Court of Appeal Supreme Court New South Wales Medium Neutral Citation: HP Mercantile Pty Ltd v Hartnett [2016] NSWCA 342 Hearing dates: 8 September 2016 Decision date: 08 December 2016 Before: Bathurst CJ at [1]; Leeming JA at [58]; Payne JA [186] Decision: The orders in respect of all respondents except the 39th respondent Mr Foletti are: 1. Appeal dismissed. 2. Appellant to pay the costs of the respondents as agreed or assessed. Catchwords: CONTRACT – construction and interpretation – agricultural investment scheme – suite of related contracts between investors, representative and manager – loan agreements to facilitate investment – construction of limited recourse provision PRACTICE – facts agreed for purpose of separate question – where defendants reserved right to contend for different facts if question resolved unfavourably to them – whether appropriate to answer questions Legislation Cited: Bankruptcy Act 1966 (Cth), s 111 Income Tax Assessment Act 1936 (Cth) s 98, Part IV Supreme Court Act 1970 (NSW), s 101(2)(r) Taxation Administration Act 1953 (Cth), Sch 1 Subdiv 388-B Taxation Laws Amendment Act 1986 (Cth) Trustee Act 1925 (NSW), s 59(4) Cases Cited: Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26; (2012) 16 BPR 30,397 Atwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16; (2016) 90 ALJR 572 Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334; [1999] HCA 9 Beaufort Developments (NI) Ltd v Gilbert-Ash (NI) Ltd [1998] UKHL 19; [1999] 1 AC 266 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 Director of Public Prosecutions (Cth) v JM (2013) 250 CLR 135; [2013] HCA 30 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Fitness First Australia Pty Ltd v Fenshaw Pty Ltd [2016] NSWCA 207 Gosling v McCombie (1972) 126 CLR 487 Guo Hui Cai v Ciao Yan Guo (No 2) [2014] NSWSC 1416 HP Mercantile Pty Ltd v Clements [2014] NSWSC 509 HP Mercantile Pty Ltd v Kym and Paul Clements [2015] NSWCA 212 International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151; [2008] HCA 3 Life Insurance Company of Australia Ltd v Phillips (1925) 36 CLR 60 Lindsay (WN) & Co Ltd v European Grain & Shipping Agency Ltd [1963] 1 Lloyd's Rep 437 Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 R (Evans) v Attorney General [2015] AC 1787; [2015] UKSC 21 R v Brown [1996] AC 543 R v Clowes (No 2) [1994] 2 All ER 316 Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900 Re Sigma Finance Corp (in administrative receivership) [2009] UKSC 2; [2010] 1 All ER 571 Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 Robbins v Federal Commissioner of Taxation (1974) 129 CLR 332 Shell UK Ltd v Total UK Ltd [2010] 3 All ER 793; [2010] EWCA Civ 180 Simic v New South Wales Land and Housing Corporation [2016] HCA 47 Thompson v Smith (1976) 135 CLR 102 Tyrrell v The Owners Corporation Strata Scheme 40022 [2007] NSWCA 8 Undershaft (No 1) Ltd v Commissioner of Taxation (2009) 175 FCR 150; [2009] FCA 41 Universal Music Australia Pty Ltd v Sharman Networks Ltd (2006) 150 FCR 110; [2006] FCAFC 41 Victoria v Tatts Group Ltd [2016] HCA 5; (2016) 90 ALJR 392 Wardle v Agricultural and Rural Finance Pty Ltd [2012] NSWCA 107 Wasa International Insurance Co Ltd v Lexington Insurance Co [2010] AC 180 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 Yarraburn Nominees v Alliance Engineering Pty Ltd [2010] NSWSC 1081 Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 Texts Cited: Lord Grabiner "The iterative process of contractual interpretation" (2012) 128 Law Quarterly Review 41 Category: Principal judgment Parties: HP Mercantile Pty Limited (Appellant) Gerard Hartnett (Respondent) Gary Robert Wilson (Respondent) Attila Bodonyi (Respondent) Oliver Fonda (Respondent) Anthony William Andrew (Respondent) Ross Alexander Mars (Respondent) Frank Alexander Watkins (Respondent) Campbell Faulds (Respondent) John Luies (Respondent) Peter James Christie (Respondent) Bacroy Pty Limited Trading As John Jansen Family Trust (Respondent) Cathrine Lesley Stewart (Respondent) Robert Scolaro (Respondent) Stephen John Noblett (Defendant) Peter David Chapman (Respondent) Donald James Duncan (Respondent) Alastair Roderick Hood (Respondent) Nicholas Rossetti (Respondent) Gary Groth-Marnat (Respondent) Alexander Leslie Alan Holmes (Respondent) Simon Gregory Pritchard (Respondent) Mark Venables (Respondent) Ronald Anthony Baldini (Defendant) Ross Douglas Jose (Respondent) Alan John Bradshaw (Respondent) Helen Marie Creaser (Respondent) Keith Alexander Wallis (Respondent) Wayne James Spindler (Respondent) Richard William Sutton (Respondent) Antonio Bartuccio (Respondent) Robin Clifford James O'Neill (Respondent) Jean-Michel Dominique Seneque (Respondent) Guilbert John Percival (Respondent) Anthony Kubicki (Respondent) Gregory Plevey (Respondent) Thomas McIntyre (Respondent) Matthew Christopher Wenke (Respondent) Christopher Michailidis (Respondent) Michael Foletti (Respondent) John Fitzpatrick (Respondent) David George Gourley (Respondent) John Jeffreys (Respondent) Sharon Kell (Respondent) Heather Kelly (Respondent) John William Dunn (Respondent) Robert John Terry (Respondent) Ross Jeffrey Smith (Respondent) Paul William McDermott (Respondent) Jonathon Sidney Lowe (Respondent) Arthur Jones (Respondent) Sean Hogan (Respondent) Holly Bryant (Respondent) Audrey Chang (Respondent) Paul Burke (Respondent) Neville Vernon Deague (Respondent) Graham Ellender (Respondent) Paul Anthony McCluskie (Respondent) Laurence Mitchell (Respondent) Valentine Vargassoff (Respondent) Kevin Raymond Vaughan (Respondent) John Anthony Van De Ven (Respondent) Jeremy Dale Simpson (Respondent) Douglas Roach (Respondent) David Ralph (Respondent) Noel Edward Quick (Respondent) Randall Kenneth Perry (Respondent) Graham Ronald Paterson (Respondent) Roberta O'Sullivan (Respondent) John Michael Fisher (Respondent) Steven Doyle (Respondent) James Noel Brickwood (Respondent) Sigrid Birzer (Respondent) Robert Arthur Handley Bailey (Respondent) Shane Allard (Respondent) Gregory Raymond Smith (Respondent) Andrew Norris (Respondent) Russell John Hawkins (Respondent) Craig Randall Hawkins (Respondent) Brian Walter Gray (Respondent) Peter Michael Deed (Respondent) Alexander Rex Cameron (Respondent) Paul Benbow (Respondent) Edmund Lawrence Woods (Respondent) Joe Galante (Respondent) David John Gray (Respondent) Ralph Young (Respondent) Sean Patrick O'Donovan (Respondent) Representation: Counsel: B Walker SC, P Knowles (HPM) CRC Newlinds SC, A D'Arville (respondents represented by Jonathon Eastoe Lawyers and/or Tiernan Lawyers) A Leopold SC, E Holmes (respondents represented by Gandhi & Shaw) Solicitors: Clear Lawyers (HPM) Jonathan Eastoe Lawyers / Tiernan Lawyers (various respondents) Gandhi & Shaw (various respondents) File Number(s): 2015/325153 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2015] NSWSC 1475 Date of Decision: 8 October 2015 Before: Darke J File Number(s): 2012/193375; 2012/193384; 2012/193391; 2012/193998; 2012/194010; 2012/194019; 2012/194028; 2012/194133; 2012/194141; 2012/194151; 2012/196070; 2012/196092; 2012/196652; 2012/196655; 2012/201149; 2012/201186; 2012/201195; 2012/201203; 2012/201228; 2012/201230; 2012/201232; 2012/201234; 2012/201235; 2012/201238; 2012/201239; 2012/201240; 2012/201241; 2012/201242; 2012/201243; 2012/201244; 2012/203941; 2012/203942; 2012/203943; 2012/203944; 2012/203945; 2012/203947; 2012/204674; 2013/166139; 2013/177961; 2013/256939; 2014/88487; 2014/88497; 2014/88710; 2014/88711; 2014/88714; 2014/88715; 2014/88716; 2014/88718; 2014/88719; 2014/88720; 2014/88722; 2014/88724; 2014/88725; 2014/88726; 2014/88727; 2014/88728; 2014/88730; 2014/88731; 2014/88732; 2014/88735; 2014/88736; 2014/88738; 2014/88739; 2014/88740; 2014/88741; 2014/88743; 2014/88744; 2014/88745; 2014/88746; 2014/88749; 2014/88750; 2014/88751; 2014/88753; 2014/88756; 2014/88759; 2014/88760; 2014/88761; 2014/88762; 2014/88763; 2014/88765; 2014/88766; 2014/88767; 2014/88768; 2014/88769; 2014/88770; 2014/88771; 2014/89521; 2014/89550; 2014/89574 [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.] Judgment 1. BATHURST CJ: The agreements the subject of the present proceedings are both ill-conceived and poorly drafted. They give rise to considerable difficulties of construction. The issue in the present case is the construction of a limited recourse provision contained in cl 5.2(c) of an agreement described as an Investor Loan Agreement (the Loan Agreement) between Tumut River Orchard Management Limited (TROM or the Manager) and the respondents. It is not in dispute that TROM assigned its interest in the Loan Agreement to the appellant. 2. The background to the proceedings may be stated shortly. The proceedings arose out of a failed agricultural investment scheme promoted by TROM. The respondents, who are parties to separate proceedings in the Court below (the Growers), entered into the scheme by executing a series of agreements, an Investment Deed (the Investment Deed) an Orchard Licence Deed, whereby TROM licensed a portion of land for the purpose of the businesses of planting, growing and harvesting stone fruit trees (the Licence Agreement) and a Farming Management Agreement, whereby TROM agreed to supply plants, maintain harvest and market the stone fruit trees (the Farming Agreement). 3. TROM also offered to lend Growers the amount required for them to participate in the scheme. The Growers availed themselves of that facility and entered into Loan Agreements in the terms of the one the subject of the present proceedings (the Loan Agreement). As I indicated, TROM assigned its interests in this agreement to the appellants. 4. It will be necessary to deal with these agreements in more detail subsequently in this judgment. 5. The scheme failed and the appellant sued the Growers for monies outstanding under their respective Loan Agreements, contending that the limited recourse provision contained in cl 5.2(c) of these agreements had no application in the circumstances. The separate questions the subject of this appeal are designed to resolve that issue. 6. The question of construction is encapsulated in the separate questions which the Court has been asked to answer on the basis of an agreed set of facts. The relevant questions are in the following terms: "1. On the basis of the agreed facts in paragraphs 1-25, 26(a) and 27, on the proper construction of clause 5.2(c) of each of the Relevant Loan Agreements (as defined in the Statement of Agreed Facts), did each of the Relevant Defendants (as defined in the Statement of Agreed Facts) make available all their income in its entirety within the meaning of clause 5.2(c) of the applicable Relevant Loan Agreement (as defined in the Statement of Agreed Facts) from their interest in the Relevant Project(s) (as defined in the Statement of Agreed Facts) to the Representative? 2. On the basis of the agreed facts in paragraphs 1-25, 26(b) and 27, on the proper construction of clause 5.2(c) of each of the Relevant Loan Agreements (as defined in the Statement of Agreed Facts), did each of the Relevant Defendants (as defined in the Statement of Agreed Facts) make available all their income in its entirety within the meaning of clause 5.2(c) of the applicable Relevant Loan Agreement (as defined in the Statement of Agreed Facts) from their interest in the Relevant Project(s) (as defined in the Statement of Agreed Facts) to the Representative? 3. If the answer to question 1 or 2 above is in the affirmative, on the proper construction of clause 5.2(c) and clause 4.1 of each of the Relevant Loan Agreements, is the Plaintiff precluded from claiming the relief it seeks against any Relevant Defendant in respect of whom one or more events of default under clause 4.1 of the Relevant Loan Agreement has occurred?" 1. It should be noted that it was agreed in the Statement of Facts, and not disputed at the hearing, that, by reason of cl 5(a) of the Loan Agreement, the Growers irrevocably authorised and directed the Representative, referred to in cl 5.2(a), to pay to the lender, until the whole of the principal sum under the Loan Agreement had been paid, all amounts payable by the Representative to the borrower pursuant to the Investment Deed described in cl 5.2(a) of the Loan Agreement and that that authority had not been revoked (Agreed Statement of facts at [21] and [25]). 2. The questions were sought to be determined on the basis of two alternative scenarios set out at [26] of the Agreed Statement of Facts. That paragraph is in the following terms: "In the Relevant Projects at all material times there were Gross Sale Proceeds (as defined in the Relevant Investment Deeds) that were not remitted to the Representative in circumstances where had the Gross Sale Proceeds been remitted to the Representative, either: (a) an amount was payable by the Representative to the Borrower pursuant to the Relevant Investment Deeds as described in clause 5.2(a) of the Relevant Loan Agreement; or (b) an amount was not payable by the Representative to the Borrower pursuant to the Relevant Investment Deeds as described in clause 5.2(a) of the Relevant Loan Agreement." 1. The primary judge answered the three questions in the affirmative and, as a consequence, dismissed the proceedings. It is that decision which is the subject of this appeal. 2. I have had the advantage of reading the judgments of Leeming JA and Payne JA in draft. Leeming JA would answer the first two questions in the negative and allow the appeal. Payne JA would dismiss the appeal. Although the matter is finely balanced, I agree with Payne JA. What follows are my reasons for doing so. Is it appropriate to answer the separate questions? 1. Like the other members of the Court, I held significant reservations as to whether it was appropriate to answer the separate questions. However, for the reasons given by Leeming JA and Payne JA, I agree that they be answered. Consideration 1. Leeming JA has set out the relevant principles of contractual construction in terms with which I agree. In the present case, the context presented by the suite of agreements entered into is of importance in determining the issue in question. Most of the relevant provisions have been set out in the judgments of Leeming JA and Payne JA. I will not set them out again except to the extent that it is necessary to understand these reasons. 2. The primary agreement is the Investment Deed, the parties to which were the Growers, who agreed to become parties to the agreement on entering into the scheme, TROM and Permanent Trustee Co Ltd, described in the Investment Deed as the Representative (the Representative). The Investment Deed defines the expression "Project" as the scheme constituted by the Investment Deed, whilst "Project Agreement" or "Project Agreements" are defined to mean any agreement or related agreements entered into by each Grower under the Deed. These agreements include at least the Farming Agreement and the Licence Deed, the forms of which are contained in Schedules to the Investment Deed and in respect of which the Representative, by cl 19.1, is appointed attorney of the Grower for the purpose of executing them. 3. Clause 4.1 of the Investment Deed provides that persons wishing to apply for "Project Agreements" are required to complete an application form and lodge it with a cheque payable to the Representative for "the Selling Price". "The Selling Price" is defined in cl 4.2 as the sum of the amounts payable in accordance with the terms of the Project Agreements. Clause 5 provides that TROM may, in its absolute discretion, provide finance to approved applicants to facilitate the purchase of or subscription for a Licence and Farming Agreement. 4. Clause 10 contains various covenants by the Manager. They are expressed to be covenants with the Representative with the intent that their benefit should inure for the benefit of the Representative and the Growers jointly and severally. Importantly, they include a covenant by the Manager (TROM) to pay to the Representative, within 30 days after its receipt, money that, under the Investment Deed, is payable by the Manager to the Representative. Clause 19.3 of the Investment Deed confers on the Representative the power to institute, prosecute and compromise legal proceedings to recover any money payable to it. 5. Clauses 16 and 17 of the Investment Deed deal with what might loosely be described as receipt and distribution of Gross Sale Proceeds. "Gross Sale Proceeds" are defined, so far as relevant, as gross proceeds from the sale of Fruit by the Growers pursuant to the Farming Agreements. 6. Clause 16.1 obliges the Representative to open what is described as an Investment Account in which it is required to deposit the Gross Sale Proceeds, any income derived from such proceeds and any other money received on behalf of the Growers. Clause 17.2 provides that the Gross Sale Proceeds received by the Manager shall be paid to the Representative to be held in accordance with the provisions of the Investment Deed. 7. Clauses 16.3 and 16.4 deal with payments out of this Investment Account. They are in the following terms: "16.3 The Representative shall be entitled to and shall pay out of the Investment Account all reasonable costs and expenses properly incurred for the purposes of the Project in accordance with this Deed, including any payments, remuneration or indemnities to which the Representative, the Manager and the Auditor are respectively entitled. 16.4 The Representative and the Manager shall be entitled to be reimbursed under Clause 16.3 for all reasonable costs and expenses properly incurred for and on behalf of the Growers in respect of the following: (a) printing and postage of all cheques, statements, notices and reports required for or in connection with the Project, including the Annual Report; (b) stamp duty on cheques required for or in connection with the Project; (c) bank charges, financial institution duties, federal debits tax and such other government or semi-government charges or imposts as may be incurred in connection with the Project; (d) any brokerage payable in respect of funds invested in Authorised Investments; (e) costs, fees and expenses in relation to the maintenance of administrative records in connection with the Project; (f) any costs, fees and expenses incurred in respect of professional services or advice provided to the Manager under clause 7.3 or to the Representative pursuant to clauses 8.3, 19.2 and 19.3. (g) all other costs and disbursements in the connection the management and administration of the Project and the performance and functions of the duties of the Representative under the Project and Corporations Law; and (h) disbursements in connection with convening or holding any meeting of Growers and implementing any resolution passed by Growers." 1. One particular difficulty with these provisions is whether the power and duty conferred on the Representative by cl 16.3 extends to monies payable by Growers under their respective Licence and Farming Agreements. I do not think that it does. This is because the words "purpose of the Project" seem to me to relate to general expenses incurred in the administration of the Project as distinct from obligations under the various Farming and Licence Agreements entered into by individual Growers. That construction seems to me to derive some support from the nature of the particular amounts referred to in cl 16.4. Further, the contrary construction would give cl 17.7 no work to do. The construction is also supported by the provision of cl 16.7 which gives the Respondent limited recourse to the Manager in the event that there is a shortfall in the amount available to enable remuneration and the costs and expenses incurred in accordance with cl 16.4 to be paid. 2. Clause 17 is headed "Income Distribution and Accounts in Respect Thereof". Clause 17.1(a) provides that "Existing Growers" are entitled to what are described as 150 "Income Entitlements" for each Farming Allotment issued to them. It is unnecessary to deal with the Growers referred to in cl 17.1(b). 3. Clause 17.2 obliges the Manager to pay all Gross Sale Proceeds to the Representative. 4. Clause 17.3 describes "Net Income". It is in the following terms: "17.3 The Net Income in each Financial Year shall be the sum of the Gross Sale Proceeds and any other income in respect of that Financial Year including income derived from the investment of funds pursuant to Clause 16.6, less all costs and expenses (including remuneration) payable out of the Investment Account under this Deed in respect of that Financial Year." 1. Although this amount is described as Net Income, having regard to the other provisions contained in cl 17, it is not referring to the Net Income of individual Growers, or for that matter Growers generally, having regard to the method by which monies due under the Farming and Licence Agreements are to be deducted. 2. Clause 17.4 provides for the Representative, if recommended by the Manager, to set aside out of the Gross Sale Proceeds an amount for contingencies. It is in the following terms: "17.4 Subject to the Representative's covenant contained in Clause 20(b), the Representative shall, if recommended to do so by the Manager, set aside out of the Gross Sale proceeds such sums as are from time to time determined by the Manager to the credit of a reserve or provision for the purpose of meeting contingencies or such other purpose as the Manager shall in its absolute discretion think conducive to the interests of the Growers and shall invest the sums so set aside in Authorised Investments and the provisions of this Deed relating to the investment of such funds shall apply to the investment of such sums. The sums so set aside may be applied for the purpose of meeting the contingency or purpose for which the reserve or provision was established or at the discretion of the Manager with the approval of the Representative, be transferred to and form part of the Gross Sale Proceeds." 