts (1886) 3 TLR 182 Nunin Holdings Pty Ltd v Tullamarine Estates Pty Ltd [1994] 1 VR 74 Panoutsos v Raymond Hadley Corporation of New York [1917] 2 KB 473 Pennington v Crossley and Sons (Limited) (1897) 13 TLR 513 Potter v Sanders (1846) 6 Hare 1; 67 ER 1057 Re Steam Stoker Co (1875) LR 19 Eq 416 Reed v The Kilburn Co-operative Society (1875) LR 10 QB 264 Rogers v The Queen (1994) 181 CLR 251 Shepherd v FCT (1965) 113 CLR 385 Stocken v Collin (1841) 7 M & W 515; 151 ER 870 Stocken v Collins (1841) 9 C & P 853; 173 ER 997 Tallerman and Company Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93 Tankexpress A/S v Compagnie Financiere Belge Des Petroles SA [1949] AC 76 Thairlwall v Great Northern Railway Company [1910] 2 KB 509 Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 Vines v Djordjevitch (1955) 91 CLR 512 Wallaby Grip Limited v QBE Insurance (Australia) Ltd [2010] HCA 9; (2010) 240 CLR 444 Walton v Gardiner (1993) 177 CLR 378 Warwicke v Noakes (1791) 1 Peake 98; 170 ER 93 Whitworth Street Estates Ltd v James Miller and Partners Ltd [1970] AC 583 Woodcock v Houldsworth (1846) 16 M & W 124; 153 ER 1126 Woolworths Limited v Strong (No 2) [2011] NSWCA 72 Texts Cited: Byles on Bills of Exchange and Cheques 28th ed (2007) Sweet & Maxwell Chitty on Contracts, 30th ed (2008) Thompson Reuters vol 1 CL Pannam "Postal Regulation 289 and Acceptance of an Offer by Post" (1960) 2 Melbourne University Law Review 388 JC Campbell, "Should the 'rule in Hastings-Bass' be followed in Australia?" - Trustees' duty to enquire and trustees' mistakes" (2011) 34 Australian Bar Review 259 JW Carter, E Peden and GJ Tolhurst, Contract Law In Australia, 5th ed, LexisNexis, Butterworths (2007) Meagher, Heydon & Leeming, Meagher Gummow & Lehane's Equity Doctrines & Remedies 4th ed (2002) LexisNexis, Butterworths RA Samek "A Reassessment of the Present Rule Relating to Postal Acceptance" (1961) 35 Australian Law Journal 38 Simon Gardner "Trashing with Trollope: A Deconstruction of the Postal Rules in Contract" (1992) 12 Oxford Journal of Legal Studies 170 Category: Principal judgment Parties: 2011/236264 David James Wardle (First Appellant) Gavin Winston Long (Second Appellant) Agricultural and Rural Finance Pty Limited (First Respondent) Oceania Agriculture Pty Limited (Second Respondent) 2003/92819 Peter Brakatselos (First Appellant/First Cross-Respondent) Geoffrey Nevell Fredericksen (Second Appellant/Second Cross-Respondent) Allan Patrick Holmes (Third Appellant/Third Cross-Respondent) Nicholas Charles Rowe (Fourth Appellant/Fourth Cross-Respondent) Maria Francesca Russo (Fifth Appellant/Fifth Cross-Respondent) David James Wardle (Sixth Cross-Respondent) Jennifer Dianne Wallace (Sixth Appellant/Seventh Cross-Respondent) Franco Giannuzzi (Seventh Appellant/Eighth Cross-Respondent) Gavin Winston Long (Ninth Cross-Respondent) Maria Michael (Tenth Cross-Respondent) Christina Spyrakis (Eleventh Cross-Respondent) Agricultural and Rural Finance Pty Limited (Respondent/Cross-Appellant) Oceanic Agriculture Pty Limited (Respondent/Twelfth Cross-Respondent) Representation: Counsel: SD Epstein SC; A Tsekouras (Appellants/Cross-Respondents) TS Hale SC; CJ Bevan (First Respondent/Cross-Appellant) P Condon, solicitor (Second Respondent/Twelfth Cross-Respondent) Solicitors: Abadee Dresdner & Freeman (Appellants/Cross-Respondents) Evangelos Patakas & Associates (First Respondent/Cross-Appellant) Peter Condon & Associates (Second Respondent/Twelfth Cross-Respondent) File Number(s): 2011/236264; 2003/92819 Decision under appeal Citation: Agricultural and Rural Finance Pty Limited v John Edward Atkinson & Ors [2011] NSWSC 555 Date of Decision: 2011-06-09 00:00:00 Before: Einstein J File Number(s): 2011/236264 HEADNOTE (This headnote does not form part of the Court's judgment) FACTS On 28 April 1997, Oceania Agriculture Ltd ("OAL") filed a prospectus with the Australian Securities Commission in relation to a project identified as the "Port Macquarie Tea Tree Plantation". Investors in the project acquired rights in respect of particular allotments of land on which tea trees would be planted. The project was intended to run for 17 years. The investment scheme involved a financing arrangement whereby a company known as Agricultural and Rural Finance Pty Ltd ("ARF") provided finance. Most investors also entered into an indemnity agreement under which OAL agreed to indemnify their obligations of repayment under the loan contracts in particular circumstances. ARF received an initial capital contribution from the promoter of the project, Gerard Cassegrain & Co Pty Ltd, of $300,000 to cover the cost of the loans. Thereafter, it obtained further funds through a "round-robin" arrangement, whereby the application moneys lent to investors were paid to OAL and then on-lent to ARF, which lent the funds to further investors. The project was ultimately a failure, due largely to a dramatic fall in the price of tea tree oil. The project terminated in January 2003. On termination, ARF commenced proceedings in the Equity Division against 216 borrowers, seeking payment of loan moneys that it claimed were repayable by each investor on cessation of the scheme. The proceedings involving Mr Bruce Gardiner were pursued as a test case. The defendants gave undertakings to be bound on common questions arising from the construction of the loan agreements and the indemnity agreements. The borrowers argued that the indemnity agreement was effective and enforceable, thereby releasing them from any obligation to repay amounts under the loan agreements. Mr Gardiner also filed a cross-claim, asserting breaches of s 52 of the Trade Practices Act 1974 (Cth), ss 995 and 996 of The Corporations Law and ss12DA and 12DB of the Australian Securities and Investments Commission Act 2001 (Cth). Young CJ in Eq gave judgment in favour of ARF and dismissed the cross-claim by Mr Gardiner. Mr Gardiner appealed from this decision. The Court of Appeal allowed Mr Gardiner's appeal in part and dismissed the cross-appeal by ARF. ARF and OAL in turn appealed to the High Court. The High Court appeal ultimately turned on whether Mr Gardiner had made payments under the loan agreements "punctually" (punctual payment of interest was required by the indemnity agreement). The High Court decided that Mr Gardiner had not made his payments punctually, thus he (and, by extension, other defendants who had not made their payments punctually) was not protected by the indemnity agreement. After the conclusion of the High Court case, the Supreme Court entered judgment in favour of those defendants who had uncontroversially made their payments punctually. A number of the remaining defendants contended that the test case did not produce the effect that ARF should have judgment for the amount it claimed against them. These remaining defendants sought to advance various defences not relied upon by Mr Gardiner, including a defence based on the provisions of the Contracts Review Act 1980. ARF argued that these defences were precluded by the undertakings the defendants had given in relation to the test case. Einstein J presided a six-day hearing on the notice of motion for the striking out of certain paragraphs of the defences and cross-claims of the remaining defendants. The judge held that certain paragraphs should be struck out (Agricultural & Rural Finance Pty Ltd v Atkinson [2010] NSWSC 311) on the basis that they went behind the undertakings given by the defendants. This led to the remaining defendants' "postal rule" defence, whereby it was argued that payment was made punctually if placed in the post before the due date, being struck out The primary judge also rejected certain evidence concerning the remaining defendants' Contracts Review Act defence (Agricultural & Rural Finance Pty Ltd v Atkinson [2010] NSWSC 425). That particular evidence had been advanced in the test case in relation to a prospectus liability claim, which ultimately failed. The primary judge decided the substantive remaining issues against the remaining defendants, including the Contracts Review Act defence and the claim that payments had been made punctually (Agricultural & Rural Finance Pty Ltd v Atkinson [2010] NSWSC 635) On appeal, the remaining defendants (the "Appellants") contended that the primary judge had been in error in: 1. his construction of the undertakings given by the Appellants and the extent to which they were bound by the test case; 2. striking out the Appellant's "postal rule" defence; 3. assuming that the borrower bore the onus of proving that the payments had been made punctually; 4. finding that one Mr Holmes, who had posted an endorsed bank cheque that arrived before the due date, but which ARF's bank did not accept until after the due date, had not paid "punctually"; 5. striking out a defence based on estoppel by representation and waiver; 6. striking out the prospectus evidence advanced to support the Contracts Review Act defence; and 7. reaching the conclusion that he did in relation to the Contracts Review Act defence because he had incorrectly rejected the prospectus evidence. ARF sought leave to cross-appeal concerning the manner in which the primary judge had calculated interest on the sums owed to it by the Appellants under the loan agreements. The Court held, allowing the appeal in part, allowing the cross-appeal and dismissing the cross-appeal: Construction of the separate trial order and undertakings (per Campbell JA; Barrett JA & Sackville AJA agreeing) Consent orders should be construed having regard to the surrounding circumstances [104]. Kirkpatrick v Kotis [2004] NSWSC 1265 cited. At the time the orders were given, no defendants other than Mr Gardiner had filed defences. Proper reading of undertaking was an agreement to be bound by the findings of the test case concerning what might ultimately turn out to be common questions between Mr Gardiner's case and their own [116]. The primary judge was in error in finding that the "postal rule" defence was a collateral attack on the findings of the High Court in the test case. The Appellants were free to raise as a defence an issue that had not been decided in the test case. The Appellants were not, however, free to disprove factual findings made in the test case [117-126]. Blair v Curran (1939) 62 CLR 464, Brewer v Brewer (1953) 88 CLR 1 distinguished The High Court rejected an argument that both ARF and OAL had waived the requirement for punctuality. It did not consider an election by ARF alone, and its decision turned on the particular conduct alleged by Mr Gardiner. The High Court's finding did not cover all arguments that ARF and/or OAL had abandoned or renounced rights under the loan and indemnity agreements [127-129]. The High Court's findings on the meaning of "punctuality" did not preclude the raising of the "postal rule" defence, which is concerned not with the time of payment, but what acts count as payment [130]. The postal rule (per Campbell JA; Barrett JA & Sackville AJA agreeing) The postal acceptance rule is a principle of convenience. The Post Office is not an agent but a public institution under a duty to carry the mails. Formation of a contract by the posting of an acceptance is only justified if the offeror contemplated and intended that the offer might be accepted by that act. It is not a rule robust enough to fit a "postal rule" within its ambit. Nor does the pragmatic justification for the postal acceptance rule apply to the "postal rule" [132 - 148]. Tallerman and Company Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93, Holwell Securities Ltd v Hughes [1973] 1 WLR 757, Nunin Holdings Pty Ltd v Tullamarine Estates Pty Ltd [1994] 1 VR 74 cited. Adams v Lindsell (1818) 1 B & Ald 681, Potters v Sanders (1846) 6 Hare 1, Dunlop v Higgins (1848) 1 HLC 381, In re National Savings Bank Association (1867) LR 4 Eq 9, In re Imperial Land Co of Marseilles (1872) LR 7 Ch App 587, In re Imperial Land Co of Marseilles (1872) LR 15 Eq Cas 18, Household Insurance Co v Grant (1879) LR 4 ExD 216, Henthorn v Fraser [1892] 2 Ch 27 considered. It is not a general rule that requests for payment via cheque or remittance create an assumption analogous to the "postal rule" [149-151]. Comber v Leyland [1898] AC 524 distinguished. The posting of a cheque to pay a debt does count as a manifestation of intention to assign and so creates an equitable assignment, but that mere fact does not assist in determining the moment at which payment occurred [152-153]. That is because a cheque is not an assignment at all, it is an instruction to a banker, that has the quality of negotiability. Alexander v Steinhardt, Walker & Co [1903] 2 KB 208 distinguished. The rule that a notice of dishonour will be adequately given if, notwithstanding delays in the mail, it was placed in the post at a time as to arrive, in the ordinary course of things, on the day following the day on which the bill was dishonoured, does not apply analogously to the "postal rule" [154-159]. Stocken v Collins (1841) 9 C & P 853, Stocken v Collin (1841) 7 M & W 515, Woodcock v Houldsworth (1846) 16 M & W 124 distinguished. Eaglehill Ltd v J Needham Builders [1973] AC 992 cited. When a creditor accepts a cheque in payment of debt it is a question of fact whether the cheque is accepted as conditional payment or as total discharge of the debt. Only where it is clear from the facts and construction of the contract that the creditor would accept posting of the cheque itself as payment will this be so [160-202]. Tilley v Official Reciever in Bankruptcy (1960) 103 CLR 529, National Australia Bank Ltd v KDS Construction Services Pty Ltd (1987) 163 CLR 668 cited. Norman v Ricketts (1886) 3 TLR 182, Thairlwall v Great Northern Railway Company [1910] 2 KB 509, Tankexpress A/S v Compagnie Financière Belge Des Petroles SA [1949] AC 76, Beevers v Mason (1978) 37 P & CR 452 distinguished. There is no "postal rule" of general application that applies to all transactions and has the effect that, where the use of the post in payment is contemplated, payment is completed when the payment is placed in the post by the debtor [211-218]. Despite the primary judge's error in reasons for striking out postal rule defence, the primary judge did come to the correct conclusion in doing so. The "postal rule" defence of Ms Russo, as a fair sample of all "postal rule" defences, disclosed no legal basis for the argument that she had paid the required repayments punctually [228-231]. The onus in showing punctuality of payments (per Campbell JA; Barrett JA & Sackville AJA agreeing) Young CJ in Eq had made a finding concerning who bore the onus of proving punctuality or lack of punctuality, from which the parties were not free to depart [242-250] (per Campbell JA; Barrett JA & Sackville AJA not deciding) In this case, the debtor was obliged to prove the enforceability of the indemnity because it was in the form of an exculpation or exclusion. There was no error by the primary judge in assuming debtor bore the onus of proof [251-255]. Vines v Djordjevitch (1955) 91 CLR 512 considered. Mr Holmes' payment (per Campbell JA; Barrett JA & Sackville AJA agreeing) The cheque that Mr Holmes submitted for payment, which was received on time but only sent for collection by ARF's banker after the date for payment, had been accepted by ARF as punctual payment on condition of it being honoured on presentation. As it was, in the event, honoured on presentation, it was a punctual payment [269-274]. George v Cluning (1979) 28 ALR 57 cited. Striking out estoppel and "waiver" defences (per Campbell JA; Barrett JA & Sackville AJA agreeing) The primary judge's construction of the test case undertakings let him into error in striking out the Appellants' estoppel and waiver defences. The findings made in the test case about the authority of Mr Lloyd to act for respondents should be read in context to refer to authority of Mr Lloyd in relation to particular representations, not his general authority or employment relationship. Appellants not to be precluded from arguing Mr Lloyd had authority to make certain other representations. The estoppel argument should be repleaded, but the waiver defence would serve no additional purpose [296-303]. Contracts Review Act defence and cross-claim (per Campbell JA; Barrett JA & Sackville AJA agreeing) The primary judge was in error in deciding that it was an abuse of process to use evidence advanced in a prospectus liability claim that failed in the test case proceedings in a new defence under the Contracts Review Act 1988. Providing that the appellants observe the findings of fact made in the test case litigation, the particulars rejected were being put to a substantially different purpose [319-355]. Hunter v Chief Constable of the West Midlands Police [1982] AC 529, Ashmore v British Coal Corporation [1990] 2 QB 338 distinguished. Walton v Gardiner (1993) 177 CLR 378, Rogers v The Queen (1994) 181 CLR 251 cited. Because of the primary judge's error in rejecting the prospectus evidence, his judgment on the merits of the Contracts Review Act defence and cross-claim is unsound [336-340]. ARF cross-appeal on interest (per Campbell JA; Barrett JA & Sackville AJA agreeing) ARF cross-appeal could have been brought as of right as total amount of interest sought from Appellants collectively exceeded $100,000. Leave to cross-appeal is granted [344]. Blackmore v Browne; Kara Kar Holdings Pty Ltd v Blackmore [2011] NSWCA 114 cited. Primary judge was in error by construing terms of the loan agreement by taking into account subsequent conduct [359]. Whitworth Street Estates Ltd v James Miller and Partners Pty Ltd [1970] AC 583, Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234, Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 cited. However, this error did not affect the correctness of his decision. Interest payments were not required because the business was not producing a net income. The actual payment of interest was not required to secure discounted interest rate, as the adequate consideration was already provided for in the exchange of promises to discount rate and pay interest in advance (when it is payable). Cross-appeal dismissed [359-365]. Judgment CAMPBELL JA: TABLE OF CONTENTS Para Nature of the Case 2 Court Proceedings Leading to the Judgments Appealed Against 7 The Issues and Conclusions in this Appeal 16 PART A - THE GARDINER TEST CASE 18 The Separate Trial Order and the Undertakings 19 The Agreements Sued On 29 Outcome of the Gardiner Test Case 34 Dates of Mr Gardiner's Payments 37 Decisions Concerning Punctuality of Mr Gardiner's Payments 41 Mr Gardiner's Estoppel and Waiver Defences 47 Mr Gardiner's Estoppel Defence 47 Mr Gardiner's "Waiver" Defence 53 Mr Gardiner's Misleading and Deceptive Conduct Claims 70 Misleading and Deceptive Conduct Through Representations 71 Misleading and Deceptive Conduct Through Prospectuses 76 PART B - THE SEPARATE TRIAL ORDER AND UNDERTAKINGS 104 The Primary Judge's Construction of the Separate Trial Order and Undertakings 104 The Primary Judge's Decision on the Postal Rule Defence 106 Construction of Separate Trial Order and Undertakings - Decision 113 The Strike Out Judgment Concerning the "Postal Rule" 127 PART C - THE "POSTAL RULE" 132 Relevant Cases 134 Contract Formation 134 Service Out of the Jurisdiction 149 Equitable Assignment 152 Notice of Dishonour of the Bill of Exchange 154 Payment of a Debt 160 Title to a Bill of Exchange 203 Conclusions About the "Postal Rule" 211 Conclusions About the Law Concerning the "Postal Rule" 211 Application to the Facts 219 PART D - CONSEQUENCES OF DECISION ON "POSTAL RULE" DEFENCES 232 Futile to Remit? 232 Set Aside Findings of Lack of Punctual Payment Even If No "Postal Rule" Defence? 241 Was there a Finding in the Gardiner Test Case Concerning Onus? 242 Who Had the Onus Concerning Punctuality? 251 PART E - DID MR HOLMES PAY ON TIME? 256 Facts Concerning Mr Holmes' Payment 256 Mr Holmes' Payment - Decision 269 PART F - STRIKING OUT MR WARDLE'S ESTOPPEL AND "WAIVER" DEFENCES 275 Mr Wardle's Waiver and Estoppel Defences 277 The Strike out Judgment on Waiver and Estoppel 282 PART G - THE CONTRACTS REVIEW ACT DEFENCE AND CROSS-CLAIM 304 The Contracts Review Act Defence and Cross-Claim 304 The Original Contracts Review Act Defence and Cross-Claim 304 The Amendment to the Contracts Review Act Defence and Cross-Claim 309 The Strike Out Judgment Concerning the Contracts Review Act 313 Consideration of the Striking Out of the Contracts Review Act Defence and Cross-Claim 319 The Contracts Review Act Judgment 336 The Principal Judgment Concerning Contracts Review Act 338 PART H - ARF's APPLICATION FOR LEAVE TO CROSS-APPEAL 341 The Interest and Costs Judgment 341 ARF's Cross-Appeal Concerning Interest 345 PART I - CONSEQUENTIAL MATTERS AND ORDERS 366 ********** Nature of the Case 1The First Respondent, Agricultural and Rural Finance Pty Ltd ("ARF"), lent money to over 200 borrowers to enable them to invest 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. The Loan Agreement under which those people borrowed was in a standard form. It required payments of interest and payments of principal to be made on specified dates. 2Each of the borrowers had entered two agreements with the Second Respondent, Oceania Agriculture Limited ("OAL"), and ARF. Under one of them ("the Licence and Management Agreement"), OAL agreed to develop on behalf of the borrower a business of cultivating, harvesting and processing tea trees to produce tea tree oil on an identified area of land near Port Macquarie that the borrower had a licence to occupy. The borrower was obliged to pay certain fees to OAL, but under the Loan Agreement ARF agreed, and was irrevocably directed, to make those payments direct to OAL on behalf of the borrower from the money that was lent. Under the second agreement ("the Indemnity Agreement") OAL agreed that, in certain circumstances, it would indemnify the borrower against the borrower's liability to repay principal and interest to ARF. 3It is not now disputed that the business of conducting the tea tree plantations failed and that circumstances then arose that made the Principal Sum due and payable under each Loan Agreement at the option of ARF. ARF exercised that option. The present dispute relates to a provision of the loan agreement whereby the borrower would have no liability to repay any part of the Principal Sum outstanding, or interest thereon, if the indemnity granted under the Indemnity Agreement was effective and enforceable in accordance with Clause 2 of the Indemnity Agreement. Clause 2 of the Indemnity Agreement stated that one of the conditions for the indemnity being effective and enforceable was that the borrower "punctually paid" both the interest and the reductions of the Principal Sum payable pursuant to the relevant Loan Agreement. 4On 9 June 2011, Einstein J ordered that judgment be entered for ARF against eleven of the borrowers, each in a stated amount of money: Agricultural and Rural Finance Pty Ltd v Atkinson [2011] NSWSC 555. Judgment has also been entered against other borrowers, but they are not involved in the applications now before this Court. 5These reasons for judgment relate to an appeal as of right that is brought by two of those eleven borrowers, Mr Wardle and Mr Long. They also relate to an application for leave to appeal brought by another seven of those borrowers, Mr Brakatselos, Mr Fredericksen, Mr Holmes, Mr Rowe, Ms Russo, Mrs Wallace and Mr Giannuzzi. As well, the reasons relate to an application for leave to cross-appeal that is brought by ARF against the two Appellants, the seven Applicants for Leave to Appeal, and another two borrowers against whom Einstein J ordered judgment be entered on 9 June 2011, Ms Michael and Ms Spyrakis. Court Proceedings Leading to the Judgments Appealed Against 6ARF began proceedings against over 200 borrowers in the Commercial List of the Equity Division of the Supreme Court in June 2003. The proceedings sued each of them for unpaid principal and interest. 7Many, but not all, of the defendants to ARF's claim were at one time represented by Clayton Utz. The borrowers to whom these reasons for judgment relate were all so represented. 8The court adopted a procedure whereby the proceedings against one of the borrowers, Mr Bruce Gardiner, would be treated as a test case concerning certain issues ("the Gardiner Test Case"). Young CJ in Eq (as his Honour then was) heard and determined Mr Gardiner's case: Agricultural and Rural Finance Pty Ltd v Atkinson [2006] NSWSC 202. From that decision there was an appeal to the Court of Appeal: Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235. There followed a further appeal to the High Court of Australia: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570. The outcome of the High Court's decision was that ARF succeeded in its claim against Mr Gardiner concerning three of the four loans it had made to him. The three loans in relation to which ARF succeeded were ones in respect of which Mr Gardiner had not "punctually paid" all of the interest payments and reductions of Principal Sum. 9After the High Court decision in the Gardiner Test Case, Hammerschlag J ordered that there be a verdict for approximately sixty-six of the defendants who had made wholly punctual payments on all of their loans. 10Some of the ongoing defendants, including all those involved in the present hearing, contended that the Gardiner Test Case did not entitle ARF to judgment for the amount it claimed against them. Those defendants and ARF disagreed about the manner in which the orders and undertakings on the basis of which the Gardiner Test Case had been conducted, affected certain defences that they wished to advance. Einstein J resolved that dispute by a judgment given on 21 April 2010 after a six-day hearing of a Notice of Motion brought by ARF that sought to strike out certain paragraphs of the defences and cross-claims of the continuing defendants. The judge held that certain paragraphs should be struck out: Agricultural & Rural Finance Pty Ltd v Atkinson [2010] NSWSC 311 ("the Strike Out Judgment"). 11Part, but not all, of the defences that the ongoing defendants had pleaded under the Contracts Review Act 1980 survived the strike out application. In the course of the final hearing, ARF and OAL objected to certain evidence that the continuing defendants sought to bring in support of the Contracts Review Act defence. In a judgment given on 10 May 2010 the primary judge rejected the evidence: Agricultural & Rural Finance Pty Ltd v Atkinson [2010] NSWSC 425 ("the CRA Judgment"). 12Many of the questions argued before us relate to whether the primary judge was correct in the decisions he made in the Strike Out Judgment and the CRA Judgment concerning the effect of the Gardiner Test Case on the ongoing defendants. The Appellants and the defendants who are applicants for leave to appeal, contend that the incorrectness of the primary judge's decision to strike out part of the Contracts Review Act defence provides one reason why his rejection of the evidence was incorrect, but they also rely on other matters for that contention. 13The primary judge decided the substantive issues that remained in the case after the Strike Out Judgment in a judgment delivered on 17 June 2010: Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 635 ("the Principal Judgment"). He rejected what remained of each defendant's Contracts Review Act defence. He also rejected a submission that each of the continuing defendants escaped liability because he or she had paid punctually each instalment of interest or principal in question. Other issues argued before us relate to whether the Principal Decision was correct in those two respects. 14Apart from one discrete issue that relates to Mr Holmes, all the issues that are raised by the defendants who now seek leave to appeal are identical to issues raised in the appeal brought by Mr Wardle and Mr Long. ARF does not object to the Court granting leave to appeal to those seven defendants. It is appropriate that leave be granted to them. I will refer to them henceforth as Appellants. The Issues and Conclusions in this Appeal 15In this Court, the Appellants have been represented by Mr SD Epstein SC and Ms A Tsekouras. ARF and OAL have been represented by Mr TS Hale SC and Mr CJ Bevan. 16The issues that arise in this judgment, and the conclusions I have come to concerning them, are: 1. Whether the judge was correct in the construction he placed on the separate trial order and undertakings pursuant to which the Gardiner Test Case was conducted, and in particular the extent to which matters decided in the Gardiner Test Case bound the Appellants. I have concluded that the judge incorrectly construed the order and undertakings, by attributing to the Gardiner Test Case more extensive consequences than were justified. 2. Whether the judge was in error in striking out defences whereby borrowers contended that they had paid punctually if they had put a cheque into the post by the date on which the debt fell due. I conclude that although the judge's reasons for striking out these defences should not be accepted, his conclusion was correct. I conclude that there is no general rule of law whereby, if the parties to a transaction contemplate that the post might be used for communication between them, a document is treated as being notionally in the hands of the recipient as soon as it is posted. I conclude that the payments that the Appellants were obliged to make to ARF were not made at the time an appellant posted a cheque to ARF for the purpose of making that payment. 3. Whether, if I were wrong in my conclusion that the judge was right to strike out the defences contending that posting a cheque was the equivalent of payment, it would in any event have been futile to remit the case because of factual findings. I conclude that it would not have been futile to do so. 4. Whether, when ARF sues a borrower for debt, the borrower bears the onus of proving that a payment has been made punctually, or ARF bears the onus of proving that the payment was not made punctually. I conclude that the borrower bears the onus. In consequence I conclude that the judge's findings that certain payments were not made punctually have not been vitiated by the judge adopting an incorrect onus of proof. 5. Whether the judge correctly concluded that one particular borrower, Mr Holmes, had failed to pay punctually. Mr Holmes had posted a bank cheque that ARF received before the due date, but ARF's bank required proof that ARF had title to the cheque, which Mr Holmes did not provide to ARF until after the due date. I conclude that Mr Holmes had paid on time. 6. Whether the judge was in error in striking out a defence that alleged that ARF had waived strict compliance with provisions of the Loan Agreement requiring payment to be made punctually, or was estopped from denying that payment had been made punctually. I conclude that he was in error in striking out the estoppel defences, but that no separate purpose is served by the waiver defence and it should remain struck out. 7. Whether the judge was in error in striking out part of the defence under the Contracts Review Act. That part of the defence contended that the contracts on which ARF sued were unjust because the prospectus, pursuant to which investors made investments in the prescribed interest schemes, did not disclose a material fact. The undisclosed fact was that when an investor borrowed money from ARF and paid it to OAL, OAL did not keep it for the purpose of operating the scheme but rather lent it back to ARF, which then lent it to another borrower, a process that went on repeatedly. I have concluded that the judge was in error in striking out this defence. 8. Whether the judge was in error in evidentiary rulings that were dependent in part on relevance to the Contracts Review Act defence. I have concluded that those rulings should be set aside. 9. Whether leave should be granted to ARF to cross-appeal concerning the manner in which the judge calculated interest on the judgment to which the primary judge held ARF was entitled. I have concluded that leave to cross-appeal on that question should be granted, but that the judge's manner of calculation of interest was correct, and thus the cross-appeal should be dismissed. PART A - THE GARDINER TEST CASE 17Determining whether the primary judge was correct in striking out parts of the defence of the Appellants, and in refusing to permit them to lead certain evidence in support of their Contracts Review Act defence, requires an examination of the extent to which the Appellants were bound by the Gardiner Test Case. That in turn requires consideration of the separate trial order and undertakings that led to the Gardiner Test Case being conducted, and detailed consideration of the issues and findings made in the Gardiner Test Case, and of the defences that the Appellants were prevented from pursuing. The Separate Trial Order and the Undertakings 18ARF began proceedings against 216 borrowers by a Summons filed on 18 June 2003. By 29 August 2003 the defendants for whom Clayton Utz acted, including all the present Appellants, had been served with a summons, and filed an appearance. On 29 August 2003 the Court made orders by consent: "1) The defendants for whom Clayton Utz acts [Tea Tree Investor Group] nominate a defendant [Nominated Defendant] to file and serve its, his or her defence on or before 12 September 2003. 2) The Nominated Defendant to file and serve its, his or her defence on or before 12 September 2003. 3) The Tea Tree Investor Group identify those parts of the defence of the Nominated Defendant said to be common with other persons in the Tea Tree Investor Group on or before 12 September 2003." Notwithstanding a direction on 19 September 2003 to comply with the third of these orders, it appears never to have been complied with. 19At some time between 22 and 25 September 2003 (the evidence is unclear) Mr Gardiner filed a defence. By 7 November 2003 he had also filed a cross-claim against ARF and OAL. 20There were then further directions from the Court that sought to resolve appropriate questions for preliminary determination. On 21 November 2003 the Court directed that the parties "agree on the common issue questions" on or before 28 November 2003. 21That evidently was not done, because on 28 November 2003 there was a further direction requiring the plaintiff to provide to the defendants: 1) ...Draft questions for preliminary determination together with an outline of contentions of fact and law in support of the construction for which the plaintiff contends either as outlined in the questions or following from them by 10 December 2003. 2) The defendants are to confer with the plaintiff in respect of any proposed amendments to those questions and provide to the plaintiff contentions of fact and law in support of the contention for which they contend on the construction issue arising from the questions posed by 16 December 2003. 3) The parties are to endeavour to settle the agreed issues or questions by no later than 18 December 2003. 22That direction also was evidently not complied with, because on 19 December 2003 there was a direction that on 19 March 2004: ... directions are to be made in relation to either: (a) the separate questions to be determined; or (b) the case against Mr Gardiner and the associated cross claims. 23By consent between ARF, OAL and the defendants for whom Clayton Utz acted (other than a Mr Stephen Lloyd, who neither consented nor opposed), the court made orders on 19 March 2004, in these terms: "The Court orders, by consent and subject to written undertakings by each of the defendants for whom Clayton Utz acts to be bound on common questions by the findings of the 'Gardiner Test Case' that: Pursuant to Part 31 Rule 2 of the Supreme Court Rules, there be decided separately from any other question in these proceedings all issues arising from the following: (a) The claim by Agricultural and Rural Finance Pty Limited against Bruce Gardiner; (b) The cross-claim filed by Bruce Gardiner on 19 September 2003; (c) The second cross-claim filed by Oceania Agricultural Pty Limited on 13 November 2003. (the 'Gardiner Test Case')." At the time those orders were made the only defendant represented by Clayton Utz who had filed a defence was Mr Gardiner. 24Numerous defendants, including all those involved in these present reasons for judgment, then gave an undertaking in the form of a letter addressed to Clayton Utz that referred to the proceedings, and said "I undertake to be bound by the findings of the Gardiner Test Case". 25By the time the Gardiner Test Case came on for hearing, OAL's cross-claim had fallen away. 26On 29 July 2005, the final day of the first instance hearing of the Gardiner Test Case, Young CJ in Eq gave leave to Mr Gardiner to amend his defence to plead "waiver" by adding a new paragraph 34A. Young CJ in Eq made orders that redefined the separate issue to take account of the falling away of the OAL cross-claim, and of the amendments to Mr Gardiner's cross-claim. Those orders also noted some agreements that gave some greater precision to the extent to which findings in the Gardiner Test Case bound the other defendants: "The Court orders by consent and subject to written undertakings by each of the defendants for whom Clayton Utz acts to be bound on common questions by the findings of the 'Gardiner Test Case', that: i. Pursuant to Part 31 rule 2 of the Supreme Court Rules, there be decided separately from any other question in these proceedings all issues arising from the following (the 'Gardiner Test Case'): (a) the claim by Agricultural and Rural Finance Pty Limited against Bruce Gardiner; and (b) the Further Amended Cross-Claim filed by Bruce Gardiner on 26 July 2005. ii. The Court Notes the agreement of the parties that, insofar as any question decided in the Gardiner Test Case extends to the proper construction of the Loan Agreements and/or the Indemnity Agreements sued on in the claim by Agricultural and Rural Finance Pty limited against Bruce Gardiner, each of the Defendants is bound by the Court's determination of that question, subject to the Defendant seeking to rely upon surrounding circumstances, upon which the agreement entered into by that defendant is to be construed, being different to the surrounding circumstances relied upon by Bruce Gardiner. iii. The Court Further Notes that this does not preclude any Defendant form bringing a further Cross-Claim based upon any representations or statements made to the Defendant which induced them to invest in the Projects, subject to any available limitation point. iv. The Court Further Notes that the Defendants are not precluded from raising any contention based upon the particular circumstances of a Defendant in answer to any contention that a failure to strictly comply with clauses 3.2, 3.3(a) and 4.1 of the Loan Agreements denied the Defendant an entitlement to indemnify be reason of the operation of clauses 2(a) and 2(b) of the Indemnity Agreements." 27On 11 April 2006, at the time of ordering that judgment be entered against Mr Gardiner, Young CJ in Eq gave directions for the filing of any defence which any of a long list of defendants (which included all the Appellants) wished to pursue. Mr Hale told us, and Mr Epstein accepted, that the defendants other than Mr Gardiner filed defences in July 2006. The Agreements Sued On 28Mr Gardiner, and each of the Appellants, borrowed money from ARF under a standard form of loan agreement. The standard form had been an annexure to the prospectuses pursuant to which the prescribed interests were made available to investors. 29The only parties to a loan agreement were ARF (called "the Lender") and the particular borrower to whom the loan was made. By Clause 1.1 of the Loan Agreement, ARF agreed to make the loan to the borrower. Clause 2.1 provided: "Subject to the specific requirements of this agreement in respect of payments and repayments from time to time, and subject further to Clause 7, the Principal Sum outstanding and all interest outstanding must be paid to the Lender on demand on or after seventeen (17) years from the date of this agreement ..." 30Clause 3 of the Loan Agreement created an obligation to make periodical payments of interest on the Principal Sum. Clause 4 created obligations to make certain repayments of principal. Clause 5.1 provided: "The parties agree that subject to Clause 7 below the whole of the Principal Sum remaining outstanding shall become immediately repayable at the option of the Lender on the happening of any one or more of the following events without the necessity of any notice of demand: (a) if the Borrower defaults in the due and punctual payment of interest or the Principal Sum or any repayment instalment or any other moneys payable under this agreement; (b) if the Borrower defaults in the observance or performance in any of his other covenants or obligations contained in this agreement; (c) if the Borrower ceases to carry on the Business." 31Clause 7 of the Loan Agreement provided: "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." 32Mr Gardiner and each of the Appellants also entered an Indemnity Agreement in a standard form. The parties to each Indemnity Agreement were OAL, ARF, and the particular borrower to whom a loan was being made. Recitals to the Indemnity Agreement referred to the Borrower having entered a Loan Agreement, with ARF, and a Licence and Management Agreement with OAL. The Agreement continues: "C. The Indemnifier wishes to indemnify the Borrower for any amounts owing to and payable to the Lender subject to certain conditions and upon the occurrence of certain events set forth in this agreement. D. The Borrower wishes to protect its interests by entering into this Agreement and paying the Indemnity Fee. E. The Lender agrees to limit its recourse for repayment of any principal amount outstanding and any interest thereon to the Indemnifier as set out herein. NOW THE PARTIES HERETO AGREE AS FOLLOWS: 1. Subject to the terms of this Agreement and in consideration of the payment on the date hereof of the Indemnity Fee as provided in Clause 5 by the Borrower to the Indemnifier, receipt of which payment is acknowledged by the Indemnifier, the Indemnifier agrees to indemnify and save harmless the Borrower against any demand by the Lender for repayment of any Principal Sum outstanding and any interest thereon under the Loan Agreement subject to the terms of this agreement ('the Indemnity'). 2. 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 the reductions of the Principal Sum set forth in Clause 4.1 of the Loan Agreement; and (c) the Borrower is not otherwise in default of any covenant or obligation contained in the Loan Agreement (save and except for any covenant or obligation to repay principal and interest which is subject to the Indemnity) or the Licence and Management Agreement; and (d) the Borrower has ceased to carry on the Business as a result of: [certain identified types of circumstances] 3. Subject to Clause 2 hereof the Indemnifier agrees to pay to the Lender upon demand of the Lender or the Borrower any Principal Sum outstanding under the Loan Agreement and any interest thereon and the Borrower irrevocably directs the Indemnifier to make such payment and agrees that the Lender may demand such payment from the Indemnifier. The Indemnifier acknowledges the terms of the Loan Agreement, in particular clause 7 of the Loan Agreement. 4. The Lender agrees and acknowledges that the Borrower may rely upon the Indemnity set forth herein and that notwithstanding any failure on the part of the Indemnifier to punctually perform any covenant or obligation contained herein the Lender shall not have recourse to the Borrower if the Indemnity herein contained is effective and enforceable in accordance with the terms of Clause 2." The "Indemnity Fee" was $250. Each borrower relevant to this judgment paid it. Outcome of the Gardiner Test Case 33Though it will be necessary to consider some aspects of the various decisions in the Gardiner Test Case in detail later in these reasons, it is convenient at this stage to give an overview of that litigation. 34ARF made four loans to Mr Gardiner. Young CJ in Eq entered judgment against him concerning all four loans. By the time of the trial before Young CJ in Eq, it was uncontroversial that the Project had terminated on 4 January 2003, that thereby Mr Gardiner had ceased to carry on the Business within the meaning of Clause 5.1(c) of the Loan Agreement, and that ARF had exercised its option to accelerate payment under Clause 5.1 by reason of Mr Gardiner ceasing to carry on the Business. 35Clearly, all four of the conditions listed in paragraphs (a)-(d) of Clause 2 of the Indemnity Agreement had to be satisfied before the indemnity was effective and enforceable. A sufficient reason for his Honour holding Mr Gardiner liable on all four loans was that he held that one of the conditions for the indemnity being effective and enforceable, namely that the Borrower had ceased to carry on the Business as a result of one of the circumstances identified in Clause 2(d) of the Indemnity Agreement, was not satisfied concerning any of the four loans. However, the Court of Appeal later held, contrary to the conclusion at first instance, that that condition for enforceability of the indemnity had been satisfied. That aspect of the decision of the Court of Appeal was not questioned in the High Court. Dates of Mr Gardiner's Payments 36The critical factor determining the outcome of the case in both the Court of Appeal and the High Court, so far as all judges involved in those decisions were concerned, was that the applicability of the Indemnity Agreement depended upon whether payments had been made punctually. The situation concerning payments under Mr Gardiner's first loan contract was, as set out by Handley AJA at [360]: Amount Due Due Date Date Paid $4375 31 January 1998 30 January 1998 $4375 30 April 1998 13 August 1998 $4375 31 July 1998 13 August 1998 $2696 (interest) 29 October 1998 10 November 1998 $4375 31 October 1998 10 November 1998 37In this and the following table "Date Paid" refers to the date shown in ARF's records as when the debt in question was paid. The situation concerning payments under Mr Gardiner's second loan contract was, as set out by Handley AJA at [363]: Amount Due Due Date Date Paid $2187.50 30 June 1998 30 June 1998 $2187.50 30 September 1998 10 November 1998 $2187.50 31 December 1998 30 December 1998 $2187.50 31 March 1999 23 March 1999 $1348 (interest) 7 April 1999 30 June 1999 38As Basten JA recorded at [246] there was no suggestion that any payment due under the third loan agreement had not been made punctually. 39Concerning the fourth loan, Mr Gardiner accepted that payment had been made late. The only reasons that he advanced why that the lateness in payment did not deprive him of the benefit of the indemnity arose from his "waiver" defence, and under his cross-claim. Decisions Concerning Punctuality of Mr Gardiner's Payments 40Notwithstanding the discrepancies between the dates due and dates paid of some of the payments relating to the first and second loans, Spigelman CJ and Basten JA both held that the payments had been made in accordance with the required agreement. Spigelman CJ held that, as a matter of construction of the particular documentation involved in its context, the requirement to pay punctually was adequately satisfied if the person who is entitled to the benefit of the original obligation accepts an actual payment as constituting punctual payment. He held that ARF had accepted as being punctual the payments that Mr Gardiner made after the due date. Basten JA held that certain dealings between ARF and Mr Gardiner (the details of which need not be explained at this stage) had the effect that ARF was obliged to treat the payments made concerning the first and second loans as made punctually. Thus, Spigelman CJ and Basten JA both held that the indemnity applied concerning the first and second loan, and that in consequence Mr Gardiner had no liability to ARF concerning those loans. Handley AJA dissented on both of those points, and thus would have held Mr Gardiner liable to repay both the first and second loans. 41Mr Gardiner brought a cross-claim against ARF and OAL, seeking (so far as presently relevant) orders that the Loan Agreement and Indemnity Agreement operated so as not to impose liability on him to repay the loans. He sought this relief in exercise of the Court's powers to do so under the Trade Practices Act 1974 (Cth), Corporations Law, or the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"). The basis for his claim was a contention that OAL and ARF had engaged in misleading and deceptive conduct in breach of s 52 Trade Practices Act, ss 995 and 996 Corporations Law, or ss 12DA and 12DB of the ASIC Act. That claim was dismissed both by Young CJ in Eq and in the Court of Appeal. Special leave to appeal to the High Court was not granted concerning it. 42The outcome in the Court of Appeal was that Mr Gardiner was not liable concerning the first, second or third loan, but was liable for the fourth loan. 43In the High Court, ARF did not dispute that Mr Gardiner had no liability concerning the third loan. Nor did Mr Gardiner dispute that he was liable concerning the fourth loan. 44The High Court reached an opposite conclusion to that of the Court of Appeal concerning the first and second loans. In broad terms, Gummow, Hayne and Keifel JJ held that nothing in the text or context of the agreements justified reading "punctually" in any fashion other than as requiring exact observance of the appointed time. They held that nothing in the dealings between ARF and Mr Gardiner justified a conclusion that the payments concerning the first and second loan had been made punctually. Kirby J, in separate reasons, reached the same conclusions. Heydon J agreed with the conclusions of the plurality. He also agreed, subject to two qualifications, with their reasons, apart from four particular paragraphs that the plurality judges recognised were dicta. 45Thus the outcome of the Gardiner Test Case in the High Court was that Mr Gardiner was liable to ARF concerning the first, second and fourth loan, but not concerning the third loan. Mr Gardiner's Estoppel and Waiver Defences Mr Gardiner's Estoppel Defence 46Paragraph [26] of Mr Gardiner's defence pleaded an estoppel by representation. The pleaded representation was: "... in or about June 1997, ARF and OAL represented to the defendant that if an investor were not in default, the indemnity provided for in the Indemnity Agreement would apply to indemnify a farmer in circumstances where the projects terminated as a result of any reason other than the farmers' electing to terminate the projects. Particulars The representations were express and oral. They were made by Stephen Lloyd on behalf of inter alia ARF and OAL at an investment seminar held at the offices of Ord Minnett in Sydney in or around June 1997, which was attended by the defendant. At the seminar Mr Lloyd said words to the effect of those identified in paragraph 26." 47He contended that in reliance on the representation he entered into the various documents that were related to becoming an investor in the project. He contended that ARF was thereby estopped "from asserting that the proper construction of the indemnity agreement is other than in accordance with the representation pleaded in paragraph 26." 48Mr Gardiner also contended at [30] of his defence that that representation was confirmed by further representations. The particulars of that allegation were: "The representations were express and oral and were made by Stephen Lloyd on behalf of inter alia OAL and ARF either during a telephone conversation between the defendant and Stephen Lloyd in late 1997, or during a visit to the Project site by the defendant in January 1998, in response to specific questions from the defendant. Further representations were made by Stephen Lloyd on behalf of inter alia OAL and ARF in conversations in or about March 1998 in response to questions from the defendant. These further representations were made following an audit by the Australian Taxation Office upon the defendant's investment in the projects." 49He pleaded that in reliance upon all these representations he entered into the documents connected with investing in Project No 2. He asserted that thereby ARF was estopped: "... from asserting that the proper construction of the indemnity agreement is other than in accordance with the representation pleaded in paragraphs 26 and 30." 50In substance, paras [26] and [30] of Mr Gardiner's defence pleaded an estoppel against ARF and OAL which prevented them from contending that one of the circumstances identified in clause 2(d) of the Indemnity Agreement had not arisen. Whether any such estoppel existed was ultimately of no importance to the outcome of the Gardiner Test Case . A majority of the Court of Appeal held (although for different reasons) that the circumstances identified in Clause 2 of the Indemnity Agreement existed in relation to the first, second and third loans. Thus, the majority held that Mr Gardiner was entitled to enforce the indemnity against OAL. 51The High Court held that Mr Gardiner failed to satisfy Clause 2(a) and (b) of the Indemnity Agreement because he failed to make all payments "punctually". For that reason, contrary to the conclusion reached by the Court of Appeal, Mr Gardiner was not entitled to enforce the indemnity against AOL. The estoppel defence pleaded by Mr Gardiner in paras [26] and [30] was not relevant to the punctuality issue and was not addressed by the High Court. Even so, this part of Mr Gardiner's defence remains of some significance because the topic of Mr Lloyd's authority to act on behalf of ARF, and some aspects of the law concerning estoppel, were considered by reference to that estoppel pleading in various of the courts that considered the Gardiner Test Case. Mr Gardiner's "Waiver" Defence 52Mr Gardiner did not plead an estoppel defence in relation to the punctuality issue. However, the "waiver" defence (para [34A]) that was added to Mr Gardiner's defence on the last day of the first instance hearing ([27] above) contended that, concerning the first, second and fourth loans, "... ARF and OAL waived any non-compliance with the requirements to pay strictly in accordance with: (a) clauses 3.2 and 3.3(a) of the Loan Agreements; and (b) clause 4.1 of the Loan Agreements, as a basis for denying the effectiveness or enforceability of the indemnity provided for in clause 1 of each Indemnity Agreement applicable to each of those investments, and therefore as a basis for denying that the defendant's obligation to repay the loans was to be performed by OAL and that ARF had no right of recourse against him. Particulars During the course of his site visit in January 1998, Mr Gardiner in substance requested Mr Lloyd to put in place a procedure whereby Mr Gardiner would receive contact a couple of days in advance of the due date of quarterly payments. Mr Lloyd said in substance that would not be a problem. That procedure was put in place. On or about 16 July 1998 Mr Gardiner had a conversation with Mr Lloyd in which Mr Lloyd informed Mr Gardiner in substance that: (a) OAL effectively acted as agent for ARF; (b) 'we are pleased to receive payments from farmers at any time within reason'; (c) there was no need to pay additional interest; (d) Mr Gardiner need not be concerned about the indemnity; (e) Mr Gardiner was 'fine'. On or about 27 October 1998 Mr Gardiner telephoned Ms Edwards and requested that she confirm with Mr Lloyd that there would be no adverse circumstances as a result of delay in payment. If there was a problem he requested that either Mr Lloyd or Mr Henry contact him. Neither Mr Lloyd nor Mr Henry advised Mr Gardiner that there were any adverse consequences arising. On 2 June 1999 Mr Gardiner received a letter from Ms Edwards which recorded that, as a consequence of ARF's failure to send a reminder notice, the payment due on 7 April 1999 would be accepted as 'on time' up until 30 June 1999." 53Relevantly for the significance of the dates of the activities that were thus pleaded as giving rise to a "waiver", ARF had made the loans to Mr Gardiner as follows: (a) first loan (ref TT 081) - 29 October 1997; (b) second loan (ref TT 094) - 30 March 1998; (c) third loan (ref TT 131) - 25 June 1998; (d) fourth loan (ref TT 214) - 10 May 1999. 54The plurality in the High Court decision of the Gardiner Test Case made three observations about the particulars given of the "waiver": "41 ... First, the Mr Lloyd mentioned in the particulars was the managing director of OAL. Ms Edwards was described [[2006] NSWSC 202 at [51]] by the trial judge as 'financial controller' of ARF. In this Court the appellant described her as ARF's bookkeeper and OAL's compliance officer. The particulars do not identify the party or parties for whom Mr Lloyd or Ms Edwards was allegedly acting when taking the steps described in the particulars. Given the way in which the pleading itself was framed ('ARF and OAL waived any non-compliance') it may well be that each was alleged to be acting on behalf of both ARF and OAL (emphasis added). 42 Secondly, the particulars suggested that the waiver of 'any non-compliance with the requirements to pay strictly in accordance with [the relevant provisions]' was constituted by the combination of four separate events: Mr Lloyd's response to a request made of him at a site visit in January 1998, a conversation with Mr Lloyd in July 1998, a conversation with Ms Edwards in October 1998 and a letter from Ms Edwards dated 2 June 1999. Yet at trial, it would seem that attention was directed for the most part, perhaps even exclusively, to the alleged conversation between Mr Gardiner and Ms Edwards in October 1998 and what followed. 43 The third observation to make is a temporal observation. The defaults in punctual payment under the first and second loan agreements included defaults that had occurred before the last of the dates mentioned in the particulars (2 June 1999) and one that had occurred before that date (on 7 April 1999) but was remedied by payment on 30 June 1999 (the date mentioned in the letter of 2 June 1999 as the last day on which ARF would 'accept payment as "on time"'). Some of the defaults under the first and second loan agreements occurred before the alleged conversation of October 1998; some occurred after that date." 55Even though their Honours said at [41] that it "may well be" that each of Mr Lloyd and Ms Edwards was alleged to be acting on behalf of both ARF and OAL they made a stronger comment at [45]: "... The plea of waiver added at trial alleged that 'ARF and OAL waived any non-compliance with the requirements' to pay punctually (emphasis added). It was not alleged, and it was not submitted in argument, that one of ARF or OAL might be bound to treat the indemnity as effective and enforceable even if the other was not. It is not necessary, therefore, to consider any such differential outcome." 56Young CJ in Eq gave no specific reasons that related to the conversations relied on in the particulars to Mr Gardiner's paragraph 34A that had occurred between Mr Gardiner and Mr Lloyd in January 1998 and July 1998. However, concerning the conversations particularised in paragraph [30] of the defence (late 1997 or January 1998, and March 1998) he observed, at [87], that in cross-examination Mr Gardiner had admitted that the particulars given in his defence in this respect were incorrect. Young CJ in Eq rejected the defence of "waiver" said to arise from a conversation on 27 October 1998 between Mr Gardiner and Ms Edwards primarily because Ms Edwards denied that any such conversation had occurred, and Young CJ in Eq accepted her denial. At [52] he also gave some other reasons why, even if he were wrong about accepting her denial, the conversation would not give rise to a waiver. However, as his acceptance of Ms Edwards' denial was never overturned, it is not necessary to consider those additional reasons in [52]. 57In the Gardiner Test Case in the Court of Appeal Handley AJA at [387] gave a fuller explanation of why it was not appropriate to find that the various representations that Mr Gardiner had alleged in the particulars to [30], and the representations of January 1998 and 16 July 1998 that were alleged in the particulars to paragraph 34A had been made: ... the appellant conceded that there was no relevant phone conversation in 1997. He gave affidavit evidence about his meeting with Mr Lloyd at the site in January 1998 but did not say that the later representations were made either on that occasion or in March (Black 72-6). He gave affidavit evidence of the later representations being made by Mr Lloyd on the telephone in May in the context of the ATO investigation (Blue 1/16-18). He conceded in cross-examination that the relevant particulars in his defence were incorrect (Black 73, 74-5), but then said that the later representations were made at the site meeting in January, and during the ATO investigation in May (75). The Judge appears to have rejected the appellant's evidence about the later representations during his visit to the site in January (Red 162 para 140)." 58At [85] Young CJ in Eq recorded, and evidently accepted, a submission by the then counsel for ARF that "whilst Mr Lloyd was an officer of OAL, he was never an officer of the plaintiff". His reasons for rejecting the estoppel alleged to arise from Mr Lloyd's representations at the Ord Minnett seminar around June 1997 were, at [88]: "I cannot find sufficient nexus between what Mr Lloyd said at an investment seminar and the lender to found any estoppel against the lender. Although the lender played a vital part in the scheme, it was not one of the principal actors in the drama. Mr Lloyd was not employed by it and I cannot see how, on the evidence that was adduced, it can be said that the plaintiff is to be estopped by anything that Mr Lloyd may have said." 59Insofar as the estoppel was alleged to arise against OAL, Young CJ accepted, at [150], that a representation of the type Mr Gardiner had alleged had been made at the Ord Minnett seminar. However, he found that no estoppel arose against OAL because (at [167]) Mr Gardiner had not relied on the representation in entering into the transactions. 60In the Gardiner Test Case in the Court of Appeal, Handley AJA considered the effect of a letter that Ms Edwards wrote to Mr Gardiner on 2 June 1999. That letter recorded that the interest payment that had been due on 7 April 1999 concerning the second loan contract was overdue. It said: "As we failed to send reminder notices we will accept payment as 'on time' up until 30 June." Mr Gardiner made the overdue payment on 30 June. 61Because Mr Gardiner had been late in making the payment that fell due under the second loan contract on 30 September 1998 he was (absent any relevant variation, estoppel or election concerning that payment) disentitled to the benefit of the indemnity. Handley AJA held that, notwithstanding the letter of 2 June 1999 and the payment pursuant to it, Mr Gardiner had also failed to pay punctually concerning the payment due on 7 April 1999. He said, at [370]: "The appellant did not rely on this letter as a release of these loan debts or as a contractual variation, and an estoppel based on the letter was not pleaded. There was no consideration moving from the appellant or his wife which could have supported a release or contractual variation. Late payment of an amount already overdue is neither consideration nor detrimental reliance which could support an estoppel. An agreed variation of the due date before the event, even if it was not supported by fresh consideration, would normally establish an estoppel by convention. A non-contractual variation, when a payment is already overdue, does not have this effect, and the accrued breach remains." 62Another reason that led Handley AJA to hold Mr Gardiner liable concerning the first and second loan contracts was that any "waiver" by ARF did not bind OAL. He said, at [375]: "A waiver by ARF of late payment for the purposes of the loan agreement cannot, without more, be a waiver by OAL of late payment for the purposes of the Indemnity Agreement. Although both OAL and ARF were parties to the latter this did not make ARF the agent of OAL to vary or waive the condition precedent in cl.2(a) and (b) of the Indemnity Agreement. It is not competent for two parties to a tripartite agreement to alter the rights of the third party without its consent. Any variation or waiver of the requirement for punctuality would transfer liability for the unpaid balance from the appellant as borrower to OAL as indemnifier. There is no evidence that ARF had authority to do this, and no evidence of conduct by OAL which could establish a binding variation, waiver, or estoppel." 63Basten JA at [255] held that the letter of 2 June 1999 was "an express variation of the borrowers' obligations under the first and second loan agreements". At [261] his Honour said that the letter of 2 June 1999 "should be understood as an extension of the time for due and punctual payment of that amount". In [263] his Honour said that the apparent intention of the letter "was to provide reassurance to the borrowers that they were not to be treated as in default". 64Basten JA appears to have taken the view that it was of no consequence that the rights of OAL were not affected by the letter of 2 June 1999. At [257] his Honour said that it "may follow" that acceptance of the payments by ARF as a sufficient satisfaction of the financial obligations between it and the borrowers also satisfied the requirements for punctual payment under Clause 2(d) of the Indemnity Agreement. Amongst the reasons he gave were that ARF: "... was itself a party to the indemnity agreement and, to the extent that it waived default by a borrower under the loan agreement, it may be taken to have waived any reliance on such default by the borrower for the purposes of the indemnity agreement. Secondly, that approach is confirmed by the fact that the effect of default under the indemnity agreement is incorporated into the loan agreement, by virtue of cl 7, so that absence of default (subject to satisfaction of the other conditions) would mean that the borrower had no further liability under the loan agreement. If the lender were intending to accept the borrower's tender of payments as sufficient compliance with obligations under the loan agreement, otherwise than for the purposes of cl 7 and the operation of the indemnity agreement, that distinction should have been made clear. Nor can the indemnifier, [OAL], suggest otherwise, because it will have no obligation to make any payment to [ARF] in respect of a borrower who has no obligation under the loan agreement." 65The plurality in the High Court identified at [49] the precise ways in which it was contended before them that Mr Gardiner escaped the consequences of some of his payments concerning the first and second loans not being made strictly on or before the due dates: "The Borrower submitted that there was a 'waiver' in one or more of three different senses: an election between inconsistent rights; an application of the common law doctrine of forbearance; or the abandonment or renunciation of a right. The Borrower accepted that the plea of waiver was not a plea which sought to allege that there had been a variation of any relevant agreement, or that the doctrine of promissory estoppel was engaged. There was no consideration for a variation of agreement. There was no detrimental reliance for a promissory estoppel." Their Honours then analysed in detail why there had been no election, no forbearance, and no abandonment or renunciation of a right. 66Their Honours reiterated at [72] that: "... the appeal to this Court was conducted on the footing that estoppel was not in issue and was not in issue because Mr Gardiner could not show detrimental reliance upon any representation that the indemnity remained effective and enforceable despite failure to make payment punctually." 67In the course of explaining why a doctrine of "forbearance" did not produce the effect that Mr Gardiner had no liability, the plurality considered the decision of the English Court of Appeal in Panoutsos v Raymond Hadley Corporation of New York [1917] 2 KB 473. Their Honours discussed Panoutsos as follows, at [83]: "... There, a contract for sale and shipment of goods no later than a specified date, by one or more vessels, provided that each shipment was to be deemed a separate contract and that payment be 'by confirmed bankers' credit'. The buyer opened a credit but it was not 'confirmed'. With notice of that fact the sellers made some shipments and drew on the credit for payment. The sellers sought and obtained an extension of time for completing the shipments. Before that extended time had expired the sellers cancelled the contract on the ground that the credit provided was not 'confirmed'. In an ex tempore judgment, Viscount Reading CJ said [at 477] that '[i]t is open to a party to a contract to waive a condition which is inserted for his benefit' and that, in this case, the sellers had waived the condition for a confirmed bankers' credit. He continued [at 478]: 'If at a later stage the sellers wished to avail themselves of the condition precedent, in my opinion there was nothing in the facts to prevent them from demanding the performance of the condition if they had given reasonable notice to the buyer that they would not ship unless there was a confirmed bankers' credit. If they had done that and the buyer had failed to comply with the condition, the buyer would have been in default, and the sellers would have been entitled to cancel the contract without being subject to any claim by the buyer for damages.' On its face, then, what was said in Panoutsos may be read as supporting the Borrower's submissions about forbearance. It is to be observed, however, that the facts in Panoutsos can readily be fitted within principles of estoppel, for it is evident that the buyer of the goods had relied on the implicit representation that its performance was sufficient. And Panoutsos was later treated [Charles Rickards Ltd v Oppenhaim [1950] 1 KB 616 at 623 per Denning LJ] as an example of the application of those principles rather than as establishing any separate principle of forbearance." 