1. It can thus be seen that, at least in certain circumstances, part of the Gross Sale Proceeds can be withheld from Net Income and thus the monies ultimately available to meet the payment of expenses of individual Growers due under the Licence or Farming Agreements or distributions to them. 2. Clause 17.6 provides for the Representative to credit to each Grower's account a share of Net Income according to a formula which so far as relevant is as follows: "17.6 At the end of the each Financial Year the Representative shall credit to the account of each Grower a share of the Net Income in accordance with the following formulas: (i) Growers who subscribed in accordance with Clause 17.1(a); Te Pe –––––––––––––– X ––––––––––––––- X GSP Aggregate of all Te's Pn + Pe …. Where: Pe = Projected Production of Total Number of Trees Existing Growers for each X Licenced to Existing Tree in accordance with Growers Table 1 Pn = Projected Production of Total Number of Trees Treetop Growers for each X Licenced to Treetop Tree in accordance with Growers Table 1 Te = Income Entitlement of an individual Grower subscribed in accordance with Clause 17.1(a) … GSP = Gross Sale Proceeds of the Project TABLE 1 Projected Harvested Production In Kilograms For Each Tree 1995/6 1996/7 1997/8 1998/9 1999/2000 and thereafter Treetop Growers 0 0 12 28.7 38.5 Existing Growers 2.4 15.34 30.66 38.5 38.5" 1. It can thus be seen that an individual Grower's share of the proceeds is not based directly on what is harvested from the land allocated to him or her but rather is calculated as a proportion of Gross Sale Proceeds in accordance with the formula in cl 17.6. 2. Clauses 17.7 and 17.8 are of particular importance. They provide as follows: "17.7 Upon an amount being credited to the account of a Grower pursuant to Clause 17.6, the Representative shall deduct from such account and shall pay to the person entitled thereto all costs, expenses and outgoings as are properly chargeable to the Grower under his Agreements. 17.8 The Representative shall, within sixty (60) days of the end of each Financial Year, cause any amount standing to the credit of the account of each Grower to be paid to the Grower less any negative amount carried forward from any earlier period as referred to in Clause 17.9, PROVIDED HOWEVER that the Representative shall be entitled to deduct such amount as is reasonable in respect of tax which may be payable by the Representative pursuant to section 98 of the Income Tax Assessment Act, 1936 from any payment to a Grower who is a non-resident for the purposes of section 98 of the said Act AND PROVIDED FURTHER that upon the Representative making payment of all tax payable as aforesaid, any balance remaining from the amount retained for such purposes shall forthwith be paid to the Grower." 1. Clause 17.7 in my view makes provision for the payment of costs, expenses and outgoings payable by an individual Grower under the Farming and Licence Agreements into which he or she entered. That appears from the obligation on the Representative to deduct from the Grower's account and pay costs, expenses and outgoings under the Agreements. In contrast to the Project Agreement, the expression "Agreements" in cl 17.7 is not defined. However, in my opinion, it can only be taken to mean the Project Agreements. 2. Clause 17.8 provides for the payment of the balance after payment of such outgoings to the Grower. It is only that amount that the Representative is required to pay to the Grower. 3. Clause 18 provides for annual audit reports showing the Net Income and the Grower's entitlement to Net Income. 4. The structure of the Investment Deed can thus be summarised as follows. Although Licence Agreements were entered into with individual Growers in respect of particular lots, the Grower's entitlement was based on a formula which did not directly depend upon actual production from his or her particular lot. Further, although the Grower was personally liable for the fees payable under the Licence and Farming Agreements, those fees were to be deducted prior to any distribution being made to the Grower. 5. The Licence Agreement provided for TROM to licence to a Grower a portion of land of which TROM was the registered proprietor. It provided for the payment of a licence fee of $500 on the date of execution and then an annual fee of 5% of the Gross Sale Proceeds to which the licensee was entitled under the provisions of the Investment Deed. This was presumably 5% of the amount to which the Grower was entitled after application of the formula under cl 17.6. 6. Clause 14 of the Licence Agreement is in the following terms: "14.(a) The Grower shall by his execution of this deed be deemed to have irrevocably authorised and directed the Representative to pay to the Manager, until the whole of the amounts referred to in Clause 2(a)(ii) have been paid, all amounts payable by the Representative to the Grower in pursuance to Clause 17.8 of the Investment Deed representing the income of the Grower in respect of the Grower's Farming Allotment to be applied to the Manager in payment of the amounts referred to in Clause 2(a)(ii). (b) Only after 30th of June 1998 and in the event that the Grower's income in any one subsequent year is insufficient after the deduction of any other amount payable to the Manager, to pay the amounts referred to in Clause 2(a)(ii) or part thereof, then such amount or part thereof may be paid out of the Grower's income in any following year. (c) Subject to the Grower's income from his interest in the Project being made available in its entirety by the Grower to the Representative for the purpose of meeting the Grower's payment obligations to the Manager under the Licence Agreement the Manager shall have no other recourse to the Grower for the amounts referred to in Clause 2(a)(ii)." 1. This provision presents its own difficulties of construction. If the fee as payable under the Licence Agreement falls within the words costs, expenses and outgoings as are properly chargeable to the Grower under cl 17.7 of the Investment Deed, they are paid before any entitlement to the Grower under cl 17.8 arises. In those circumstances, cl 14(a) would have no work to do. If the fees do not fall within cl 17.7, then it is difficult to see how the Grower's entitlement under cl 17.8 could be made available in its entirety for the purpose stated in cl 14(c), having regard to an equivalent provision in the Farming Agreement. However, like Leeming JA, I do not find it necessary to express a concluded view on this question. 2. Under the Farming Agreement, TROM undertakes to supply, plant, maintain, harvest and market the trees to be planted on the land the subject of the Licence Agreement. The Farming Agreement provides that, for the purpose of marketing, the harvested fruit can be pooled with stone fruit of other Growers. By cl 11.5, TROM undertook to pay the Gross Sale Proceeds to the Representative. 3. Clause 19 deals with payment by the Growers for the services provided under the Farming Agreement. It is unnecessary to set these provisions out in detail. They provide for payment of costs together with an amount equivalent to 5% of the share of Gross Sale Proceeds (if any) to which the Grower is entitled under the provisions of the Investment Deed. 4. Clause 29 of the Farming Agreement is in similar terms to cl 14 of the Licence Agreement. Similar difficulties arise in respect of this clause as arise in relation to cl 14, although some of the payments required fall more readily within the expression costs, fees and expenses in cl 17.7 of the Investment Deed. 5. What, however, is relatively clear from the Agreements is that the intention of the parties was that any liability under the Licence or Farming Agreements was to be met out of the Grower's entitlement to funds received from the venture prior to money being paid to the Grower under cl 17.8 of the Investment Deed. This is so irrespective of whether liability to make the payments under the Licence or Farming Agreements arose under either cl 17.7 or as a result of the irrevocable direction contained in cl 14.1 and cl 29.1 of the Licence and Farming Agreements respectively. 6. The Loan Agreement, in my opinion, is a related agreement within the definition of Project Agreement in the Investment Deed. The loan the subject of the Agreement was to facilitate purchase and subscription of Licences and Farming Agreements (cl 5 of the Investment Deed) and its form is a Schedule to the Investment Deed. Further, it was referred to in the Prospectus as a facility available to investors who took up two or more Farming Allotments. 7. In these circumstances, the question arises whether the monies due under the Loan Agreement are payable by the Representative under cl 17.7 as outgoings properly chargeable to the borrower under his "Agreements". However, I do not think it is necessary to decide that question. Whether such payments were payable by the Representative under cl 17.7 of the Investment Deed or payable out of the Grower's entitlement under cl 17.8 as a result of the direction in cl 5.2(a) of the Loan Agreement, the contractual intention was that liability under the Loan Agreement would be satisfied prior to distribution of funds to the Grower. 8. There are two matters which should be noted in the Loan Agreement. First, cl 4 provides that the principal and interest due under the Loan Agreement becomes immediately due and payable on an event of default. An event of default is defined in cl 4.1(b) to include the following: "4.1(b) if default be made by any person other than the Lender of any observance or performance of any obligation contained on its part contained in this agreement or in any Security or on any other account or transaction between the Lender or the Borrower". 1. It can be seen that failure by TROM to observe and perform any obligation on its part under any security documents, does not constitute an event of default. Clause 5.1 of the Investment Deed charges the Farming Agreement as security for the loan. Thus default by TROM of its obligation under cl 11.5 of the Farming Agreement to pay all Gross Sale Proceeds to the Representative would not constitute default by the Borrower under the Loan Agreement. 2. The other matter is that cl 8.3 of the Loan Agreement gives TROM the right to assign the benefit of the agreement. 3. Clause 5.2 of the Loan Agreement is in the following terms: "5.2(a) The Borrower shall, by his execution of this Deed, be deemed to have irrevocably authorised and directed the Representative to pay to the Lender, until the whole of the Principal Sum has been repaid and Interest paid, all amounts payable by the Representative to the Borrower in pursuance of Clause 17.8 of the Investment Deed representing the income of the Borrower in respect of the income of Borrower's Farm Business (the Borrower's Farming Allotments), to be applied by the Lender in payment of the amounts referred to in Clause 3 and Items 3 to 6 of Schedule 1 hereto. (b) In the event that the Grower's income in any one year in insufficient after the deduction of any other amount payable to the Manager, to pay the Principal and Interest amounts referred to in Items 4C, 5 and 6C of Schedule 1 hereto or part thereof then such Principal and Interest or part thereof may be paid out of the Grower's income in any subsequent year. (c) Subject to the Grower's income from his interest in the Project being made available in its entirety by the Grower to the Representative for the purpose of meeting the Grower's payment obligations to the Lender under the Loan Agreement the Lender shall have no other recourse to the Grower for the Principal and Interest amounts referred to in Items 4C, 5 and 6C of Schedule 1 hereto." 1. The contentions of the parties as to the construction of cl 5.2 of the Loan Agreement are set out in the judgment of Leeming JA and I will not repeat them. The issue stated shortly is whether the limited recourse provision available in cl 5.2 is lost when Gross Sale Proceeds are not remitted by TROM to the Representative. 2. Clause 5.2(a) of the Loan Agreement contains an irrevocable authorisation and direction by the Borrower to the Representative in respect of monies payable under cl 17.8 of the Investment Deed. That money is stated in cl 5.2(a) to represent the income of the Borrower in respect of the income of the Borrower's Farm Business (the Borrower's Farming Allotments). Farming Allotment is defined as the part of the land in which the Borrower is entitled to carry on the farm business. The direction presumably was framed in these terms as it was apparent to the parties that they were the only funds which the Borrower would receive from its investment. 3. Clause 5.2(b) uses somewhat different wording. First, it refers to Grower's Income as distinct from "representing the income of the Borrower in respect of the income of the Borrower's Farm Business". Second, rather than referring to cl 3 and Items 3-6 of Sch 1 to the Loan Agreement, it merely refers to Item 4C, 5 and 6C of Sch 1. The latter change is explicable as it is those items in the Schedule which provide for specific payments but it is by no means clear why the expression Grower's Income in cl 5.2(b) is used in substitution for the words in cl 5.2(a). However, there is nothing in the agreement or the contractual context to suggest that it was intended to refer to a different amount to that referred to in cl 5.2(a). 4. Clause 5.2(c) uses the expression Grower's Income from his interest in the Project. Project is defined as the scheme represented by the Investment Deed. The only income received by the Grower under the scheme is income derived from the Farming Agreement payable to him or her under the mechanism contained in cll 16 and 17 of the Investment Deed. In these circumstances, I do not think the difference in wording between the description of Grower's Income in cl 5.2(c) and the description of income of the Borrower contained in cl 5.2(a) has any substantive effect. 5. The real difficulty arises out of the use of the words "in its entirety" in cl 5.2(c). It is certainly arguable that these words extend beyond a Grower's entitlement under cl 17.8 to money to which the Grower would have been entitled had TROM accounted for the whole Gross Sale Proceeds in any year to the Representative in accordance with the agreement. There is nothing commercially unreasonable about the benefit of a limited recourse agreement being limited to the situation where the agreements, which in effect provided the mechanism by which the lender is to be paid, are carried out in accordance with their terms. 6. Notwithstanding this I do not think the words "in its entirety" have that effect. First, the concept of making the income available in its entirety sits uneasily with cl 5.2(b) which seems to provide that other amounts payable to the Manager (who at the time of entry into the Loan Agreement was also the lender) be deducted first. 7. Second, each of the limited recourse provisions in the Licence Agreement and the Farming Agreement are subject to the Grower's income from his interest in the Project being made available in its entirety to the Representative for the purpose of meeting the Grower's payment obligations under those agreements. It is difficult to see how this income could be made available in its entirety for both of the specific purposes as well as the purpose of the Loan Agreement. 8. Third and importantly, the structure of the agreement is such that the Borrower has no control over any of the funds derived from the venture until at least the money is credited to his account. Up until the time of payment of the Gross Sale Proceeds to the Respondent, the funds are under the control of TROM which is both the Manager and the lender and thereafter under the control of the Representative. The Loan Agreement provides (cl 4.1(b)) that default by TROM under any security is not an event of default under the Loan Agreement. It would be unusual if a failure by TROM to account for the whole of the Gross Sale Proceeds under the Farming Agreement, whilst not constituting default by the Borrower under the Loan Agreement, would lead to the loss of the limited recourse protection. 9. In these circumstances, I am of the view that the limited recourse provision continues to apply in circumstances where TROM withheld part of the Gross Sale Proceeds which should have been paid to the Representative. I appreciate that that leaves the words "in its entirety" with no work to do. However, having regard to the matters to which I have referred, it seems to me that, even if that is the case, the construction which I have given to the provisions should be preferred. As Leeming JA has pointed out, otiose words are not uncommon in contracts. It is not surprising that they appear in agreements as poorly drafted as those in question in the present case. It may be that the drafter used the expression "in its entirety" to emphasise that the monies were to be applied in payment under the Loan Agreement prior to any payment being made to the Grower. 10. Further, what is required by cl 5.2(c) is that monies in question are made available to the Representative. In my opinion, the authorisation and direction have the effect of making those monies so available. If TROM fails to pay the Gross Sale Proceeds to the Representative, the Representative has power under cl 19.3 of the Investment Deed to seek to recover such monies. Once received, they would form part of the Gross Sale Proceeds and be dealt with in accordance with cll 16 and 17 of the Investment Deed and the direction given by the Borrower to the Representative. In these circumstances, it seems to me that, regardless of whether the words "in its entirety" extend the obligation of the Borrower to make available money above and beyond those actually available for distribution under cl 17.8, the Borrower has made those funds available within the meaning of cl 5.2(c). 11. For these reasons, I agree with the orders proposed by Payne JA. 12. I agree with both Leeming JA and Payne JA that Question 3 should be answered in the affirmative. 13. LEEMING JA: This appeal turns on a single question of construction, on uncontested facts. These reasons are as long as they are partly because the issue arises from a suite of somewhat casually drafted documents, and partly because of some procedural complexities, but mostly because the arguments for and against the question are numerous and quite subtle. Overview 1. The respondents to this appeal each invested in one or more of four horticultural schemes promoted in the 1990s, known as the Coonabarabran Orchard Project, the Queensland Orchard Project, the Tumut River Orchard Project and the Treetop Project. Each scheme was promoted through the issue of a prospectus. It was common ground that all issues could be determined by reference solely to the Coonabarabran Orchard Project. In what follows I shall follow that course and ignore some minor differences (including as to documentation and parties) with the other three projects. 2. The essence of the project was that: 1. each investor would be licensed an allotment of land for a period of 14 years; 2. horticultural activity (preparatory work, planting, nurturing, pruning and harvesting peach and nectarine trees) would take place on the land throughout that period, with the intention that the produce be marketed and sold; 3. most of the project costs, including the fees for licensing the land and conducting the horticultural activity, were to be paid from the sale proceeds; 4. investors could borrow in order to fund their investment in the project, on terms that all save the initial two repayments would also be paid from the sale proceeds. 1. Although entering into the loan was optional, all of the respondents to this appeal did so. The scheme was marketed on the basis that an investor who borrowed $12,900 for the initial costs would be able to claim at least $12,900 of tax deductions in the first three years, with the large majority ($11,674) claimable in the first year (there was also the possibility of deductions for interest). 2. In addition to the investors, who were also described as "Growers", each project involved Tumut River Orchard Management Ltd (TROM). TROM performed a variety of roles. In the case of the Coonabarabran Orchard Project, TROM was (a) the licensee of land near Coonabarabran, (b) the Manager who would cause the horticultural activity (growing, marketing and selling peaches and nectarines) to take place on the land, and (c) the lender to investors. 3. The other participant in the project was the Representative. In the case of the Coonabarabran Orchard Project, the Representative was Permanent Trustee Company Ltd. The Representative had an important role at the outset. The application form in the prospectus authorised the Representative to execute the Licence Agreement and the Farming Agreement on the investor's behalf, and the loan application form likewise authorised the Representative to enter into the Investor Loan Agreement on the investor's behalf. Throughout the operation of the project, investors' funds (including money borrowed from TROM) were to be paid to the Representative. If and when the peaches and nectarines were sold, the proceeds of sale were to be paid to the Representative. The expenses of the horticultural project, including TROM's fees, and all save the first two loan repayments, were to be paid by the Representative. After all expenses had been paid, the Representative was required to transfer the remainder to the investor. 4. HPM was not a party to any of the agreements. At some stage, TROM purported to assign its right, title and interest under the various loan agreements to the appellant, HP Mercantile Pty Ltd (HPM). HPM has brought proceedings to recover the amounts outstanding on those agreements. 5. Before the primary judge there were some 88 proceedings brought by HPM against individual investors. The number of proceedings has led to a complicated procedural history which is essential to understanding how the issues in the appeal arise and what this appeal determines. Procedural history 1. One of the proceedings brought by HPM, in relation to the Queensland Orchard Project, went to trial in March 2014: HP Mercantile Pty Ltd v Clements [2014] NSWSC 509. The defendant, Mr Phillip Clements, did not press all of the issues raised by him. Even so, HPM failed to establish a contractual right to repayment, by reason of the limited recourse provision in the Investor Loan Agreement, and the proceedings were dismissed. HPM appealed. 2. While the appeal was pending, Mr Clements died. On 10 April 2015, shortly before it was listed for hearing, the appeal was compromised, on terms including that Mr Clements' executors would not bring any further appeal to the High Court of Australia if HPM succeeded, and that HPM would, if it succeeded either in this Court or in the High Court, accept $10 from the executors in full satisfaction of its claim. It followed that the appeal no longer lay as of right, because after 10 April 2015 the amount in issue was $10. 