68At [94]-[97] the plurality considered whether, even if the facts for which Mr Gardiner contended were made out, they would result in Mr Gardiner escaping liability by reason of waiver. Their Honours held that they would not: "If, as the particulars alleged, both ARF and OAL unequivocally represented to Mr Gardiner, in effect, that the indemnity remained effective and enforceable despite his past failures to pay punctually, his several arguments about waiver depended upon attributing determinative significance to the fact of the representation. That is, no matter which of the three ways in which the argument for waiver was put, the fact that ARF as Lender and OAL as Indemnifier represented that the indemnity remained effective and enforceable, despite past defaults, was said to be sufficient to hold those parties to that represented state of affairs. But if, as is the case here, there was no election between inconsistent rights, there was no variation of the contract, and there was no detrimental reliance upon the representation, no reason is given for holding the party concerned to its earlier expressed attitude beyond the fact that the representation was made. To hold that the making of the representation, without more, suffices to alter the rights and obligations for which the parties stipulated by their contract is a step that should not be taken. It should not be taken for two reasons. First, to hold that the making of a representation, without more, alters the rights and obligations of parties to a contract would be to supplant accepted principles governing whether an estoppel is established and whether a contract has been varied. It would supplant those principles by dispensing with the need to show detrimental reliance to establish an estoppel and by discarding as irrelevant the need to show consideration for an agreement to vary an existing contract. The second reason, which in a sense is no more than the obverse of the first, is that no reason is proffered to hold the person making the representation to it. The person to whom the representation is made has not relied on it; it is not demonstrated that departure from the representation would be unjust; there was no consideration to support a bargain." Mr Gardiner's Misleading and Deceptive Conduct Claims 69Mr Gardiner brought a cross-claim against ARF and OAL in which he contended that they had each engaged in misleading and deceptive conduct that caused him to enter the Loan Agreements. He also alleged that ARF breached an obligation of good faith, and that OAL had breached certain fiduciary and contractual obligations, but those further allegations are not presently relevant. Misleading and Deceptive Conduct Through Representations 70One strand of Mr Gardiner's misleading and deceptive conduct case was based upon the various representations that he had pleaded in [26], [30] and [34A] of his defence ([47], [49] and [53] above). Of the oral representations there pleaded, only the June 1997 representation at the Ord Minnett seminar was established as a matter of fact. Handley AJA held (at [389]-[391]) that, so far as agency under the general law was concerned, that representation had not been made on behalf of ARF: "Mr Lloyd was the managing director of OAL at the time but had no formal position with ARF. OAL did not dispute its responsibility for the representations if they were made, but ARF did and the Judge found that there was not a sufficient nexus between Mr Lloyd's conduct at the investment seminar and the lender ARF to found any estoppel against the latter. ARF knew, through Mr Sarks, that Mr Lloyd was attending investment seminars to promote the scheme with loans from ARF and indemnities from OAL. Mr Lloyd was actively involved in funding ARF so it could make loans to investors and worked closely with it for that purpose. However ARF's knowledge and OAL's role as ARF's banker does not make ARF responsible for Mr Lloyd's representations. Unless there is independent evidence of authority an agent's representations are not evidence against the putative principal. It was said that Mr Lloyd 'offered' the loan and indemnity agreements to prospective investors who attended the seminar, but this is not correct. He issued invitations to treat. The prospectus required intending investors to complete and lodge the attached application forms and this was an offer to OAL on the terms of the prospectus. Mr Lloyd did not make offers on behalf of ARF at the seminar and agency cannot be established on that basis." 71Mr Gardiner's counsel also submitted that ARF was liable for Mr Lloyd's representation by reason of s 84(2) of the Trade Practices Act and the equivalent provisions in s 762(4)(b) of the Corporations Law and s 12GH(2) of the ASIC Act. The former of these provisions provided: "Any conduct engaged in on behalf of a body corporate: (a) by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or (b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent; shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate." 72Handley AJA rejected that submission (at [393]): "Mr Lloyd was not a director or servant of ARF and agency had to be established before sub-s (2)(a) could operate. On the assumption that Mr Lloyd was 'any other person' within sub-s (2)(b) there was no evidence that his conduct was 'engaged in on behalf of' ARF or that it was done at the direction or with the consent or agreement of a director, servant or agent of ARF. Mr Lloyd was one of the defendants named in the Schedule to the Summons but was not called by the appellant. Accordingly s 84(2) does not assist the appellant to establish that Mr Lloyd made the first representations as agent for ARF." 73At [400] Handley AJA said that, even if the telephone conversation that was alleged to have occurred in May 1998 did, in fact, take place, "there was no possible basis for a finding that Mr Lloyd had any authority to bind ARF during any telephone conversation in May 1998." 74Because Mr Lloyd was OAL's managing director OAL would be bound by any representations that Mr Lloyd made. Even so, Mr Gardiner's misleading and deceptive conduct case against OAL, arising from the various representations of Mr Lloyd, failed because Mr Gardiner could not establish reliance (Handley AJA at [401]-[416]). Misleading and Deceptive Conduct Through Prospectuses 75Another aspect of Mr Gardiner's misleading and deceptive conduct claim arose from the various prospectuses that OAL had issued concerning the prescribed interest scheme. The prospectus relating to Project No 1 was lodged with the ASC on 10 April 1997. The prospectus relating to Project No 2 was lodged with the ASC on 16 February 1998. There was a supplementary prospectus concerning Project No 1, and two supplementary prospectuses concerning Project No 2. Mr Gardiner had invested in both Project No 1 and Project No 2. He contended that the various prospectuses were misleading and deceptive because none of them disclosed certain facts that were relevant to the operation of the projects. 76The allegations of non-disclosure that Mr Gardiner made concerning Project No 1 were not identical to those that he made concerning Project No 2. However, one matter that he alleged, that was common to both projects and all the prospectuses, was a failure to disclose "the ARF Funding Arrangements" (Gardiner cross-claim para [32] and [33]). That term was defined in paragraph 2(e)(v) of Mr Gardiner's cross-claim as follows: "As at 10 April 1997, ARF had no funds to lend to investors, apart from $250,000 which GCC lent to ARF to enable loans to be made to Farmers, which Farmers paid the funds to OAL as licence and management fees. OAL lent those funds to ARF so that ARF could have funds available to lend to further investors who would pay licence and management fees, which OAL would lend to ARF ('the ARF Funding Arrangements')." 77The significance of the ARF Funding Arrangements was that even though investors borrowed, collectively, millions of dollars from ARF, and paid it to OAL, that did not result in OAL having anything like millions of dollars to use in conducting the tea tree plantation. This was because very soon after OAL received a payment from an investor it lent that amount back to ARF, which in turn lent it to another investor. When Mr Wardle's defence later referred to this same state of affairs, it referred to it as the "round robin arrangements". 78Though this aspect of Mr Gardiner's cross-claim is hard to follow (paragraph cross references in [39] of his cross-claim do not make sense), a benign reading is that he is trying to say that ARF is also liable for the misleading and deceptive conduct involved in the non-disclosures in the prospectus because it was "a person involved". 79Young CJ in Eq referred at [169] to Mr Gardiner's case concerning the prospectuses as relating to a failure to "disclose various funding arrangements between members of the Cassegrain family and their companies". However, his consideration of that topic depended solely upon non-disclosures that were different to the non-disclosure concerning the ARF Funding Arrangements. 80In [26] of his cross-claim, Mr Gardiner made allegations that Handley AJA at [417] accurately summarised as: "... that the prospectus contained statements that OAL as manager had no assets and liabilities other than those disclosed, that all costs to date had been met by Gerard Cassegrain & Co Pty Ltd (GCC) and that the moneys paid by investors would be spent by OAL in providing the services described in the Management and Licence Agreements. It contained a table showing how the licence and management fees of $23,750 per farm, payable in the first two years (the funds subscribed) would be spent, and stated that, except as disclosed, no interest existed in the project for the benefit of any promoter (Blue 2/543-5)." (emphasis added) 81Paragraph [27] contained an allegation that the second prospectus included statements to the same effect as those I have italicised in the immediately preceding quotation. 82When [26] of Mr Gardiner's cross-claim alleged that the prospectus represented that "the funds paid by each farmer will be applied by OAL in the provision of services and rights described in the Management and Licence Agreement", it used the exact words of Clause 8.1 of the prospectus. 83However, Mr Gardiner's cross-claim pleaded, at [34], that he was induced to enter the Loan Agreements by the terms of the prospectus, and "believing at the time" on the basis of his reading those documents: "... that the funds provided by Farmers to OAL when investing in the Projects would be expended by OAL to perform its obligations and provide the services to Farmers referred to in the Project Deed and the Licence Management Agreements, and for no other purpose." (emphasis added) 84Handley AJA referred to this allegation of a sole purpose of use of the funds as the "alleged funds subscribed representation" ([427]). 85Paragraph 37 of Mr Gardiner's cross-claim alleged that "by reason of the matters alleged in paragraph 32" (ie, the non-disclosure of the ARF Funding Arrangements, and three other non-disclosures that Mr Wardle does not now seek to invoke) the statements or representations identified in paragraph 26 were misleading or deceptive. Paragraph 38 of the cross-claim alleged that "by reason of the matters alleged in paragraph 33" (ie, the failure of the second prospectus to disclose the ARF Funding Arrangements, and its failure to disclose various other matters on which Mr Wardle does not now seek to rely) the statements or representations alleged in paragraph 27 were misleading or deceptive. 86Handley AJA at [422], found that the existence of the ARF Funding Arrangements was proved, and that those funding arrangements were not disclosed in the prospectus relating to Project No 1. The situation concerning disclosure of the ARF Funding Arrangements in the prospectus relating to Project No 2 was somewhat more complex. That prospectus included, in section 6.4, some brief financial statements of OAL and ARF as at 30 June 1997. The balance sheet of OAL included amongst its assets a current asset of a loan to ARF for $1,058,750, and in its non-current assets, a loan to ARF of $1,391,250. The accounts of ARF recognised those loans as liabilities, and included as an asset loans to investors of $1,694,000. Handley JA said, at [326] concerning prospectus No 2: "Although there is no express statement about the financing arrangements, these accounts would place an interested party on notice that the investments might in fact be the subject of finance from the manager, which would render it financially dependent on the viability of [ARF]. However, [ARF] included in its assets receivables totalling approximately $2.75 million, being almost the total amount of its assets. It may be inferred that the bulk of the non-current receivables were loan repayments which were subject to the indemnity granted by [OAL]. Accordingly, the informed reader would be at least put on notice that should either project terminate in circumstances where the indemnity agreements operated, the viability of both companies would be in serious doubt." 87Handley JA found at [427] that of the various non-disclosures that had been alleged, the only one that had been proved as at the date of the original prospectus was the ARF Funding Arrangement. There appears to be no finding about whether the pleaded non-disclosure concerning the second prospectus had been made out. That may well be because, at [327] Handley JA had said he was not persuaded that Young CJ in Eq was in error in concluding that Mr Gardiner "did not demonstrate that his decision to invest in Project No 2 was materially affected by any false or misleading statement in the second prospectus: at [179]." 88Handley AJA held that a plaintiff relying on contravention of the sections of the Corporations Law on which Mr Gardiner based his claim, must prove reliance ([442]). He noted that Mr Gardiner's evidence about the matters that caught his attention in the prospectus did not say anything about non-disclosure of the ARF Funding Arrangements ([443]). He found, at [444] that Mr Gardiner "based his decisions on the availability of loan funds and the protection he thought was conferred by the indemnity and not on the representations in the prospectus." 89Having thus disposed of the non-disclosure of the ARF Funding Arrangements as causative of Mr Gardiner's loss, Handley AJA went on to consider whether the "alleged funds subscribed representation" provided the basis for recovery. He held that the "alleged funds subscribed representation" had not been made by the prospectus ([465]). He held that the statement in paragraph 8.1 of the prospectus that the moneys paid by investors would be used in providing the services described in the Management and Licence Agreements needed to be read in conjunction with the table, set out at para 8.9 of the prospectus, that set out how the funds were budgeted to be spent. That table included a significant allowance (11.2% of the funds subscribed, if there was only the minimum subscription of 50 farms, and nearly 25% of the funds subscribed, if the maximum subscription of 400 farms was reached) for "contingency, profit and risk". The proper reading of the prospectus required one to understand that there was a "composite representation" in paragraphs 8.1 and 8.9, concerning the manner in which funds would be spent, and that composite representation did not include a representation that the funds would only be spent in the provision of services and rights described in the Management and Licence Agreement. 90Handley AJA found, at [475]: "Although it appears that the ARF funding arrangements falsified the composite funds subscribed representation from the outset, the appellant did not plead reliance on the composite representation. He only relied on the alleged funds subscribed representation ('and for no other purpose') (para [445])." 91He went on to state, at [477] that even if the "alleged funds subscribed representation" had been made, he was not persuaded to find that Mr Gardiner had relied upon it. Handley AJA also said that he was "not prepared to infer that disclosure of the ARF Funding Arrangements would have affected his decisions to invest." 92Mr Gardiner's case based upon alleged misleading and deceptive conduct in the second prospectus failed for reasons analogous to those why his case concerning the first prospectus failed. 93Spigelman CJ agreed with Handley AJA concerning the allegedly misleading conduct by Mr Lloyd ([136]). Relevantly for present purposes, Spigelman CJ agreed with Handley AJA that the first prospectus did not convey the representation that the funds subscribed would only be used by ARF to provide services under the Management Agreement, and agreed with Handley AJA concerning reliance issues in relation to both prospectus one and prospectus two ([137]-[138]). 94One of the allegations Mr Gardiner made was that OAL had breached fiduciary or contractual obligations towards Mr Gardiner by, in effect, engineering a vacancy in the office of trustee for a sufficiently long period to entitle ARF to accelerate repayment of the principal lent to each investor. In the course of considering that allegation, Young CJ in Eq said, at [134]: "There is no secret about the fact that some monies which investors might reasonably have supposed would be used in the Projects found their way via round robin transactions back into the hands of the plaintiff or Mr Cassegrain, but the bulk of the material suggests that this was not the cause of the Projects failing but rather it was the dramatic fall in the price of tea tree oil." 95Basten JA referred to that statement, with apparent approval, at [300]. 96Basten JA at [305] made a positive finding that the round robin arrangement resulted in the statements in paragraph 8.1 and 8.9 of the prospectus being misleading: "Although the sale of 125 farms prior to 30 June 1997 should, on the calculations provided in the prospectus have produced a cashflow to [OAL] of almost $3 million, the fact that all but one of the investments were financed and that the moneys used for that purpose were recirculated, meant that the statements set out above in the prospectus were indeed false and misleading." 97However, Basten JA went on to hold that Mr Gardiner had not established that that misleading aspect of the prospectus had caused him damage. At [322] Basten JA held that the correct approach to that question was not to enquire whether, at the time the project terminated, the availability of additional resources to OAL might have provided a financial basis to continue the maintenance of the project in the hope that the prices available for tea tree oil would improve. Rather, the correct way of approaching the question was to enquire whether there was any causal connection between the misrepresentation and Mr Gardiner's decision to make the investment. 98Because he had held that, for other reasons, Mr Gardiner had no liability concerning the first three investment contracts, Basten JA determined the question of causation of damage only concerning the fourth loan contract. That loan contract was entered for the purpose of investing in Project No 2, to which prospectus number two related. Basten JA at [327] was not willing to differ from the conclusion of Young CJ in Eq that Mr Gardiner had not shown that his decision to invest in Project No 2 was materially affected by any false or misleading statement in the second prospectus. 99Basten JA referred to [179] of the decision of Young CJ in Eq as the place where his Honour had reached that conclusion. What Young CJ in Eq said at [179] was: "Mr Gardiner or his wife bought nine more farms after the second prospectus. There is, however, insufficient material to find that the fact, if it be the fact, that part of the loans were repaid during 1997/98 had any effect whatsoever on Mr Gardiner's decision to invest. As I have found the facts, ss 1023B and 1024 of the Corporations Law have no part to play in this case and there is no breach of s 995 or s 996 that is relevant to the cross-claim." 100That paragraph deals specifically with one of the allegations of non-disclosure that Mr Wardle does not now seek to rely upon, namely an alleged non-disclosure that OAL had repaid certain non-current liabilities to a related company. Even so, Basten JA's conclusion is one of non-reliance that extends to the failure to disclose the ARF Funding Arrangements. 101Spigelman CJ at [138] also agreed with Basten JA's analysis of reliance concerning prospectus two. 102When the High Court granted special leave to appeal in the Gardiner Test Case, that leave was granted concerning only a limited number of grounds. The grounds of appeal that were permitted did not include anything relating to the misleading and deceptive conduct allegations, and in particular did not include anything relating to the prospectuses. PART B - THE SEPARATE TRIAL ORDER AND UNDERTAKINGS The Primary Judge's Construction of the Separate Trial Order and Undertakings 103In the Strike Out Judgment the primary judge accepted that consent orders should be construed in the light of any relevant surrounding circumstances: Kirkpatrick v Kotis [2004] NSWSC 1265; (2004) 62 NSWLR 567. He accepted, at [23], a submission of ARF that the undertakings and orders concerning the Gardiner Test Case are to be construed in the light of the following surrounding circumstances: "i. The proceedings involved claims against defendants all arising out of the same subject matter ii. The claim by the plaintiff in each case was the same, namely, the recovery of sums advanced on the loan agreements associated with the two projects; iii. The clear assumption was that in most cases the issues raised by the defences and cross-claims would be the same; iv. As a consequence a test case was likely to determine whether the defendants had any defence to the claim and if so, what their defence was; v. Due to the commonality of the defences a test case had the advantage of resolving most of the issues without the need to conduct 216 different cases; vi. A test case would be desirable if it bound the parties to the findings of the test case; vii. The 184 defendants represented by Clayton Utz were prepared to give undertakings to enable the test case to proceed." 104The Strike Out Judgment continued at [24]-[30]: "I further accept that it clearly was not in the contemplation of the parties that if issues were decided adversely to Mr Gardiner in the test case the remaining defendants who gave undertakings might avoid the consequences of such a judgment by relying upon defences in different terms to those in the test case. It was against that background that defendants gave the undertakings which were in these terms: 'I undertake to be bound by the findings of the Gardiner Test Case.' (emphasis added) It is clear from the introductory words to the judgment/order of 29 July 2005 and paragraph 1 (Green Tab 7) that the common questions in all of the cases, the subject of the undertakings, were those referred to in paragraphs (a) and (b) of the order namely, the issues raised by the claim against Mr Gardiner and the cross-claim. It is notable that paragraph 1 does not refer to the defence filed by Bruce Gardiner. The common issue under paragraph 1(a) was the claim by ARF, namely, that each of the defendants is liable under the loan agreements. It was clearly assumed that the defendants would file defences in the same terms as Mr Gardiner. This is was [sic] what occurred after Young J gave judgment on 29 March 2006. On a proper construction of the Orders of 29 July 2005, the 'common questions' and 'all issues arising from... the Gardiner Test Case' were all issues other than those identified in paragraphs 2, 3 and 4. Unless a defendant was able to come within the exception, or 'carve out', of paragraphs 2, 3 or 4 the outcome of the Test Case would determine the outcome of the claim against him, her or it." The Primary Judge's Decision on the Postal Rule Defence 105Some of the Appellants pleaded a defence that contended that they had punctually paid certain sums due under the relevant Loan Agreement because they had put a cheque for that sum into the post on or before the due date. The Appellants who raised such a defence were Mr Long, Mr Brakatselos, Mr Fredericksen, Mr Rowe, Ms Russo and Mrs Wallace. The particulars of that defence varied with the individual factual circumstances of individual defendants. 106Mr Epstein submits to us, and also submitted to the primary judge prior to the Strike Out Judgment, that there is a common law principle known as the "postal rule". He submits that under that rule if parties envisage the use of the postal services as a means of communication between them, then a communication from a party is ordinarily regarded as made at the time and place of posting and not at the time and place of receipt. He submits that the "postal acceptance rule" relating to contract formation is only one aspect of that rule. He submits that the rationale is that the post office is the agent of the recipient of the posted item (as well, perhaps, the agent of the sender), and that once an item is posted the sender is not free to recall it. In particular, he submits that the rule applies to the satisfaction of payment obligations, so that if a creditor asks a debtor to send a payment through the post, putting a letter containing the payment in the post is sufficient to amount to payment. He submits that in the present case those ongoing defendants who relied upon the "postal rule" should have been free to advance a case that they paid an amount that was due under the loan agreement punctually by a particular date if they put a letter containing a cheque for that amount into the post on or before that date. 107In the Strike Out Judgment the primary judge took the case of Ms Russo as a typical example. The basis upon which ARF contended that she had not made all payments punctually was that a payment of interest was due on 30 June 1998, but ARF did not receive by it until 1 July 1998. Ms Russo pleaded in her defence that she had made that payment punctually. The particulars were: "... in its letter of 18 June 1998 ARF invited the defendant to make her payment of $2,696 by posting a cheque to ARF at PO Box 779, Port Macquarie NSW 2444 and the cheque was posted by the due date." 108The letter of 18 June 1998 referred to in that pleading was: "Pursuant to your Loan Agreement relating to your investment in the above project interest for the year ending 30 June 1999 is due and payable in advance on or before 30 June 1998. Details of the payment due is as follows: No. Farms two (2) Amount per Farm $1,348.00 Total Due $2,696.00 Would you please remit your payment by either: 1) Posting your cheque to Agricultural & Rural Finance Pty Ltd PO Box 779, PORT MACQUARIE NSW 2444 OR 2) Depositing the amount due to the following bank account: Account Name: Agricultural & Rural Finance Pty Ltd Bank: ANZ Bank, Wauchope NSW BSB: [XXX XXX] Account Number: [XXXX XXXXX] And then faxing a copy of the deposit slip to 02 6585 2264." 109In the Gardiner Test Case, Mr Gardiner had not pleaded a "postal rule" defence. Some of his payments were received by ARF so long after the due date that it is highly unlikely that they were posted on or before the due date. 110The reasons that the primary judge gave in the Strike Out Judgment for not permitting the "postal rule" defences included (at [70]-[73]): "The active defendants have contended that importance lies in the fact that Mr Gardiner did not plead the postal rule defence. That however misses the point. It was determined against him that time is of the essence of the loan agreements in the Court of Appeal (Spigelman CJ dissenting) and in the High Court (unanimously) (first finding). Furthermore, the High Court (upholding Handley JA in dissent) held that the due date for payment cannot be postponed unless there is a variation of the loan agreement supported by consideration or an estoppel based on detrimental reliance on conduct by ARF prior to the due date (second finding). I accept that to permit the defendants to now plead a common law rule that allegedly treats posting of a cheque as performance of an obligation to pay by the due date involves a collateral attack on these two findings. It also involves a breach of the undertaking to be bound by these two findings." 111After observing that Ms Russo's defence presupposed that the cheque was not received by ARF on or before the due date, but was posted on or prior to the due date, the judge continued (at [76]-[80]): "The 'postal rule' is concerned with determining who bears the risk of a cheque lost in transit. It is not a rule about deemed time of payment for the purposes of a loan contract which makes time of the essence. It will be observed that in pleading the postal rule at paragraph 25, Ms Russo does not allege any variation of the terms of the Loan Agreement or any estoppel. The contention is that, by reason of her receipt of ARF's letter of 18 June 1998 inviting her to make her payment by posting a cheque to it, the mere act of posting the cheque amounted to payment under clauses 3.3(a) and 4.1 of the Loan Agreement. It is clear from the authorities in relation to the postal rule that it is a rule based upon agreement or contract. See, for example, Thairlwall v Great Northern Railway (1910) 2 KB 509 where, at 515, Bray J said in relation to the principle laid down in Norman v Ricketts: 'The principle there laid down is that the parties, debtor and creditor, can agree to make and accept payment of the debt in some form other than cash, and that when the creditor asks his debtor to send the amount due by post, then if the debtor sends a cheque for the amount by post the risk of loss in transit falls on the creditor, and the posting is equivalent to payment.' The letter of 18 June 1998 did not constitute a variation of the Loan Agreement. It is clear that the Loan Agreement was not being varied and that the Loan Agreement set out all of the obligations of the parties. The pleading of the postal rule is inconsistent with and contrary to the decision of the High Court: see especially at [32]-[39], [49], [63]-[67] (Red Tab 3). If the payment was received after the due date then the payment cannot be punctual." Construction of Separate Trial Order and Undertakings - Decision 112Even though the undertakings were, oddly, given by the various defendants to Clayton Utz, rather than to the Court, Mr Epstein accepts that it would be an abuse of process to go behind them. 113In my view, the primary judge has construed the consent orders and undertakings incorrectly. At both the time the order for separate trials was made, and at the time Young CJ in Eq redefined the separate question on the last day of the hearing, Mr Gardiner was the only defendant, of those represented by Clayton Utz, who had filed a defence or cross-claim. Thus, at the time those orders were made, and at the time the Clayton Utz defendants gave their undertakings, there was no firm basis for knowing what defences or cross-claims any defendant other than Mr Gardiner might file. Of the surrounding circumstances relevant to construction of the consent orders and undertakings that the primary judge identified ([104] above) there is no specific evidence that the "clear assumption was that in most cases the issues raised by the defences and cross-claims would be the same." Nor was there specific evidence that "a test case had the advantage of resolving most of the issues". From the nature of the claims made by ARF, the notional reasonable bystander would have realised that there was reason to believe that there may well be a significant overlap between the issues raised by Mr Gardiner's case and the issues raised by the defences and cross-claims that the numerous other defendants might eventually file. However, the notional reasonable bystander would also infer from the nature of the claims that ARF made, and the nature of Mr Gardiner's defence and cross-claim, that it was likely that some issues in Mr Gardiner's case would differ from issues in the case of another defendant. At the least, whether Mr Gardiner had relied upon the various representations that he pleaded in his estoppel case was likely to be unique to his case. Further, some of the representations upon which Mr Gardiner based his estoppel case were made only to those who attended the Ord Minnett seminar, and others were made in conversations between Mr Gardiner and Mr Lloyd. The inherent circumstances of marketing and administering a prescribed interest scheme are such that there would be the opportunity for investors other than Mr Gardiner to have conversations in different terms to those that Mr Gardiner had had, which might lead other investors to allege estoppel or some species of "waiver" that was different to the defences that Mr Gardiner relied on. 114The undertaking that the Clayton Utz defendants gave omitted the words "on common questions". However, it should be understood as having the same meaning as the undertaking that the two court orders of 19 March 2004 and 29 July 2005 stated that the separate trial order was subject to, namely that those defendants would be "bound on common questions by the findings of the Gardiner Test Case". That conclusion should be reached because the giving of those undertakings was clearly treated as fulfilment of the condition subject to which the court ordered the separate determination of Mr Gardiner's case, and all parties thereafter conducted themselves on that basis. 115At the time each of the separate trial orders was made, the pleadings in the Gardiner Test Case enabled one to identify what the questions in that case would be, at least at the level of issues, but it was impossible to identify what would be "common questions" between the Gardiner Test Case and the case of any other defendant. As all relevant parties would know, prior to the making of the separate trial order, the court had tried to have the parties to the litigation agree on what were the common issues between Mr Gardiner's case and that of the other defendants, but that attempt had failed. In this context, the meaning of the undertaking that the parties gave was that the defendants other than Mr Gardiner who gave the undertaking would be bound by the findings of the Gardiner Test Case concerning what ever might ultimately turn out to be common questions between their respective cases and the case of Mr Gardiner. 116In the law of issue estoppel a distinction is drawn between findings on issues in the proceedings, and subsidiary or collateral findings made on the way to deciding an issue. As Dixon J said in Blair v Curran (1939) 62 CLR 464 at 532-3: "In the phraseology of Lord Shaw, 'a fact fundamental to the decision arrived at' in the former proceedings and 'the legal quality of the fact' must be taken as finally and conclusively established (Hoystead v Commissioner of Taxation (1926) AC 155). But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation." 117Similarly, Fullagar J in Brewer v Brewer (1953) 88 CLR 1 at 15 said: "Issue estoppel only applies to issues. There is no estoppel as to evidentiary facts found in the course of determining the affirmative or negative of an issue." 118Fairly clearly, the purpose of the separate trial order and undertakings was for the Gardiner Test Case to decide matters that were common to Mr Gardiner's litigation and the litigation of other defendants, insofar as there were such common matters. For that reason, the proper construction of the obligation "to be bound on common questions by the findings of the 'Gardiner Test Case'" extends not only to the outcome of common issues, but also to evidentiary findings concerning common factual questions made on the way to the determination of a common issue. Mr Epstein accepts that that is the correct construction (tp 9). 