3. When the appeal came on for hearing on 21 April 2015, leave to appeal was refused. The Chief Justice, with whom Beazley P and Gleeson JA agreed, said that "granting leave to appeal where the proceedings, in reality, are hypothetical between the parties and designed solely to bind, as a matter of precedent, persons who are not parties to the litigation and who have no opportunity to be heard, seems to me an entirely inappropriate way for a Court to proceed and could itself be productive of substantial injustice": HP Mercantile Pty Ltd v Kym and Paul Clements [2015] NSWCA 212 at [7]. The separate questions and the Statement of Agreed Facts 1. In those circumstances, in July 2015, three questions were ordered to be determined separately from and prior to all other questions in each of the numerous proceedings commenced by HPM and pending in the Commercial List. The questions focus on clause 5.2(c) of the Investor Loan Agreements, which is central to this appeal, and which amounts to a conditional limited recourse provision for the purpose of repayment of the balance of the loans (save for the initial two repayments). The clause provides: "Subject to the Grower's income from his interest in the Project being made available in its entirety by the Grower to the Representative for the purpose of meeting the Grower's payment obligations to the Lender under the Loan Agreement the Lender shall have no other recourse to the Grower for Principal and Interest amounts referred to in Items 4C, 5 and 6C of Schedule 1 hereto." 1. The amounts in item 4C of Schedule 1 of the Investor Loan Agreement were all of the repayments of principal save for the initial two repayments; the other items dealt with interest. It was for that reason a limited recourse, as opposed to a no recourse provision. But little turns on that; the amounts in issue in the litigation were amounts of principal and interest excluding the initial two repayments. However, the fact that the provision was conditional, turning upon the satisfaction of the opening words, "the Grower's income from his interest in the Project being made available in its entirety", is central to this appeal. 2. The first and second questions reserved for separate determination each asked whether, on the basis of specified agreed facts, the investors made available all their income in its entirety within the meaning of cl 5.2(c) of the applicable Investor Loan Agreement to the Representative (which is to say, whether the condition in cl 5.2(c) was satisfied). The third question asked, if the answer to the first or second question was affirmative, whether HPM was precluded from claiming the relief it seeks from the defendants. 3. The three questions were based on 27 paragraphs of facts said to be agreed. Those paragraphs identified the four horticultural projects and the contractual documents involved in each (pars 1-6). It was agreed that each defendant entered into the documents pertaining to the relevant project, including the loan (pars 7, 12-15). It was agreed that in each case, the lender advanced the principal in accordance with the Investor Loan Agreement, and the defendant was required to make, and did make each of the two initial payments (pars 18-20). It was agreed that the defendant had, in accordance with provisions of the loan agreements identified in more detail below, given the Representative irrevocable authority to pay amounts due under each of the Investor Loan Agreement, the Licence Agreement and the Farming Agreement from amounts payable to the respondent, and that none of those authorities had been revoked (pars 21-25). It was agreed that by a series of assignments, all of TROM's rights, title and interest under each Investor Loan Agreement had vested in HPM (par 27). 4. Paragraph 26 was in these terms: "In the Relevant Projects at all material times there were Gross Sale Proceeds (as defined in the Relevant Investment Deeds) that were not remitted to the Representative in circumstances where had the Gross Sale Proceeds been remitted to the Representative, either: (a) an amount was payable by the Representative to the Borrower pursuant to the Relevant Investment Deed as described in clause 5.2(a) of the Relevant Loan Agreement; or (b) an amount was not payable by the Representative to the Borrower pursuant to the Relevant Investment Deed as described in clause 5.2(a) of the Relevant Loan Agreement." 1. It will be seen that subpars (a) and (b) exhaust the universe of possibilities. The only difference between questions 1 and 2 was that question 1 was to be answered on the basis of pars 1-25, 26(a) and 27 applying, while question 2 was to be answered on the basis of pars 1-25, 26(b) and 27 applying. It is clear that common to both questions was the factual proposition that at all material times there were Gross Sale Proceeds which were not remitted to the Representative. It was, accordingly, unnecessary to consider which party carries the burden of proving that the limitation in cl 5.2(c) applied: cf Wardle v Agricultural and Rural Finance Pty Ltd [2012] NSWCA 107 at [249]-[253]. Rather, the only issue was as to the construction of the clause: did it apply if there were Gross Sale Proceeds that were not remitted to the Representative? 2. The document then referred to "Outcomes 1 and 2". Outcome 1 was that if all of the answers to questions 1, 2 and 3 were affirmative, then the actions against the investors insofar as they were based on the four horticultural projects would be dismissed. Outcome 2 was that if any of the questions were answered negatively, the actions would proceed to trial. 3. The hearing before the primary judge, although set down for three days, was completed in a single day. The large majority of defendants were represented by two firms of solicitors, who retained separate counsel. The same occurred on appeal, and, in light of the different approaches adopted, it is convenient to adopt the descriptions chosen by the parties and refer to the "Gandhi and Shaw" respondents and the "Eastoe Tiernan respondents". (There are some 68 Gandhi and Shaw respondents and some 36 Eastoe Tiernan respondents; the total number of respondents exceeds the number of proceedings, because in some cases there were two or three joint investors sued by HPM.) 4. The primary judge delivered judgment promptly, answering each question negatively: HP Mercantile Pty Ltd v Hartnett [2015] NSWSC 1475. In accordance with the parties' agreement, the proceedings were either dismissed with costs, or dismissed insofar as they related to the four horticultural schemes. HPM's appeal to this Court accordingly is as of right. The amount in issue very considerably exceeds the $100,000 required by s 101(2)(r) of the Supreme Court Act 1970 (NSW). The note to the Statement of Agreed Facts 1. At the outset of the hearing of the appeal, members of the Court indicated concern in relation to the procedure which had been followed. The title of the so-called "Statement of Agreed Facts" was, in truth, capable of misleading the reader. The document commenced with a note to the effect that the defendants contended that even accepting the essence of the Plaintiff's pleaded case, on its proper construction cl 5.2(c) of the Investor Loan Agreements was an answer to claim. However, the note continued: "Accordingly, these facts are agreed only to permit the determination of those separate questions and the parties are bound by the agreement for that purpose only and not in the event and to the extent that the agreed outcomes result in the actions by the Plaintiff or part of those actions proceeding towards trial, i.e. Outcome 2 as referred to below. In particular, if Outcome 2 eventuates, the parties will not be bound by any admission or agreement in respect of these facts." 1. The essential problem is readily stated. This Court was being asked to determine the answers to three questions on a particular basis, and, in the event that the appeal was allowed, then the parties were free to proceed on a basis other than that on which those answers had been given. It is, as Lord Neuberger PSC observed, "a basic principle that a decision of a court is binding as between the parties": R (Evans) v Attorney General [2015] AC 1787; [2015] UKSC 21 at [52]. In what sense then are the parties bound by this Court's judgment if they are later free to dispute all aspects of the basis on which it has been determined? 2. All parties made common cause in seeking to allay the Courts' concerns. HPM pointed to what occurred in Director of Public Prosecutions (Cth) v JM (2013) 250 CLR 135; [2013] HCA 30, and the Gandhi and Shaw respondents drew the Court's attention to Tyrrell v The Owners Corporation Strata Scheme 40022 [2007] NSWCA 8 at [14]-[15] and Atwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16; (2016) 90 ALJR 572 at [21]-[26]. In each of those decisions the possibility of the agreed facts being disputed at a later hearing was addressed. But those authorities did not address my concern, which would become acute in the event that the question of construction were resolved favourably to HPM on the limited matter in which it has been presented and the matter went to trial. It may be assumed (the pleadings are not included in the appeal papers) that there are a series of factual defences (such as estoppel and claims of misleading and deceptive conduct) on which the investors rely. Would it be open to them to contend, against a different matrix of facts established by evidence, for a different answer to the question of construction? 3. Fortunately, it is unnecessary to analyse the position any further. In their supplementary submissions supplied after the hearing, the Eastoe Tiernan respondents added: "It is true that if there is to be a full hearing of the matter, that some or all of the facts may be contested. However, the issue of the proper construction of the contract will not be revisited as it will have been determined finally. This has utility to all parties and is productive of the expeditious resolution of the case as a whole." 1. The Gandhi and Shaw respondents agreed. So did HPM. The consequence is that it will not be open, in the event that the proceedings go to trial, for a party to contend (even on the basis of evidence of different surrounding circumstances) for a construction which is contrary to that determined by this Court. On that basis, I am satisfied that it is appropriate to determine the appeal on its merits. Although this Court is exercising federal jurisdiction (deriving from claims under federal law in the underlying proceeding, notwithstanding the purely contractual issue arising on appeal), I do not consider there is anything contrary to the inhibitions articulated in Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334; [1999] HCA 9 at [45]-[59]. The questions are squarely based on the transactions into which the respondents entered, and their answers will bind the parties and reduce the controversy between them. The contracts 1. There were four contractual documents in the prospectus circulated in relation to the Coonabarabran Orchard Project: an Investment Deed dated 26 May 1993 between the Manager and the Representative, to which the various Growers would become parties, and three agreements contained in the prospectus: the Licence Agreement, the Farming Agreement and the Investor Loan Agreement. 2. The prospectus contained two forms which an investor could complete. The "Form of Application" was mandatory. It stated that "by signing this Application, I/We authorise Permanent Trustee Company Ltd. as my/our nominee and agent to enter into the Licence and Farming Agreements on my/our behalf and to bind me/us to the terms of those Agreements as if I/We had signed the same". As earlier noted, it was agreed that each investor was bound by both the Licence and Farming Agreements. 3. The Investor Loan Agreement was optional, but was entered into by all of the respondents to the appeal (and, I would infer, by all or the overwhelming majority of investors in the project). The form authorised Permanent Trustee as nominee and agent to enter into the Investor Loan Agreement on the investor's behalf and to bind the investor to its terms as if the investor had signed the agreement. 4. The form also stated that there were two payments, each of $1,875 per Farming Allotment, to be made three and six calendar months after the date of the loan, "and thereafter [repayments] will be made out of the proceeds of all amounts payable by the Representative to the Borrower in pursuance of Clause 17.8 of the Investment Deed representing the income of the Borrower in respect of the Borrower's Farming Allotments". The Licence Agreement 1. By the Licence Agreement, TROM, which was entitled to be the registered proprietor of some 460 hectares of land near Cootamundra granted a licence to the investor over specified Farming Allotments for 14 years. Licence fees were payable of $500 upon signing the agreement (cl 2(a)(i)), and then annual fees of "the amount equivalent to five per cent (5%) of the share of the Gross Sale Proceeds (if any) to which the Licensee is entitled under the provisions of the Investment Deed payable on or before 30th June in the relevant financial year" (cl 2(a)(ii)). 2. The Licence Agreement contained a limited recourse clause, cl 14, as follows: "14. (a) The Grower shall by his execution of this deed be deemed to have irrevocably authorised and directed the Representative to pay to the Manager, until the whole of the amounts referred to in Clause 2(a)(ii) have been paid, all amounts payable by the Representative to the Grower in pursuance to Clause 17.8 of the Investment Deed representing the income of the Grower in respect of the income of the Grower's Farming Allotment to be applied to the Manager in payment of the Licence Fee amounts referred to in Clause 2(a)(ii). (b) Only after 30th June 1998 and in the event that the Grower's income in any one subsequent year is insufficient, after the deduction of any other amount payable to the Manager, to pay the amounts referred to in Clause 2(a)(ii) or part thereof then such amount or part thereof may be paid out of the Grower's income in any following year. (c) Subject to the Grower's income from his interest in the Project being made available in its entirety by the Grower to the Representative for the purpose of meeting the Grower's payment obligations to the Manager under the Licence Agreements the Manager shall have no other recourse to the Grower for the Licence Fee amounts referred to in Clause 2(a)(ii)." The Farming Agreement 1. Under the Farming Agreement, the Manager was required to plant, prune, maintain and where necessary replace at its own cost dead or diseased trees: cll 1.3 and 2. The Manager was required to inspect the trees, and, in its absolute discretion, determine if and when fruit was to be harvested: cl 9.1. Clause 9.3 provided: "The Grower hereby irrevocably appoints the Representative the attorney of the Grower under power in the Grower's name and as the Grower's act and deed for the purpose of borrowing such monies as required to harvest Fruit from time to time to be secured by a charge or charges over such Fruit that the proceeds therefrom, PROVIDED THAT and it is hereby acknowledged and agreed that any liability of the Grower in respect of such borrowing shall be limited to the value of the Fruit and any proceeds therefrom. The Representative shall procure the discharge of such charge or charges as soon as practicable after the completion of any such harvest and the receipt of the proceeds from the sale of the Fruit." 1. The Manager was then to "cool, grade, pack and, if necessary, store any harvested fruit": cl 10. 2. Clause 11 was titled "Marketing and sale". Clause 11.1 provided: "The Grower hereby appoints the Manager as his agent and nominee to sell the Fruit harvested pursuant to this Agreement. For the purposes of facilitating the sale of the Fruit the Manager shall be entitled to pool the Fruit with other stone‑fruit of the same species harvested from adjacent or nearby lands and the Grower hereby acknowledges that he shall have no interest in any particular stone‑fruit forming part of the pool but only such proportionate interest in the whole of the pool in the proportion that the number of his Trees bears to the total number of trees from which the stone‑fruit is pooled." 1. Clauses 11.2, 11.3 and 11.4 dealt with the promotional and sales activities of the Manager. Clause 11.5 was in the following terms: "The Manager shall for the time being under the Investment Deed pay all Gross Sale Proceeds to the Representative to be dealt with in accordance with the provisions thereof." 1. Once again, there was a limited recourse provision in cl 30 in the Farming Agreement, which closely followed the language of the limited recourse provisions in the Licence Agreement, as follows: "30. RECOURSE TO A GROWERS INCOME (a) The Grower shall by his execution of this deed be deemed to have irrevocably authorised and directed the Representative to pay to the Manager, until the whole of the amounts referred to in Clause 19.2(b), 19.4 and 19.5 have been paid, all amounts payable by the Representative to the Grower in pursuance to Clause 17.8 of the Investment Deed representing the income of the Grower in respect of the income of the Grower's Farming Allotment to be applied to the Manager in payment of the amounts referred to in Clause 19.2(b), 19.4 and 19.5. (b) Only after 30 June 1998 in the event that the Grower's income in any one subsequent year is insufficient after the deduction of any other amount payable to the Manager, to pay these amounts or part thereof, then such amounts or part thereof may be paid out of the Grower's income in any following year. (c) Subject to the Grower's income from his interest in the Project being made available in its entirety by the Grower to the Representative for the purpose of meeting the Grower's payment obligations to the Manager under the Farming Agreements the Manager shall have no other recourse to the Grower for these amounts referred to in Clause 19.2(b) and 19.4. and 19.5." The Investment Deed 1. The Manager promised to provide various services to each Grower, including works and services in accordance with the Farming Agreements: cl 8.1(a). The Manager gave a covenant to the Representative, "with the intent that the benefit of the said covenant shall inure to the Representative and to the Growers jointly and each of them severally" that it would strive to carry on and conduct its business in a proper and efficient manner: cl 10(a). 2. The Representative was required to open a bank account styled the "Coonabarabran Investment Account" into which was required to be deposited the Gross Sale Proceeds: cl 16.1(a). Clauses 16.3 and 16.4 gave rights to the Representative and the Manager to pay out and reimburse reasonable costs and expenses properly incurred in accordance with the Deed. 3. Clause 17 was entitled "Income Distribution and Accounts in Respect Thereof". The clause is important because the competing constructions of the words "Grower's income from his interest in the Project" in cl 5.2(c) pick up different provisions within it. Clause 17.1 provided that each Grower was entitled to a number of Income Entitlements based on the number of farming allotments issued to them. Clause 17.2 and 17.3 provided that: "17.2 All Gross Sale Proceeds received by the Manager pursuant to the Farming Agreements shall be paid to the Representative to be held by it in accordance with this Deed. 17.3 The Net Income in each Financial Year shall be the sum of the Gross Sale Proceeds and any other income in respect of that Financial Year including income derived from the investment of funds pursuant to Clause 16.6, less all costs and expenses (including remuneration) payable out of the Investment Account under this Deed in respect of that Financial Year." 1. Clause 17.4 required the Representative to set aside amounts from Gross Sale Proceeds for the purpose of meeting contingencies or some other purpose recommended by the Manager. Such sums could be applied for the nominated contingency or purpose, or alternatively, at the discretion of the Manager with the approval of the Representative, could be "transferred to and form part of the Gross Sale Proceeds". Clause 17.5 made provision for setting aside provision for income tax. Clause 17.6 provided that: "At the end of each Financial Year the Representative shall credit to the account of each Grower a share of the Net Income in accordance with the following formulas". Notwithstanding those words, the formulas determined a proportion, based upon the number of a Grower's Income Entitlements compared to the total number of Income Entitlements of the Gross Sale Proceeds (rather than Net Income) of the Project. 1. Clauses 17.7-17.9 provided: "17.7 Upon an amount being credited to the account of a Grower pursuant to Clause 17.6, the Representative shall deduct from such account and shall pay to the person entitled thereto all costs, expenses and outgoings as are properly chargeable to the Grower under his Agreements. 17.8 The Representative shall, within sixty (60) days of the end of each Financial Year, cause any amount standing to the credit of the account of each Grower to be paid to the Grower less any negative amount carried forward from any period as referred to in Clause 17.9, PROVIDED HOWEVER that the Representative shall be entitled to deduct such amount as is reasonable in respect of tax which may be payable by the Representative pursuant to s 98 of the Income Tax Assessment Act, 1936 from any payment to a Grower who is a non-resident for the purposes of s 98 of the said Act AND PROVIDED FURTHER that upon the Representative making payment of all tax payable as aforesaid, any balance remaining from the amount retained for such purposes shall forthwith be paid to the Grower. 