119Sometimes it is appropriate to talk of "findings" of a judge concerning factual matters, but "holdings" or "decisions" of the judge concerning questions of law. However, in light of the purpose of the separate trial order and undertakings, I do not think it would be appropriate to draw that distinction in the present case. In my view, "the findings of the 'Gardiner Test Case'" covers both evidentiary findings concerning common factual questions, and decisions on questions of law that are common to Mr Gardiner's case and the case of any particular defendant. 120In my view, the reasoning in [24]-[30] of the Strike Out Judgment ([105] above) is erroneous. If a defendant wished to raise by way of defence an issue that had not been decided in the Gardiner Test Case, the defendant was free to do so. The preferable view (though it is not critical to the outcome of this appeal) is that in litigating that different issue a defendant would not be free to disprove a factual finding relevant to the determination of that issue that had been made in the Gardiner Test Case. 121The primary judge's attempt to identify the "common questions" by reference only to ARF's claim against Mr Gardiner, and Mr Gardiner's cross-claim against ARF, is mistaken. As a matter of ordinary language, there can only be a "common question" concerning matters that a court is required to decide. In a context, like the present case, where there were the equivalent of pleadings, the matters that the court is required to decide only emerges from the process of pleading and particularisation. 122It is an inherently unlikely construction of the words of the undertaking that the court required that all the defendants would be bound to submit to judgment if Mr Gardiner was held liable to ARF. Indeed, the notion of "Mr Gardiner being held liable to ARF" is itself inapt - Mr Gardiner was being sued concerning four different loans and, as ultimately happened, there was no basis for believing that the outcome of ARF's claim against Mr Gardiner would be the same concerning all four loans. Further, even if Mr Gardiner were to be ultimately held liable concerning all his loans, it was perfectly possible, as at the date the separate trial orders were made, that he would be held liable because of some peculiarity of the factual situation he was in, to which some or all other defendants were not subject. Indeed, this is ultimately what happened. Mr Gardiner was found liable concerning three of his four loans because he did not make all payments punctually, but there were sixty-six defendants later held to be not liable because they had made all their payments punctually. 123Conversely, it is an inherently unlikely construction of the words of the undertaking that the court required that ARF would be bound to permit judgment to be entered for all the defendants if Mr Gardiner was ultimately found not to be liable. Mr Gardiner disputed his liability to ARF on numerous different bases. At the time the orders were made, there was no basis for there being any common understanding that all of those bases would be open to all of the defendants. If it were to ultimately transpire that Mr Gardiner escaped liability concerning all his loans by reason of some conversation that he alone had had with Mr Lloyd, it could not reasonably be expected that Mr Gardiner's success on that basis would avail a defendant who had never talked to Mr Lloyd. 124The separate trial order made by Young CJ in Eq identified, in paras [ii], [iii] and [iv], some matters concerning which a defendant would be free to contend that his or her situation was different to that of Mr Gardiner. However, there is nothing in the terms of that order to suggest that it was agreed that those "carve outs" were exclusive. 125These errors that the primary judge made in construction of the undertakings affected the whole of the Strike Out Judgment. They require this Court to consider for itself whether the outcomes of the Strike Out Judgment are correct. The Strike Out Judgment Concerning the "Postal Rule" 126There is a further specific error, though related to the ones already identified, in the primary judge's reasons for not permitting the "postal rule" defences. It is in the last three of the paragraphs that I have quoted at [111] above. It is correct to say that the decision of the High Court in the Gardiner Test Case held that as a matter of construction of the Loan Agreement and the Indemnity Agreement the indemnity was effective only if each payment was made strictly on time. Their Honours also recognised that there could be reasons why this term of the contract would not ultimately govern the legal relations of the parties. They did not purport to state those reasons exhaustively. They specifically recognised that a valid variation of contract might provide such a reason, and that an estoppel might provide a reason. 127Their Honours also held that there was no election by ARF against recovering the Principal Sum. They arrived at that decision because on the application of principles concerning election to the facts of Mr Gardiner's case, ARF had chosen not to accelerate payment of the Principal Sum by reason of the payments being late, and to that extent had made an election. However, it had made no choice between inconsistent rights insofar as any question of whether Mr Gardiner was in breach of his obligation to pay punctually was concerned. That finding of the High Court is not inconsistent with ARF, in a different factual situation concerning a different borrower, having made an election not to assert any right it had against a borrower arising from that borrower's breach of a provision of the lending agreement. 128Their Honours also held that OAL had, in Mr Gardiner's case, not made any election because it had no inconsistent rights arising from Mr Gardiner's failure to pay punctually between which it could be required to choose. As the indemnity agreements concerning all the borrowers were in standard form, that finding would apply equally concerning any borrower. However, it was a peculiarity of Mr Gardiner's pleading, to which the plurality in the High Court drew specific attention, that the "waiver" on which he relied was a waiver by both ARF and OAL. Thus, their Honours did not need to consider the situation of a borrower who alleged that there was an election by ARF alone, and that that election was sufficient to disentitle ARF to recover from him or her. The plurality's discussion of abandonment or renunciation at [88]-[93] was tied to particular conduct that Mr Gardiner relied upon. It does not decide that in no conceivable circumstances could a borrower succeed by alleging an abandonment or renunciation of a right on the part of ARF or OAL. 129Contrary to the primary judge's statement at [71] ([111] above), a contention that, by reason of the "postal rule" a defendant had paid a debt at the time of putting a cheque for that debt into the post is not a contention that the due date for payment of the debt has been "postponed". Rather, it is a contention about what, in the circumstances of the particular contract and payment, counts as payment of the debt in question. It is by reference to the time at which the act that counts as payment is performed that one decides whether there has been "punctual payment". For a defendant to contend that he or she has paid a debt on time by reason of the "postal rule", does not involved a "collateral attack" on the High Court's decision that, on the true construction of the agreements, exact promptitude in payment was required. Rather, it is an argument about what counts as "payment". To put this another way, if as a matter of correct analysis putting a cheque in the mail is "payment" of the debt, that does not mean that the due date for payment has been "postponed". Rather, it is a contention that, in the context of that particular contract and payment, the due date for payment is the date of putting the cheque in the post. 130These provide additional reasons why the judge's reasons for striking out the "postal rule" defences are erroneous. PART C - THE POSTAL RULE 131Mr Epstein's submission about the "postal rule" and the factual basis for the judge's decision are identified at [107]-[109] above. I will now consider whether the judge's decision to strike out the postal rule defences was right in its result. I have concluded that it was. 132I am not persuaded that there is a general "postal rule" of the type that Mr Epstein submits. He gives various examples from areas of the law outside the familiar postal acceptance rule in the law of contract in support of his submission that such a rule exists. However in my view they can all be explained without needing to find that there is an overarching "postal rule". I turn to consider the specific cases upon which Mr Epstein relied, and some additional ones that cast light on the topics dealt with by the cases he relied on. The Relevant Cases Contract Formation 133It is hard to find a convincing explanation for the posting of an acceptance sometimes being a sufficient acceptance of an offer, beyond the urgent practical necessity of having some rule to decide by what act and at what time people who are negotiating for a contract, but are not in each other's presence, become bound. 134Indeed, the future existence of the postal acceptance rule itself might be in doubt. In Tallerman and Company Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93 at 111 Dixon CJ and Fullagar J said: "The general rule is that a contract is not completed until acceptance of an offer is actually communicated to the offeror, and a finding that a contract is completed by the posting of a letter of acceptance cannot be justified unless it is inferred that the offeror contemplated and intended that his offer might be accepted by the doing of that act ..." 135That statement requires something more precise than a contemplation that the postal services might be used as a medium of communication. For it to be "inferred that the offeror contemplated and intended that his offer might be accepted" by the posting of an acceptance there would need to be a basis in the terms or circumstances in which the parties were communicating from which such an intention could be inferred. The required inference is that it is the posting itself which is the acceptance, not just that the post might be the means by which an acceptance is communicated. For the statement of Dixon CJ and Fullagar J to be the law would accord with current views about it being the objective intention of the parties, ie what the bystander would infer was the mutual intention of the parties, which is of importance in contact formation. However, as Dixon CJ and Fullagar J recognised at 112, their statement of principle was not relevant to the outcome of the case before them, as the parties had agreed that it be conducted on a different basis. Until there is a case whose outcome depends on the present status of the postal acceptance rule it is safer to proceed on the basis that the law as stated in the English cases I shall shortly mention continues to be the law in Australia. 136In Adams v Lindsell (1818) 1 B & Ald 681; 106 ER 250 (a case, incidentally, in which the offer itself stated "receiving your answer in course of post") the Court at 683 used both practicality, and a blatant fiction, to justify their conclusion that the contract was complete upon the acceptance being posted: "If the defendants were not bound by their offer when accepted by the plaintiffs till the answer was received, then the plaintiffs ought not be bound till after they had received the notification that the defendants had received their answer and assented to it. And so it might go on ad infinitum. The defendants must be considered in law as making, during every instance of the time their letter was travelling, the same identical offer to the plaintiffs; and then the contract is completed by the acceptance of it by the latter." 137In Dunlop v Higgins (1848) 1 HLC 381; 9 ER 805 Lord Cottenham LC said at 348, 812 that the explanation for the contract arising in that case was that there was a usage of trade to accept a postal offer by post. That remark in its context may well have meant that the usage was one of the trade in which the parties were both participants, or perhaps a custom of merchants generally. Either way, a trade custom would provide a legitimate explanation for why the acceptance is complete upon posting. 138However, two years earlier in Potter v Sanders (1846) 6 Hare 1; 67 ER 1057 Sir James Wigram V-C had held that a contract for the sale of land arose when a letter accepting a written offer was put into the post. The decision was given without any explanation as to why that was so, and in circumstances where the parties were not in any way involved in a trade or business. 139In re Imperial Land Co of Marseilles (Harris' Case) (1872) LR 7 Ch App 587 similarly held that posting an acceptance brought about a contract even though it was not formed between merchants. Sir W James LJ at 592 put the power to accept by post as arising from "the ordinary usage of mankind in those matters". Sir G Mellish LJ at 593 put it on the basis that the offeror either directly or impliedly tells the offeree to send his answer by post. He also justified it by reference to the practical necessity of the acceptor having certainty about whether a contract was in existence or not. If it were a provision of the offer itself that provided the basis for the contract arising upon posting an acceptance that would be consistent with the objective theory of contract. However, logically the offer should convey more than that the offeree should send the answer by post - the offeror would need to expressly or impliedly tell the offeree to send the answer by post and that it would be treated as accepted upon posting. In In re Imperial Land Co of Marseilles (Wall's Case) (1872) LR 15 Eq Cas 18 at 21, Sir R Malins V-C justified the postal acceptance rule by reference to the offeror knowing that it was "the regular settled mode of conducting such business" to send the acceptance by post, and thus sending the offer by post involved an implied authority to accept by post. 140It is clear that if a letter accepting an offer is posted, a contract exists even if the letter never reaches the addressee: Household Insurance Co v Grant (1879) LR 4 ExD 216 at 219, 227. (The exasperated dissent of Bramwell LJ contains some plausible objections to this outcome, but has not prevailed). In Household Insurance Co at 228, Baggallay LJ said that it was not in every case in which an offer was accepted by post that a contract resulted, only in "cases in which by reason of general usage, or of the relations between the parties to any particular transactions, or of the terms in which the offer is made, the acceptance of such offer by a letter through the post is expressly or impliedly authorized." 141Some cases have held that putting an acceptance of an offer into the post constitutes a contract because the Post Office is the agent of both parties: In Re National Savings Bank Association (Hebb's Case) (1867) LR 4 Eq 9 at 12; Household Insurance Co at 221. However, that justification for the contract arising has been convincingly rejected. In Henthorn v Fraser [1892] 2 Ch 27, Lord Herschell (with whom Lindley LJ agreed) said at 33: "It strikes me as somewhat artificial to speak of the person to whom the offer is made as having the implied authority of the other party to send his acceptance by post. He needs no authority to transmit the acceptance through any particular channel; he may select what means he pleases, the Post Office no less than any other. The only effect of the supposed authority is to make the acceptance complete so soon as it is posted, and authority will obviously be implied only when the tribunal considers that it is a case in which this result ought to be reached. I should prefer to state the rule thus: Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted." 142That amounts to saying that there is a rule of law that posting counts as the acceptance of an offer in certain circumstances. The "agency" of the Post Office is not part of his Lordship's account. 143Kay LJ at 35-36 was more robust: "Dunlop v Higgins has been explained by saying that the Post Office was treated as the common agent of both contracting parties. That reason is not satisfactory. The Post Office are only carriers between them. They are agents to convey the communication, not to receive it. The communication is not made to the Post Office, but by their agency as carriers. The difference is between saying 'Tell my agent A, if you accept,' and 'Send your answer to me by A.' In the former case A is to be the intelligent recipient of the acceptance, in the latter he is only to convey the communication to the person making the offer which he may do by a letter, knowing nothing of its contents. The Post Office are only agents in the latter sense. All Dunlop v Higgins decided was, that the acceptor of the offer having properly posted his acceptance, was not responsible for the delay of the Post Office in delivering it; so that after receipt the said party could not rescind on the ground of that delay." 144As Dr Pannam put it, "the Post Office is no one's 'agent' but is a public institution under a public duty to carry the mails": CL Pannam "Postal Regulation 289 and Acceptance of an Offer by Post" (1960) 2 Melbourne University Law Review 388 at 393. See similarly RA Samek "A Reassessment of the Present Rule Relating to Postal Acceptance" (1961) 35 Australian Law Journal 38 at 39, Simon Gardner "Trashing with Trollope: A Deconstruction of the Postal Rules in Contract" (1992) 12 Oxford Journal of Legal Studies volume 12 170 at 173-175. 145There is widespread acceptance among commentators that it is hard to find an explanation for the postal acceptance rule, other than the pragmatic necessity of having a rule of some sort, and that rule being no worse than any alternative: Pannam, op cit; Gardner, op cit; Carter, Peden & Tolhurst, Contract Law in Australia, 5th ed (2007) LexisNexis Butterworths [3-35]; Chitty on Contracts, 30th ed (2008) Thompson Reuters, vol 1 [2-048] ("best explained as one of convenience"); Holwell Securities Ltd v Hughes [1973] 1 WLR 757 at 763-764 per Templeman J; Nunin Holdings Pty Ltd v Tullamarine Estates Pty Ltd [1994] 1 VR 74 at 81 per Hedigan J. The relevance of this for the present case is that if no more satisfactory explanation for the postal acceptance rule is available than that a rule of some sort is needed to enable there to be certainty about when and how a contract may be formed by people communicating at a distance, that does not provide a very promising basis for arguing that there is a general rule of law whereby, if the parties envisaged that the post will be used, posting a document has the same effect as handing it to the intended recipient. 146Further, it is not as though, even concerning contract formation, there is a rule that in all circumstances when the parties envisage communication by post, putting a document into the post has the same effect as handing the document to the intended recipient. That is because for an offeror to withdraw the offer it is not enough to put the letter of withdrawal in the post - the withdrawal must actually be communicated to the offeree before it is effective: Henthorn v Fraser. 147Even if one accepts that there is a pragmatic justification for the postal acceptance rule, that does not mean that there is also a pragmatic justification for a "postal rule" concerning payment of a debt. The pragmatic circumstances that attend the payment of a debt by a debtor to a creditor who is not in the creditor's immediate vicinity are different to those that attend the entering of a contract between people who are not in each others' immediate presence. The contract is the start of a legal relationship between the parties, while payment of a debt is performance of an existing legal obligation. In particular, the debt already has a known date when it is due, while the contract does not exist until there is acceptance. The means that are available for payment of a debt are different to those that are available for entering a contract. It is always possible to pay a debt before its due date, but there is no analogous concept concerning entering a contract. Service Out of the Jurisdiction 148Comber v Leyland [1898] AC 524 concerned a rule of court that enabled service outside the jurisdiction of a writ alleging a breach within the jurisdiction of any contract, wherever made, which according to the terms of the jurisdiction must be performed within the jurisdiction. The contract in question was between an English banker and its Brazilian agent. The English banker had financed the export of goods to Brazil. It sent the bills of lading to the agent, with instructions to hold them and the property represented by them, and the net proceeds when realised in trust, with those proceeds to be remitted in first-class bank bills, within 30 days after arrival of the vessels at the Brazilian port. The writ alleged that the Brazilian agents had realised the goods, and not remitted the proceeds. 149The House of Lords held that the obligation to "remit" was performed by putting bank bills into the mail in Brazil. Thus there was no part of the contract of the agents that was to be performed within the jurisdiction of the British courts, and hence service out of the jurisdiction was not justified. 150Comber is purely a case concerning construction of the terms of the individual contract. The requirement to remit within 30 days after arrival of the vessels made clear that it was putting the bills into the mail that was performance of the contractual obligation. No general principle is stated in it concerning whether the posting of a communication that effects a legal act has the same effect (including in particular as to the time at which it is performed) as if that communication had been handed directly to its intended recipient. Nor can any such principle be derived from it. Equitable Assignment 151Alexander v Steinhardt, Walker & Co [1903] 2 KB 208 concerned a Chilean firm which owed money to the plaintiff, an English firm. The Chilean firm shipped copper ore to England. It sent the bill of lading relating to the ore to the defendants, another English firm, with instructions to pay a certain part of the proceeds to the plaintiff. It also wrote to the plaintiff, informing it of the instruction given to the defendant. Before that letter reached the plaintiff the Chilean firm became bankrupt. The Chilean administrator of the bankruptcy gave instructions to the defendant by telegram not to pay the plaintiff. 152Bigham J held that the plaintiff was entitled to be paid, because the Chilean firm had made an effective equitable assignment of part of the debt that would arise upon sale of the ore. He held that the assignment was complete at the time the Chilean firm posted its letter to the plaintiff. His reasoning was brief, and by analogy to what the situation would be if a draft at sight had been posted, but the result accords with Australian law. Under Australian law, an equitable assignment of part of a debt can be effected by a manifestation of an intention to assign: Norman v FCT (1963) 109 CLR 9 at 32; Shepherd v FCT (1965) 113 CLR 385, Meagher, Heydon & Leeming, Meagher Gummow & Lehane's Equity Doctrines & Remedies 4th ed (2002) LexisNexis Butterworths, [6-175], [6-180]. The writing and posting of the letter would count as such a manifestation of intention. The case does not assist in deciding when payment occurs, if a cheque is posted to pay a debt. Paying a debt takes more than a manifestation of intention. Notice of Dishonour of the Bill of Exchange 153Authorities before the enactment of the Bills of Exchange Act 1882 (Imp) held that regardless of whether it is actually delayed in the post, a notice of dishonour of a bill of exchange is adequately given if the notice is put into the post at a time such that, in the usual course of post, the addressee would receive it on the day following that on which the bill is dishonoured: Stocken v Collins (1841) 9 C & P 853; 173 ER 997, nonsuit refused Stocken v Collin (1841) 7 M & W 515; 151 ER 870; Woodcock v Houldsworth (1846) 16 M & W 124; 153 ER 1126. An important factor in the reasoning in those cases was that the person giving the notice had put it into the post promptly after dishonour, and thus done all that could be required of him to give notice of dishonour promptly. Necessarily, the notice would not be "of dishonour" unless it was given after the dishonour had occurred. 154It is no surprise that considerations of practicability, concerning what was in someone's power to do, loom large in the formulation of the law that governs everyday commercial dealings involving rights and obligations concerning a bill of exchange. But the factor that was important in the notice of dishonour cases, of doing all one can, is not present when considering payment of a debt by post. This is because it is quite practical for the debtor to put a cheque into the post well in advance of the time the debt is due for payment. It is also important that the issue in these cases about notice of dishonour was whether the notice had been given sufficiently quickly, not with the precise time at which it was given. 155Now, s 54 Bills of Exchange Act 1909 (Cth) provides specific rules that deal with the manner in which the post can be used in giving notice of dishonour of a bill of exchange. One such rule is s 54(o), which provides: "where a notice of dishonour is duly addressed and posted the sender is deemed to have given due notice of dishonour, notwithstanding any miscarriage by the post- office." That rule gives effect to the outcome in Stocken and Woodcock. 156In Eaglehill Ltd v J Needham Builders Ltd [1973] AC 992 Lord Cross of Chelsea (with whom Lords Reid, Diplock and Simon agreed) said at 1009 that the analogous English rule: "... affords no ground for the view that if there is no miscarriage and the notice is received in the ordinary course of post it is given when it is posted and not when it is received. Indeed, the word 'deemed' suggests the contrary." 157The time of giving a notice of dishonour was of critical importance in Eaglehill. This was because it had been predictable that the bill of exchange in question would not be met on presentation, the notice of dishonour had been prepared in advance, and by a clerical error was put into the post before the dishonour had actually occurred. However, the notice was not received until after the dishonour had occurred. It was held that the time of receipt of the notice was the time when the notice of dishonour was given, and thus adequate notice of dishonour had been given. 158When legislation governing bills of exchange envisages that notice of dishonour might be given by post, it is hard to see how that creates a different situation to that which arises if the parties to a contract envisage that a particular type of document might be sent by post. Yet Eaglehill provides a direct authority against the time of posting being the time at which a posted notice of dishonour is given. Payment of a Debt 159The law concerning payment of a debt by cheque is accurately summarised in Contract Law In Australia, op cit at [28-16]. The learned authors say that where a creditor accepts a cheque as payment of a debt: "... the consequences depend on the intention of the parties. There are two possibilities: the cheque may be accepted as conditional payment; or as a discharge of the debtor's obligations. In the former case the debtor will be discharged only if the bill is honoured on presentation, and, if it is not, the creditor has the choice of suing on the original contract or on the separate contract evidenced by the bill. On the other hand, if the intention was for the debtor to be treated as discharged under the contract, the creditor is restricted to an action on the bill of exchange. In the absence of indications to the contrary, payment will be presumed to be conditional on the bill of exchange being met." (footnotes omitted) 160Concerning the first situation, of a cheque operating as a conditional payment of a debt, Dixon CJ said in Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 at 532: "Prima facie when a cheque is taken for the price of goods, or for that matter in respect of any other debt contracted, it operates as conditional payment. The condition is that the cheque be paid on presentation: if it is dishonoured the debt upon the original consideration revives." 161Kitto J at 535-536, with whose reasons Menzies J at 537 agreed, made remarks to similar effect. 162In National Australia Bank Ltd v KDS Construction Services Pty Ltd (1987) 163 CLR 668, Mason CJ, Brennan, Deane, Dawson and Toohey JJ also made remarks to similar effect at 676, and continued: "The condition is a condition subsequent so that, if the cheque is met, it ranks as an actual payment from the time it was given. Subject to non-fulfilment of the condition subsequent, the payment is complete at the time when the cheque is accepted by the creditor: Thomson v Moyse [1961] AC 967 at 1004." See also Marreco v Richardson [1908] 2 KB 584 at 592; Hannaford v Smallacombe (1993) 69 P & CR 399 at 406. 163Concerning the second situation, of a cheque being accepted as a total discharge of a debt, Lord du Parcq in Tankexpress A/S v Compagnie Financière Belge Des Petroles SA [1949] AC 76 said at 103: "If a contract provides for payment in cash, the party to whom payment is due may accept in substitution payment by cheque. Instead of money, a creditor may be willing to accept meal or malt and he may be willing to postpone the date of performance of a contractual duty. No one would doubt this, I think, if a single payment were due under a contract. One who has plainly manifested his willingness to accept a substituted method of performance cannot, when payment is made in the accepted manner, take advantage of some provision in the contract which gives him a remedy in default of payment." See also Chitty op cit at [21-073], [21-074] and [21-077]. 164When a creditor accepts a cheque in payment of a debt it is a question of fact whether the cheque is accepted as a conditional payment or as a total discharge of the debt: Chitty op cit [21-073]; Byles on Bills of Exchange and Cheques 28th ed (2007) Sweet & Maxwell at [31-001]. However, the fact-finding on that question starts from the prima facie position identified in Tilley, that the cheque is accepted as a conditional payment. 165Cases concerning the payment of a debt by the posting of a cheque or bill of exchange need to be considered against the background of those principles concerning the payment of a debt by a cheque. 166In Warwicke v Noakes (1791) 1 Peake 98; 170 ER 93 a creditor gave a specific direction to his debtor to send him by post a bill of exchange in payment of a debt. The debtor was held to have been discharged when the bill was posted but was misappropriated in the course of the post and drawn against. The explanation was: "as the plaintiff ... directed the defendants to remit the whole money in this way, it was remitted at the peril of the plaintiff". 167The case is complicated, though, by the fact that the defendant had acted as an agent of the plaintiff to collect various debts that the plaintiff was owed in the defendant's neighbourhood, and the plaintiff's request was for the whole of the money collected, and the payment of the defendant's own debt, to be remitted by posting a bill. An agent would not be personally liable for losses that were sustained through the wrongdoing of others in carrying out a specific direction of his principal. No distinction seems to have been drawn between at whose risk the bill was posted, insofar as it comprised money that the defendant had collected as agent, and insofar as it comprised money in payment of the defendant's own debt. 168In Norman v Ricketts (1886) 3 TLR 182 Lord Esher MR (Lindley and Lopes LJJ concurring) said: "if a debtor had to pay his creditor money, as a general rule a debtor must come and pay his creditor. But if the creditor asked him to pay in a particular way, the debtor might do so. If he asked to pay through the post, the putting the letter in the post with the money was sufficient." He held that, where a debtor had been requested to pay by cheque sent by post, and the debtor duly posted a cheque which was stolen in transit and cashed by the thief, the debt had been paid. 169That case does not explicitly deal with the time at which a debt is paid if it is paid by posting a cheque. As well, being reported only in the summary form commonly used in the Times Law Reports, the reasoning might not be fully exposed. The entire report occupies less than one column of one page (divided into two columns) of the report. Subsequent cases that I discuss below have explained why the decision was made. 170Next in chronological sequence are three cases that held that posting a cheque is not payment of a debt. 171In Luttges v Sherwood (1895) 11 TLR 233 the plaintiff had sold goods to the defendant on credit. The defendant accepted a bill of exchange, and posted the accepted bill to the plaintiff, but it never arrived. The plaintiff sued for the price of the goods. The judge was not satisfied that the plaintiff had suggested that the bill be posted. Charles J, at 234 "was not satisfied that there was any express authority by the plaintiff to use the post for transmitting the bill, and he declined to treat the cases as binding him to hold that the post office was the plaintiff's agent to receive payment. He therefore gave judgment for the plaintiff ..." 172In Pennington v Crossley and Sons (Limited) (1897) 77 LT 43 a wool merchant in Bradford had sold wool to a carpet manufacturer in Leeds for about twenty years. The manufacturer always paid for the goods by a cheque that was posted, and accompanied by a blank form of receipt for signature by the merchant. Concerning the sale in question, the manufacturer followed the usual course, but the cheque was fraudulently cashed. The Court of Appeal gave judgment for the merchant in an action for the price. They distinguished Norman v Ricketts on the ground that in that case there was "what amounted to a request to send a cheque by post" while there was no such request in the case before them. They declined to infer any such request from the course of business. Lord Esher MR said, at 44: "The course of business was merely that the defendants sent cheques to the plaintiff by post, and the plaintiff never objected to being paid in that way. It would be outrageous for the court to infer from that that the plaintiff ever requested the defendants to send him cheques by post, and agreed to run the risk of loss in the transit." Lord Esher had given the judgment in Norman v Ricketts. 