17.9 If in respect of any Financial Year subject to the Licence Agreement and the Farming Agreement the amount standing to the account of a Grower is a negative amount the Representative shall be entitled to offset that amount against the Grower's account for any subsequent period or periods. This provision shall not limit the right of the Manager or the Representative to receive payment pursuant to this Deed." 1. It will be seen that cl 17 distinguishes between paying money and crediting to an account. By cl 17.2, the Manager is required to pay the Gross Sale Proceeds to the Representative. The Representative is then (by cl 17.4 and 17.5) to set aside part of that amount of money for provisions, then (by cll 17.6 and 17.7) to credit particular amounts to the accounts of individual investors. Thereafter, in relation to the individual account of investors, the Representative is to pay amounts properly chargeable to the Grower, and to pay the balance to he grower. The Investor Loan Agreement 1. The Investor Loan Agreement required the Borrower to repay the principal sum in the amounts and on the dates set forth in item 4 of Schedule 1. That item of the Schedule required payment of two relatively small amounts, each of $1,875, three and six calendar months after the date of the agreement (items 4A and 4B). Item 4C provided that "balance of the Principal Sum by direct deduction from income of the Farm Business in accordance with clause 17.7 of the Deed and clauses 3.3 and 5.2". It appeared to be common ground at the Bar table that the reference to cl 17.7 was an error and should be read as a reference to cl 17.8. 2. Clause 3.3 provided: "The balance of the Principal Sum and accrued interest and all other monies which may from time to time be owing under this agreement to the Lender shall except as hereinafter provided be repaid to the Lender on the due dates for payment by direct deduction from the monies payable by the Representative to the Borrower in pursuance of 17.8 representing the income of the Borrower in respect of the Borrower's Farming Allotment and the Borrower by his execution hereof hereby authorises the Representative to pay the Lender all such monies subject to the operation of clause 5.2." 1. Clause 4.1 relevantly provided: "Default The Principal Sum and interest thereon shall immediately become payable and each Security shall immediately become enforceable at the option of the Lender upon the happening of one or more of the following events without the necessity for any notice or demand: - (a) if subject to the operation of paragraph 5.2 below default be made by the Borrower in the due and punctual payment of the Principal Sum or interest thereon or any instalment of Principal or interest at any time due and payable by the Borrower to the Lender; (b) if default be made by any person other than the Lender of any observance or performance of any obligation contained on its part contained in this agreement or in any Security or on any other account or transaction between the Lender or the Borrower; (c) if the Borrower shall cease to carry on the Farm Business; (d) if the Borrower stops or suspends payment or states its intention of so doing; (e) if in relation to the Borrower any act or event mentioned in section 461 of the Corporations Law shall occur……; (f) if the Borrower without the prior consent of the Lender creates or attempts or purports to create any mortgage or charge over any part of the property the subject of any Security ranking or which might rank in priority to or pari passu with that Security; (g) if any Security becomes enforceable according to its terms (whether actually enforced or not)." 1. Security was defined to mean: "this agreement and any security now or hereafter given to or held by the Lender for the payment of the whole or any part of the Principal Sum and interest thereon." 1. Clause 5 was titled "Security". By clause 5.1 the Borrower charged to the Lender its interest in the Farm Business and the Farming Agreements as security for the punctual repayment of the Principal Sum and interest. 2. Clause 5.2, the provision at the centre of the dispute, then provided: "(a) The Borrower shall, by his execution of this Deed, be deemed to have irrevocably authorised and directed the Representative to pay to the Lender until the whole of the Principal Sum has been repaid and Interest paid, all amounts payable by the Representative to the Borrower in pursuance of Clause 17.8 of the Investment Deed representing the income of the Borrower in respect of the income of the Borrower's Farm Business (the Borrower's Farming Allotment), to be applied by the Lender in payment of the amounts referred to in Clause 3 and Items 3 to 6 of the Schedule 1 hereto. (b) In the event that the Grower's income in any one year is insufficient after the deductions of any other amount payable to the Manager, to pay the Principal and Interest amounts referred to in Items 4C, 5 and 6C of Schedule 1 hereto or part thereof then such Principal and Interest or part thereof may be paid out the Grower's income in any subsequent year. (c) Subject to the Grower's income from his interest in the Project being made available in its entirety by the Grower to the Representative for the purpose of meeting the Grower's payment obligations to the Lender under the Loan Agreement the Lender shall have no other recourse to the Grower for Principal and Interest amounts referred to in Items 4C, 5 and 6C of Schedule 1 hereto." 1. Clause 5.3 contained an acknowledgement by the Borrower that the provisions of cl 3.3 did not relieve the Borrower from any liability to make the payments referred to in item 6A and 6B of Schedule 1. 2. Finally, various provisions addressed the possibility of assignment. Clause 8.3 authorised the Lender to assign the benefit of the Security. Clause 8.4 prevented the Borrower from assigning any of the Borrower's rights or powers without the Lender's prior written consent. No clause made express provision for an assignment of the debts created by the loans, although cl 1.1 defined the "Lender" to "mean and include the Lender its successors and assigns as the case shall require". The same clause defined "Borrower" to "mean and include the Borrower, its successors and permitted assigns as the case shall require". The reasons of the primary judge – questions 1 and 2 1. The primary judge was conscious of the fact that the same questions of construction had earlier been determined by Black J in Clements. In accordance with an approach articulated by Lindgren J in Undershaft (No 1) Ltd v Commissioner of Taxation (2009) 175 FCR 150; [2009] FCA 41 at [68]-[74] and applied in Guo Hui Cai v Ciao Yan Guo (No 2) [2014] NSWSC 1416 at [46]-[47], his Honour analysed the position for himself, and in that manner independently reached the same conclusion as Black J, and for slightly different reasons. His Honour recorded that he was fortified in his conclusion by the fact that it was the same as that reached by Black J (at [80] and [89]). 2. The principal steps in his Honour's reasoning were as follows: 3. First, his Honour focussed upon the similar words "representing the income of the Borrower", "the Grower's income" and "the Grower's income from his interest in the Project" in cll 5.2(a), (b) and (c). When read with cl 3.3, he concluded that the words in cl 5.2(a) denoted the cl 17.8 monies: at [53]-[56]. 4. Secondly, his Honour considered that "the Grower's income" in cl 5.2(b) was also to be read as a shorthand reference to cl 17.8 monies: at [57]-[58]. 5. Thirdly, his Honour observed the different language of "the Grower's income from his interest in the Project" in cl 5.2(c), and summarised at [61]-[65] various textual arguments advanced by HPM, and various responses from the defendants at [66]-[70], all of which were reiterated by at least one party on appeal. 6. Fourthly, by reference to the provisions that income be made available by the Grower, his Honour observed that the language suggested that the income be something over which Growers have control, so that they can place it at the disposal of another, referring to Thompson v Smith (1976) 135 CLR 102 at 105. The primary judge stated that while Growers had an interest in the pool of fruit, they did not receive the Gross Sale Proceeds or any part of them, and were not in a position to control them. In contrast, Growers were in a position to control how payments under cl 17.8 were actually dealt with: at [71]-[72]. 7. Fifthly, his Honour stated that the irrevocable authority in cl 5.2(a) did not render the condition of the limited recourse clause 5.2(c) otiose. His Honour referred to the possibility that an amount could be paid to a Grower by mistake, although noting that there was no suggestion that any such mistake had ever occurred: at [73]. 8. Dispositively, at [74] and [75], his Honour preferred the view that despite the different language employed throughout cl 5.2, all were references to monies payable in accordance with cl 17.8. His Honour said: "The question remains whether such amounts should be regarded as 'the Grower's income from his interest in the Project' within the meaning of clause 5.2(c). In my view, notwithstanding the different language employed throughout clause 5.2 concerning the income of the Grower, such amounts should be so regarded. By clause 5.2(a), all amounts payable pursuant to clause 17.8 are said to represent 'the income of the Borrower in respect of the income of the Borrower's Farm Business (the Borrower's Farming Allotments)'. That suggests that out of all the income generated by the Borrower's farm, the amounts payable under clause 17.8 may be taken to represent the Borrower's income from the farm business. Further, as noted earlier, it seems to me that 'the Grower's income' within clause 5.2(b) should be read as a reference to monies payable under clause 17.8 of the Investment Deed. The draftsperson could have, but did not, repeat the language that was used in clause 5.2(a). Instead, a shorthand expression was employed. I do not think that the reference in clause 5.2(b) to 'deductions of any other amount payable to the Manager' indicates that the Grower's income is something that exists prior to any deductions. The reference can just as well be read as merely descriptive of what remains of any amounts payable under clause 17.8 after the deduction of any other amount payable to the Manager. In clause 5.2(c) yet another expression, 'the Grower's income from his interest in the Project', is employed. To my mind, when read in the context of clause 5.2 as a whole, the expression ought to be taken as a further reference to the Borrower's income from the farm business, being amounts payable under clause 17.8 of the Investment Deed. As a source of income, the Grower's interest in the Project does not seem to me to be a concept that is different from the Borrower's Farm Business. Language that differs from that found in clause 5.2(a) is once again used, but I do not think that the change signifies that clause 5.2(c) is dealing with a different concept of income." 1. His Honour then addressed the relationship between that conclusion and the limited recourse provisions in the Licence and Farming Agreements at [76]: "In my view, this construction does not create disharmony between the Loan Agreement and the Licence and Farming Agreements. It is correct that Licence Fees and farming fees are intended to be deducted before any amounts become payable under clause 17.8. However, clause 14 of the Licence Agreements and clause 30 of the Farming Agreements expressly provide that such fees can be met out of amounts payable under clause 17.8. Those provisions seemingly cater for the situation where there are arrears which may be paid in any subsequent year." 1. His Honour added that the summaries of the terms of the investor loans and parts of the taxation opinions (which were included in the prospectus) were of no real significance, assuming that they were admissible for the purpose of construction: at [77]-[78]. 2. For those reasons, his Honour concluded that the limited recourse provision in cl 5.2(c) was available if the Borrower made available any amounts payable pursuant to cl 17.8. He observed that the conclusion was consistent with those reasons by Black J and answered questions 1 and 2 "Yes": at [79]-[81]. The reasons of the primary judge – question 3 1. The primary judge addressed question 3 more concisely. Aside from summarising the parties' submissions (at [83]-[85]), and once again observing that statements in other documents included in the prospectus were of no real assistance (at [88]) and that his conclusion was fortified by that reached by Black J (at [89]), the entirety of his Honour's reasons were at [86]-[87]: "There is some force in the submission that only defaults under clause 4.1(a) are subject to clause 5.2. Nevertheless, in the context of defining an event of default in the prompt payment of principal or interest, the expression 'subject to the operation of paragraph 5.2 below' is likely to have been employed to make it clear that there is no default in relation to amounts which are permitted to be rolled over into subsequent years (see clause 5.2(b)). Despite the existence of some overlap between paragraph (a) and later paragraphs, particularly paragraphs (b) and (d), the draftsperson may not have seen a need to make the clarification again. In any case, having regard to that overlap, there is no apparent logic in making defaults under paragraph (a) subject to clause 5.2 (including the limited recourse provision), whilst leaving other defaults free of clause 5.2. In these circumstances, one should be wary of placing too much significance on the presence of the qualification in clause 4.1(a) and its absence from the following paragraphs. In my view it is more significant that the limited recourse provided for in clause 5.2(c) is expressly made subject to a condition, yet that condition says nothing about clause 4.1 or a lack of any events of default. Moreover, it is far from self-evident that a limited recourse provision would only operate for the benefit of a Borrower if the Borrower was not in default. I agree that clauses 4.1 and 5.2(c) can operate together. Events of default can bring forward the time for payment of the Principal Sum and interest, and make the security enforceable, whilst recourse to the Borrower personally is precluded in relation to certain amounts. Further, I am unable to accept that an event of default under clause 4.1 gives rise to a new payment obligation that is independent of the payment obligations contained in clause 3 and Schedule 1. In my opinion, the better view is that a Borrower can rely on the limited recourse provision even if an event of default under clause 4.1 has occurred." HPM's submissions – questions 1 and 2 1. HPM submitted that a Grower's "income from his interest in the Project" was the Grower's share of the income generated by the Project prior to deductions of amounts due under the various agreements, notably the Licence and Farming Agreements, which could be equated, for present purposes, with the Grower's proportionate share of the Gross Sale Proceeds. 2. HPM advanced no fewer than ten submissions in support of its construction. The first contrasted the difference in language between cl 5.2(a) and (c), and on that basis maintained that the different words in (c) be given a different, broader meaning. The second noted the similarities between cl 5.2(a) and the counterpart provisions in cll 14(a) and 30(a) of the Licence Agreement and Farming Agreement, all of which identified both a payment obligation and the source of payment from which the obligation was to be satisfied. HPM emphasised the difference with cl 5.2(c), which neither created a payment obligation nor identified a source from which the obligation was met. The third observed that there was no need to make available funds in the hands of the Representative, and that the more likely construction was a reference to the funds generated from the sale of fruit in the hands of the Manager (which was the Grower's agent). The fourth invoked the principle that the related contracts be construed harmoniously, and pointed to the similar clauses 14(c) and 30(c), which could not be confined to cl 17.8 funds, because the fees due under the Licence Agreement and Farming Agreement were deducted at an anterior stage (ie under cl 17.7). The fifth invoked statements in the prospectus from the taxation opinion and summary, which were said could be used on the question of construction and supported HPM. The sixth relied on cl 5.2(b), to support a conclusion that the income referred to was gross income, rather than net income. The seventh was based on the proposition that growers had an interest in the proceeds of sale of the fruit prior to the distribution under cl 17.8, which was aptly described by the words "Grower's income from his interest in the Project" in cl 17.8. The eighth observed that the original lender might assign the debt, and invoked a sensible commercial purpose, so that the assignee lender might not be exposed to the risk that the Borrower and its agents might redirect the only source of funds from which the loan could be repaid. The ninth was to challenge the reasoning of the primary judge to the extent it was based upon an absence of control, on the basis that the Manager was the Grower's agent, and that there was no reason for the Grower not to be found liable for its agent's omissions. The tenth drew upon the tax effective nature of the Projects, which were premised on the proposition that the Growers were themselves primary producers. It was said that the Court "should not now entertain a construction of clause 5.3(c) that denies that the proceeds from the fruit sales were the income of the Grower". It was also said that the submission that income was "made available" simply by giving authorities and directions to the Manager would render the non‑recourse provision in cl 5.3(c) otiose. The respondents' submissions – questions 1 and 2 1. The Ghandi and Shaw respondents supported the construction of the primary judge. They observed that there was a sharp distinction between the initial two repayments of principal, and the first two interest payments, on the one hand, and all subsequent payments (under items 4C and 6C of Schedule 1). They submitted that if there was recourse to the investor personally in respect of the latter payments, that would be "manifestly contrary to a business‑like construction of the Non‑recourse provision, the Loan agreements and Schemes implemented by the suite of agreements as a whole". They made three submissions in support of that proposition. The first was that the contrary construction meant that TROM could by its own breach deprive the investors of the benefit of the non‑recourse provision, noting that it was a necessary condition of any Gross Sale Proceeds not having been provided to the representative that TROM had breached its obligation to remit the entirety of those proceeds to the representative. 2. Secondly, they referred to the similarly worded obligations to make available Gross Sale Proceeds for the purpose of making other payments (including fees under the Farming Agreement and Licence Agreement) which also involved a non‑recourse provision, and noted that to the extent that the representative as trustee was entitled to reimbursement, that right existed both at general law and by s 59(4) of the Trustee Act 1925 (NSW). They pointed to what was said in Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26; (2012) 16 BPR 30,397 at [39] to the effect that the right cannot be excluded, and contended that that was the effect of the contrary construction. 3. Thirdly, they submitted that the "practical reality of the Schemes" was that individual investors were in no position to know whether all Gross Sale Proceeds had been remitted to the representative, in particular, in light of the pooling provisions which prevented a determination of the proportion of Gross Sale Proceeds which were attributable to any particular investor. They said that the documents provided as part of the scheme meant that investors "simply do not have control (or even knowledge) of the Gross Sale Proceeds", and therefore cannot "make them available" in a way other than already provided for by the suite of contracts (this was similar to the fourth point relied on by the primary judge). 4. By notice of contention, they advanced an alternative submission, which had not been argued before the primary judge, which was that by entering contracts which included cl 17.2 of the Investment Deed, pursuant to which it was agreed the Gross Sale Proceeds would be paid to the representative, and thereafter promising (by the irrevocable authorities) that the payments due under the Licence Deeds and Farming Agreements would thereafter be paid, the investors did thereby "make available" the Gross Sale Proceeds. 5. The Eastoe Tiernan respondents relied directly upon the similarity of language of "income" in cl 5.2(a) and 5.2(c), and advanced four further reasons in support. The first was that HPM's construction would mean that "income" was equated with the Gross Sale Proceeds. Secondly, by reason of the provisions for pooling, it was said that no part of the Gross Sale Proceeds could be identified to a particular grower, so as to speak sensibly of such proceeds being the grower's income. Thirdly, they pointed to what they said was the absurdity of the growers losing the benefit of the non‑recourse provisions in the loan as a consequence of the breach by TROM of its obligation to remit the Gross Sale Proceeds to the representative. Fourthly, they pointed to the fact that cl 5.2(c) referred to the grower making his income available for the purpose of meeting his obligations under the loan agreement. That (singular) purpose suggested, so it was said, that the other requirements required under cl 17, prior to there being any payment to growers, were not requirements to which the "income" was subject. Applicable principles of construction 1. It is idle to pretend that the questions of construction raised on this appeal are anything other than contestable. I should acknowledge at the outset that although I have reached a different conclusion, my task has been made easier by the illuminating analyses of Black and Darke JJ. Basic principles of construction 1. First, it is axiomatic that a contract can have but one legal meaning. As it was put by Sir Montague Smith, "[A]fter all, there must be one true construction". His advice on behalf of the Judicial Committee of the Privy Council was applied in Life Insurance Company of Australia Ltd v Phillips (1925) 36 CLR 60 at 78-79. That is not to say that the application of that legal meaning to the facts may not be uncertain in a particular case, which is the point made by Branson and Lindgren JJ in Universal Music Australia Pty Ltd v Sharman Networks Ltd (2006) 150 FCR 110; [2006] FCAFC 41 at [29]-[30] and [55]-[56]. However, the way in which the question arises in this litigation, on agreed facts, means that any difficulties of application fall away. 2. Secondly, it is axiomatic that (a) the words in a sentence are not building blocks whose meaning is unaffected by the rest of the sentence, (b) the sentence is the unit of communication by which language works, and (c) the significance of individual words is affected by other words and the syntax of the whole sentence: see Lord Hoffmann's speech in R v Brown [1996] AC 543 at 561 and its endorsement in Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 397. The task is not to find the legal meaning of particular words within the clause, but the clause as a whole. This principle bears upon some of the submissions which focussed on the particular words "made available" and "by the Grower". 3. Thirdly, the words in cl 5.2(c) are readily capable of sustaining more than one literal or grammatical meaning. No party contends that the competing legal meanings are not open as a matter of the literal or grammatical meaning of the contractual language. One available grammatical meaning of "the Grower's income from his interest in the Project" is the monies required to be paid to the grower pursuant to cl 17.8 of the Investment Deed. Another available grammatical meaning of the same words is the proportion of the Gross Sale Proceeds attributable to the particular Grower. The "income" of most Australian employees is, after all, considerably more than the amounts credited to their bank accounts by their employers, and the income declared by investors in the Coonabarabran Orchard Project would exceed the amounts received by them pursuant to cl 17.8. 4. Fourthly, the task of identifying the single legal meaning of the clause is the task of identifying the imputed intention of the parties, by reference to the contractual text construed in light of its context and purpose: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[51] and [108]-[109]; Victoria v Tatts Group Ltd [2016] HCA 5; (2016) 90 ALJR 392 at [51]-[75]; Simic v New South Wales Land and Housing Corporation [2016] HCA 47 at [18] and [78]. 5. Fifthly, as the High Court said in Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 at [82]: "It was necessary to construe the [contract] so as to avoid it making commercial nonsense or working commercial inconvenience. Its commercial purpose - the purpose of reasonable persons in the position of TOC and the plaintiff - was relevant. That, in turn, required attention to 'the genesis of the transaction, the background, the context, the market' in which the parties were operating, as known to both parties." [Citations omitted.] 1. Sixthly, it is open to the parties to confine the material available to the Court for the purpose of identifying the legal meaning. For example, the parties may choose not to adduce evidence of surrounding circumstances or commercial purpose which would otherwise be admissible on the question of construction. In the present case, the question arises on a very narrow background (given by the Statement of Agreed Facts), and it will be seen below that, even then, there remains a dispute as to whether material not contained in the contractual documents may be used for the purposes of construction. I am not implying any criticism of the way the issue has been presented; to the contrary, where as here a large number of parties have become bound by the same contractual terms, it is unlikely that there will be much scope for evidence of surrounding circumstances. 2. Seventhly, it is trite that the contract must be construed as a whole, with a view to the legal meaning reflecting a measure of internal coherence: thus "preference is given to a construction supplying a congruent operation to the various components of the whole": Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [16]. In a case such as the present, where the difficulties are real, that involves what Lords Neuberger and Mance have described as an "iterative process" – "checking each of the rival meanings against the other provisions of the document and investigating its commercial consequences": see Re Sigma Finance Corp (in administrative receivership) [2009] UKSC 2; [2010] 1 All ER 571 at [12], and see Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900 at [28] and Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 at [98]. Lord Grabiner has, in my view rightly, regarded this as "fundamental": "The iterative process of contractual interpretation" (2012) 128 Law Quarterly Review 41 at 45-49 and 61. The process of working through the consequences of the competing literal or grammatical meanings enables a court to assess whether either party's preferred legal meaning gives rise to a result that is more or less internally consistent and avoids commercial absurdity. 3. What is more, in complex cases such as the present, it is likely that there will be internal inconsistencies or infelicities on any construction. It is important therefore not to conclude the evaluation too soon. Just because one party's preferred construction leads to a result which is internally inconsistent does not mean that the other party's competing construction is the legal meaning. The other construction may, on analysis, involve a more serious internal inconsistency. 4. Eighthly, all four contractual documents are to be read together. Not only does cl 5.2 refer in terms to cl 17.8 of the Investment Deed, but also the entire purpose of the loan, entered into simultaneously with the other three contracts, was to fund costs of the Coonabarabran Orchard Project, which was governed by those other three contracts. The position resembles that stated in Zhu v Treasurer of the State of New South Wales at [82]: "The execution of the Deed Poll pursuant to an obligation in, and at the same time as, the Agency Agreement meant that it had to be given a construction conformable with the Agency Agreement." 1. There was no dispute at all, at least so far as I was aware, between the parties as to the operation of these principles of construction. Yet there was a tendency in some of the submissions to enumerate as large a number of textual and contextual submissions as could be, with the seeming intent that that party's construction should be favoured merely as a matter of numerical abundance of supporting arguments. But ascertaining the legal meaning of a commercial contract is not determined by counting the number of arguments put on each side, still less by the creative ingenuity of the parties' lawyers. The weight to be given to competing considerations 1. The various textual and contextual submissions advanced by the parties do not all carry the same weight. Indeed, the weight they carry varies depending upon the particular contract, and there are principles for determining which submissions are of greatest weight in any particular case. The following matters bear directly on this point. 2. First, the agreements appear to have been hastily and somewhat casually drafted. This may be a consequence of the commercial imperative for the prospectus (which was lodged on 4 June 1993) to be registered in time for its being marketed to potential investors before 30 June of that year. Irrespective of the cause, there are superficial drafting errors and obscurities throughout the documents. For example (the following are taken only from clauses which are of central relevance to the appeals), 1. In cl 17.6 of the Investment Deed, the first reference to "accordance" is misspelt. 2. The erroneous reference to cl 17.7 (as opposed to cl 17.8) in item 4 of Schedule 1 of the Loan Agreement has been noted above. 3. Clause 5.2 of the Loan Agreement shifts from "Borrower" in cl 5.2(a) to references to "Grower" in cl 5.2(b) and (c), although plainly at all times is referring to the same person. 4. The application form for the loan asks for a cheque payable to "permanent [sic] Trustee Company Ltd". 1. Secondly, there is a recurring verbosity and lack of precision in the drafting. Why is the qualified limited recourse provision found in cl 5.2(c) under the heading "Security" rather than as a qualification upon the obligation to repay? How does a deemed irrevocable authorisation and direction differ from the irrevocable authorisation and direction which cl 5.2(a) would otherwise effect? Why is the future tense used? And why the authorisation of repayment to the Lender under cl 3.3 as well as cl 5.2(a)? I am not implying that there is any great difficulty identifying the legal meaning of cl 5.2(a); as Mr Walker observed of the future deeming in it, "the language may not be elegant but it is unmistakably clear". My point is that the loose use of language here and elsewhere throughout the contracts tends to diminish the weight that is to be given to some of the more nuanced submissions advanced by the parties. 2. Thirdly, there are also some quite serious infelicities in the drafting. There is, for example, a large difficulty with the formula in cl 17.6 (which determines a proportion of Gross Sale Proceeds), contrary to the introductory words of the same clause, which refer to "a share of the Net Income". What is meant by including the Investor Loan Agreement as part of the Security is also highly unclear. 3. The weight to be given to various considerations based on text, context and purpose leading to the determination of a contract's legal meaning depends on the particular contract. For example, greater weight should be given to a change in language in a contract which uses language carefully and consistently. Conversely, as I said in Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 at [98]: "Legal meaning should not turn on arguments based on semantic exactitude where it is plain that the parties have recorded their bargain in loose, ungrammatical language." 1. Diplock LJ was making much the same point when he said in Lindsay (WN) & Co Ltd v European Grain & Shipping Agency Ltd [1963] 1 Lloyd's Rep 437 at 443: "... the drafting is not self-consistent, and the nomenclature employed is not uniform. The usual presumption that the same word is used throughout the contract in the same meaning is less strong than in the case of a contract drafted at one time by a single draftsman." 1. Those considerations tend to diminish the force of some of the parties' finer textual submissions. For example, where as here there is every indication that no close detail has been paid to much of the language, I find it difficult to give much significance to what flows from the words "for the purpose", or the use of the passive in the words "by the Grower". 2. The nature of litigation is such that the particular issue presented to a court is often one which may never have come to the parties' attention. As Mr Sumption QC pithily put the position in submissions in Wasa International Insurance Co Ltd v Lexington Insurance Co [2010] AC 180 at 186: "Any judicial interpretation of a contract involves retrospectively attaching to it a meaning which hypothetical persons in the position of the parties are assumed to have intended at the time when it was made, but which may have been unclear or unknown to those particular parties." 1. In the present case, the possibility that TROM would have assigned the Borrowers' debts and failed to remit all of the Gross Sale Proceeds to the Representative is scarcely a circumstance which could have been at the forefront of the drafter's mind. Ordinarily in such cases, I am inclined to think that context and purpose are apt to have less weight. For example, the numerous contests between the lessors and lessees concerning the ownership at the end of the lease of poker machine entitlements (a form of valuable statutory property which came into existence after many leases had been entered into) all took place in essentially the same context and purpose and were resolved on the basis of quite fine textual differences in each lease (see for example Yarraburn Nominees v Alliance Engineering Pty Ltd [2010] NSWSC 1081 at [30]-[35]). 2. Finally, and especially where the contract is characterised by looseness of expression and unnecessary words, it makes sense for the legal meaning of identical words in related agreements to be the same. "[W]here parties have used language which means one thing in a contract to which they were parties, and they use the same language in another, it is likely that it will have the same meaning": Shell UK Ltd v Total UK Ltd [2010] 3 All ER 793; [2010] EWCA Civ 180 at [16]. In the present case, this is an aspect of reading the four agreements which the Representative was authorised to enter into on the Grower's/Borrower's behalf together and as a whole. The substance of the reasoning of the primary judge 1. In order to explain why I have reached a contrary construction from that reached by the primary judge, it will be seen that, putting to one side the first and second steps relating to cl 5.2(a) and (b) (which were and are uncontroversial), the substance of the reasons of the primary judge involved: 1. giving identical meaning to three differently worded terms in successive paragraphs (a), (b) and (c) within cl 5.2 of the Investor Loan Agreement: "representing the income of the Borrower", "the Grower's income" and "the Grower's income from his interest in the Project"; 2. avoiding the problem of otiosity of cl 5.2(c) in light of the irrevocable authority in cl 5.2(a) by having regard to the possibility of a mistaken payment by the Representative to the Grower, and 3. giving weight to the words "by the Grower" so as to connote something over which the Growers have control. 1. I agree that the analysis should commence with the text of cl 5.2(c). However, I respectfully favour a different approach in relation to each aspect of the reasons. I deal with each aspect in turn. The textual differences between cl 5.2(a), (b) and (c) 1. Should identical legal meaning be given to the different words in each of the paragraphs within cl 5.2(a), (b) and (c) of the Investor Loan Agreement? Although the drafting is far from exemplary, I nevertheless consider that the following considerations apply. 1. First, the inference is available that the reason the language shifts from "Borrower" in par (a) to "Grower" in pars (b) and (c) is because the clauses have been taken from their counterparts in the Licence Agreement or the Farming Agreement (where "Grower" is used throughout); this is a matter strengthening the force of the consideration that they bear the same meaning in each agreement. 2. Secondly, a sensible distinction can be drawn between the differences between the cl 17.8 "income of the Borrower" and "Grower's income" in pars (a) and (b) on the one hand, and the "Grower's income from his interest in the Project" in par (c). Paragraphs (a) and (b) are about payments of monies which otherwise would be paid to the Grower under cl 17.8. Paragraph (c) is about something being made available. Those words "being made available" are broader. They are readily capable of extending to the process described in cl 17 of the Investment Deed of various expenses being deducted from the Gross Sale Proceeds by reason of accounting entries, before any payment is actually made to the Grower. In this respect, I do not think that much turns on the particular meaning "made available" has been held to bear in different contexts (such as s 111 of the Bankruptcy Act 1966 (Cth) in Thompson v Smith, dealing with a particular rule relating to property made available to a bankrupt's spouse). The salient considerations for present purposes are merely that those words are (a) different, (b) broader and (c) readily capable of corresponding with the accounting concepts in cl 17, as well as the obligations to make payments. 3. Thirdly, those considerations align with the shift in language from "income" to "income from his interest in the Project ... in its entirety". In particular, the words "in its entirety" tend to confirm that a broader concept is involved in par (c) than in the previous paragraphs. 1. The competing submission is that the words "income from his interest in the Project ... in its entirety" in cl 5.2(c) refer to the same notion of "income of the Borrower" in cl 5.2(a) and (b). In pars (a) and (b), the reference is plainly enough to the cl 17.8 amounts; the submission draws strength from the repetition of "income" in each clause. I accept that the less than felicitous drafting of this particular contract, causes less weight to be given to the additional words in cl 5.2(c). But the fact remains that not one but two opportunities have been seized by the drafter to expand the concept of income in cl 5.2(c) ("from his interest in the Project" and "in its entirety"). It is natural when repeating a concept already specified to use a shortened abbreviation, but it is unusual when doing so to use additional words to denote the same concept, and in the present case, the additional words are words whose ordinary meaning is expansive. Accordingly, I am reluctant to conclude that those conspicuously added words should not carry some difference in legal meaning, as opposed to being a further reference to the same concept of income referred to in the previous paragraphs. The otiosity of the condition in cl 5.2(c) on the respondents' construction 1. The justification relied on by the parties and applied by the primary judge for avoiding par (c) being otiose in light of par (a), namely, to deal with the possibility of a mistaken payment, is, in my view, quite weak. This is not a contract which suggests that any attention has been given to the possibility of one party failing (whether deliberately or inadvertently) with its obligations in relation to the payment of monies. Moreover, normally it is unnecessary to deal with mistaken payments, which generate rights dehors the contract at general law. 2. The Eastoe Tiernan respondents posited a further way in which the clause would have work to do. They pointed to the possibility of an investor countermanding the direction, or obtaining relief from a court setting it aside. I do not think this submission has any material force. For one thing, the possibility is entirely hypothetical. For another, it is no answer to a submission that one's construction of a clause makes it wholly otiose in light of another clause to say that a party might itself breach that other clause or seek to have that other clause set aside. 3. Contracts often contain otiose words. I accept that "the argument from redundancy is seldom an entirely secure one", because "people often use superfluous words", as Lord Hoffmann observed in Beaufort Developments (NI) Ltd v Gilbert-Ash (NI) Ltd [1998] UKHL 19; [1999] 1 AC 266 at 274. But here there is a qualified limited recourse provision, and the construction for which the respondents contend would remove the entirety of that qualification. Accepting as I do that the precise meaning of the condition to which the limited recourse clause is subject is contestable, nonetheless, the Court should strain against a construction which alters its basic nature, by construing it to amount to a provision whose operation is unqualified. That is to say, not lightly should the parties be presumed to have agreed that notwithstanding the elaborate textual qualification to the clause by which the lender's recourse was limited, the lender's recourse was in all cases limited. 4. Such considerations also seem to me to answer the notice of contention. The construction contended for denies the qualifying words in cl 5.2(c) all operation, by reason of the effect of cl 5.3(a). Not lightly should all those conditional words in the first half of cl 5.2(c) be rendered inoperative. The Growers' absence of control 1. There is some force in this consideration. No doubt the bargain struck by investors makes it very difficult for them to exercise any actual control over the horticultural activities on the land, or on the marketing and sale of the peaches and nectarines. But that is, after all, an inherent element of the bargain, involving primary production on a pooled basis. It explains why the appointment of a manager was inevitable. 2. The question is one of construction. On balance I consider that the use of the passive voice in cl 5.2(c) provides a relatively slight support for an inference that the condition is not satisfied unless the Grower is personally responsible for failing to make proceeds available. I see no artificiality in regarding the words "by the Grower" as meaning "by the Grower and his, her or its agents". An agent's conduct and knowledge is ordinarily imputed to a principal, and there is no reason not to read the contractual language in that fashion here, especially when the point of the Project is for the investor to obtain a taxation benefit from being directly involved in primary production. 3. There is a further consideration, not raised by the parties, which would tend to strengthen my conclusion. Suppose the Representative becomes insolvent, and for that reason fails to cause all of the payments which should be made to the Lender. That may come about through no fault of the Borrowers, and be entirely beyond the Borrowers' control. That would lead to a new Representative being appointed, but, as presently advised, I am inclined to the view that the Borrower would no longer be able to rely upon cl 5.2(c). It is however unnecessary to express a concluded view on this issue. Remaining arguments 1. I now deal with those submissions raised by the respondents which were not relied on by the primary judge. The relevance of the similarly worded qualified limited recourse provisions in the Licence and Farming Agreements 1. As already noted, all parties agreed that the suite of contractual documents should be read harmoniously. To my mind, it follows that some significant weight must be given to the very similarly worded limited recourse provisions in cl 14 of the Licence Agreement and cl 30 of the Farming Agreement. 