173Baker v Lipton (Limited) (1899) 15 TLR 435 concerned a man who applied for shares in the defendant, and sent a cheque with his application. He was not allotted the full amount for which he had applied, and the company posted him a cheque for the balance. The cheque was misappropriated and fraudulently cashed. Ridley J gave judgment for the man's executrix, in an action for the balance. He held that "where there was no request by the plaintiff that a cheque should be sent by post, ... the cheque was so sent at the risk of the sender. It did not constitute payment until the cheque was received." 174Thairlwall v Great Northern Railway Company [1910] 2 KB 509 contains a discussion of the justification for the decision in Norman v Ricketts. Thairlwall held that a company had no debt to its shareholder for a dividend when it had posted a dividend warrant (the equivalent of cheque) to the shareholder at his registered address, but that cheque had not arrived. Bray J put the decision on the basis that the shareholder had agreed that the act of posting of the cheque should be payment. Bray J explained Norman v Ricketts at 515 as depending upon the principle: "... that the parties, debtor and creditor, can agree to make and accept payment of the debt in some form other than cash, and that when the creditor asks his debtor to send the amount due by post, then if the debtor sends a cheque for the amount by post the risk of loss in transit falls on the creditor, and the posting is equivalent to payment. It is true that in the case of Norman v Ricketts the cheque sent had got into the hands of a third person and the money had been paid to that person. But I can find nothing in the report to shew that those facts entered into the consideration of the Court when giving their decision. The ground of their decision was that the creditor had agreed that the posting of the cheque should be payment, and that therefore it was payment." 175In other words, he regarded Norman v Ricketts as involving an agreement that the posting of the bill of exchange itself is accepted as a discharge of the debt. It is clear that that is the way he regarded Norman v Ricketts, because he went on to say: "The first question is whether there was any agreement by or obligation on the plaintiff to accept this dividend warrant as payment." 176The "agreement" that he found the shareholder had made was no ordinary contract. It arose from three facts. First, a proposal had been put to a general meeting that a dividend of a certain amount be paid by dividend warrant and sent by post to proprietors. Second, the meeting had passed a resolution approving the payment of the dividend without proposing any amendment to the way in which the directors said they intended to make the payment. Third, there was a provision in the legislation governing corporations that directors have the management and superintendence of the affairs of the company and power lawfully to exercise all the powers of the company. 177He found, at 517-518, that this agreement: "was equivalent to the request in Norman v Ricketts. After that the stockholders became entitled to payment in that way and in that way alone. Therefore, when the dividend warrants had been sent by post to the proprietors on February 15, the dividends were paid, and the stockholders had no further remedy, except upon the dividend warrants." 178Lord Coleridge J at 520 said that it would be sufficient if the company could: "prove a request by the plaintiff or agreement between the plaintiffs and defendants that payment should be made by means of a warrant posted to the plaintiff." 179Like Norman v Ricketts, Thairlwall is a decision about what is the mode by which payment could be made, not explicitly about the time at which it was made. However, if the consensus of the parties was that the posting of the cheque was itself unconditional payment, it would inevitably follow that the time of payment was the time of posting the cheque. 180One matter relevant to the outcome in Thairlwall is that it would only have been the resolution declaring the dividend that created a debt to the shareholder. That resolution (itself contractually binding between the shareholders and the company) in effect left it to the directors to decide by what means to pay it. The shareholder could have no higher right than was conferred by the resolution that had created the debt in the first place. 181Thairlwall is to be contrasted with a case that was decided in the previous month. In Acraman v South Australian Gas Company [1910] SALR 59 the South Australian Full Court upheld a claim for payment of a dividend, brought by a shareholder against the company in which he held shares. A cheque for the dividend had been posted to him, but gone astray. Way CJ reached his conclusion on the ground that the shareholder had neither requested nor consented that the dividend be paid by a posted cheque. That conclusion was reached notwithstanding that the shareholder had twice previously received dividends in that way, and that he had received a notice from the company informing him that it would post the dividend in question on a particular date. Way CJ said, at 66: "But these facts did not amount to a request or consent. All they established was that the company had twice taken the risk of sending dividend orders to the plaintiff through the post, that he had received the cash to which he was entitled on presenting them, and that he knew that the company proposed to take the same risk a third time." 182In D & J Fowler Limited v French [1914] SALR 254 a storekeeper posted a cheque in payment of an account to a supplier, but the cheque was stolen. When the storekeeper refused to supply another cheque, the supplier sued him for the price of the goods. The supplier succeeded. Gordon J stated the principle at 261 as being: "In order to make the posting of a cheque by A, a debtor, to B, his creditor, payment, A must prove that B authorized him to send the cheque by post, B thus impliedly agreeing to run the risk of the loss of the cheque in the post office." 183Murray J took the view that the outcome depended upon whether the creditor had become the holder of the cheque immediately upon its being posted. He said, at 267, that whether that is so: "depends upon whether there is evidence that the plaintiffs had agreed to the Post Office being treated as their agents for the purpose of receiving a cheque. They may be shewn to have so agreed by having requested that a cheque should be sent by post ... but consent or agreement, in this or some other form, express or implied, is necessary in every case ... It was argued for the defendant that a request or agreement can be implied from a previous course of dealing between the parties ... I do not doubt that there may be cases where such an inference may be drawn, but each case depends on its own circumstances. It is not enough merely to prove that the debtor has been in the habit, even over a course of years, of making payment by cheque forwarded through the post, and that the creditor has accepted the cheques when they arrived ... There must be evidence to justify the inference that the Post Office was accepted by the creditor as his agent from the moment the cheque was posted." (citations omitted) 184On the facts of the case, he declined to draw such an inference. Buchan, Temporary J at 269-270 reasoned to similar effect. The last sentence should, I think, be understood in the sense that it must be a justifiable inference that the creditor accepted that the act of posting was payment. 185In Mitchell-Henry v Norwich Union Life Insurance Society Ltd [1918] 1 KB 123 the defendant sent the plaintiff a letter reminding him that a particular amount would become due on May 15, asking that it be paid at a particular office, and saying, "please return this notice when remitting". The debt in question was £48. The defendant posted the amount, in cash, and by registered letter, but an employee of the defendant's landlord, who signed for the letter, stole the money. Bailhache J declined to make a declaration that the debt had been paid. He said, at 125: "By the ordinary law it is clear that a debtor must seek out his creditor and pay his debt at the creditor's house or place of business. Therefore it was prima facie the duty of the plaintiff to pay the defendants at their office. But this duty may sometimes be varied by a creditor intimating to his debtor that he is prepared to receive payment through the post, and in modern times payment of debts is more usually made in that way. It was decided by the Court of Appeal in Pennington v Crossley & Son [77 LT 43] that where there has been a practice between parties to make payments by cheques sent through the post, that fact is not of itself sufficient evidence from which can be inferred a request by the creditor for payments to be made in that way. There must be a request, either express or implied, but very little evidence beyond a course of dealing is evidence of an implied request:" 186He went on to say, at 126 "the use of the word 'remitting' is sufficient evidence of a request by the defendants to the plaintiff to make the payment through the post", but that the remittance "must be made in the ordinary way in which sums of money are remitted through the post", and sending as large a sum as £48 in cash through the post was outside that ordinary course. The decision was affirmed on appeal, without departing from the reasoning in the court below: Mitchell-Henry v Norwich Union Life Insurance Society Ltd [1918] 2 KB 67. Again, this case concerns whether a debt has been paid when payment is sent through the post, not when it is paid. 187Tankexpress, mentioned at [164] above) was a case in which the time of a payment made by cheque was critical. It concerned a time charterparty under which Norwegian shipowners made their ship available to a Belgian company. Clause 11 of the charterparty required payment of the hire to be "in cash, monthly, in advance, in London" and conferred an express right of withdrawal if such payment was not made. The hire fell due on the 27th of each month. A cheque for the hire that was due on 27 September 1939 was dispatched from Brussels on 25 September, addressed to Hambros Bank of London, but did not arrive until 3 October. The House of Lords held that the shipowner was not entitled to withdraw the ship. 188The case in the House of Lord proceeded by reference to the findings of an arbitrator. One of those findings was (81): "The accepted method between the parties, during the currency of the charter, with regard to the payment of hire had been for the charterers to make the payment of hire in London at the office of Hambro's Bank, Ld by sending a cheque in favour of Hambro's Bank, Ld (drawn on the Italo-Belgian Bank, Ld of London) to be placed by them to the credit of the owners with the Kristiana Folkebank, Oslo, and the payment of hire had been regularly and properly paid in this way during the currency of the charter and had always been paid on its due date until this payment of the hire due on September 27." 189Until the disputed payment, that way of proceeding had always resulted in the cheque for the hire arriving in London by the due date, but in September 1939 the outbreak of war delayed it. As Lord du Parcq said at 104, there was no finding, and nothing to suggest, that the charterers had any reason to expect that there would be an unusual delay in transmission. 190All their Lordships took the view that, as a matter of construction of the charter party, strict punctuality of payment was required: 91, 94, 100, 102. 191Lord Porter took the arbitrator's finding that the hire "had always been paid on its due date" to mean that the cheque had always been received in London on the 27th of each month (92). He said, at 93: "the true inference to be drawn is that the method of performance of the contract was varied by an arrangement for payment to Hambro's Bank by cheque posted at such time as would in the ordinary course of post reach London on the twenty-seventh of the month. 'Regularly and properly' are the words used by the arbitrator, and 'properly,' I think, means in accordance with the accepted practice. No doubt the appellants could at any time have insisted upon a strict performance of the contract after due notice, but they were not, in my view, entitled suddenly to vary the accepted method of performance without first notifying the respondents in time to enable them to perform the contract in strict conformity with the terms of the charterparty. I think, therefore, that payment was duly made in accordance with the practice adopted and accepted between the parties and in the way and at the time stipulated." 192Lord Wright at 95 regarded the procedure "accepted between the parties" as necessary to fill a gap in the express terms of the contract. He said, at 97, that the arbitrator's finding was "that the allowance of a two days course of post was inter alia the correct procedure under the contract. The trouble was the failure in the course of post", and that "the effect of the method was simply to put on the shipowners the inconvenience of any delay in the course of post". He gave an alternative justification at 98: "While the shipowners ... were entitled to insist for the future months of the charter on something which might be regarded as a more correct fulfilment of the terms of cl 11, they could only do so on giving reasonable notice of their intention and could not cancel until the notice had operated." 193Lord Uthwatt at 100-101 said: "So long as the arrangement stood, it represented an agreed method of working out the obligation as to payment imposed by the charterparty, as distinct from an agreement to vary its terms. So long as it stood, the shipowners could not demand, nor the charterers insist on making, payment otherwise than in accordance with the terms of the arrangement." 194He construed the arbitrator's finding as meaning that "sending" was satisfied by the dispatch of the cheque, and did not require its receipt. (Lord du Parcq said the same at 105.) Lord Uthwatt also said, at 101 that: "the shipowners were (subject to the cheque being duly honoured) bound to accept that cheque so sent and so received as representing by virtue of the working arrangement the payment due to be made on September 27." 195Lord du Parcq (with whom Lord Morton of Henryton agreed on these points) said at 103: "the parties had, not indeed varied the contract, but adopted for the time being a substituted mode of performance of the contract which was acceptable to, and accepted by, each of them. ... It is true that in the present case your Lordships are concerned not with a single payment but with payments which fell due monthly over a long period, but I think it can hardly be disputed that, where periodical payments have to be made, a substituted method of payment which has been 'accepted between the parties' from the beginning must be regarded as fully satisfying the requirements of the contract until timely notice is given by one or other of the parties that he withdraws his acceptance of it. That such notice might be given effectively I do not doubt." 196In the present case, unlike the situation in Tankexpress, there was no established course of dealing under which dispatch of a cheque a particular number of days before the due date was accepted on both sides as an adequate mode of performance of the obligation to pay punctually. The decision in Tankexpress is a variant of the second of the ways in which a cheque operates to pay a debt discussed at [160]-[164] above. The finding of the arbitrator was to the effect that it was not the handing over of a cheque that was accepted as discharge of the debt, but that in accordance with the arrangement between the parties the posting of the cheque in sufficient time to arrive on time in the ordinary course of post was itself discharge of the debt. 197Beevers v Mason (1978) 37 P & CR 452 is a decision of the English Court of Appeal that turns precisely on when a debt has been paid when the payment is made by posting a cheque. The appellant was the tenant of some agricultural land. He usually paid his rent by cheque through the post, and was invariably late. The agent of his landlord wrote requesting that "in future the rents ... should be paid direct to me at my Goole office." After the tenant was once again late, the landlord's agent sent a statutory notice requiring the tenant to pay the rent within two months from the service of the notice on him. On the last day of that two-month period the tenant put a cheque in the post addressed to the landlord (not the agent), that the landlord received some two days after expiry of the two-month period. The appeal proceeded on the basis that the cheque was then presented and paid (458). Shaw LJ, delivering the judgment of the Court, held that the payment had been made on time. He said at 458-459: "On general principles, the landlord should have the rent in cash in his hands by the due date. This requirement may, however, be waived by express arrangement, or by necessary implication where the facts are sufficiently strong to establish that the landlord has shown that he is content to accept payment by cheque posted by the due date of payment. Inferences of this nature are not to be too readily drawn, but, where the facts support them clearly and emphatically, they are not to be dismissed." The first two sentences of this passage were quoted and applied in the English Court of Appeal in Hannacombe v Smallacombe at 405. 198In Beevers, after quoting extensively from Tankexpress, Shaw LJ continued, at 460: "Where, over the years, the course of dealing has been such as to show that the sending of a cheque by post to the landlord was the accepted mode of payment, a request to send the cheque to the agent does no more than provide an alternative destination for the cheque. A payment direct to a creditor, other things being equal, can hardly be less effective in law than a payment made in the same way and in the same conditions to the [agent]. It might be otherwise if, for example, the creditor were out of England or his whereabouts were uncertain. Here, the cheque was sent to a known address and was delivered. If, in the circumstances, the post is properly to be regarded as the agent of both landlord and tenant with regard to the transmission of the rent (as was conceded for the respondents in the argument before us) it is irrelevant and immaterial that, despite the request referred to, the cheque was sent to the landlord direct. When the cheque was put in the post, then, subject only to its being honoured, the rent was paid." (emphasis added) 199That case is distinguishable from the present case. One reason is because of the concession made by counsel for the landlords (italicised above) about the post office being the agent of both parties. Another is because the long history of rent being paid by cheque, and late, provided the only possible basis for the factual finding that "the sending of a cheque by post to the landlord was the accepted mode of payment". Without those matters, the general principle quoted at [198] above would have led to the conclusion that the payment was late. 200An Australian first-instance decision that deals with this topic is the decision of McGregor J in the Australian Mutual Provident Society v Derham (1979) 25 ACTR 3. The plaintiffs had a life insurance policy issued by AMP. To obtain a payment of the surrender value they signed a form addressed to AMP that contained a direction for a cheque for the surrender value to be posted to a particular address. They signed that form when the space for the address was blank, and handed it to their agent for delivery to AMP. He fraudulently filled in an address that was not their address. AMP posted the cheque to the address on the form; the agent obtained it, and misappropriated it. The plaintiffs failed in an action against AMP to recover the surrender value. McGregor J at 9 accepted a principle that: "the posting of a cheque or other instrument, or of money which is lost before it reaches the creditor does not amount to payment, unless the creditor requested the debtor to pay in that manner, in which case he will be taken to have run the risk of its being lost." 201Weinberg J made mention of Norman v Ricketts and Thairlwell in Lindholdt v Merritt Madden Printing Pty Ltd [2002] FCA 260 at [51]. However, it is apparent from [50] and [52] that the question of whether a payment was made at the time of posting a cheque was not fully argued before him, and His Honour did not come to a conclusion concerning it. Title to a Bill of Exchange 202Before reaching a conclusion about what can be drawn from these cases about payment of a debt by the posting of a cheque, it is appropriate to consider the related topic of the passing of title to a cheque or bill or exchange. 203It has been held that title to a bill of exchange would pass under English law if the bill was put into the post addressed to an intended holder, but as French law at the time permitted the person who had posted it to there was no delivery of the bill until the letter left the town at which it was posted: Ex parte Cote; in re Deveze (1873) LR 9 Ch App 27. 204Channon v English, Scottish & Australian Bank (1918) 18 SR (NSW) 30 arose when a debtor posted a cheque addressed to his creditor, because someone who said he was from the creditor's office telephoned and asked him to do so. The cheque was stolen and fraudulently cashed. The debtor sued his banker for negligence and conversion in cashing the cheque. The outcome turned on whether the plaintiff had title to the cheque at the time of its conversion. Pring J (with whom Sly J agreed on this point) held at 33 that because the authority of the telephoner to act for the creditor was not established "the post was the messenger of the plaintiff only", and thus the debtor retains title to the cheque until it came into the hands of the creditor. Similarly, Ferguson J at 37 said: "if [the creditor] did ask the plaintiff to post the cheque, he made the post office his agents to receive it, and delivery to the post office was delivery to him. If the plaintiff posted it without any such request, express or implied, the post office was his agent, and the cheque remained his property until delivery to [the creditor]." 205In Kendall v London Bank of Australia Ltd (1918) 18 SR (NSW) 394 the plaintiff had received an assessment of New South Wales income-tax. It stated that payment could be made at the Taxation Office or remitted to the Commissioners of Taxation by draft or by cheque crossed and marked "Commissioners of Taxation - not negotiable". He wrote a cheque payable to "50 or Bearer", crossed it with two parallel transverse lines (but no words), and posted it. The cheque came into the hands of a fraudster, on whose behalf the defendant bank collected it. The plaintiff succeeded in an action against the defendant for conversion. One issue was whether the plaintiff retained title to the cheque. Cullen CJ said, at 404: "If [the] terms of the Commissioners' notification had been observed, there would be authority for saying that as soon as the letter containing the cheque was put in the post any risk of loss would be on the Commissioners, and not on the taxpayer: Norman v Ricketts (3 TLR 182). As it was, the risk remained with Kendall, the drawer of the cheque. Assuming, however, that this cheque reached the office of the Commissioners in due course of post there was nothing binding on the Commissioners to accept it as payment." 206Sly J said, at 409: "... as [the] plaintiff had not complied with the directions of the Commissioners in sending cheques, the post office was not the agent of the Commissioners in this case. And although the cheque may have been received in the office of the Commissioners (I do not say that it was so received) the Commissioners themselves never received the cheque or payment of it." 207Ferguson J dissented as to the result, because he took the view that the defendant had acted without negligence, but agreed that the plaintiff had title to the cheque. He said, at 412: "The post office was not the agent of the Commissioners to receive cheques unless they were drawn in accordance with this direction. It was the agent of the plaintiff so far as this cheque was concerned, and the property in the cheque remained in him until it had been received and accepted by the Commissioners, or by some person authorised to accept on their behalf. There is no evidence of any act of acceptance, so the plaintiff continued to be the owner of the cheque ..." 208An appeal to the High Court failed: Kendall v London Bank of Australia Ltd (1920) 28 CLR 401. The reasons of Isaacs and Rich JJ for holding that the plaintiff had title were, at 409: "Had that direction been followed, the cheque would have been at the risk of the Commissioners so far as the respondent is concerned, and probably would never have gone astray. But the cheque never reached the Commissioners' hands, and was never accepted by them. Not having been sent in the form directed, the sending of the cheque was a mere offer of the cheque by Kendall to the Commissioners, which, until accepted, remained his." 209It should be observed that these reasons do not depend on the notion of agency that Sly and Ferguson JJ had invoked. Further, they stress the need for the cheque to be accepted by the creditor. It is the reasons of the High Court, not the reasons of the judges in the NSW Full Court, which are the binding precedent: Mid-City Skin Cancer & Laser Centre Pty Ltd v Zahedi-Anarak [2006] NSWSC 844; (2006) 67 NSWLR 569 at [300]-[327] and cases there cited; Andrews v Calori (1907) 38 SCR 588 at [24] (Supreme Court of Canada). (Some analogical support for that proposition also comes from how, when the decision of a court that held A, B and C is reversed because its finding of C was wrong, its finding of A and B does not constitute a binding precedent: Balabel v Air-India [1988] 1 Ch 317 at 325-326). Conclusions About the "Postal Rule" Conclusions About the Law Concerning the "Postal Rule" 210The question at issue in the different types of cases on which Mr Epstein relied is whether a legal act has been effectively performed by an action involving the posting of a letter or other document. I do not accept that there is a "postal rule" that applies indiscriminately to all sorts of legal transactions and says that if the parties envisage the use of the postal services as a means of communication between them, the posting of a letter or other document has the same legal effect as there would have been if the letter or other document had been handed to the intended recipient at the moment of its posting. The ineffectiveness of the mere posting of a withdrawal of an offer provides a counterexample. In Pennington it would be odd to say that the parties did not envisage the use of the post for payment, when they carried on their businesses in different cities and the manufacturer had paid bills by post for 20 years, but that was not enough to conclude that the manufacturer paid his bill by putting a cheque in the post. Similar remarks could be made about Acraman and D & J Fowler. In Eaglehill it would be hard to conclude that the parties did not envisage that the post might be used for sending a notice of dishonour, when that course was permitted by legislation, but the mere posting of the notice did not constitute the giving of notice. Further some of the cases relied upon as illustrating the "postal rule", Comber v Leyland and Alexander v Steinhardt Walker, can be explained on a different basis. Finally, the uncertainty of the basis on which the postal acceptance rule operates in the law of contract provides no encouragement for it to be extended to other areas. 211The submission that there is a broad common law "postal rule" is another example of the phenomenon that if one coins a name, people will assume that there really is something that is referred to by the name: cf J C Campbell, "Should the 'rule in Hastings-Bass' be followed in Australia? -- Trustees' duty to enquire and trustees' mistakes" (2011) 34 Australian Bar Review 259 at 259-260. 212This court is required to apply the law concerning payment of a debt by a cheque as it has been expounded in Tilley and in KDS Construction. A request to send a cheque by post in payment of a debt might be made in circumstances in which the court infers that the creditor was representing that posting of the cheque is to be a total discharge of the debt. If such a representation were acted on, it would displace the usual prima facie situation by which acceptance of a cheque operates as a conditional payment of the corresponding debt, from the date when the cheque is accepted. Alternatively a request to post a cheque might be made in circumstances where the court infers that the creditor was representing that no objection would be taken to the payment being made by cheque, but that the cheque was to have its usual prima facie role, once accepted, as a conditional payment of the cheque. It is always a question of fact which inference the court draws. 213In deciding which inference it would draw, a court would presumably bear in mind that it would be unusual if a mere request to send a cheque for the purpose of paying a debt disentitled the creditor from considering whether the particular cheque that was sent was one that it would accept, conditionally, in payment of the debt. For instance, if a cheque was made out to a payee whose name was spelt slightly differently to that of the creditor, or if it was a cheque that was drawn by someone other than the debtor and had been indorsed by the debtor to the creditor, or if the signature looked as though it might be incomplete, a mere request for the debtor to pay by cheque would ordinarily not disentitle the creditor from declining to accept the cheque in payment of the debt. It may be that if the debtor acted on the request to send a cheque, and no reasonable objection could be taken to the cheque that the debtor actually sent, the creditor could not decline to accept it on captious grounds or none. But it would be the time at which the creditor accepted the cheque that was the time of payment of the debt. 214Consistently with these principles, in Australian law Norman v Ricketts, Thairlwall, Tankexpress and Beevers v Mason are all to be explained as cases where the court concluded that the creditor had agreed that the act of posting the cheque would in itself be payment. A consequence of such an agreement would be that the immediate right to possession of the cheque passed to the creditor the moment the cheque was put into the post. That would put the creditor at the risk of loss if the cheque was misappropriated, and also give the creditor from that moment title to sue in conversion if the cheque was misappropriated. If the Post Office was the nominated messenger of the creditor (his agent in that limited sense) it is understandable that delivery of a cheque to the Post Office might count as delivery to the creditor, for the purpose of deciding who has an immediate right to possession of the cheque. However the nomination of the Post Office as messenger is not enough, in itself, to confer on the Post Office authority to receive payment of a debt on behalf of the creditor. And in any event, even when there is a consensus that posting a cheque will be payment of a debt, the Post Office does not become the agent of the creditor to receive the payment - it is just that the posting is the act that the parties accept as being payment. 215Insofar as one can tell from the short report, the finding in Norman v Ricketts that the parties intended posting of the cheque to be payment of the debt seems surprising. A debt was owing for goods supplied. The debtor and creditor lived in different parts of England. The creditor wrote to the debtor saying: "The favour of the cheque within a week will oblige". The debtor duly put a cheque into the post within a week. No other facts appear in the report that could lead to the conclusion that posting of the cheque amounted to payment. I would not have concluded that there was enough in those facts to displace the prima facie presumption that a cheque was intended to be a conditional payment of a debt upon acceptance. However, Lord Esher's decision really turns on a question of fact, so that it seems surprising is of no great consequence. In any event, it is not a precedent that binds me. 216If the creditor had not agreed that putting a cheque in the post would itself be payment Luttgers, Pennington, Baker, Acraman, and D & J Fowler show that the debt is not treated as discharged by the posting. As Channon and Kendall show, a cheque that is posted without a request by the creditor to do so, or in a different form to that which a creditor requested, remains the property of the drawer, and thus could not operate as payment of the debt. While I do not doubt the correctness of the result in AMP v Derham, the principle that McGregor J accepted is too dogmatic, in that it does not recognise the need for the court to decide the significance of the request to pay by cheque in the circumstances of the instant case. 217Many of the cases place significance on whether there has been a request by the creditor to send a cheque by post. It is understandable that the absence of a request by the creditor to send a cheque by post would be decisive that the posting was not itself payment of the debt - as was decided in Luttges, Pennington, and Baker. However the converse - that if there is a request to send a cheque by post, the posting is payment of the debt - does not follow. It depends on the terms of the request. If there is a clear request to pay the debt by posting a cheque, that might, depending on all the circumstances, displace the prima facie position that the debt is conditionally paid upon acceptance of the cheque. However, if the request is to send a cheque for the purpose of paying the debt, one could not from that piece of evidence alone draw the inference that it was the posting itself that was to be the payment. Application to the Facts 218The standard terms of the Loan Agreement contained a provision entitling a notice or demand to be served by posting it, and stating that service was deemed to have been effected a certain time after posting. However, there was no analogous provision that stipulated the way in which payments of principal and interest were permitted to be made, or deeming any situation concerning time of payment to arise. The Loan Agreement to which each Appellant was a party showed that ARF had an address in Port Macquarie, and the borrower had an address that was not in Port Macquarie. The relevant obligation to pay interest arose under clause 3.3(a) of the Loan Agreement, which so far as relevant said "the Borrower will pay to the Lender on or before 30th of June 1998 interest for 12 months in advance on the Principal Sum then outstanding". The relevant obligation to repay principal arose under clause 4.1, which said, "the Borrower will repay to the Lender the sum of $8,750 per Allotment in respect of the Principal Sum or before 31 October 1997...". 