2. True it is that the same contractual words can bear different legal meanings, even in the same contract. Walsh J said in Robbins v Federal Commissioner of Taxation (1974) 129 CLR 332 at 339 that there is "no rule of general application that the same meaning ought to be given to an expression in every part of the document in which it appears". A recent application may be seen in Fitness First Australia Pty Ltd v Fenshaw Pty Ltd [2016] NSWCA 207 at [37]-[46]. 3. However, the provisions in cl 14 of the Investor Loan Agreement and cl 30 of the Farming Agreement follow the same structure as cl 5.2 in the Investor Loan Agreement, and employ almost precisely the same language. Each was entered into by dint of the execution of the forms in the prospectus granting authority to the Representative. All concerned a matter of central importance to an investor intending to gain the immediate benefit of deductions by reason of borrowing funds – how were the expenses inevitably associated with the project to be paid? All indications point to the investor receiving the benefit of the same qualified and limited recourse provision. Indeed, in a suite of contractual documents replete with unnecessary textual differences, it seems to me that greater weight than would usually be the case should be given to the similarity emerging from these three clauses. 4. That has an important consequence. Each of cl 14(c) of the Licence Agreement, cl 30(c) of the Farming Agreement and cl 5.2(c) of the Investor Loan Agreement refers to the Grower's income being made available in its entirety for the purpose of meeting the obligations to pay fees under the Licence Agreement, or fees under the Farming Agreement, or repayments of principal and interest under the Investor Loan Agreement. The identical words "for the purpose" in each of those three agreements cannot sensibly bear the meaning for the exclusive purpose. Read together, none of the purposes in each of the three contracts can be an exclusive purpose. Each is to be read as meaning a purpose – to pay amounts of money originally due to TROM under any of those three agreements. 5. Darke J did not rely upon this point. However, the Eastoe Tiernan respondents did, and in Clements, Black J identified at [39] a submission which his Honour regarded as "compelling", based on the words "for the purpose" and "in its entirety". His Honour reasoned at [39] that cl 5.2(c) must be taken to refer to amounts payable under (the counterpart of) cl 17.8, because part of the Gross Sale Proceeds was necessarily to be applied under cl 17.7 to meet other expenses, and so was not available for the purpose of meeting obligations under the Investor Loan Agreement. For the reasons stated above, I do not think that this is correct, let alone dispositive. To be quite clear, I do not think that there is any single dispositive consideration which dictates the legal meaning of the clause (and, although his Honour used the word "compelling", I do not think that his Honour's reasons, read fairly, invoke the literal meaning of that word). 6. Moreover, there are quite powerful reasons to give the same words "income from his interest in the Project" in cl 5.2(c) the same meaning as those words bear in cl 14(c) and 30(c), two clauses in cognate agreements which use the same language and disclose the same structure and have the same purpose. I have considered whether anything material to this appeal emerges from this. However, I do not think that, upon analysis, there is much that assists. I explain why below. 7. If one focusses attention on any single year, then there will only be amounts payable to Growers under cl 17.8 if the earlier provisions in cl 17 (including the deductions and payments in cll 17.6 and 17.7) have occurred. One might then ask what is the point of cll 14(a) and 30(a) irrevocably authorising the Representative to pay cl 17.8 amounts to satisfy obligations which would already have been discharged in the event that there were any cl 17.8 amounts available? 8. One solution to the difficulties posed in the previous paragraph turns on timing. Undoubtedly, in the first and second years of operation, there will not be expected to be any Gross Sale Proceeds: the immature trees will have produced no fruit, so only if there were an insurance payout or something of that kind would revenue be derived from the horticultural activities. Accordingly, in the usual course of things, there will be no funds available under any part of cl 17, let alone cl 17.8, in the early years. Clauses 14(b) and 30(b) will not apply; those clauses only apply after 30 June 1998. The effect of cll 14(c) and 30(c) will be to prevent recourse being had to the Grower to pay those expenses, which will simply accrue. However, there may come some later year when the Gross Sale Proceeds exceed the amounts payable to persons other than the Grower, so that if attention were confined to that year alone, there would be an amount payable to the Grower under cl 17.8. On one view, it would be in those circumstances that cll 14(a) and 30(a) have work to do: amounts which would otherwise be payable to the Grower under cl 17.8 are the subject of the irrevocable authorisation and direction to make payments of the other amounts referred to in cll 14(a) and 30(a) incurred in previous years. Similarly, it is arguable that cll 14(c) and 30(c) also refer to the possibility that amounts incurred in previous years have accrued. That is how I understand the primary judge to have proceeded (see at [76] reproduced above). 9. I was initially attracted to the reasoning that (i) cl 5.2(c) in the Investor Loan Agreement must be read conformably with cl 14(c) and cl 30(c) in the Licence and Farming Agreements, (ii) the latter two clauses could not be confined to cl 17.8 income because there would be no point in limiting recourse to such income in respect of amounts to which earlier subclauses within cl 17 would apply, and (iii) therefore cl 5.2(c) must extend to more than cl 17.8 income. However, in light of the considerations of timing which I have sought to explain above, I do not consider that the reasoning is sound. 10. I should make it clear that there were few any submissions on the proper construction of cll 14(a) and 30(a), and I do not express a concluded view as to their legal meaning. But it will be seen that, putting to one side the limitation of what may be deduced from the words "for the purpose" and "in its entirety", the highly similar language and structure of cl 14 in the Licence Agreement, cl 30 of the Farming Agreement and cl 5.2 of the Investor Loan Agreement does not much illuminate the legal meaning of cl 5.2(c). Is HPM's construction unbusiness-like and uncommercial? 1. All respondents pointed to the what they said was the unlikelihood of a construction whereby the Lender could gain an advantage by reason of the breach of the Manager, bearing in mind that when the respondents first participated in the projects, the Manager and Lender were one and the same company, TROM. Although the validity of the assignment to HPM is an agreed fact for the purposes of this appeal, the respondents said that it was not something which should be taken to have been imputed to the parties when they applied under the prospectus. 2. This submission, although rhetorically powerful, is in my opinion wrong in principle. The primary judge was correct not to rely upon it. 3. First, there is no question but that any lender may ordinarily assign the borrower's obligation to repay. That is the position at general law, against the context of which a loan agreement falls to be construed. The fact that lenders, large and small, assign all or parts of the debts owed to them, is notorious. The bespoke nature of the loans made to the respondents, which were subject to conditional limited recourse provisions, would naturally bear upon the price which could be realised for the debts, but in light of the express reference in the definition of "Lender" to an assignee, I do not think it can be said that the possibility of an assignment is foreign to the context. That said, I do not accept HPM's submission that a commercial approach (in order to favour the position of an assignee) supports this construction. 4. Secondly and more importantly, the respondents' submission amounts to an appeal to construe the contract so as to deny a benefit to the assignee HPM in light of a breach by the Manager. I consider that this is wrong in principle. A contract is not construed broadly or narrowly by reference to what would or would not be a breach by the other party. Rather, the general law provides principles which restrict a party which is itself in breach from relying on what would otherwise be its contractual rights. If the respondents' submission were accepted, then there would be a conflation of the interpretative process of allocating legal meaning to a commercial contract, and the general law principles which preclude a party in breach from taking advantage of its own breach. They are two distinct areas of discourse. Do the extrinsic materials assist? 1. The prospectus contains various other documents which address the question of recourse to the borrower (save for the payments after three and six months). Thus: 1. The "Key Data" at the very beginning of the prospectus included, under the heading "Liability of the Growers" the words: "If the Grower chooses to take up the investor loan shown at page 62 he must repay principal and interest in the manner specified. These liabilities are subject to recourse to the net cash distributions of the Grower's Farming Allotment(s). Intending investors should read the Licence, Farming Agreement and Loan Agreements on page 47, 52 and 62 respectively to fully understand their obligations." 1. A single page (p 34) in the prospectus headed "INVESTOR LOAN SUMMARY OF TERMS" contains two references to the loan repayments. First, after identifying the two repayments to be made after three and six calendar months, the summary states: "balance of outstanding principal to be repaid out of all amounts payable by the Representative to the Grower representing the income of the Grower's Farming Allotments." However, a note at the bottom of the same page states: "As long as the Minimum Principal Repayments and the first two Interest Payments are made in the manner and by the date specified and the Borrower performs all other duties and obligations under the Loan, Licence and Farming Agreements then the recourse of the Lender to the Borrower for the other amounts payable under the Investor Loan shall be limited to the Borrower's income from his Farming Allotments." 1. The taxation opinion included in the prospectus stated: "The balance of the principal sum is paid from the income of the investor's Farming Allotments. Provided the Investor complies with this and his other obligations, while he has an obligation to pay the balance, the lender has recourse only to the income of the Investor's Farming Allotments and not to the Investor personally." 1. The parties were at issue as to whether regard might be had to what might be called the non-contractual documents contained in the prospectus for the purpose of construction. HPM sought to rely on those statements. The Gandhi and Shaw respondents submitted orally that the summary and taxation opinion were "just opinions by the accountant as to various aspects of the arrangements", that "the summary of key terms is someone's subjective understanding of the meaning or effect of the contractual arrangements between the parties" and "that neither of those documents ... could be taken, in the relevant sense, to reveal background facts". However, if they were wrong about this, they submitted that the documents supported their construction. 2. I disagree with the Gandhi and Shaw respondents' submission that the documents are not available. However, I agree with the primary judge that the documents provide no material assistance. 3. The documents were not merely the opinion or subjective understanding of the effect of the proposed transactions. They were disclosed in the prospectus, a document which every investor may be taken to have read. Indeed, the statements were given prominence in the prospectus, precisely because they were summarising the effect of the contractual documents. Far from being uncommunicated subjective opinions (which are inadmissible), the contents of the prospectus are in my view available as part of the context. The context to investors entering into the suite of agreements in the present case was the prospectus which was lodged with the Australian Securities and Investments Commission, and then distributed to investors. The position was as stated by Gleeson CJ in International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151; [2008] HCA 3 at [8]: "This is a case in which the Court's general understanding of background and purpose is supplemented by specific information as to the genesis of the transaction. The Agreement has a history; and that history is part of the context in which the contract takes its meaning." [Citation omitted.] See also Zhu v Treasurer of the State of New South Wales at [82]. 1. The same approach was taken in R v Clowes (No 2) [1994] 2 All ER 316, another decision as to the terms of an investment which had been solicited by a brochure. Watkins LJ, delivering the judgment of the Court of Appeal, said at 328 that: "Even if the brochure as a whole were not a contractual document, the contract as contained in the application form fell to be construed by reference to it: see per Lord Wilberforce in Prenn v Simmonds [1971] 3 All ER 237 at 239-242; [1971] 1 WLR 1381 at 1383-1386." 1. Nevertheless, I respectfully agree with the primary judge that the non‑contractual materials are of scant benefit. They are on the whole equivocal on the point presently in issue. The problem is that it may be inferred that no one foresaw the possibility that TROM might assign the loans to a third party and that the Manager would not perform all of its obligations. It is not surprising that the summary materials do not speak directly to the issue which arises in this appeal. The relevance of a trustee's right to reimbursement? 1. The Gandhi and Shaw respondents contended orally that the Representative was a trustee, and thus had a right of indemnity at general law and under statute for expenses properly incurred. The foundation for the submission was that the Representative was appointed "to be the representative in respect of the interests of the Growers in the Project" by cl 2 of the Investment Deed. The short answer is that those words are insufficient in the present context to give rise to a relationship of trust. To the contrary, those words (not to mention the name "Representative") are entirely appropriate to create a relationship of principal and agent. Summary 1. For those reasons, I respectfully disagree with the conclusions reached by Black J and Darke J, and with the additional submissions advanced in support of the respondents' construction. I think that HPM's construction of cl 5.2(c) of the Investor Loan Agreement is to be preferred, essentially because: 1. it gives to the words "income from his interest in the Project" a meaning which they naturally bear, where the Manager is appointed the respondents' agent to sell the peaches and nectarines, especially in a context where considerations of taxable income and allowable deductions loom large; 2. it respects the change in language in paragraph 5.2(c) when contrasted with pars (a) and (b); 3. it gives a broader meaning to the words "made available in its entirety" which corresponds to the differences between paying money and crediting accounts; 4. it avoids a result whereby the qualified limited recourse provision is converted, by a process of construction, into an unqualified limited recourse provision; and 5. I am unpersuaded that anything material, let alone "compelling", turns on the words "for the purpose" in cl 5.2(c) of the Investor Loan Agreement, when once it is seen that the same words appear in cl 14(c) of the Licence Agreement and cl 30(c) of the Farming Agreement, which three agreements are to be read together and harmoniously. 1. I do not for a moment consider that all of the considerations point in the same direction. In particular, I accept that there are difficulties in determining, prior to the application of the formula in cl 17.6, the proportion of the proceeds of sale to which the individual Growers are entitled, and that there is some force in the submissions based on an absence of control. There is also force in a further consideration raised by Payne JA, which is that the exercise of the powers in cl 17.4 to set aside a reserve for contingencies and to transfer that reserve to form part of the Gross Sale Proceeds in a later year, would lead to the obligation to make available the entirety of a grower's income from his interest in the Project to apply to something which falls outside of ordinary notions of income. I accept that the legal meaning which I have concluded is borne by the clause is not one in whose favour every textual and contextual submission tends. But, as Lord Rodger observed in Multi-Link Leisure Developments Ltd v North Lanarkshire Council [2010] UKSC 47; [2011] 1 All ER 475 at [27], there are cases where "no construction is ever going to produce perfect harmony amongst all its elements". This is an example. Having weighed the parties' competing contentions, I conclude that the least disharmony is produced by HPM's construction. Remaining issues and orders 1. Question 3 does not, on the view I have reached, arise. However, if I were wrong about the answers given in relation to questions 1 and 2, I would agree with the reasons and conclusions given by the primary judge. By way of concise explanation, I think that the strongest submission advanced by HPM in favour of the default clause being independent of cl 5.2(c) is the fact that cl 4.1(a) is expressly subject to paragraph 5.2 while the other paragraphs are not expressed to be subject at all. Given the other textual infelicities in the contracts, which include incorrect cross-references, I do not think that material weight can be given to that matter. 2. In July 2016, the 39th respondent, Mr Michael Foletti, was made bankrupt. HPM acknowledged that the appeal should not be pressed as against his trustee in bankruptcy. That is reflected in the orders proposed below. In the event that there are other matters affecting the orders arising out of the large number of respondents, the parties should exercise the power to apply to vary the orders within the time specified by UCPR r 36.16. 3. I propose the following orders: In respect of all respondents save for the 39th respondent, Mr Michael Foletti: 1. Appeal allowed. 2. Set aside the answers to questions 1 and 2 given on 8 October 2015 in each proceeding, and in lieu thereof, answer each of those questions "No". 3. Set aside orders 2 and 3 made on 8 October 2016 in each proceeding, and in lieu thereof, order that the costs of the separate questions be costs in the cause, and the proceedings be listed for directions before the Commercial List Judge on a date to be fixed. 4. Order the respondents to pay the appellant's costs of the appeal. 1. PAYNE JA: The present appeal raises a difficult question of construction about a limited recourse provision in a Loan Agreement. The Loan Agreement formed part of a suite of documents entered into by investors in a tax driven agricultural investment scheme. 2. I have had the benefit of reading the decision of Leeming JA in draft. I gratefully adopt his Honour's summary of the facts and his explanation of the relevant legal principles, with which I agree. I have set out facts and made reference to authority only where necessary to explain my reasons for reaching a different ultimate conclusion. The separate questions 1. I remain troubled about the separate questions the subject of this appeal. Each of questions 1 and 2 is predicated thus: On the basis of the agreed facts in paragraphs 1-25, 26 [(a) or (b)] and 27 … 1. Thus agreed fact 26 is at the heart of the separate questions: 26 In the Relevant Projects at all material times there were Gross Sale Proceeds (as defined in the Relevant Investment Deeds) that were not remitted to the Representative in circumstances where had the Gross Sale Proceeds been remitted to the Representative, either: (a) an amount was payable by the Representative to the Borrower pursuant to the Relevant Investment Deeds as described in clause 5.2(a) of the Relevant Loan Agreement; or (b) an amount was not payable by the Representative to the Borrower pursuant to the Relevant Investment Deeds as described in clause 5.2(a) of the Relevant Loan Agreement. 1. It will be recalled that the agreed facts provided that if any of the separate questions are answered "no" then "the actions against the Relevant Defendants shall proceed towards trial" and, in that event, "the parties will not be bound by any admission or agreement in respect of those facts". 2. For my part I am not sure that the agreed facts describe the universe of possible outcomes necessary to illuminate the correct construction of the Loan Agreement. I expect that if the matter proceeds to trial difficult questions will arise about the effect of the judgment of this Court. 3. The pleading was not before the Court, but I assume (and the parties did not suggest otherwise) that a cause of action based on a federal statute was relied upon in this case and the Court was thus exercising federal jurisdiction. 4. I have wavered about whether the questions being posed were hypothetical and thus inappropriate for this Court to answer. Ultimately I was persuaded that the agreement of each of the parties, recorded in these reasons, that "the issue of the proper construction of the contract will not be revisited (my italics) as it will have been determined finally" is sufficient to make the decision of the Court on the separate questions akin to a demurrer and not hypothetical. Relevant context - the suite of relevant agreements 1. In order to address the critical questions of construction it is important first to understand the scheme revealed in the various agreements the subject of these proceedings. I will address the Coonabarabran agreements as those were the only agreements referred to by the parties on the appeal. 