219Mr Epstein submits that the Loan Agreement, on its proper construction, would not require a borrower to pay in person, and in legal tender, at the address of the creditor, but rather would permit a payment to be made in a manner which reasonable people would regard as conformable with proper practice. He submits that sending a cheque by post is such a mode of paying a debt. 220Subject to a qualification, I would accept that that is the correct construction of the agreement. There are nineteenth century authorities that hold that there is proper tender of payment of a debt only if it is made in cash: Re Steam Stoker Co (1875) LR 19 Eq 416 at 421; Blumberg v Life Interests and Reversionary Securities Corp [1897] 1 Ch 171, appeal dismissed [1898] 1 Ch 27; Johnston v Boyes [1899] 2 Ch 73. Chitty on Contracts, op cit at [21-039], [21-086]. However, as Mitchell-Henry ([186] above) shows, even by 1918 payment by cheque was usual. More recently, in George v Cluning (1979) 28 ALR 57 Mason J (with whom Aickin J agreed) said at 62 that a person who receives a personal cheque: "without objecting to it on the ground that it did not constitute legal tender, must taken to have accepted the cheque as payment of the amount for which it was drawn. The practice of giving and accepting personal cheques in payment of debts and liabilities is now so widespread that there is a general expectation on the part of persons making payments that a personal cheque, given in payment of a debt or liability, will be accepted unless the payee objects before or at the time of receipt that the cheque does not constitute legal tender." 221He accepted, at 63, that the law was that: "a personal cheque, though not legal tender, was a sufficient payment if not objected to on that account." 222Barwick CJ at 59 said: "The agreement contemplated the transmission of money by post and it is more than unlikely that the parties contemplated the transmission of banknotes. Further, the cheque itself, unless the agreement is read as demanding legal tender, is conditional payment. When honoured it is payment as from the date of the receipt of the cheque. Of course, if it were not honoured, then no payment had been made. To construe an agreement such as the present and in modern times as requiring legal tender to effect payment, one would need, in my opinion, very precise indications to that effect. As I have mentioned, the possibility of payment by post points away rather than towards such a construction." 223Though those statements were dicta (as the case held that an option was adequately exercised by giving notice, and payment of the option fee was not a pre-requisite of exercise) I would accept them as stating the modern Australian law. The qualification I would make to Mr Epstein's submission is that, even though on the construction of the payment obligation in the Loan Agreement it is possible to pay by cheque, unless the creditor clearly indicates otherwise a payment made by cheque is still subject to the possibility that the cheque might not be accepted as payment. A consequence of this qualification is that, because the possibility exists of the cheque not being accepted as payment, the payment does not occur until the cheque has been received and the creditor has had the opportunity to decide whether to reject the cheque. 224The letter of 18 June 1998 sent to Ms Russo opened by reminding the borrower that the payment in question was due "on or before 30 June 1998". 225The request to remit the payment by either posting a cheque to ARF, or depositing the amount due in a particular bank account, would have the effect that, if a borrower adopted either of those modes of payment, ARF would not be able to complain that Ms Russo or her agent had failed to arrive at its office, bearing cash. The request to remit the payment by those particular modes is in substance a representation that a payment by either of those modes will suffice, and if a borrower acted on that representation (and, perhaps, if no proper objection could be taken to the cheque actually sent) ARF would be estopped from alleging that a permissible mode of performing the payment obligation had not been used. 226The precise request made by the letter was for Ms Russo to "remit the payment" by cheque or electronic funds transfer. That is not saying to "pay by" posting the cheque. The request means to send the payment by cheque or funds transfer. There is no representation in the letter that ARF would accept any time of payment, other than that required on a proper construction of the contract, as adequate performance of the contract. Nor is there a basis for concluding that ARF was representing that it would treat the act of posting the cheque as itself payment of the debt. Had there been such a representation the usual presumption that a cheque is intended to operate as a conditional payment upon acceptance may well have been displaced - but the representation is not there. If Ms Russo made a payment by either of the requested modes, that might even be analysed as giving rise to a contractual variation rather than an estoppel. Such a situation could be analysed (admittedly rather artificially) as an offer by ARF to accept the mode of performance as adequate, the offer being accepted by conduct, with the consideration being the act that is done at ARF's request. However, any such contractual variation could rise no higher than the terms of the representation about what the creditor would accept as a satisfactory mode of performance. 227I have earlier said that the judge's reasoning for striking out the postal rule defences ([127]-[130] above) should not be accepted. An additional reason is that his Honour's reasons mistakenly presuppose that there is such a thing as a "postal rule" in the common law, though in his view its scope is restricted to deciding who bears the risk of loss of a cheque in transit. Even concerning who bears the risk of loss of a cheque in transit, more is involved than whether a creditor requested that a cheque be posted. 228However, the primary judge came to the right conclusion about striking out those defences. When the case was argued before him on the basis of treating Ms Russo's defence as a fair sample of all the "postal rule defences" he was justified in proceeding by considering her defence alone. In any event, there is no ground of appeal contending that he erred in treating Ms Russo's defence as typical. Indeed, except in one respect, the appeal was also conducted by treating Ms Russo's defence as typical. The particulars to her defence, and the terms of the letter of 18 June 1998, provide no legal basis on which it could be concluded that she had paid her debt punctually. 229The exception just mentioned is that the submissions in reply of the Appellants referred to a letter that OAL sent to one of the Appellants, Mrs Wallace, dated 1 September 1999. Mrs Wallace lived in South Australia. The letter reminded her that she had a payment that fell due on 30 September 1999, and said: "Please send your cheque made out to:" ARF, and gave its post office box number in Port Macquarie. The letter concluded: "I have enclosed a stamped addressed enveloped [sic] for your convenience." 230While that letter does not give Mrs Wallace the alternative of making a payment by direct crediting of a bank account, it is still incapable of displacing the presumption that the cheque, once received and accepted by ARF, would operate as a conditional payment of the debt, effective from the date of acceptance. There is another reason why the fact that Mrs Wallace was not offered a choice of modes of paying does not make a relevant difference between her case and that of Ms Russo. It is that when a contract allows two alternative ways of performing the choice of which to take lies with the person who is to perform: Reed v The Kilburn Co-operative Society (1875) LR 10 QB 264; Head v Kelk (1963) 63 SR (NSW) 340 at 345-346 per Herron J (McClemens J agreeing). PART D - CONSEQUENCES OF DECISION ON "POSTAL RULE" DEFENCES Futile to Remit? 231Mr Hale submits that, even if the primary judge had incorrectly struck out the various "postal rule" defences, there would be no need to remit the case for further hearing because this Court could decide, on the basis of evidence already given and findings made in the Principal Judgment, that those defences were bound to fail on the merits. Even though on the view I take that question does not arise, I will deal with the submission. 232Mr Hale submits that there have been credit-based findings made against all six of the Appellants who seek to invoke the "postal rule" and that those findings cannot be reversed on appeal unless the primary judge is found to have misused his unique position (which is not suggested here): Abalos v Australian Postal Commission (1990) 171 CLR 167; Fox v Percy (2003) 214 CLR 118 at [20]-[31]. In light of my conclusion that the judge was right to strike out the "postal rule" defences, this question does not arise. However, I shall state my conclusions concerning it. 233An issue that the judge determined in the Principal Judgment was whether certain of the ongoing defendants had made relevant payments punctually. The Appellants in relation to whom the judge considered that question are Mr Brakatselos, Mr Fredericksen, Mr Long, Mr Rowe, Ms Russo, Ms Wallace, Mr Giannuzzi, and Mr Holmes. Mr Holmes' argument for why he had paid punctually is of a different character to the rest of these Appellants, and will be considered separately later, at [256] ff. 234In deciding whether those Appellants had paid punctually, the judge proceeded on the basis that it was each respective Appellant who bore the onus of proving that he or she had paid punctually. Mr Epstein says that the judge should not have proceeded on that basis. I will consider his argument on that topic later, at [241] ff. 235By virtue of having struck out the postal rule defences, the judge approached the question of whether payment had been made punctually by regarding the payment as made when it was received by ARF. ARF had a box at the Port Macquarie post office from which it regularly collected mail that was addressed to it at that post office box. The judge appears to have proceeded on the basis of assuming the correctness of a submission by the Appellants that payment was received by ARF when a posted cheque was placed in ARF's post office box ([148]). 236Ms Vanessa Edwards was a full-time employee of Gerard Cassegrain & Co from August 1997 until 21 June 1999. Thereafter she was an employee of OAL. In those employments she performed various clerical and secretarial tasks connected with the two projects. In particular, she maintained an Excel spreadsheet on which she recorded the dates on which the plaintiff received payments from borrowers. ARF contended that the date of receipt of each payment that was in dispute in the litigation was the date shown on the spreadsheet. The primary judge rejected an attack on the credit of Ms Edwards, and accepted the reliability of the spreadsheet. 237For the purpose of establishing the date on which each cheque in question had been received by ARF, those Appellants who contended that all their payments had been made punctually, gave evidence. Mr Brakatselos' evidence was that he sent a cheque to ARF by post on 27 May 1998. He produced a cheque butt dated 27 May 1998. He was cross-examined in relation to his recollection of writing the cheque, and the system that applied in his office for collection of outgoing mail. He was cross-examined about why he had not disputed a schedule that ARF sent to him on 16 July 1998 that showed the payment due on 31 May 1998 as having been received on 1 June 1998, or another similar, later, schedule. The judge's conclusion, at [202] was "ultimately, the evidence of Mr Brakatselos cannot be said to cast doubt upon the accuracy of the plaintiff's records." 238The issue to which the judge was directing attention was the date on which ARF had received Mr Brakatselos' cheque. While he recorded that "there were significant doubts raised about Mr Brakatselos' recollection" ([197]), he made no finding about when Mr Brakatselos posted the cheque in question. If the legal basis upon which the postal rule defence is put forward were correct, these findings do not have the effect that it would inevitably be found that Mr Brakatselos did not put the cheque into the post on or before 31 May 1998. 239The judge's findings concerning all the other Appellants who contend that, judged in accordance with the postal rule, they made punctual payment are similarly inconclusive on that question. I reject the submission that the findings in the Principal Judgment would have made it pointless to remit the matter had the legal basis on which the postal rule defence is put forward been open to the Appellants. Set Aside Findings of Lack of Punctual Payment Even If No "Postal Rule" Defence? 240Mr Epstein submits that even if the judge was right in striking out the "postal rule" defences, his findings in the Principal Judgment that the relevant defendants other than Mr Holmes had not paid punctually should be set aside. The judge approached the question of whether the payments were made on time by enquiring whether each Appellant had established that his or her payments were made on time. Mr Epstein submits that the judge should have approached the matter by enquiring whether ARF had established that the payments in question were not made on time. Was there a Finding in the Gardiner Test Case Concerning Onus? 241The first topic to consider concerning onus is whether the primary judge was right in holding, at [13] and [148] of the Principal Judgment, that there was a finding in the Gardiner Test Case, from which the Appellants could not depart, on the topic of who bore the onus of proof concerning punctuality or unpunctuality of payment. 242In the Gardiner Test Case at first instance, Young CJ in Eq dealt explicitly with where the onus lay concerning Clause 7 of the Loan Agreement. He said at [43] and [44]: "The plaintiff and OAL say that the plaintiff must succeed on the debt claim unless Mr Gardiner establishes that the indemnity applies. Mr Gardiner says that in this case, on the proper construction of the loan agreement the obligation of Mr Gardiner to repay imposed by clause 2.1 of the loan agreement was subject to clause 7 and clause 7 was an agreement that the borrower had no liability to repay if the indemnity was effective and enforceable. The argument is that this is virtually a condition precedent to the liability under clause 2.1: Vines v Djordjevitch (1955) 91 CLR 512 at 519-521 is cited. I find it hard to read clause 7 in that way. The word 'provided' which usually (but not always) is used in a document where there is a condition precedent, is not used. Rather, there appears to be a primary assumption of liability which is not to apply if certain things occur. To my mind the onus of proof is on Mr Gardiner. However, I do not consider that it is likely that this is going to affect the result of the litigation." 243At [52]-[53], Young CJ in Eq dealt with the related question of onus under Clause 2 of the Indemnity Agreement: "... the fact of punctual performance is one of the matters to be established before a right comes into existence or a right continues to exist. Under clause 2 of the indemnity agreement, all four matters must be established before the indemnity is valid and enforceable. Because of the failure to pay punctually, Mr Gardiner can only succeed on the large loan, TT131." (emphasis added) 244Mr Gardiner's Further Amended Notice of Appeal to the Court of Appeal contains no challenge to these statements concerning onus. 245In the Gardiner Test Case in the Court of Appeal neither Spigelman CJ nor Handley AJA made any explicit statement about on whom the onus of proving that payment had been made punctually, or that payment had not been made punctually, fell. However, Spigelman CJ at [65] and Handley AJA at [357] said that they would assume that the onus was on Mr Gardiner to prove that one of the events in clause 2(d) of the Indemnity Agreement had occurred. 246Even though the question of onus appears not to have been in dispute in the Court of Appeal, it was, with respect, appropriate for their Honours to take the step of making that assumption when they then proceeded to find that one of the conditions listed in Clause 2(d) had been satisfied. That is because, to find that one of the conditions listed in Clause 2(d) had been satisfied, they would need either to make findings that led to that conclusion, or else make assumptions that were favourable to the party who lost on that issue. They adopted the latter course so far as onus was concerned. Even though it is hard to see how there could be any difference between where the onus fell of proving facts relevant to Clause 2(d) and where the onus fell of proving facts relevant to Clause 2(a), one cannot infer that their Honours would have been willing to make any similar assumption concerning where onus fell concerning Clauses 2(a) and (b). 247Basten JA dealt with the question of where onus lay concerning Clause 7 of the Loan Agreement. At [199] and [214]-[217] he concluded that Mr Gardiner did not bear the onus of proof, but rather ARF needed to establish that a liability had arisen because the indemnity was not effective and enforceable. Basten JA recognised, at [214], that: "... if cl 7 provided a true exception or exemption from liability, the Appellant would bear the onus of establishing that he fell within the exception: see Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (1993) 40 NSWLR 206 at 226-228 (Sheller JA, Handley and Cripps JJA relevantly agreeing, and applying The Glendarroch [1894] P 226 at 231 (Lord Esher MR))." He took the view that clause 7 was better seen as a provision defining the scope of the obligation of the lender under the contract. However, as Basten JA was the only one who dealt with the topic in the Court of Appeal, there is no finding of the Court of Appeal concerning the onus of proof under Clause 7. 248When the Gardiner Test Case went to the High Court, Mr Gardiner filed an Amended Notice of Contention, clause 8 of which contended that on the proper construction of the Loan Agreement, ARF bore the onus of proving that the indemnity granted to Mr Gardiner, as Borrower under the Indemnity Agreement, was not effective and enforceable as a condition of establishing Mr Gardiner's liability as borrower under the Loan Agreement. That clause of the Notice of Contention was not the subject of any separate consideration in the judgments in the High Court. In the Principal Judgment in the present case the primary judge referred, at [13], to Mr Gardiner's contention concerning onus as being "by implication dismissed" in the High Court. In my view, that puts the matter too highly - the question was simply not dealt with, and it appears that there was no application after judgment for the High Court to deal with the onus point in the Notice of Contention. The plurality in the High Court, at [22], referred to clause 7 as one that "limited the Borrower's liability". That description of the clause does not bring with it any conclusion concerning onus, as a clause can limit liability by operating as an exception or exclusion to a liability otherwise established, or by being treated as part of the definition of the scope of liability. 249In these circumstances, I would conclude that Young CJ in Eq made a finding that a Borrower had the onus of proving that payments were made punctually. That finding was not departed from by a majority in the Court of Appeal, or by any judge in the High Court. In my view, the decision of Young CJ in Eq concerning onus was a "finding" within the meaning of the consent orders and undertaking, and the Appellants are not free to depart from it. However, against the possibility that I am wrong in taking that view, I shall also consider the question of onus for myself. Who Had the Onus Concerning Punctuality? 250For ARF to succeed in an action to recover a lent amount against a Borrower, it would in my view suffice if ARF established, either by proof or concession: * the entering of the Loan Agreement; * the making of the loan; * circumstances entitling ARF to exercise of the contractual power under Clause 5.1 to accelerate the time for repayment of the Principal Sum; * exercise of that contractual power, and * thereafter, failure of the Borrower to pay the Principal Sum. In my view, if, when those matters were established, a borrower wished to escape liability on the ground that Clause 7 of the Loan Agreement applied, it would have the onus of proving that "the indemnity granted under the Indemnity Agreement ... is effective and enforceable in accordance with clause 2 of the Indemnity Agreement." Clause 7 of the Loan Agreement is a matter of exculpation or exclusion. 251In Vines v Djordjevitch (1955) 91 CLR 512 at 519-520 Dixon CJ, McTiernan, Webb, Fullagar, and Kitto JJ said, concerning where the burden of proof lay when a statute created a right or obligation that was subject to a proviso or exception: "When an enactment is stating the grounds of some liability that it is imposing or the conditions giving rise to some right that it is creating, it is possible that in defining the elements forming the title to the right or the basis of the liability the provision may rely upon qualifications exceptions or provisos and it may employ negative as well as positive expressions. Yet it may be sufficiently clear that the whole amounts to a statement of the complete factual situation which must be found to exist before anybody obtains a right or incurs a liability under the provision. In other words it may embody the principle which the legislature seeks to apply generally. On the other hand it may be the purpose of the enactment to lay down some principle of liability which it means to apply generally and then to provide for some special grounds of excuse, justification or exculpation depending upon new or additional facts. In the same way where conditions of general application giving rise to a right are laid down, additional facts of a special nature may be made a ground for defeating or excluding the right. For such a purpose the use of a proviso is natural. But in whatever form the enactment is cast, if it expresses an exculpation, justification, excuse, ground of defeasance or exclusion which assumes the existence of the general or primary grounds from which the liability or right arises but denies the right or liability in a particular case by reason of additional or special facts, then it is evident that such an enactment supplies considerations of substance for placing the burden of proof on the party seeking to rely upon the additional or special matter." 252An analogous principle applies in deciding where the onus of proof lies concerning matters relevant to liability under a contract. In my view, in substance, Clause 7 of the Loan Agreement is an exception that states a basis upon which a liability that would otherwise arise does not apply. I recognise that Clause 2.1 of the Loan Agreement states that the obligation to pay the Principal Sum 17 years from the date of the agreement is subject to Clause 7, and that Clause 5.1 likewise makes the obligation to pay the Principal Sum subject Clause 7 if the payment date is accelerated. However that is not enough to decide that the onus of proof of lack of punctual payment falls on ARF. It is very common for an insurance policy to state that the insurer agrees, subject to the terms and conditions, to indemnify the insured against certain species of loss (eg McCann v Switzerland Insurance Australia (2000) 203 CLR 579 at [26].) A provision of that type has never been thought to place the onus that an insurer usually bears of showing that a loss falls within an exception: Wallaby Grip Limited v QBE Insurance (Australia) Ltd [2010] HCA 9; (2010) 240 CLR 444 at [25]. 253For these reasons, considering the matter afresh, I reach the conclusion that it is a Borrower who bears the onus, when sued by ARF on the Loan Agreement, to prove the applicability of the Indemnity Agreement. 254For these reasons, the primary judge made no error in deciding the Principal Judgment on the basis that each Appellant bore the onus of proving that he or she had made the payments in question punctually. PART E - DID MR HOLMES PAY ON TIME? Facts Concerning Mr Homes' Payment 255There was only one payment that Mr Holmes was obliged to make that ARF contended was not made punctually. That was a repayment of principal of $8,750, that was due for payment on or before 31 October 1997. 256The Excel spreadsheet that Ms Edwards maintained shows that that amount was paid on 24 October 1997. 257Mr Holmes obtained a Westpac Bank cheque dated 20 October 1997 for the amount of $8,750. It was payable to AP & AM Holmes or bearer. It was crossed "Not Negotiable". 258On the back of the cheque there came to be written "please pay into the account of Agricultural & Rural Finance Pty Ltd" followed by the signatures of Mr Holmes and Mrs Holmes. There were no other endorsements on the cheque. 259Ms Edwards received that cheque in Port Macquarie on 24 October 1997. She made arrangements for it, along with other payments that other borrowers had made, to be banked at ARF's bankers, the ANZ Bank. 260A few days later the ANZ Bank returned the cheque to ARF. Ms Edwards said this happened "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 Ms Edwards with a form. 261On 27 October 1997 ARF wrote to Mr Holmes, saying: "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 & AM Holmes and we are unable to deposit the funds 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 & AM Holmes)." 26227 October 1997 was a Monday. The judge accepted that the likelihood is that Mr Holmes received the letter by Thursday, 30 October 1997. 263On Monday, 3 November 1997 Mr Holmes faxed to ARF the completed form. The form was addressed to the Manager of the ANZ Bank at its Wauchope branch. Its substance was: "We A.P. Holmes & A.M. Holmes of [address] authorise that cheque number [XXXXXX XXXXXX XX XXXX] dated 20-10-97 for $8,750.00 drawn by Westpac Bank payable to AP & AM Holmes be deposited to the account of Agricultural and Rural Finance Pty Ltd " 264The form was dated 2 November 1997 (a Sunday), and signed by Mr and Mrs Holmes. Ms Edwards received a faxed version of signed form on 3 November 1997, and banked the cheque that day. Mr Holmes accepted in cross-examination that he could have faxed the form on the previous Friday, the day the money was due. 265After the cheque had cleared Ms Edwards wrote to Mr Holmes on 13 November 1997 saying: "Please accept this letter as confirmation that your cheque for $8,750 was received on 24 October 1997. This complies with the conditions of your loan agreement. Thank you for your prompt payment." 266ARF contended in the court below that the debt was not paid until the plaintiff was able to bank the cheque upon receipt of the signed authority on Monday 3 November 1997. 267The primary judge found that Mr Holmes had not made the payment promptly. He gave his reasons at [314]-[315] of the Principal Judgment: "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. 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." Mr Holmes' Payment - Decision 268In my view, the primary judge's decision concerning Mr Holmes' payment is incorrect. I have set out the principles concerning payment of a debt by a cheque at [160]-[165] above. ARF had the bank cheque in its possession from the moment it received the letter that contained the cheque. It had immediate rights to that cheque - for example, if a thief stole it, ARF would have had title to sue the thief for its conversion. The ANZ Bank was evidently unwilling to act as ARF's agent to collect the cheque without proof that ARF had title to the cheque. Even though it was a bearer cheque, the fact that it was crossed "Not Negotiable" meant that ARF would have a good title to the cheque only if it had acquired the cheque from someone who himself had a good title. As it happened, that was the case, but the ANZ Bank evidently wanted proof that that was the case before it would act as ARF's collecting bank. 269At no time did ARF reject the cheque or object to being paid by cheque. George v Cluning supports the conclusion that ARF accepted the cheque as payment, though conditionally. The entry made in the Excel spreadsheet, entering "24/10/97" in the "Date Paid" column is consistent with accepting it. Ms Edwards' letter of 13 November 1997 is also consistent with it having been accepted on 24 October 1997. From the very fact that it was a cheque, and that there was nothing to lead to the conclusion that ARF had accepted being given title to the piece of paper constituted by the cheque as a discharge of the debt, the proper inference is that it was accepted as payment subject to a condition subsequent that it was met upon presentation. Before that condition was satisfied, ARF imposed an additional condition upon its acceptance, namely that Mr Holmes arrange for the completion of the form from the ANZ Bank, and return it. 270Mr Hale submitted that ARF's letter of 27 October 1997 was not an acceptance of the cheque. I think that is right - the cheque had been accepted earlier (though conditional upon payment being met) when Ms Edwards made the entry relating to it in the Excel spreadsheet, and sought to deposit it in ARF's bank account. 271The first sentence of the letter of 27 October 1997 itself acknowledges that a "principal reduction payment" (emphasis added) has been received. That is an accurate statement. 272As both of the conditions upon which ARF accepted the cheque as payment were later met, the payment was made on the date that ARF received the letter containing the cheque. 273Mr Holmes is entitled to have judgment entered in his favour. PART F - STRIKING OUT MR WARDLE'S ESTOPPEL AND "WAIVER" DEFENCES 274This aspect of the appeal affects only the defences of Mr Wardle and Mr Giannuzzi. The defence of Mr Wardle was treated as being typical of the defences of both men. 275Mr Wardle was obliged to make a payment of principal in the amount of $245,000 on 30 October 1998. He paid it, but it was not received by ARF until 3 November 1998. He was obliged to pay another principal instalment of $98,000 on 30 September 1999. He paid that amount, but it was not received by ARF until 12 October 1999. Mr Wardle's Waiver and Estoppel Defences 276His Further Amended Defence, filed 24 March 2010, did not admit that those payments were not made punctually, but pleaded at [27] that, even if they had not been made punctually: "... the defendant says that during the period that such payments were made ARF and OAL had waived any strict compliance with the requirements to pay strictly in accordance with: (a) clauses 3.2 and 3.3(a) of the Loan Agreements; and (b) clause 4.1 of the Loan Agreements, as a basis for denying the effectiveness or enforceability of the Indemnity provided for in clause 1 of the Indemnity Agreement applicable to the defendant's investments, and therefore as a basis for denying that the defendant's obligation to repay the loan was to be performed by OAL and that ARF had no right of recourse against the defendant. Particulars (i) On 30 October 1998, the Defendant's accountant, Mr Gianuzzi spoke to Mr Steven Lloyd of OAL, in relation to the Defendant's principal repayment for Loan Agreement TT 125 and told him that the payment would be late. Mr Lloyd said that it would be 'ok'. The representation was not retracted or qualified by ARF and OAL at any material time after it was made. (ii) On 29 September 1999, Mr Gianuzzi spoke to Mr Lloyd, in relation to the Defendant's principal repayment for Loan Agreement TT 308 and told him that the payment would be late. Mr Lloyd said that it would be 'ok'. The representation was not retracted or qualified by ARF and OAL at any material time after it was made. (iii) ARF accepted the payments of principal from the defendant after the nominated due dates for payment under the Loan Agreements and did not assert that the whole of the Principal Sum under the Loan Agreements was due pursuant to clause 5.1 of the Loan Agreements. (iv) ARF accepted the payments of principal from the defendant after the nominated due dates for payment under the Loan Agreements and did not assert that default interest was due calculated in accordance with clause 5.1 of the Loan Agreements. (v) ARF accepted the payments from the defendant of principal under the Loan Agreements subsequent to the payment referred to in paragraph (a) and/or (b) above. (vi) The defendant reserves the right to provide further particulars after discovery and/or interrogatories." 277At [28]-[31] the pleading contended, on the basis of the same material as had been particularised in [27] that a conventional estoppel and an estoppel by representation arose. The pleading of the conventional estoppel was: "(a) at all material times the defendant adopted an assumption that strict compliance with the payment dates under the Loan Agreement executed by her/him was not essential to the continuation of the Indemnity provided by OAL under the Indemnity agreement, and therefore ARF's inability to require repayment of the loan by ARF from the defendant . (b) at all material times ARF and OAL adopted the same assumption. (c) each of the defendant, OAL and ARF have conventionally conducted their relationship until at least the cessation of business on the basis of the mutual assumption. Particulars The defendant repeats the particulars to paragraph 27. (d) If ARF was to depart from the assumption referred to in sub-paragraphs (a) and (b), the defendant would suffer detriment. Particulars The defendant would be exposed to ARF's claim for debt which he would not be exposed if the assumption was maintained. (e) If OAL was to depart from the assumption referred to in sub-paragraphs (a) and (b), the defendant would suffer detriment: Particulars The defendant would not be indemnified against ARF's claim for debt, which he would be indemnified against if the assumption was maintained. (f) In the circumstances, ARF is estopped from: (i) asserting that the Indemnity is not effective and enforceable merely because the defendant did not make a payment or payments under the Loan Agreement strictly on or before the due date; (ii) maintaining a claim for debt against the defendant on the basis that the Indemnity provided by OAL is not effective and enforceable merely for the reason identified in sub-paragraph (i) above. 20 In the circumstances, OAL is estopped from denying the effectiveness and enforceability of the Indemnity merely because the defendant did not make a payment or payments under the Loan Agreement strictly on or before the due date." 278The pleading of the estoppel by representation was: (a) The defendant assumed that strict compliance with the payment dates under the Loan Agreement executed by her/him was not essential to the continuation of the Indemnity provided by OAL under the Indemnity agreement, and therefore ARF's inability to require repayment of the loan by ARF from the defendant. (b) ARF and OAL induced the defendant to adopt the assumption. Particulars The defendant repeats the particulars to paragraph 27 above. (c) The defendant made payments to ARF in reliance upon the assumption. (d) Each of ARF and OAL knew that the defendant was making payments in reliance upon the assumption. (e) The defendant's action of making payment not strict compliance with the payment dates under the Loan Agreement executed by her/him will occasion detriment to him/her if the assumption is not fulfilled. Particulars The defendant would be exposed to ARF's claim for debt which he would not be exposed if the assumption was maintained. The defendant would be indemnified against ARF's claims by OAL under the Indemnity Agreement if the assumption was maintained. (f) ARF, is failing to avoid the detriment by initiating and prosecuting these proceedings. (g) OAL is failing to avoid the detriment by refusing to indemnify the defendant against ARF's claim. (h) In the circumstances, ARF is estopped from: (i) asserting that the Indemnity is not effective and enforceable merely because the defendant did not make a payment or payments under the Loan Agreement strictly on or before the due date; (ii) maintaining a claim for debt against the defendant on the basis that the Indemnity provided by OAL is not effective and enforceable merely for the reason identified in sub-paragraph (i) above. 31. In the circumstances, OAL is estopped from denying the effectiveness and enforceability of the Indemnity merely because the defendant did not make a payment or payments under the Loan Agreement strictly on or before the due date." 279As a result of the Strike Out Judgment, the whole of paras [27]-[31] of the Further Amended Defence were struck out. 280Paragraph [32] of Mr Wardle's defence contained an allegation of election, that the trial judge also stuck out. Mr Epstein does not contend that the judge was wrong in doing so. The Strike Out Judgment on Waiver and Estoppel 281After setting out the principles concerning construction of the separate trial order and undertakings, quoted at [105] above, his Honour went on at [31] to observe that: "As the plaintiff has contended a comparison of the Gardiner pleadings with the defence and cross claim of the Clayton Utz defendants establishes that the pleadings are almost identical. There are some minor differences in dates. Some defendants subscribed in relation to the first prospectus and others in relation to the second prospectus. Some subscribed in respect of both. There are some minor differences in relation to the particulars of events relied upon. Some defences rely upon representations by other defendants. As the plaintiff has contended this does not affect the substance of the defence which was that the plaintiff was estopped from asserting that the proper construction of the Indemnity Agreement was other than in accordance with the representation pleaded (at [26] and [30] in the Test Case." 282He then set out paragraphs [26]-[29] of Mr Gardiner's defence (paras [47]-[50] above). He summarised the differences between Mr Gardiner's defence and a previous defence of Mr Wardle, dated 30 June 2006. The bottom line of the comparison was that the defences were in substance identical, apart from some modifications to paragraphs [26] and [27]. Those modifications took account of the fact that it was Mr Wardle's accountant, Mr Gianuzzi, who attended the Ord Minnett investment seminar, and passed on to Mr Wardle the representations that Mr Lloyd made at that seminar. In particular, that version of Mr Wardle's defence contained an allegation of "waiver" in the same terms as paragraph 34A that was added to Mr Gardiner's defence on the final day of the hearing before Young CJ in Eq. 283That comparison seems to serve no purpose. That defence of Mr Wardle was filed after Young CJ in Eq had made the Separate Trial Order, and so could not bear upon the construction of that order. Mr Wardle's defence of 30 June 2006 differed from the Further Amended Defence that was Mr Wardle's last-filed defence at the time of the Strike Out Judgment. However, no later part of the Strike Out Judgment is based upon any aspect of Mr Wardle's defence of 30 June 2006, so this irrelevancy in the judgment does not provide a reason why any part of it might be mistaken. 284The judge recorded, at [38], a submission of Mr Epstein that Mr Gardiner: "... fundamentally failed because whatever characterisation ... whether waiver, election, estoppel, the fact was that he could only point to things which happened after he defaulted or which were [in]sufficiently [un]equivocal to constitute a variation of his obligation for future payments." (I have made, in square brackets, corrections that Mr Epstein and Mr Hale agree on.) 285The primary judge at [39] rejected that submission, for the following reasons: i. It is factually wrong. As Gardiner's defence [34A] shows (Green Tab 2), he relied on both pre- and post-due date conduct. The conduct relied on, as at 16 July 1998 and 27 October 1998 was pre-due date conduct as there was still time to pay punctually when it occurred. ii. The rationale for Gardiner failing is not limited to this temporal problem (that the breach by failing to pay by the due date had already occurred). It also related to lack of authority to bind ARF. Ms Edwards had no authority to bind it (none of the continuing defendants rely on conduct by her) (see Young CJ in Eq at [52] - Red Tab 1). Mr Lloyd had no authority to bind ARF as he never worked for it and was not one of its officers (Young CJ in Eq at [88] - red Tab 1) and there was no agency relationship between ARF and OAL (Young CJ in Eq at [80] - Red Tab 1). Also see Handley JA at [388] (Red Tab 2). iii. ARF had no power to alter the requirements of cl. 2 of the indemnity agreement without OAL's approval and OAL had no power to extend the due date for payment on behalf of ARF as it was not a party to the loan agreement (see High Court at [63]-[66] - Red Tab 3). iv. This explains why the High Court said that Gardiner failed even if he had proved all the factual allegations made in his defence [34A]: see High Court at [94] (Red Tab 3). v. Hence no variation in the individual circumstances of any other defendants will gainsay their defences to a failure to pay punctually. The mismatch between the parties and the absence of any obligation to pay punctually in the indemnity agreement means that all of their defences are doomed to fail if held to the High Court's interpretation of the loan and indemnity agreements (High Court [63]-[66] - Red Tab 3)." 286The primary judge considered the question of whether pleadings of estoppel, waiver and election should be struck out by reference to the defence of a defendant who has not participated in the present appeal, Mr Atkinson. Paragraph [27] of Mr Atkinson's defence contended that: "... ARF and OAL had waived any strict compliance with the requirements to pay strictly in accordance with: a. clauses 3.2 and 3.3(a) of the Loan Agreement; and b. clause 4.1 of the Loan Agreement, as a basis for denying the effectiveness or enforceability of the Indemnity provided for in clause 1 of the Indemnity Agreements applicable to the defendant's investments and therefore as a basis for denying that the defendant's obligation to repay the corresponding loan was to be performed by OAL and that ARF had no right of recourse against the defendant." 287The particulars of that allegation were: "i. ARF accepted payment of interest from the defendant after the nominated due date for payment under Loan Agreement TT 007, TT 077, TT 159 and TT 189 and did not assert that the whole of the Principal Sum under the Loan Agreement was due pursuant to clause 5.1 of the Loan Agreement: ii. ARF accepted payment of interest from the defendant after the nominated due date for payment under Loan Agreement TT 007, TT 077, TT 159 and TT 189 and did not assert that default interest was due calculated in accordance with clause 5.1 of the Loan Agreement: iii. Prior to any investment being made in Project 1 or Project 2 (and from time to time thereafter prior to the due dates for payment of principal or interest) by the defendant or any investors introduced by the defendant, Mr Stephen Lloyd on behalf of ARF and OAL advised the defendant, for his own benefit and for the benefit of such investors, that strict compliance with the payment dates for such principal and interest payments would not be required to ensure that the indemnity given by the OAL under the relevant Indemnity Agreements remained effective and enforceable." 288To understand (iii) of these particulars, it is relevant that Mr Atkinson had not only invested in the projects himself, but had also acted as an agent or broker to encourage other people to invest. 289Mr Atkinson's defence also contained in [28]-[29] a conventional estoppel allegation that was pleaded in identical terms to the conventional estoppel allegation of Mr Wardle, save only that the particulars of Mr Atkinson's conventional estoppel pleading referred to paragraph [27] of his own defence. Mr Atkinson's defence did not raise any estoppel by representation defence. 290At [49] the primary judge said that paragraphs [27]-[29] of Mr Atkinson's pleading was: "i. Directly contrary to the ratio of the majority decision in the High Court .... It contends that the plaintiff's acceptance or agreement to accept non-punctual payments somehow affects OAL's entitlements under the Indemnity Agreement. ii. Directly contrary to the finding of the Court of Appeal in that it pleads that Mr Lloyd was authorised to bind the plaintiff." 291The primary judged noted at [51] a submission by Mr Epstein that findings in the Gardiner Test Case about Mr Lloyd's authority related to the particular occasions when Mr Lloyd's authority was in issue in that case, and that those findings did not conclude the question of whether he was the agent of ARF for any purpose on any other occasion. 292After considering the findings that had been made in the Gardiner Test Case about Mr Lloyd's authority, the judge returned to the question of the consent orders, and held at [56]: "... by permitting the test case to go forward in a form which included evidence of the type referred to by Handley JA, in general terms all parties agreed to be bound by factual findings concerning the part played by Mr Lloyd in making sundry representations but not on behalf of ARF. The active defendants, notwithstanding that they may wish to now raise other aspects of Mr Lloyd's alleged conduct, are seen to have given up any such rights by agreeing to the form of the original undertakings. ... The parties intended to be bound by findings generally in relation to Mr Lloyd's alleged conduct carrying with it questions of his reliability and credit. They cannot now revisit these parameters." (emphasis in original) 293At [60]-[61], the judge considered Mr Wardle's Further Amended Defence. He said, at [61]: "The particulars (i)-(vi) relate to representations concerning punctual payment. For the reasons explained above, on the basis of the High Court's decision, these are matters which can only go to ARF's entitlement to exercise its rights under clause 5 of the Loan Agreement. These are irrelevant to the question of whether the indemnity by OAL is 'effective and enforceable' under clause 2 of the Indemnity Agreement." 294At [85], he reiterated: "Authority was clearly a contested issue on which findings were made and by which the defendants who gave undertakings are bound. The allegation that Mr Lloyd had authority on behalf of ARF was central to the pleading of waiver in paragraph 34A of the Test Case defence." 295The judge's construction of the Separate Trial Order, that I have discussed earlier, led him into error concerning the significance of the findings in the Gardiner Test Case on Mr Lloyd's authority. Young CJ in Eq ([59] above) and Handley AJA (with whom Spigelman CJ agreed concerning misleading conduct) both held that Mr Lloyd was not ARF's agent at the Ord Minnett investment seminar around June 1997 ([71], [94] above). There were findings that Mr Lloyd was not an employee of ARF, and had no formal position with it. There was also an explicit finding by Handley AJA ([73] above) that Mr Lloyd was not an agent of ARF. However, the general words of that finding should in fairness be read subject to the context in which it was made. 296The plurality judgment in the High Court at [7] said that the question of agency was agitated before them, but did not need to be resolved. Thus, it is the findings of the Court of Appeal concerning authority that are determinative, for the purpose of the operation of the undertakings and the Separate Trial Order. 297There would be a finding in the Gardiner Test Case, by which the Appellants are bound, that on any occasion at which it was contended in the Gardiner Test Case that Mr Lloyd had acted on behalf of ARF, Mr Lloyd had no authority to do so. However, the findings in the Gardiner Test Case do not preclude the Appellants from seeking to establish that Mr Lloyd was an agent of ARF at the times and in performing the tasks on which Wardle relied in his Further Amended Defence. The type of case that is sought to be made is, I gather, of a de facto authority arising other than from Mr Lloyd being an employee or having any formal position with ARF. 298Nothing in the judgments in the Gardiner Test Case precludes in principle there being an estoppel against ARF from asserting that there has been a failure to make a payment punctually. Mr Hale accepted in argument that in principle there could be an estoppel arising from a representation that bound both ARF and OAL, and also that there could be an estoppel as against ARF alone. That concession was correctly made. I have held that if ARF sued a borrower to recover the Principal Sum the onus of proving that Clause 7 of the Loan Agreement was operative would be upon the borrower. That would require the borrower to prove, as against ARF, that (inter alia) the various payments had been made punctually. It could so allege in its pleading, and then meet any denial of that allegation by a further pleading that ARF is estopped from denying that the payments were made punctually. However, whether there could be an estoppel against ARF alone seems unlikely to be of importance, because the real issue is whether any representation made by Mr Lloyd (which, by virtue of his position as Managing Director of OAL, would be made on behalf of OAL) was also made on behalf of ARF. 299Mr Hale in argument also contended that the particulars in para [27] of Mr Wardle's Further Amended Defence did not clearly assert that Mr Lloyd was acting on behalf of ARF. 300While the particulars are not as clear in that respect as they might be, it seems to me fairly clear that that is their intent. The allegation that a representation made by Mr Lloyd "was not retracted or qualified by ARF" would be pointless if the representation had not been made on behalf of ARF in the first place. Further, this was not a reason that the judge gave for striking out the waiver and estoppel paragraphs. Indeed, para (iii) of the particulars of Mr Atkinson's pleading ([289] above), which the judge took as a typical pleading, quite clearly alleged that Mr Lloyd was acting on behalf of both ARF and OAL. 301No argument was presented to us to the effect that any defence of "waiver" was open to Mr Wardle, that was different to the estoppels that he pleaded. The only role that the waiver defence that had been pleaded played in the argument before us was that it provided the particulars that came to be read into the estoppel defences. 302Mr Wardle and Mr Giannuzzi should have been permitted to have a trial on their estoppel defences. For that reason, the judgments against them should be set aside, and a new trial ordered. Rather than restore paras [27]-[31] of the Further Amended Defence, the estoppel defences should be repleaded, with the extent of the repleading permitted by this Court being confined to inserting the particulars now contained in para [27] into paras [28]-[31], and permitting those particulars to be modified to make clear that Mr Lloyd is alleged to be acting on behalf of both ARF and OAL. Such an order will not preclude a judge in the Commercial List from allowing a further amendment, if a case for a further amendment is made out. PART G - THE CONTRACTS REVIEW ACT DEFENCE AND CROSS-CLAIM The Contracts Review Act Defence and Cross-Claim The Original Contracts Review Act Defence and Cross-Claim 303After the decision of the Court of Appeal, and before the High Court judgment in the Gardiner Test Case was delivered on 11 December 2008, the case management of the balance of the proceedings continued. On 20 May 2008 the Appellants were granted leave to amend their defences to plead a defence and cross-claim based on the Contracts Review Act. 304The defence that the Appellants then added was in substance contained in paras [33] and [34] of Mr Wardle's defence. Para [33] opened by saying: "Further or in addition, if, which is not admitted, clause 2 of the Indemnity Agreement has the effect of preventing the defendant from relying on the Indemnity if there has been any default by the defendant in paying principal or interest under the Loan Agreement on the nominated due date for payment, clauses 2(a) and 2(b) of the Indemnity Agreement were unjust in the circumstances relating to the Indemnity Agreement at the time it was made, within the meaning of s 7 of the Contracts Review Act (1980) ('the Act') for the following reasons:" 305It then went on to plead, in lettered subparagraphs over numerous pages, various matters relating to the circumstances in which the Indemnity Agreement had been entered, in which it was envisaged or represented that the prescribed interest scheme would operate, and in which it had in fact operated. It alleged that the draconian consequences of the indemnity not applying if a payment was not made punctually were such that the provision was not necessary for the protection of the legitimate interests of OAL, and that the loss of the indemnity imposed on investors a burden that was grossly disproportionate to any detriment that OAL suffered. 306The relief was identified in [34] of the pleading: "In the circumstances, so as to avoid as far as practicable the unjust consequence referred to in paragraph 33 above, the Court ought to vary: (a) clauses 2(a) and (b) of the 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 clauses 4.1 of the Loan Agreement which has been accepted by ARF; and (b) clause 7 of the Loan Agreement so as to provide that notwithstanding any other provision of clause 7 the Lender acknowledges that the Borrower shall 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 paragraph 33 and 34 above." 307Mr Wardle also filed a 39th cross-claim, to which both ARF and OAL were cross-defendants, that sought relief to similar effect, against both ARF and OAL. Other Appellants filed similar cross-claims. The Amendment to the Contracts Review Act Defence and Cross-Claims 308In March 2010, at a time when the hearing of ARF's claim against the Appellants and some other ongoing defendants had been fixed for 6 April 2010, the Appellants sought to amend their Contracts Review Act defences and cross-claims. The amended documents were permitted to be filed on the basis that ARF would be permitted at the commencement of the hearing to dispute whether the amendments should remain on the record. It was the portion of the Contracts Review Act defence and cross-claim that had been added in March 2010 that was struck out in consequence of the Strike Out Judgment. 309The addition that the Appellants sought to make to their Contracts Review Act defence was the addition to [33] of a new subparagraph (ba). The new subparagraph included, in substance, a reliance on the failure of the prospectuses to disclose the round robin arrangements. It also alleged some other non-disclosures in the prospectuses, but Mr Epstein does not now seek to support including those other non-disclosures in the defence. 310Relevantly, the new subparagraph (ba) alleged that the prospectus concerning Project No 1 includes statements or representations that: "OAL as manager had no assets or liabilities as at 10 April 1997, except as recorded in paragraph 3.1 (paragraph 3.1); ... the funds paid by each Farmer would be applied by OAL in the provision of services and rights described in the Management and Licence Agreement (paragraph 8.1) and in paragraph 8.9 recorded a table (based on assumptions as to farms sold) stating how it was anticipated the management fee of $23,750 per farm would be expended ..." 311It alleged that the Project No 2 prospectus included the second of these statements or representations, though with different assumptions as to farms sold and a different management fee per farm. It continued: "v) On the basis of the representations contained in the Project 1 Prospectus and the Project 2 Prospectus project expenditure by OAL in connection with the tea tree plantation scheme promoted in the Prospectuses and having regard to the actual number of farms sold was to be as summarised below (the 'Projected Expenditure'): Project 1 Project 2 Total (1997) (1998) (1999) Management fee per farm $23,750 $24,700 $24,700 Number of farms 153 199 249 601 Total all farms $3,633,750 $4,915,300 $6,150,300 $14,699,350 Particulars Paragraph 8.9 of the Project 1 Prospectus; Paragraph 8.9 of the Project 2 Prospectus vi) For the purpose of making loans to the investors under the various Prospectuses and Supplementary Prospectuses an initial amount of approximately $250,000 was advanced to ARF by GCC (the 'Initial Funds') vii) As at the date of issue of the Project 1 Prospectus, ARF had no funds apart from the amount referred to in sub-paragraph (v) viii) The terms of the funding arrangement between ARF, OAL and GCC were that the Initial Funds would be used by ARF to lend to investors who would then pay the proceeds of such loans to OAL who would in turn lend the funds to ARF to enable ARF to make further loans to other investors (the 'round robin arrangements'). ix) as the result of the round robin arrangements: aa) the only cash available to OAL to fund the Projected Expenditure was the Initial Funds plus the actual cash paid by investors as part of their original subscription monies, and from investors via ARF, by way of an agreed loan principal reduction (the 'Actual Funds'); bb) The Actual Funds were substantially less than the Projected Expenditure as represented in the Prospectuses Particulars The Projected Expenditure is particularised at sub-paragraph iv) above. cc) The difference between the actual funds and Projected Expenditure was intended to be derived from the cash generated from sales of tea tree oil. ... xviii) The result of the above transactions was that: aa) the only funds available to the projects promoted in the Prospectuses ('the Projects') were the Actual Funds (and not the amounts of the Projected Expenditure) and any income earned by the Projects through the sale of tea tree oil; ..." The Strike Out Judgment Concerning the Contracts Review Act 312The primary judge accepted, at [87], that there were no "findings" on "issues arising" in the Gardiner Test Case with which the proposed new Contracts Review Act claims were inconsistent. Mr Hale does not contest that conclusion. 313The primary judge referred to a submission that Mr Epstein had made that the Contracts Review Act case he sought to run was "a generic case". He referred to Mr Epstein having acknowledged in argument that the case that Mr Gardiner advanced on prospectus liability is based upon the same fundamental facts as the Appellants based their amended defence under the Contracts Review Act. 314The primary judge also said, at [89]: "iii Further it does appear that the defendants will be seeking to re-run that failed case but doing so by seeking relief under a different statute ('a different statutory regime': see T163/17)." 315That appears to be a reporting of an acknowledgement that Mr Epstein made at a particular part of the transcript. It is clear that there is a typographical error, and the intended reference was to line 17 on page 162. What Mr Epstein in fact said, at and around that part of the transcript, was: EPSTEIN: And the discussion in the judgments and the way the case is pleaded is somewhat difficult to follow without understanding of the underlying facts. HIS HONOUR: Yes. EPSTEIN: And the way I was going to approach this was to explain the factual basis for the Gardiner complaint and the complaint we contend we're entitled to maintain through a different statutory regime." 316Thus, the statement that "the defendants will be seeking to re-run that failed case" is his Honour's own conclusion. 317I will set out the whole of the balance of his Honour's reasoning ([90]-[93]) concerning striking out the Contracts Review Act amendments: "In Hunter v Chief Constable of the West Midlands Police [1982] AC 529 Lord Diplock said this at pages 541 to 542: 'My Lords, collateral attack upon a final decision of a Court of competent jurisdiction may take a variety of forms. It is not surprising that no reported case is to be found in which the facts present a precise parallel with those of the instant case. But the principle applicable is, in my view, simply and clearly stated in those passages from the judgment of AL Smith LJ in Stephenson v Garnett [1898] 1 QB 677, 680-681 and the speech of Lord Halsbury LC in Reichel v Magrath (1889) 14 App Cas 665,668 which are cited by Goff LJ in his judgment in the instant case. I need only repeat an extract from the passage which he cites from the judgment of AL Smith LJ: "... the Court ought to be slow to strike out a statement of claim or defence, and to dismiss an action as frivolous and vexatious, yet it ought to do so when, as here, it has been shewn that the identical question sought to be raised has been already decided by a competent Court." The passage from Lord Halsbury's speech deserves repetition here in full: '... I think it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again.'" Only 9 years later in Ashmore v British Coal Corporation [1990] 2 QB 338, the Court of Appeal [Lord Donaldson MR with whose reasons Stuart-Smith and Farquharson LLL agreed] dealt with sample cases selected from numerous similar claims against the same employers. The head note before the Court of Appeal includes the following: 'Held, dismissing the appeal, that the categories of conduct rendering a claim frivolous, vexatious or an abuse of the process were not closed but depended on all the relevant circumstances of the particular case, public policy and the interests of justice being very material considerations...' Notwithstanding that the Contracts Review Act defence (ba) is put forward under a different regime to that invoked with respect to prospectus liability by Mr Gardiner under the Corporations Act, the principled exercise of the material discretion is to refuse leave being granted to the active defendants to plead defence (ba)." Consideration of the Striking Out of the Contracts Review Act Defence and Cross-Claim 318Hunter v Chief Constable [1982] AC 529 held that a statement of claim should be struck out as an abuse of process. It was brought against police officers by one of the Birmingham Six who alleged that he had been assaulted while on remand. In the course of a trial of the Birmingham Six for murder, an issue arose about whether a confession that Mr Hunter had made while he was on remand was voluntary. The criminal trial judge conducted a hearing on the voir dire. In admitting the confession into evidence, the criminal trial judge held that it had been established beyond reasonable doubt that there had been no physical violence from the police to the defendant. By his civil action, Mr Hunter alleged that in truth the police had assaulted him, on the occasion that had been investigated on the voir dire at his earlier criminal trial. A sufficient reason why there would be no issue estoppel preventing Mr Hunter from contending in the civil proceedings that he had been assaulted would be that the prosecuting party in the civil proceedings was not the same as the defendants in the proposed civil proceedings. However, the civil proceedings were still an abuse of process, because they sought to litigate the identical issue that had been litigated in the earlier proceedings, and to have the court come to a different conclusion concerning it. 319Ashmore v British Coal Corporation Ashmore v British Coal Corporation [1990] 2 QB 338 arose when 1500 women employed as colliery canteen workers each brought a claim in an industrial tribunal that they were employed on less favourable terms than certain male comparators, contrary to a requirement of the Equal Pay Act 1970. Fourteen sample cases were chosen and litigated, explicitly on the basis that they would not be test cases but might assist in resolving the others by agreement. By the time of the hearing only one comparator was being relied on. All fourteen women whose case was litigated lost, on two bases. The first was that they were not employed on like work to the comparator that they chose, because he was employed on night work and alone. The second was because their employer had established a statutory defence, that the difference in rate of pay was genuinely due to a material factor which was not the difference of sex. The remaining cases had been stayed while the fourteen cases were being decided. Ms Ashmore was one of the women whose claim had not been litigated. She sought to proceed with it, contending that her case was different to the ones that had been litigated because she worked alone and on night shift. The Court of Appeal held that the relevant industrial tribunal had been correct to strike her claim out on the ground that it was frivolous or vexatious. That decision is hardly surprising, when Ms Ashmore seems to have had no basis to distinguish her case from the cases that had already been decided so far as the statutory defence was concerned. It must be frivolous and vexatious to bring a case that is bound to fail. 320Though the primary judge reasoned by reference to Hunter and Ashmore, the essential question, in deciding whether the Contracts Review Act defence should have been struck out, is whether litigating it would have involved an abuse of process. In Walton v Gardiner (1993) 177 CLR 378 Mason CJ, Deane and Dawson JJ said, at 393 that: "... proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it sought to litigate anew a case which has already been disposed of by earlier proceedings." 321In Rogers v The Queen (1994) 181 CLR 251 Mason CJ said, at 255: "The circumstances in which abuse of process may arise are extremely varied and it would be unwise to limit those circumstances to fixed categories. Likewise, it would be a mistake to treat the discussion in judgments of particular circumstances as necessarily confining the concept of abuse of process." 322In the present case, the statements or representations in the prospectuses that were relied on in the new subparagraph (ba) were the same statements that were the foundation of Mr Gardiner's misleading and deceptive conduct claim. Indeed, the new subparagraph used identical words to those of Mr Gardiner's cross-claim in conveying the content of those statements ([81] and [82] above, cf [311] and [312]). 323However, the forensic use that was sought to be made of those statements was different in the two pleadings. The forensic point of the allegation of the round robin arrangement in Mr Gardiner's pleading was to allege that the identified statements or representations in the prospectuses were misleading and deceptive, and that that misleading and deceptive conduct had caused him loss and damage to the extent that ARF was entitled to recover from him. He contended that had the prospectuses made proper disclosure he would not have invested in either project, and would not have entered any Loan Agreement with ARF. 324The ARF Funding Arrangements was one of four matters that Mr Gardiner alleged had not been disclosed in the prospectuses. Mr Gardiner relied on all four matters for the allegation that the statements in the prospectuses were misleading and deceptive. 325The role that the non-disclosure of the round robin arrangement plays in the Contracts Review Act claim is different. The Appellant's case is that the non-disclosure and other matters I have set out at [312] provide an additional reason, along with those that had already been pleaded in [33] of the defence, for the correctness of the allegation in the chapeau of [33] (essentially, that clauses 2(a) and 2 (b) of the Indemnity Agreement were unjust within the meaning of s 7 Contracts Review Act). In the Contracts Review Act defence, the round robin arrangements are sought to be relied upon in combination with matters that were different to the other three non-disclosures relied on by Mr Gardiner, to reach the conclusion that the provisions of the contract in question were unjust. 326Section 7 identifies the relevant meaning of "unjust" as being "where a 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 ...". Section 9(1) Contracts Review Act provides: "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." 327Section 9(2) goes on to require the court to have regard, to the extent that they are relevant in the circumstances, to matters included in a long list. 328If the allegations concerning the round robin arrangement were added to the Contracts Review Act defence, it would not be correct to say that thereby identical questions were sought to be raised to those which had already been decided. While some of the same factual matters are asserted, they are being used for different forensic ends. Deciding whether a statement is misleading and deceptive is simply not the same as deciding whether, in part because of that statement and what the truth is about the subject matter of the statement, a provision in a contract is unjust. 329In any event, it is not as though there is a finding in the Gardiner Test Case that will be controverted if the aspect of the Contracts Review Act claim that is sought to be raised were litigated. That is because there was a finding in the Gardiner Test Case that the ARF Funding Arrangements (ie the round robin arrangements) were proved, and were not disclosed in the prospectus relating to Project No 1 ([87] above). A limitation under which the Appellants would labour in running their Contracts Review Act case is that they could not seek to disprove the findings that Handley JA had made about the extent of disclosure of the round robin arrangements in the prospectus relating to Project No 2 ([87] above). However the existence of that limitation would itself provide a reason why the running of the Contracts Review Act defence will not result in any different finding to the ones that have been made, concerning the round robin arrangements, in the Gardiner Test Case. Further, the essential reason why Mr Gardiner failed in the part of his case that alleged that the statements in the prospectus were misleading and deceptive was that he did not establish that he had relied on the prospectuses. Necessarily, whether Mr Gardiner relied on anything will not be an issue in any litigation that the Appellants bring. 330For these reasons the present case is vastly different to Hunter, in which the exact same question - where Mr Hunter had been assaulted by the police - had already been litigated and decided against him. It is quite different to Ashmore, in which if Ms Ashmore were to succeed she would need to establish that the previous decision of the court concerning the availability of the statutory defence was wrong. In the present case, if a Contracts Review Act defence, expanded to include reliance on the round robin arrangement, were to succeed, that would not show that any aspect of the decision in the Gardiner Test Case had been wrong. 