2. As a first step investors in the agricultural scheme subscribed to a Licence Deed permitting the investor to use and occupy a portion of the land the subject of the scheme for an initial fee of $500 and a promise (in clause 2(a)(ii) of the Licence Deed) to pay an amount equivalent to 5% of the share of Gross Sale Proceeds (if any) to which the investor became entitled each financial year. In the Investment Deed "Gross Sale Proceeds" are defined as follows: "Gross Sale Proceeds" means the gross proceeds from the sale of Fruit by the Growers pursuant to the Farming Agreements and includes compensation or other amounts received by the Manager or any Grower from any marketing board or Governmental instrumentality if any Fruit is acquired by or required to be sold to any such marketing board or Governmental instrumentality and the proceeds payable by an insurer under any contract of insurance entered into for or on behalf of Growers; ... 1. Clause 14(a) of the Licence Deed treats the phrase "income of the Grower in respect of the income of the Grower's Farming Allotment" as referring to the amounts received by that Grower under clause 17.8 of the Investment Deed. Clause 14(a) of the Licence Deed provides: 14(a) The Grower shall by his execution of this deed be deemed to have irrevocably authorised and directed the Representative to pay to the Manager, until the whole of the amounts referred to in Clause 2(a)(ii) have been paid, all amounts payable by the Representative to the Grower in pursuance to Clause 17.8 of the Investment Deed representing the income of the Grower in respect of the income of the Grower's Farming Allotment to be applied to the Manager in payment of the Licence Fee amounts referred to in Clause 2(a)(ii). 1. The terms of clause 14(a) of the Licence Deed therefore treat the "income of the Grower" as being the amount payable to the Grower under clause 17.8 of the Investment Deed, not amounts that may be credited to the Grower's account under clause 17.6 of the Investment Deed prior to the payment of costs and expenses payable under clause 17.7 of the Investment Deed, or any earlier (notional) proportionate share of Gross Sale Proceeds. 2. The second step necessary to the scheme was that the investor subscribed to a Farming Agreement. The investor became at that point a "Grower", as defined. The payment due from the Grower under the Farming Agreement in the first year was $12,400 per allotment comprising $9,400 in respect of enhancement works (clause 19.1) and $3,000 in respect of maintenance and service works (clause 19.2). 3. The third step relevant to the questions raised by this scheme was that Growers had the option of entering into a Loan Agreement. All of the respondents to these proceedings took up that option. The evidence was silent about the number of participants (if any) in the scheme who did not take up the Loan Agreement option. The Lender at the time of making all the relevant agreements was also the Manager of the agricultural scheme. The Loan Agreement had a minimum borrowing requirement of $25,800 (sufficient to finance two Farming Allotments). The $25,800 borrowing comprised $9,400 in respect of enhancement works (times two); $3,000 for maintenance and service works (times two) and the $500 initial Licence Fee (times two). 4. The Borrower was obliged to make repayments of the Principal Sum "in the amounts and on the dates set forth in Item 4 of Schedule 1 hereto", relevantly $1,875 on each of three and six calendar months after entering into the Loan Agreement, and the Balance of the Principal Sum "by direct deduction from Income of the Farm Business in accordance with Clause 17.7 of the Deed and Clause 8.3 and 5.2" (italics added). The reference to clause 17.7 should be read as a reference to clause 17.8 for reasons explained in [233] below. 5. Clause 3.2(f) of the Loan Agreement entitled the Borrower to defer payment of interest for such periods as may be agreed between the Lender and the Borrower. The evidence does not reveal whether this deferment mechanism was ever engaged. 6. Thus, external cash from Growers who were also Borrowers available to finance the agricultural scheme, assuming that was what the Lender intended to do, at its commencement was limited (in the first year of operation) to $1,875 per allotment after three months, $1,875 per allotment after six months and the payment of interest for the first two years in advance. 7. Although the Loan Agreement "authorised" the Lender to remit the Principal Sum to the Representative to be applied by the Representative to make payments under any obligation of the Borrower (clause 3.1), there is no evidence of the involvement of any external funder or that the Principal Sum was ever available to the Lender or paid to the Representative, other than by book entry. 8. The taxation opinion attached to the prospectus for the scheme is a sufficient basis to conclude that Growers who took up the Loan Agreement option hoped to obtain an immediate tax deduction of $23,348 for every $25,800 loan taken out with the small remaining fraction of the loan becoming deductible to the Grower over the next two years. The interest payments in advance were also hoped to be deductible. Plainly, Growers could use these deductions to offset non scheme assessable income. In cash terms, so far as the Principal Sum of the loan was concerned, the scheme was marketed as providing that Borrowers would pay $3,750 in the first year and obtain an immediate tax deduction of $23,348. 9. The structure of the obligations involved recognised that growing and selling fruit would take time and there would be a mismatch in timing of expenditures in the agricultural scheme, which would be immediate and ongoing, and the receipt of income, which would only occur after the trees had borne fruit which was successfully marketed and sold. In the longer term, it was anticipated that external cash provided to finance the scheme would be provided by the sale of fruit, as contemplated by the Farming Agreement and the Investor Deed. The projections in the prospectus were for a net cash loss of $3,000 per allotment in the first year and a nil cash return in the second year. In the third year there was to be a tiny cash surplus of $75 per allotment projected. Substantial returns for the sales of nectarines and peaches (the two fruit trees being cultivated) were not projected until years five and six. The Investment Deed 1. The Investment Deed bound the Manager, the Representative and, after subscription to the Licence Deed and the Farming Agreement, the Grower. The structure of the funding for the agricultural scheme, and the distribution of the proceeds of the scheme (if any) were governed by the provisions of the Investment Deed. 2. In the Investment Deed the Manager was specifically identified as the party who may agree to provide financial accommodation, in the form of the Loan Agreement, to Growers (clause 5). 3. The Manager covenanted with the Representative (for the specific benefit of the Growers) that it would, inter alia, exercise its powers and perform its functions under the Deed diligently (clause 10(aa)), keep proper accounts in accordance with the then Corporations Law (clause 10(h)) and, significantly, "pay to the Representative, within 30 days of receiving it, money that, under this Deed, is payable by the Manager to the Representative" (clause 10(l)). 4. The Representative covenanted with the Manager (for the benefit of each Grower) that the Representative would exercise all due diligence and vigilance in protecting the rights and interests of the Growers under this Deed and the Project Agreements (being Agreements entered into under the Investment Deed (clause 20(b))). 5. So far as funding was concerned, the Representative was obliged to open and conduct a project bank account styled "Investment Account" into which it was required to deposit: 1. the Gross Sale Proceeds of sale of any fruit produced as part of the scheme; 2. income derived from investment of the Gross Sale Proceeds; and 3. any other income received for and on behalf of the Growers (clause 16). 1. The sources of initial funding for the agricultural scheme were thus: 1. any payments made by the Lender on behalf of the Growers comprising $1,875 per allotment after three months, $1,875 per allotment after six months and the payment of interest for the first two years in advance; 2. the Gross Sale Proceeds of the sale of any fruit produced as part of the scheme; and 3. any investment returns made by the investment of funds by the Representative. 1. The provisions regarding payments to be made from the Investment Account to the Manager, the Representative and, ultimately, the Grower were contained in clauses 16 and 17 of the Investment Deed. The Representative was entitled to pay out of the Investment Account: 1. all reasonable costs and expenses properly incurred for the purposes of the Project including remuneration to which the Representative, Manager and the Auditor are entitled (clause 16.3); and 2. all reasonable costs and expenses incurred for and on behalf of the Growers including stamp duty, brokerage and costs fees and expenses in relation to administrative record keeping (clause 16.4). 1. Additionally, the Manager was entitled to request the Representative to invest surplus funds standing to the credit of the Investment Account (clause 16.6). If the Investment Account had insufficient funds to pay the Representative or make payment of the amounts described in clause 16.4, the Manager undertook to pay those amounts, provided that the Manager was entitled to be reimbursed those amounts when "adequate funds" became available. 2. Clause 17 is headed "Income Distribution and Accounts in Respect Thereof". Clause 17 had the following features: 1. each Grower was entitled to specific Income Entitlements, depending on the point in time at which he or she invested (clause 17.1); 2. all Gross Sale Proceeds received by the Manager were required to be paid to the Representative, reflecting the obligation also contained in the Farming Agreement in clause 11.5 (clause 17.2); 3. the Net Income in each year of income was the sum of the Gross Sale Proceeds and any other income LESS all costs and expenses (including remuneration) payable out of the Investment Account (clause 17.3). The costs and expenses (including remuneration) payable out of the Investment Account are those found in clause 16 and also in clause 17; 4. subject to "protecting the rights and interests of the Growers" under clause 20(b) of the Investment Deed, the Representative was obliged to keep aside such credit or reserve as the Manager determined. Importantly, such contingencies and reserves could subsequently be "transferred to and form part of the Gross Sale Proceeds" (italics added) – presumably in that year or any subsequent year (clause 17.4); 5. subject to "protecting the rights and interest of the Growers" under clause 20(b) of the Investment Deed, the Representative was obliged to keep aside a provision for income tax payable by the Representative on behalf of Growers, for example withholding tax or certain types of trust income (clause 17.5); 6. a formula was provided requiring the calculation by the Representative of Net Income standing to the credit of the account of each Grower. (clause 17.6). As I will explain below, this formula was apparently incapable of calculating that Net Income figure for each Grower; 7. the Representative was obliged to deduct from the Grower's account all costs, expenses and outgoings properly chargeable to the Grower (clause 17.7); and 8. any amount standing to the credit of a Grower in the account of the Grower after this process is to be paid to that Grower less any negative amount carried forward from an earlier year and any tax for s 98 Income Tax Assessment Act 1936 (Cth) or withholding purposes (which taxation provisions do not concern us here) (clause 17.8). 1. It is tolerably clear that clauses 17.6 and 17.7 do not provide a mechanism to enable the identification in a separate "account" for each Grower of the Grower's assessable income, assuming that on traditional taxation principles assessable income is equivalent to a proportionate share of Gross Sale Proceeds. Clause 17.6 in terms sets out to calculate a different amount, being the Grower's share of Net Income, which it will be recalled is defined in clause 17.3 and is a quite different concept to a proportionate share of Gross Sale Proceeds. The reference to "Gross Sale Proceeds" in the formula must be an error. If clause 17.6 was truly to be used to calculate "Net Income" (as the clause says) then, at a minimum, that term should have been used in the formula in clause 17.6 rather than the term "Gross Sale Proceeds". 2. It is equally clear that clauses 17.6 and 17.7 do not provide a mechanism to calculate a Grower's allowable deductions, being on traditional taxation principles equivalent to a proportionate share of all costs and expenses. 3. The reporting provisions to which I will shortly refer also make it clear that the calculation of a proportionate share of Gross Sale Proceeds and a proportionate share of all costs and expenses was not the purpose of those clauses. 4. Given the importance that a Grower's taxation position assumed in the submissions made by the appellant it is necessary to say something briefly about that matter. While this is not the occasion for a dissertation about the changes wrought to the fundamental mechanics of the taxation system by the introduction of the self-assessment system in Part IV of the Income Tax Assessment Act 1936 titled "Returns and Assessments" and cognate provisions in the Taxation Administration Act 1953 (Cth), it deserves a brief mention. The Taxation Laws Amendment Act 1986 (Cth) (Act No.46 of 1986), which received the Royal Assent on 24 June 1986, effected a number of measures to facilitate self-assessment of income tax returns. The self-assessment system was thus in place at the time of entry into the Investment Deed governing the Tumut River Orchard Project which was December 1990. This was the first in time of these projects, which were otherwise 1993 (Coonabarabran), 1994 (Queensland Orchard) and post 1994 for the Treetop Project. 5. In parallel with the introduction of the self-assessment system, the Commissioner of Taxation throughout this period required progressively less information to be provided by most taxpayers with their annual taxation returns: see Taxation Administration Act Sch 1 Subdiv 388-B and its relevant history including the forms required to be used by taxpayers. 6. By reason of the availability of the self-assessment system and the introduction of "short form" returns for some taxpayers it would not be safe to conclude, in the absence of evidence, that the identification of the Grower's proportionate share of Gross Sale Proceeds was a requirement necessary to include in a Grower's income tax return in any particular year of income. 7. In the absence of evidence about the Commissioner's requirements for taxpayers, including these respondents, in relevant years of income, I would not be prepared to infer as urged by Senior Counsel for the appellant that "the Grower will return to the Commissioner as income … gross proceeds and claim deductions for expenses. You don't conceal from the Commissioner by simply putting what you say is the net figure and say that's what I've earned this year…". 8. Shortly put, the provisions of the Income Tax Assessment Act 1936 and the Taxation Administration Act are labyrinthine and changed fundamentally over the period during which this scheme was intended to operate. More importantly for present purposes, the Commissioner's practical requirements for these taxpayers in relevant years of income were not the subject of evidence and it should not be assumed, as the submissions by the appellants tended to, that the Commissioner of Taxation required the specific identification by the Grower in the Grower's income tax return of the Grower's proportionate share of Gross Sale Proceeds. 9. A critical feature of the Investment Deed is that it provides specific powers to the Representative to institute, prosecute and compromise legal proceedings "to recover any moneys that are payable to the Representative" (clause 19.3): 19.3 The Representative shall have the power to institute, prosecute and compromise legal proceedings to obtain or recover any moneys that are payable to the Representative and to bring legal proceedings for damages against any person arising out of any loss suffered by the Growers as a result of any negligence, default, omission or breach of duty or legal proceedings to secure compliance with the provisions of this Deed or any Prospectus or any such other legal proceedings which the Representative, in consultation with the Manager, may consider necessary or desirable to administer the Project. 1. There are also some additional aspects of the Farming Agreement which should be mentioned. Clause 11.1 of the Farming Agreement provides that the Grower appointed the Manager as his agent and nominee to sell the fruit harvested pursuant to the Agreement. The Manager is entitled to pool the fruit with fruit grown by other Growers, undertake market research about buyers, determine which buyers to sell the fruit to, deliver the fruit and, implicitly, collect the proceeds of sale. 2. Clause 11.5 of the Farming Agreement, which is cognate with the Manager's covenant in clause 10(l) of the Investment Deed provides: 11.5 The Manager shall for the time being under the Investment Deed pay all Gross Sale Proceeds to the Representative to be dealt with in accordance with the provisions thereof. Reporting to the Grower 1. An important aspect of the Grower's rights was the extent to which the Representative was obliged to report to the Grower about his or her Farming Business. In addition to being provided with the audited statement of accounts (clause 20(f) of the Investment Deed), each Grower was entitled to be provided by the Representative with a report containing the following information (clause 18.1): 18.1 In addition to the accounts and the report of the Auditor to be provided to each Grower pursuant to paragraph (f) of Clause 20, the Representative shall within a period of two (2) months from the end of each Financial Year send to each Grower a report including the following information: (a) the total area of the Farming Allotments which have been planted with Fruit as at the end of the Financial Year; (b) the total amount of the Fruit harvested and sold from the Farming Allotments during the Financial Year; (c) the total Gross Sale Proceeds; (d) a financial statement in respect of that Financial Year showing: (i) the Net Income and the Grower's entitlement to the Net Income; (ii) the gross expenses of the Project divided to show separately the Manager's and the Representative's remuneration and the total reimbursement to the Manager and Representative of costs and expenses incurred in relation to the Project pursuant to this Deed; (iii) a copy of the Auditor's report to be given pursuant to Clause 15.7; and (iv) such other information as the Representative may determine. (italics added) 1. It is clear that Growers had no entitlement in these reporting provisions to the identification of their proportionate share of Gross Sale Proceeds. Rather, the suite of documents contemplates that they be informed only of "the Grower's entitlement to the Net Income". How the proportionate share of Net Income is determined is obscure. It is not identified in clause 17, unless clause 17.6 is to be understood as containing a fundamental mistake in the formula and the integer "Net Income" should have been used in the formula in clause 17.6 rather than "Gross Sale Proceeds". The text of the limited recourse obligation in the Loan Agreement 1. Having sketched that background I turn to consider the question of construction. As with any other commercial contract, the task of construction is principally concerned with the words chosen by the parties to express their bargain. 2. There is no wholly satisfactory answer to the critical questions of construction posed in this case. It is clear that the suite of agreements needs to be understood as a whole and, to the extent possible, construed in a way that is consistent and does not give rise to absurdity. 3. The agreements are poorly drafted, perhaps reflecting their origins as documents put together quickly with a 30 June deadline to attract funding by investors lured by the promise of immediate taxation benefits. Much of the drafting is confused. Defined terms are used in inconsistent ways. Terms that are defined are used in ways which make it difficult to determine if the defined meaning was intended to be applicable. There is much that appears to be inconsistent and even redundant. 4. The obligation of repayment of the Principal Sum contained in the Loan Agreement is contained in clause 3.2(a): 3.2 The Borrower shall: (a) repay the Principal Sum in the amounts and on the dates set forth in Item 4 of Schedule 1 hereto; ... 1. It will be recalled that Item 4 of Schedule 1 provides: Item 4: Principal Repayment Dates Per Farming Allotment A. 3 calendar months after the date of this Agreement $1,875 B. 6 calendar months after the date of this Agreement $1,875 C. Balance of the Principal Sum by direct deduction from Income of the Farm Business in accordance with Clause 17.7 of the Deed and Clause 3.3 and 5.2. 1. Thus the balance of the Principal Sum is repayable "by direct deduction from Income of the Farm Business in accordance with clause 17.7 of the Deed…". This must mean clause 17.8 as clause 17.7 is a clause authorising deductions to be made. The other clauses referred to are clauses 3.3 and 5.2. 2. Clause 3.3 of the Loan Agreement provided for the manner in which repayments of the balance owing under the Loan Agreement were to be made by the Borrowers: 3.3 The balance of the Principal Sum and accrued interest and all other monies which may from time to time be owing under this agreement to the Lender shall except as hereinafter provided be repaid to the Lender on the due dates for payment by direct deduction from the monies payable by the Representative to the Borrower in pursuance of 17.8 representing the income of the Borrower in respect of the Borrower's Farming Allotments and the Borrower by his execution hereof hereby authorises the Representative to pay the lender all such monies subject to the operation of clause 5.2. (italics added) 1. Thus, so far as the repayment obligation for the Principal Sum and interest is concerned, clause 3.3 directs attention only to income of the Borrower under clause 17.8, not "income" in the sense of a proportionate share of Gross Sale Proceeds. The critical question remains the construction of clause 5.2. 