331There is one aspect of Ashmore that bears some similarity to the present case. In Ashmore, all fifteen-hundred claimants had been represented by their industrial union, which instructed one firm of solicitors to act on their behalf. During interlocutory stages there was a split in the union ranks, Ms Ashmore and some other applicants joined a different union, and that union instructed different solicitors to act on behalf of those of its members who were claimants. However, one of the chosen fourteen was a member of the new union. One matter that Stuart-Smith LJ mentioned as relevant to whether it would be an abuse of process to allow Ms Ashmore's claim to continue was (at 352) that she and her advisors had had the opportunity to put forward Ms Ashmore's case as one of the sample that the tribunal would investigate fully, but they did not do so. 332In the present case, the Appellants were acting by the same solicitors as Mr Gardiner. Mr Epstein accepts that the Appellants were contributing to the cost of running Mr Gardiner's defence. Further, it would have been open to Mr Gardiner to rely on the Contracts Review Act, but he did not try to. Even recognising those matters, in my view it would not be an abuse of process for the Appellants to litigate that part of para (ba) of [33] of their defence that is based on the round robin arrangement, and the corresponding part of their cross-claims. The extent to which they are bond by the manner in which the Gardiner Test Case was run is that contained in the Separate Trial order and the undertakings. 333Even though the addition of para (ba) was made to the Contracts Review Act part of the defence very close to the trial, the judge did not place any reliance on case management considerations in ordering its striking out. Mr Hale does not now seek to invoke such considerations. 334Uniform Civil Procedure Rule 51.53(1) provides: "The Court must not order a new trial on any of the following grounds: (a) misdirection, non-direction or other error of law, (b) improper admission or rejection of evidence, (c) that the verdict of the jury below was not taken on a question that the trial judge was not asked to leave to the jury, (d) on any other ground, unless it appears to the Court that some substantial wrong or miscarriage has been thereby occasioned." In circumstances where it cannot be said that the Contracts Review Act defence, as supplemented by the new para (ba), concerning the round robin transactions is bound to fail, this is a case where the striking out of that part of the Contracts Review Act defence has resulted in a substantial wrong or miscarriage. There would cease to be a substantial wrong or miscarriage if this Court were able to deal adequately with the allegations that were struck out. However, that depends on considerations that include whether the judge has wrongly excluded evidence that relates to the Contracts Review Act defence and cross-claim. I now turn to that topic. The Contracts Review Act Judgment 335The rulings on evidence that were made in the Contracts Review Act Judgment were made by reference to the pleading of the Contracts Review Act as it was at the time. It is inevitable that if the Contracts Review Act defence is amended, any questions of admissibility of evidence must be decided by reference to the new defence. It has not been suggested that it is possible to segregate the ruling into ones that depend upon the state of the Contracts Review Act defence, and ones which do not. 336The Contracts Review Act Judgment ended with a direction from the judge for the parties to bring in short minutes or order to give effect to his Honour's reasons. The appeal papers did not contain those orders. Hence, it will be necessary for the parties to bring in short minutes of orders to give effect to this aspect of the decision. It may be that they are as simple as setting aside all the orders made, but without seeing the orders, I cannot tell. The need for at least some of the evidentiary rulings to be reconsidered means that it is not possible for this court to deal finally with the Contracts Review Act defence and cross-claim, expanded to include reliance on the round robin allegations. The Principal Judgment Concerning Contracts Review Act 337In the Principal Judgment, the primary judge held that none of the Appellants was ineligible to invoke the Contracts Review Act by reason of the exception in s 6(2) of that Act, relating to a contract "entered into in the course of or for the purpose of a trade, business or profession". ARF and OAL do not challenge that aspect of the Principal Decision. 338The primary judge decided the Contracts Review Act defence (as it existed once para (ba) had been struck out) by reference to the defence of Mr Atkinson. It is not suggested that that was different in any material respect to the defence of any of the Appellants. The judge came to the conclusion that the matters relied on in that defence did not lead to the conclusion that the contractual provisions were unjust. The Appellants have appealed against that decision. However, in light of the conclusion that they should have been permitted to run the Contacts Review Act defence on a broader basis than the primary judge permitted them, and that the court at first instance should reconsider the Contracts Review Act defence expanded to include reliance on the non-disclosure of the round robin arrangements, and the other matters I have set out in [312], it is not appropriate for that aspect of the appeal to be considered. Because the basis on which the Contracts Review Act defence is to be put will now be wider, any views that we expressed concerning the Contracts Review Act defence in its narrower form would be views concerning a question that has now become moot. 339Thus, the orders striking out para (ba) of the Contracts Review Act defences, insofar as para (ba) depends upon the round robin allegations, should be set aside. The orders striking out corresponding allegations in the various cross claims should likewise be set aside. That will in turn mean that the verdict entered against all the Appellants who sought to rely upon such a Contracts Review Act defence should be set aside. A new trial will be needed concerning the question of liability of all those Appellants. PART H - ARF's APPLICATION FOR LEAVE TO CROSS-APPEAL The Interest and Costs Judgment 340The primary judge delivered another judgment on 2 December 2010: Agricultural & Rural Finance Pty Ltd v Atkinson [2010] NSWSC 1396 ("the Interest and Costs Judgment"). So far as presently relevant, it dealt with two topics. The first involved questions of construction of the loan agreements concerning interest. The particular questions concerned the rate at which interest on each Principal Sum was payable in the period up to when ARF became entitled to repayment of the whole Principal Sum, the rate of interest payable after ARF became so entitled, and whether during each of those periods the interest was compounded, and if so on what rests. ARF has sought leave to cross-appeal for the purpose of contending that the judge should have awarded it a higher rate of interest during the period up to termination, and a higher amount of interest after termination. 341ARF also sought leave to appeal against the Interest and Costs Judgment concerning the decision of the primary judge not to award it indemnity costs for the period after a Calderbank offer was served on 8 July 2009. Another decision of the primary judge left ARF to bear its own costs concerning a hearing on 7 June 2011 that related to some aspects of the orders that were appropriate in light of the primary judge's earlier decisions: Agricultural and Rural Finance Pty Ltd v Atkinson [2011] NSWSC 555. ARF lastly sought leave to appeal concerning being deprived of its costs relating to 7 June 2011. 342At the hearing of the appeal on 16 February 2012, ARF withdrew its application for leave to appeal concerning the costs of the hearing on 7 June 2011. The Court heard argument concerning the application for leave to appeal against the primary judge's refusal to order indemnity costs and, in an ex tempore judgment delivered on that day, rejected it: Agricultural and Rural Finance Pty Ltd v Brakatselos [2012] NSWCA 17. Thus, only the application for leave to appeal concerning interest remains alive. 343The amount of interest that ARF sought from each Appellant that was additional to the amount for which the judge had entered judgment was less than $100,000. However, the total amount of interest that it sought from all Appellants plus Ms Michael and Ms Spyrakis exceeded $100,000. For the reasons given in Blackmore v Browne; Kara Kar Holdings Pty Ltd v Blackmore [2011] NSWCA 114 at [29]-[37], if ARF had brought a single cross-appeal against the Appellants, Ms Michael and Ms Spyrakis, it could have been brought as of right. That provides a powerful reason why leave to cross-appeal on the questions concerning interest should be granted. Mr Epstein does not contend otherwise. Thus, as was foreshadowed at the hearing of the appeal on 16 February 2012, ARF will be granted leave to cross-appeal concerning the questions relating to interest. ARF's Cross-Appeal Concerning Interest 344At the hearing on 16 February 2012, the Court told the parties that it had reached a conclusion that ARF's cross-appeal concerning interest should be dismissed, and that reasons for taking that course would be provided in the final reasons for judgment. The Court took the view that it was relevant for Mr Hale to know, before embarking on his argument concerning the application for leave to cross-appeal concerning costs, that it was not a possible outcome of these proceedings that ARF receive a higher judgment against any of the Appellants than it had obtained in the court below. What follows are my reasons for joining in that announcement of the result of the cross-appeal concerning interest. 345The relevant provisions of the Loan Agreements are as follows: "Recitals ... D The Borrower has requested that the Lender lend and the Lender wishes to lend to the Borrower the sums set out in Item 2 of the Schedule (individually defined as provided in the Schedule and collectively referred to as the 'Principal Sum' which term also includes capitalised interest as provided in clause 3.4) upon the terms and conditions of the agreement. ... 3. Interest 3.1 Subject to Clauses 3.2 and 3.3 below, interest shall be chargeable on the Principal Sum outstanding from time to time at the rate of 10.5% per annum payable monthly in advance. 3.2 In consideration of the Lender discounting the rate of interest set out in Clause 3.1 by 2% per annum the Borrower agrees to pay upon the execution of this agreement the first year's interest on the Principal Sum advanced at the rate of 8.5% [or 7.75%] per annum computed from 30 June 1997 [or date of execution] unless otherwise agreed between the parties. 3.3(a) In further consideration for the Lender: (i) reducing the rate of interest during the second year of this agreement to 8.5%[ or 7.75%]. the Borrower will pay to the Lender on or before 30 June 1998 [or beginning of the second year] interest for 12 months in advance on the Principal Sum then outstanding; and (ii) reducing the rates payable from and including the commencement of year 3 until repayment in full of the outstanding Principal Sum to 8.5% [or 7.75%] per annum, the Borrower will pay the Lender interest as set out in paragraph (b) below or, where applicable, paragraph (c) below. (b) Interest set out in clause 3.3(a)(ii) above shall be calculated monthly in advance on the Principal Sum then outstanding and shall become due and payable subject to such payment being made from the income of the Borrower from the Business as contemplated in clause 42.2 of the Project Deed after payment of: i) all licence fees; ii) all management fees and charges; and iii) any other amount payable prior to interest in accordance with Clause 42.2 of the Project Deed; and subject further to Clauses 3.4 and 7 (c) In the event that a Farmer makes an election under clause 18.2 of the Licence and Management Agreement, interest that the Farmer would have paid in accordance with paragraph (b) had the Farmer not made the election must be paid by the Farmer on demand of the Lender. 3.4 Any interest which becomes due and payable during the previous 12 months which is not paid by 30 June at the end of that year pursuant to clause 3.3(c) will be capitalised so as to form part of the Principal Sum then outstanding. ... 5. Default 5.1 The parties agree that subject to clause 7 below the whole of the Principal Sum remaining outstanding shall become immediately repayable at the option of the Lender on the happening of any one or more of the following events without the necessity of any notice of demand: (a) if the Borrower defaults in the due and punctual payment of interest or the Principal Sum or any repayment instalment or any other moneys payable under this agreement; (b) if the Borrower defaults in the observance or performance in any of his other covenants or obligations contained in this agreement; (c) if the Borrower ceases to carry on the Business. 5.2 Notwithstanding anything contained in this agreement if the Lender elects to call up the whole of the Principal Sum remaining outstanding pursuant to any default by the Borrower, interest on the whole of the Principal Sum remaining outstanding shall then be calculated at the rate of 10.5% per annum and shall be payable on demand." 346The primary judge referred to the date on which ARF elected to make the principal sum immediately repayable pursuant to Clause 5.1 as the date of "termination". It is convenient to adopt that terminology. Termination occurred on 4 January 2003. 347There never was any income from the Business from which payment of interests that accrued during the third and subsequent year could be made. The primary judge awarded interest on the basis that interest at 8.5% on the outstanding Principal Sum would accrue during the third year of the agreement and each subsequent year thereafter, until termination. Because the amount of interest that accrued during any of those years was not paid, it was capitalised on 30 June of each year, and the increased Principal Sum thereafter bore interest at 8.5%. Once termination occurred, interest accrued at 10.5% simple interest on the Principal Sum that was outstanding on the date of termination. 348The primary judge's construction was consistent with the construction that Handley AJA had given to the interest provisions in the Loan Agreement at [368] of the Court of Appeal decision in the Gardiner Test Case: "The Lender had stipulated for an interest rate of 10.5% but agreed to reduce this to 8.5% (Blue 2/853 cll.3.2, 3.3). On default ARF could only charge the higher rate if it called up the whole of the principal (Blue 2/855 cl.5.2). It had no other right to charge the higher rate. The letter of 2 June was undoubtedly a waiver by ARF of its right to call up the whole of the principal provided the overdue interest was paid by 30 June. When payment was made within the extended time ARF lost its right to call up the unpaid balance of the principal, and to charge interest at the higher rate." 349However, no other judge who considered the Gardiner Test Case had occasion to construe the interest provisions of the Loan Agreement in this degree of detail. Thus, there was no finding on that topic in the Gardiner Test Case that precluded ARF from arguing for a different interpretation. 350The convenient way to deal with this question is to state how the interest provisions operate on their correct construction. Clause 3.1 starts out by providing for interest to be charged at 10.5% per annum payable monthly in advance. However, that obligation to pay interest at 10.5% is subject to Clauses 3.2 and 3.3. As it happens, Clauses 3.2 and 3.3 exhaustively state what the rates of interest will be until termination, so Clause 3.1 is deprived of content during that period. No doubt the purpose of Clause 3.1 was to provide the basis for an argument that Clause 5.2, which operated in practical terms to impose a higher rate of interest after termination than would be applicable prior to termination, was not a penalty. When it had that purpose, I do not accept Mr Hale's argument that construing Clause 3.1 as imposing a rate of interest that is then immediately un-imposed by Clauses 3.2 and 3.3 is failing to give the loan agreement "a business-like interpretation" (cf McCann v Switzerland Insurance Australia Limited at [22]). 351Clause 3.2 records an agreement by the Lender to discount the 10.5% rate of interest by 2%, in return for the Borrower agreeing to pay the first year's interest at the reduced rate, in advance. Clause 3.2 is effective as a contract because it is an exchange of the Lender's promise to discount the 10.5% rate for the Borrower's promise to pay it the whole of the first year's interest at the reduced rate in advance. 352Clause 3.3(a)(i) is, likewise, contractually binding because it is an exchange of the Lender's promise to reduce the rate of interest by 2% during the second year for the Borrower's promise to pay the whole of the second year's interest in advance at the reduced rate. 353Clause 3.3(a)(ii) is, likewise, an exchange of the Lender's promise to reduce the rate by 2% during year three and subsequent years for the Borrower's promise to pay interest as set out in paragraph (b) or (c). 354Clause 3.3(b) operates only concerning the interest set out in Clause 3.3(a)(ii) - ie, from the commencement of year three until repayment in full of the Principal Sum. That interest, at the reduced 8.5% rate, is to be calculated monthly in advance, and becomes due and payable (by fairly clear implication) also monthly in advance. However, even though it is due and payable on that date, payment only need actually be made if there is net income of the business. 355If there is no net income of the business, the interest still becomes due and payable, in the third and subsequent years, monthly in advance. The effect of Clause 3.4 is that even if there is no income of the Business the interest that has fallen due, at 8.5%, but is not paid by 30 June in any year, is capitalised. It is capitalised on annual rests, and the newly arising Principal Sum, that includes that capitalised interest, will then bear interest at 8.5% pursuant to Clause 3.3(a)(ii). 356Mr Hale has submitted that Clause 3.3(a)(ii) requires interest to be paid in accordance with Clauses 3.3(b) or 3.3(c) by the due date in order for the Borrower to qualify for the discounted rate specified in Clause 3.3(a). Otherwise, he submits, the "standard rate" of 10.5% pa specified in Clause 3.1 applies. He submits that it is clear that no interest was ever paid under Clause 3.3(b) for the third and subsequent years, because there was no income of the Business from which to pay it. He submits that payment of interest, during the third and subsequent years, is a condition precedent for Clause 3.3(a)(ii) to be engaged. 357I do not agree. There is nothing in the wording of Clause 3.3 to make actual payment of any interest a condition precedent for the reduction in the rate. The reduction in the rate had already occurred, long prior to the start of the third year, as a result of the Lender exchanging its promise to reduce the rate by 2% during the third and subsequent years for the Borrower's promise to pay interest as set out in Clause 3.3(b). 358Mr Hale submits that the primary judge was in error in [119] of the Interests and Costs Judgment by referring to the actual way in which the parties performed their agreement as support for the construction that his Honour found was correct. I agree that that use of subsequent conduct was not a legitimate aid to the construction of a contract that was wholly in writing: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at [37]; Whitworth Street Estates Ltd v James Miller and Partners Ltd [1970] AC 583 at 603; Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234 at [114] and cases there cited. The primary judge was in error to rely upon it as an aid to construction of the contract, but his construction was correct notwithstanding that error. 359At [120] of the Interest and Costs Judgment the primary judge referred to the construction of the provisions concerning interest that ARF was propounding as being inconsistent with advice that ARF had obtained from its own legal advisors. That is not an available aid to construction, for the same reasons as the manner of actual performance of the agreement is not an available aid to construction. However, notwithstanding that he mentioned this advice that ARF had received, the construction that the judge arrived at was correct. 360For these reasons, the construction of the Loan Agreement by reference to which the judge granted pre-termination interest is correct. 361It is common ground that Clause 5.2 requires post-termination interest to be calculated at 10.5% simple interest on the amount of the Principal Sum that was owing at the time of termination. ARF contends that the judge allowed too small an amount for post-termination interest, because the judge started that calculation using a Principal Sum that was too small. That Principal Sum was too small solely because of the manner in which the judge had calculated the pre-termination interest. When I have upheld the judge's manner of calculation of pre-termination interest, I likewise uphold the basis for his calculation of post-termination interest. 362At [121] of the Interest and Costs Judgment the primary judge remarked that the summons claimed the various principal amounts including interest capitalised at the lower rate together with a future daily rate for interest at the higher rate. He said that, "what the plaintiff is now seeking amounts to an application for the amendment of the summons after the hearing and the final reasons for judgment." 363It is far from clear to me what role this remark plays in the judge's overall reasoning process. ARF submits that it should be read as a statement that even if ARF's interpretation of Clause 3 of the Loan Agreements were correct, the judge would not allow ARF to contend for that interpretation because of the manner in which it had made a claim for interest in the summons. 364In circumstances where the judge's interpretation of Clause 3 was correct, it is unnecessary to consider this submission any further. Insofar as it has not already been disposed of, the application for leave to cross-appeal should be dismissed with costs. PART I - CONSEQUENTIAL MATTERS AND ORDERS 365Mr Epstein informed us that some, but not all, of the Appellants have paid the judgment debts. They claim restitution with interest in their applications for leave to appeal. Lahoud v Lahoud [2011] NSWSC 994 at [34]-[43] pointed out that no argument had been put in Woolworths Limited v Strong (No 2) [2011] NSWCA 72 about whether the rate of interest payable when restitution is ordered of a judgment set aside on appeal was more appropriately the usual rate of interest payable on judgments, or the usual rate of prejudgment interest. In light of that discussion, Mr Epstein does not seek interest on the judgment amount at anything higher than the usual rate of prejudgment interest. However, provision will need to be made in the orders of the Court for more precise orders relating to restitution, on an individual basis concerning each of the defendants who seek restitution. 366Some orders can be made now to give effect to these reasons for judgment. Others will need to await the bringing in of short minutes of order. The orders that I propose be made now are: (1) Appeal allowed. (2) Set aside the judgments in the court below against each Appellant. (3) Enter judgment for Mr Holmes, with costs of the hearing at first instance. (4) Grant leave to Mr Wardle and Mr Gianuzzi to replead paras [28]-[31] of the Further Amended Defence by inserting into those paragraphs the particulars that had previously been in [27] of the Further Amended Defence, modified to make clear that Mr Lloyd is alleged to have been acting on behalf of both ARF and OAL. (5) Cross-appeal dismissed with costs. (6) Remit to the Equity Division for further hearing ARF's claim against each of the Appellants other than Mr Holmes (7) Reserve further consideration of what other orders should be made to give effect to these reasons for judgment. (8) Direct the parties within 14 days after delivery of these reasons for judgment to file short minutes of the orders that they agree are required to give effect to these reasons for judgment, and as to the costs of the appeal and the first instance hearing. (9) To the extent that the parties do not agree upon such orders, direct the Appellants within 21 days from the date of delivery of these reasons for judgment to file short minutes of the further orders they submit are required to give effect to these reasons for judgment, together with their submissions not exceeding four pages in length on the reasons why those orders are appropriate. (10) In the event that the parties do not agree upon orders pursuant to order 8, direct the Respondents within 35 days of the date of delivery of these reasons for judgment to file short minutes of the further orders they submit are required to give effect to these reasons for judgment, together with their submissions not exceeding four pages in length on the reasons why those orders are appropriate. 367Without seeking to limit the parties' submissions, draft orders would need to deal with at least the following topics, though with greater specificity: (a) The orders striking out para (ba) of the defences of the Appellants under the Contracts Review Act, in so far as it relied upon the round robin allegations, and striking out the corresponding versions of the cross-claims, be set aside (b) Set aside the orders giving effect to the decision made in the Contracts Act Review Judgment in the court below. (c) Costs of the appeal and of the first instance proceedings, including any certificate under the Suitors' Fund Act 1951. (d) Any orders for restitution 368Without the benefit of submissions, my preliminary impression is that the Appellants should receive an order for the costs concerning the appeal that have not been disposed of by orders already made, but not the whole of those costs. The postal rule submissions were not the dominant issue in the appeal, but they were a separable issue, on which the Appellants lost: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373. My present impression is that the Appellants ought receive something in excess of 25% of the costs that have not already been disposed of by orders already made. In putting it that way I am not seeking to foreclose the possibility that the Appellants receive considerably more than 25%. 369When a case is remitted for a new trial an order frequently made is that the costs of the first hearing follow the event of the remitted hearing. However, this common practice does not detract from the obligation of the court to exercise its discretion concerning costs in each case by reference to the facts of that particular case: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [54]-[61] and cases there cited. At present I am not aware of any matters that would warrant any different order to the one that is commonly made, but the parties should have the opportunity to point to any such matters. 370BARRETT JA: The many and complex issues in this appeal are dealt with comprehensively in the judgment of Campbell JA. I agree that the orders and directions that his Honour proposes be made now should be made now. I also agree with his reasons and with the observations in the last three paragraphs of the judgment. 371SACKVILLE AJA: The perils of identifying a separate question for determination before deciding other issues in the proceedings are well known. Even if care is taken in identifying the separate question, the procedure can actually prolong the proceedings and increase costs, instead of saving time and money. 372The identification of a separate question in the present proceedings was intended not only to assist in resolving the case brought by the respondent ("ARF") against Mr Gardiner, but in resolving ARF's claims against the many other borrowers it had sued. This was to be achieved by the other borrowers giving undertakings to be bound "on common questions by the findings of the 'Gardiner Test Case'" (see at [115] above). 373I think it fair to say that undertakings in this form always had the potential to generate disputes as to what were "common questions", particularly since, as Campbell JA has explained (at [114]-[115]), Mr Gardiner was the only defendant who had filed a defence and cross-claim when the other borrowers gave their undertakings. As events have transpired, much of the argument on this appeal concerned the effect of the orders identifying the separate questions for determination and the meaning of the associated undertakings given by the other borrowers. 374An unusual feature of this case is that the High Court granted leave to appeal to argue certain issues arising on the separate questions for determination: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; 238 CLR 570. However, the High Court did not need to consider the terms of the undertakings given by borrowers other than Mr Gardiner. Nor did the Court need to consider the significance of its decision on the issues of punctuality and waiver for the future conduct of the litigation. The plurality judgment simply noted (at [26]) that of the 216 persons sued by ARF, "179 had agreed to be bound by the findings made on [the] separate determination". 375I agree with the construction given by Campbell JA to the borrowers' undertakings (at [120], [121]). I also agree that the undertakings did not justify the conclusions reached by the primary Judge in the Strike Out Judgment (Agricultural & Rural Finance Ltd v Atkinson [2010] NSWSC 311). Nor should the primary Judge have held that Mr Wardle and Mr Gianuzzi were precluded from proceeding to trial on their estoppel defences (at [304] above). 376The issue presented by the so-called "postal rule" defence relied on by some of the borrowers is whether the posting of a cheque by a borrower for the requisite amount of principal or interest, before the due date for payment, constitutes punctual payment for the purposes of the Indemnity Agreement, notwithstanding that the cheque was not received by ARF until after the due date. I agree with Campbell JA that there is no general rule of law that deems the posting of a cheque by a debtor to be payment of the debt on the day the cheque is posted, as distinct from the date of receipt of the cheque. 377Whether a borrower "has punctually paid" the amounts payable under the Loan Agreement in the circumstances I have described must depend on the proper construction of the Loan Agreement and the Indemnity Agreement and on the course of dealings between the parties. If, as a matter of construction, the Agreements provide that the posting of a cheque is to be taken as payment of an instalment on the date of posting, the posting of a cheque by a borrower on, say, 28 June 1998, would constitute punctual payment of an instalment of interest due and payable on 30 June 1998. This would be so notwithstanding that the cheque was not received by ARF until after the due date. If the course of dealings between the parties established a mutual intention that the posting of a cheque was to be taken as payment of the amount due on the date of posting, the same result might follow. (I leave to one side the questions that might arise if the cheque was not met on presentation or was otherwise not capable of being negotiated.) 378If, however, the Agreements, properly construed, required the borrower to ensure that funds were actually received by ARF on or before the due date, the posting of a cheque, of itself, would not have constituted payment of the instalment due and payable. (The position may be different if the course of dealings between the borrower and ARF prior to payment varied the terms of the Agreements or otherwise prevented ARF from relying on its contractual entitlement.) The critical question is, therefore, whether the Loan Agreement and Indemnity Agreement required the borrower to ensure that the instalment of principal or interest actually reached ARF by the due date, or whether the Agreements permitted the borrowers to discharge their obligation to pay punctually by posting a cheque on or before the due date. 379The Loan Agreement (cl 5) provided that the whole of the Principal Sum outstanding was to become immediately repayable at ARF's option if the Borrower defaulted in the "due and punctual payment of interest or the Principal Sum or any repayment instalment". The Indemnity Agreement (cl 2) provided that OAL's indemnity would be "effective and enforceable" if (relevantly) the Borrower had "punctually paid" the interest payable under the Loan Agreement and the reduction of the Principal Sum set forth in the Loan Agreement. 380As Kirby J pointed out in ARF v Gardiner, at 609 [116], in a legal document with commercial purposes such as the Loan Agreement and the Indemnity Agreement, the word "punctually": "would be given an objective meaning to facilitate a business-like approach to the implementation of the agreement between the several parties that depend upon the payments ... [C]ommercial reality requires that such obligations be complied with strictly, without a need to specify an identified time or to stipulate that time was of the essence." 381It is difficult to see how a construction of either the Loan Agreement or the Indemnity Agreement that deemed payment to be made when a borrower posted his or her cheque "facilitate[s] a business-like approach to the implementation of the agreement". In the event of a dispute, how would ARF determine with certainty when a cheque, which had been received shortly after the due date, had been posted? Similarly, as the plurality pointed out (at 582-583 [37]-[38]), the Second Respondent, ("OAL") had a clear financial interest in determining whether it remained liable on its indemnity. One circumstance where OAL was not liable on the indemnity was if a borrower had not made punctual payments of instalments of interest or principal. How could OAL determine with certainty whether its indemnity had been enlivened, if it was enough for a borrower to post a cheque by the due date, regardless of the date of its receipt by ARF? 382In my opinion, neither the Loan Agreement nor the Indemnity Agreement, as a matter of construction, contemplated that payment by a borrower would be made on the date a cheque was posted, as distinct from the date on which it was received by ARF. Nor, for the reasons given by Campbell JA, was there anything in the course of dealings between ARF and the borrowers that leads to any other conclusion. 383I agree with Campbell JA (at [250] above) that Young CJ in Eq made a finding as to onus and that, by reason of their undertakings, the borrowers are not free to depart from that finding in the present appeal. I do not think it necessary to visit the question of onus afresh. 384I agree with Campbell JA on the remaining issues addressed in his Honour's judgment. 385For the above reasons, I agree with the orders proposed by Campbell JA. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 April 2012