2. It will be recalled that clause 5.2 of the Loan Agreement provides: 5.2(a) The Borrower shall, by his execution of this Deed, be deemed to have irrevocably authorised and directed the Representative to pay to the Lender until the whole of the Principal Sum has been repaid and Interest paid, all amounts payable by the Representative to the Borrower in pursuance of Clause 17.8 of the Investment Deed representing the income of the Borrower in respect of the income of the Borrower's Farm Business (the Borrower's Farming Allotments), to be applied by the Lender in payment of the amounts referred to in Clause 3 and Items 3 to 6 of the Schedule 1 hereto. 5.2(b) In the event that the Grower's income in any one year is insufficient after the deductions of any other amount payable to the Manager, to pay the Principal and Interest amounts referred to in Items 4C, 5 and 6C of Schedule 1 hereto or part thereof then such Principal and Interest or part thereof may be paid out of the Grower's income in any subsequent year. 5.2(c) Subject to the Grower's income from his interest in the Project being made available in its entirety by the Grower to the Representative for the purpose of meeting the Grower's payment obligations to the Lender under the Loan Agreement the Lender shall have no other recourse to the Grower for Principal and Interest amounts referred to in Items 4C, 5 and 6C of Schedule 1 hereto. 1. The construction of the phrase "the Grower's income from his interest in the Project being made available in its entirety by the Grower to the Representative" is at the heart of this appeal. There are at least two reasonably open meanings of the words of obligation in clause 5.2(c) which provide the condition which must be satisfied for a Grower to obtain the benefit of non-recourse under the Loan Agreement. 2. The construction propounded by the appellant was that the words "Grower's income from his interest in the Project" means: the Grower's share of the income generated by the relevant Project prior to deduction of amounts due under the Relevant Agreements (which, for present purposes, may be equated with the Grower's proportionate share of the Gross Sale Proceeds). (italics added) 1. In oral address the appellant's case was somewhat more nuanced: BATHURST CJ: Well I know I've said this to you before but do you say that the 5.2(c) amount if I can use it as an amount, is an amount arrived at after taking into account any deductions that may be made under cl 17 including cl 17.7. WALKER: Yes, and that encompasses [clause] 16 of course. 1. The appellant's case in oral address was that clause 5.2(c) required that all of the Gross Sale Proceeds must be paid by the Manager to the Representative in each year and that a failure to do so meant that the non-recourse protection would be lost, but accepted that before the Lender was entitled to be paid any sum, all of the deductions to be made under clauses 16 and 17 needed first to be made. Put in this way, the appellant's case nevertheless required the Grower's proportionate share of Gross Sale Proceeds (i.e. the entire amount) to be made available by the Manager to the Representative in each year. 2. The construction advanced by the appellant requires that the Grower's proportionate share of the Gross Sale Proceeds must in fact be received by the Representative. If not, the Grower's income from his interest in the Project has not been "made available in its entirety" to the Representative by the Grower. 3. The respondents contended that the "Grower's income from his interest in the Project" within the meaning of clause 5.2(c) means the income to which the Grower would otherwise be entitled to be paid under clause 17.8. Under this construction it is only the amount in fact otherwise to be paid to the Grower under clause 17.8 which is the subject of clause 5.2 (c) of the Loan Agreement. Whether or not earlier in the distribution process the correct amounts were contributed by the Manger or deducted by the Representative is not relevant to the protection offered to the Grower by clause 5.2(c). 4. The respondents further submitted that "the Grower's income from his interest in the Project" was "made available in its entirety by the Grower to the Representative" by entering into a suite of agreements that gave the Representative the right to receive the income and also by clause 19.3 of the Investment Deed which gave the Representative the specific power to sue the Manager (or any other person) to recover any shortfall in payment required to be made to the Representative. Mr R Newlinds SC, with whom Mr A d'Arville appeared, submitted: So our simple point ‑ and it is a simple point, and it's either right or wrong ‑ is that cl [5.2(c)] is not a guarantee by the Grower that any particular amount will be paid, it's not a promise to actually pay money, it is a promise to make available money, and we suggest that making available something, when it's money, is different than paying that money. I can make money available to someone by leaving it in my letter box, and if someone steals it in the meantime, if that was the deal, well, I made it available even though they didn't get the money. 1. If that is correct, it matters not whether the "Grower's income from his interest in the Project" means his or her proportionate share of Gross Sale Proceeds or his or her income defined in clause 17.8. This submission focusses squarely on the critical question of whether the income of the Grower, on either measure, has been "made available in its entirety". This construction of clause 5.2(c) is open and was raised by notice of contention. The meaning of "the Grower's income from his interest in the Project" in clause 5.2(c) 1. Clause 5.2(a) refers to all amounts payable by the Representative to the Borrower under clause 17.8 of the Investment Deed, which are there characterised as "representing the income of the Borrower" in respect of the "income" of the "Borrower's Farm Business". Thus, within the same clause as the limited recourse provision in 5.2(c) the "income" of the "Borrower's Farm Business" is defined as being income under clause 17.8. If the "income" in clause 5.2 is construed as having the same meaning in each of the sub-clauses, the appellant must fail. It is true that clause 5.2(a) addresses the income of the "Borrower's Farm Business" rather than the "Grower's income from his interest in the Project", but having regard to the detail of the scheme I have described above I can discern no relevant difference between the interest of the "Borrower" and the "Grower", assuming that the Grower is a party to the Loan Agreement. The income of the "Borrower's Farm Business" seems to me to be conceptually interchangeable with the "Grower's income from his interest in the Project". Each term is capable of referring to either income in the sense of income of the under clause 17.8 or income in the sense of a proportionate share of Gross Sale Proceeds. As has been seen, clause 5.2(a) defined the relevant income as that under clause 17.8. 2. Clause 5.2(b) also refers to "income" in the sense of clause 17.8 income. This is confirmed by the reference to an "other amount" payable to the Manager. If the clause were intending to identify the Borrowers' entitlement to "income" at a point earlier than clause 17.8 income the reference to an "other amount" payable to the Manager would be meaningless. Clause 5.2(b) contemplates that the amount payable to the Representative in any one year may be less than is required to pay the Principal Sum and Interest amounts in a particular year and provides that the shortfall is to be paid from the Grower's income in a subsequent year; providing for a deferral of the obligation of repayment until clause 17.8 income is available to pay the Principal Sum and Interest amounts owing by the Grower. 3. Clause 5.2(c) refers to income to be made available in its entirety by the Grower to the Representative. On its face, it appears to me to be a clause which identifies the same "income" as clause 5.2(a), namely income under clause 17.8. Although the terminology, "Borrower" vs "Grower" and "Farm Business" vs " Project" is different, the better construction is that clause 5.2(c) is referring to the same "income" as clause 5.2(a): clause 17.8 income. 4. There are several indications that this construction is preferable and that "the Grower's income from his interest in the Project" cannot mean the Grower's proportionate share of the Gross Sale Proceeds. 5. The first is that the Grower's proportionate share of the Gross Sale Proceeds is not something calculated by the Agreements the subject of the scheme. It will be recalled that agreed fact 26, at the heart of this appeal, talks broadly about "Gross Sale Proceeds" not being remitted to the Representative. Nowhere in the Investment Deed is there a calculation required of the Grower's proportionate share of "Gross Sale Proceeds". Even the formula in clause 17.6 of the Investment Deed which I have addressed above is designed expressly only to identify a credit to "the account of each Grower a share of the Net Income" (Net Income is of course calculated in clause 17.3 of the Investment Deed as Gross Sale Proceeds and other income less all costs and expenses payable out of the investment account). 6. The second is the question of control. It is clear that Growers have no entitlement in the suite of agreements to the identification of their proportionate share of Gross Sale Proceeds. Further, the suite of documents contemplates that they be informed of the Net Income and "the Grower's entitlement to the Net Income" (clause 18.1 of the Investment Deed). 7. I accept the appellant's contention that the Grower has an interest in the fruit produced on his or her allotment and the Grower's proportionate share of the Gross Sale Proceeds can properly be described as the Grower's "income", in the sense of assessable income. As I have explained above, however, I do not accept that the appellant proved or was entitled to rely upon any agreed fact demonstrating that the Grower's proportionate share of the Gross Sale Proceeds was necessarily to be included in the Grower's taxation return in any year of income. 8. It is clear that under the Investment Deed an identified share of Net Income was the only figure to which the Grower was entitled. It would be remarkable if the entitlement to non-recourse in clause 5.2(c) of the Loan Agreement rested on the Grower "making available" to the Representative something about which he or she had no control over and which was not required to be calculated by the interlocking suite of agreements, being his or her proportionate share of the Gross Sale Proceeds in any year of income. The thing that the appellant submitted was not "made available" by the Grower – his or her proportionate share of the Gross Sale Proceeds – is not something that the Grower ever knew about or was entitled to know about under the suite of scheme documents. 9. As a matter of construction I do not accept that the non-recourse nature of the Loan Agreement, a critical feature of this whole agricultural scheme, turns on non-fulfilment of a condition by a Grower based on making available something that under the Investment Deed the Grower had no right to know. 10. Thirdly, the species of income described in clause 5.2(c) is described as "for the purpose of meeting the Grower's payment obligations to the Lender under the Loan Agreement". This is an inapposite way in which to describe a proportionate share of the Gross Sale Proceeds. Whilst it is true that, at a level of generality, Gross Sale Proceeds are intended to provide the starting point for the payment of the Lender, they are the lifeblood of the entire scheme. It is unlikely as a matter of construction that if the parties were intending to refer to Gross Sale Proceeds in the context of clause 5.2(c) and the description of "income" that they would have described it as being for the purpose of meeting the Grower's payment obligations to the Lender under the Loan Agreement. That description of "income" better suits clause 17.8 income which is otherwise the subject, and the only subject, of "income" in clause 5.2. 11. Fourthly, subject to clause 20(b) of the Investment Deed, the Representative was obliged to keep aside such credit or reserve as the Manager determined. Such contingencies and reserves could subsequently be "transferred to and form part of the Gross Sale Proceeds": clause 17.4. That is, the Gross Sale Proceeds, as defined, were not necessarily limited to the proceeds of the sales of fruit in any one year. A Grower's proportionate share of Gross Sale Proceeds in any one year was thus not necessarily part of the Grower's income at all in that year of income. To conclude that "the Grower's income from his interest in the Project" was something which was not necessarily income of the Grower in that year of income would give rise to commercial absurdity and I would only be prepared to construe the clause in that way if compelled to do so. 12. The strongest argument against the construction I prefer is that there would be little need or purpose in the Grower "making available" funds to be distributed under clause 17.8 of the Investment Deed to the Representative because such funds are already in the hands of the Representative by reason of the direction given in clause 5.2(a). 13. The primary judge's finding that the clause is not superfluous by reason of the possibility of a mistaken payment is not particularly convincing. It does have the benefit, however, of providing some explanation for circumstances which might exist and give the clause separate work to do. Clause 5.2(c) is not therefore otiose. That clause would operate if the Borrowers in fact received and did not remit to the Representative payment of income that ought to have been paid to it and by it to the Lender in accordance with the authorities and directions or if the Borrowers successfully challenged the efficacy of those authorities and directions for example on the basis that they were invalid and should be set aside. In the present case there was no evidence of interference with the operations of the authorities and directions of that character. 14. There are two other circumstances where the clause would have work to do on the construction I prefer. The first is where the Grower's clause 17.8 income is greater than the amount owing in that year by the Grower to the Lender. For example, if the project were successful, clause 17.8 payments in previous years could in theory have repaid most of the Principal Sum and accumulated interest for a particular Grower. For the sake of argument, let it be assumed that in year eight only $1,000 plus accumulated interest remained outstanding but that the Grower's clause 17.8 entitlement was $1,200. In those circumstances the Grower is nevertheless required to make the entire sum ($1,200) available to the Representative for the purpose of first meeting the Grower's payment obligation to the Lender under the Loan Agreement. 15. The second is where the Representative has taken proceedings under clause 19.3 to recover amounts not paid to it in breach of duty by, for example, the Manager. The obligation to "make available" the Grower's income from his interest in the Project in its entirety would encompass the Grower not taking any step to interfere with action being taken by the Representative and, perhaps, a positive obligation to assist the Representative to recover the funds. If a positive step were taken to frustrate the Representative in such an action, no doubt the protection of the limited recourse provision in clause 5.2(c) of the Loan Agreement would be lost. 16. To the extent that there is any ambiguity in clause 5.2(c) of the Loan Agreement reference may be made to the surrounding circumstances. There is in the present case uncertainty or ambiguity in the clause, particularly as to whether the Grower's "income" is to be determined for the purpose of that clause on a gross basis or under clause 17.8 of the Investment Deed and after costs and expenses have been deducted, to warrant reference to the surrounding circumstances: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337. 17. When regard is had to those surrounding circumstances one thing is clear. This tax scheme was marketed on the basis that if the minimum principal repayments and first two interest payments were made, and the other obligations under the Loan, Licence and Farming Agreements were complied with by the Grower then the recourse of the Lender to the Borrower for any other amounts payable under the investor loan were limited to the Borrower's income from his or her Farming Allotments, which was income under clause 17.8. 18. Beyond this matter, there is no decisive answer to the question of construction which emerges from the surrounding circumstances. 19. Although the issue is finely balanced and reasonable minds can plainly differ about these issues, in my view the concepts of "Grower's income" and "Borrower's income", which variously reference the Farming Allotments, Farming Business and the Grower's interest in the Project, refer to the amount available to the Grower or the Borrower under clause 17.8 of the Investment Deed. 20. Whilst I am conscious of the fact that clause 5.2(c) uses different language from clause 5.2(a) I am not persuaded that it was intended to refer to a different concept of "income" to that defined in clause 5.2(a). In my opinion, the use of the language "Grower's income from his interest in the Project" suggests that clause 5.2(c) was intended to refer to income calculated under clause 17.8 of the Investment Deed. Did the Growers make available their income in its entirety? 1. The concept of something being "made available" involves putting something at another's disposal or within another's reach or making it available for another's use. Little assistance about the meaning of "made available" is gained from cases cited from other contexts such as Gosling v McCombie (1972) 126 CLR 487 at 506 per Walsh J and Thompson v Smith (1976) 135 CLR 102 per Gibbs J. 2. It is true that the words "in its entirety" are words of extension. Clauses 5.2(a) and 5.2(b) are about payments of monies, whereas clause 5.2 (c) refers to income being "made available in its entirety". 3. In my view, the likely explanation for the use of the words "in its entirety" is to provide for the situation where the amount of income in a particular year under clause 17.8 of the Investment Deed was more than the Grower was obliged to pay in that year, for example, in interest on the balance of the Principal Sum then owing. 4. In order to take the benefit of the limited recourse provision, the words "in its entirety" make clear that even in a particular year where the Grower's clause 17.8 income is greater than the amount owing in that year by the Grower to the Lender, the Grower is nevertheless required to make the entire sum available to the Representative for the purpose of meeting the Grower's payment obligation to the Lender under the Loan Agreement. That is, the Grower must make available the clause 17.8 income in its entirety until the whole of the Principal Sum and interest is repaid, even if in a particular year the amount of the clause 17.8 income is greater than the amount owing by the Grower to the Lender in that particular year. 5. The use of the phrase "in its entirely" makes clear that even if the project was hugely successful, the income from the project could not be diverted in part to the Grower and must be made available to the Representative and applied to payment of the Lender. In this way the phase "in its entirety" is to be understood as complementing the irrevocable authorisation contained in clause 5.2(a) of the Loan Agreement. 6. The phrase "in its entirely" is not a textural indication supporting a conclusion that the "income" to be paid in clause 5.2(a) is a dramatically different species of "income" to that to be made available in clause 5.2(c). 7. In any event, the better construction of the obligation in clause 5.2(c) seems to me to be that "the Grower's income from his interest in the Project" was "made available in its entirety by the Grower to the Representative" by entering into a suite of agreements that gave the Representative the right to receive the income and which also, by clause 19.3 of the Investment Deed, gave the Representative the specific power to sue the Manager (or any other person) to recover any shortfall. Any amount so recovered would thereafter be subject to the Borrower's direction (made under clause 5.2(a) of the Loan Agreement) that it be paid by the Representative to the Lender. 8. As a matter of construction, a Grower would not have "made available" the Grower's income in its entirety if the Grower had refused to co-operate with the Representative in an action under clause 19.3 of the Investment Deed to recover any money which, on the hypothesis I am addressing, had been misappropriated or otherwise misapplied by the Manager or had taken a step to interfere with the exercise of the Representative's rights in such a case. 9. There was no evidence that the Representative had done anything to recover funds to which it was entitled or that any Grower had failed to co-operate with the Representative in that putative recovery action. 10. Accordingly, even if the "Grower's income from his interest in the Project" in clause 5.2(c) meant his or her proportionate share of Gross Sale Proceeds, I would dismiss this appeal. Answer to separate questions 1. Although my reasons differ from those given by the primary judge, in my view he was correct to answer each of separate questions 1 and 2 "yes". 2. I agree with Leeming JA that question 3 was correctly answered "yes" by the primary judge. Orders 1. The orders I propose in respect of all respondents except the 39th respondent Mr Foletti are: 1. appeal dismissed; 2. appellant to pay the costs of the respondents as agreed or assessed. ********** 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: 08 December 2016