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  4. Mulherin v Bank of Western Australia Ltd - [2005] QSC 205

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Mulherin v Bank of Western Australia Ltd[2005] QSC 205

Mulherin v Bank of Western Australia Ltd[2005] QSC 205

 

SUPREME COURT OF QUEENSLAND

  

CITATION:

Henry Desmond Mulherin v Bank of Western Australia Ltd; Michael Gerard McCann & Anor v Bank of Western Australia Ltd [2005] QSC 205

PARTIES:

HENRY DESMOND MULHERIN

(Plaintiff)

and

BANK OF WESTERN AUSTRALIA LTD (ACN 050 494 454)

(Defendant)

 

MICHAEL GERARD McCANN

(First Plaintiff)

and

UNITED (T & C) BRETTS WHARF PTY LTD (In Liquidation) (ACN 075 934 011)

(Second Plaintiff)

and

BANK OF WESTERN AUSTRALIA LTD (ACN 050 494 454)

(Defendant)

FILE NO/S:

S 5504 of 2000 and S 3066 of 2002

DIVISION:

Trial Division

PROCEEDING:

Civil Trial

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

21 July 2005

DELIVERED AT:

Brisbane

HEARING DATES:

21, 22, 23, 24, 25, 28 February, 1, 3 March 2005

JUDGE:

Atkinson J

ORDERS:

In S 5504 of 2000:

  1. The proceedings are dismissed;
  2. The sum of $503,546.61 (together with all the interest earned thereon) held in trust by the plaintiff’s solicitors pending the outcome of this proceeding are to be paid to the plaintiff forthwith;
  3. The plaintiff pay the defendant’s costs of the proceedings, including reserved costs, to be assessed.

In S 5504 of 2000:

  1. The proceedings are dismissed;
  2. The plaintiff pay the defendant’s costs of the proceedings, including reserved costs, to be assessed.

CATCHWORDS:

ESTOPPEL – ESTOPPEL BY CONVENTION – where plaintiff unable to show a common assumption where the assumption of each party is wrong but not shared

MORTGAGES – MORTGAGES AND CHARGES GENERALLY – PARTICULAR MORTGAGES AND ENCUMBERANCES – EQUITABLE MORTGAGE – GENERALLY – what constitutes – where the acts do not create an equitable mortgage

TRADE AND COMMERCE – TRADE PRACTICES AND RELATED MATTERS – CONSUMER PROTECTION – MISLEADING, DECEPTIVE OR UNCONSCIONABLE – Character and Attributes of Conduct – Representations – Silence and Concealment – failure to disclose breach of priority deed - where the defendant under no obligation to inform the plaintiff of the breach

CORPORATIONS – WINDING UP – LIQUIDATORS – OTHER MATTERS – proceeding by liquidator to challenge voidable transaction – whether transaction an insolvent or commercial transaction or gives an unfair preference – defendant no reasonable grounds for suspecting company insolvent and providing valuable consideration

Corporations Act 2001 (Cth) s 9, s 588FA, s 588FB, s 588FC, s 588FE, s 588FF, s 588FG,

Property Law Act 1974 (Qld) s 55, s 82, s 85, s 88

Trade Practices Act 1974 (Qld) s 52

Bartercard v Wily (2001) 39 ACSR 94; [2001] NSWCA 262, cited

Beachquest Pty Ltd v Interstate Mortgage and Investment Pty Ltd [2003] 2 Qd R 586, cited

Caboche v Ramsay (1993) 119 ALR 215, cited

Central Mortgage Registry of Australia Ltd v Donemore Pty Ltd [1984] 2 NSWLR 128, cited

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, applied

Cook’s Construction Pty Ltd v Brown [2004] NSWCA 105, cited

Demondrille Nominees Pty Ltd v Shirlaw (1997) 25 ACSR 535, cited

Derwinto v Lewis (2002) 42 ACSR 645; [2002] NSWSC 731, cited

Downey v Aira Pty Ltd (1996) 14 ACLC 1068, cited

Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83, cited

Mann v Sangria Pty Ltd (2001) 38 ACSR 307; [2001] NSWSC 172, cited

Queensland Independent Wholesalers Ltd v Coutts Townsville [1989] 2 Qd R 40, applied

Re Ermayne; Sims v Tech Holdings Pty Ltd (1998) 30 ACSR 330, cited

Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77, cited

Shanemist Pty Ltd v Denmac Nominees Pty Ltd [2003] QSC 373, cited

Sims v Celcast Pty Ltd (1998) 71 SASR 142, cited

Skouloudis v Planet Enterprizes (2002) 41 ACSR 369; [2002] NSWSC 239, applied

Sutherland v Eurolinx (2001) 37 ACSR 477; [2001] NSWSC 230, applied

Swiss Bank Corp v Lloyds Bank Ltd [1982] AC 584, cited

Tosich Construction Pty Ltd (in liq) v Tosich (1997) 78 FCR 363, cited

Wily v Bartercard (2000) 34 ACSR 186; [2000] NSWSC 372, applied

COUNSEL:

A J H Morris QC with I Erskine and LA Jurth for the plaintiffs

DJS Jackson QC with SC Brown for the defendant

SOLICITORS:

Gateway Lawyers for the plaintiffs

Freehills for the defendant

  1. These are the reasons for judgment in two separate matters which were ordered to be heard together. The first matter is claim number S 5504 of 2000 in which the plaintiff is Henry Desmond Mulherin (“Dr Mulherin”) and the defendant is the Bank of Western Australia Ltd (ACN 050 494 454) (“BankWest”). The second matter is claim number S 3066 of 2002 in which the plaintiffs are United (T & C) Bretts Wharf Pty Ltd (In Liquidation) (ACN 075 934 011) (“UTC”) and its liquidator Michael Gerard McCann. The defendant in that matter is also BankWest.

Bretts Wharf Stage 2 Development

  1. Bretts Wharf is an apartment complex on the Brisbane River at Hamilton. The initial development on the site consisted of a restaurant complex and an apartment tower, subsequently known as Stage 1.
  1. On 14 January 1997, UTC and Hamilton Stage 2 Pty Ltd (“Hamilton Stage 2”) entered into an agreement dated 13 January 1997 described as a joint venture deed (“the Stage 2 joint venture deed”). The Stage 2 joint venture deed was for the development of Stage 2 of the Bretts Wharf development (“Stage 2”) which involved the construction and sale by UTC of a second apartment tower and waterfront villas. There were to be seven villas and 20 apartments to be called “The Sutherland”. Hamilton Stage 2 was the lessee pursuant to Special Lease 06/53117 (“the Stage 2 lease”) and, from 4 August 1998, the registered proprietor of land described as Lot 3 on CP 867290 in the County of Stanley, Parish of Toombul, Title Reference 17744249 (the “Stage 2 land”) where it was intended to construct Stage 2. The Stage 2 joint venture deed was signed by Donald O'Rorke on behalf of Hamilton Stage 2 and Stephen Tam and Jasper Tam on behalf of UTC. Clause 15.2 obliged UTC to guarantee the payment of $2,200,000.00 to Hamilton Stage 2.
  1. The directors of UTC at the relevant times were Stephen Shu Wing Tam and his younger brother, Jasper Moon Wing Tam. Its shareholders were Stephen Tam, Jasper Tam and United (T & C) Investments Pty Ltd (“UTC Investments”) who each held one share. Stephen Tam lived in Hong Kong where he apparently operated an LJ Hooker Master Franchise. Jasper Tam lived in Brisbane and was appointed the governing director of UTC on 11 October 1996 with authority to sign all Bretts Wharf documentation. The shareholders of UTC Investments were members of the Tam family: Stephen Tam, who held 25 per cent, Jasper Tam, 15 per cent, Simon Tam, 10 per cent, and Edmond Tam, 10 per cent. In addition, Lee Pui Tung held 20 per cent, Herman Chan, 15 per cent, and Leung YK, 5 per cent.
  1. Hamilton Stage 2 was a company controlled by Consolidated Properties Pty Ltd (“Consolidated Properties”) whose principal was Mr O'Rorke. Its solicitors were Mallesons Stephen Jaques (“Mallesons”). On 13 January 1997, the directors of Hamilton Stage 2 appointed Stephen Tam and Jasper Tam agents to execute any documentation prepared by Mallesons for the sale of units in Stage 2. The project managers of Stage 2 were Total Project Control Pty Ltd (“TPC”).

Loan from Li Kam Ming

  1. Shortly after the Stage 2 joint venture deed was executed, UTC entered into a loan agreement with Li Kam Ming (the “Li loan”) on 31 January 1997 to borrow money for the purpose of acquiring and developing Stage 2. The Li loan agreement was drafted by Mr Li’s solicitors, Bowdens. The guarantors of the loan were Stephen Tam and Jasper Tam. The loan was for $1,000,000.00. The interest payable was a further $1,000,000.00. The security was to be a registered second mortgage debenture over the assets of UTC (the “Li charge”). It was to follow a mortgage debenture charge by UTC in favour of QIDC. QIDC, however, did not become the primary lender. The Li charge was granted by UTC on 19 November 1997 to a maximum prospective liability of $3,000,000.00. BankWest became the primary lender and the Li charge ranked second after the first BankWest charge referred to below. The Li charge was lodged and registered with the Australian Securities Commission (“ASC”) on 22 December 1997.

First Loan from BankWest

  1. UTC applied to BankWest for finance for construction and development of Stage 2. The application was made on behalf of UTC by Graham Haughey of Ashe Morgan Winthrop (“AMW”). In his evidence, Mr Haughey described the business of AMW as ‘mortgage origination’. Attached to the application were a large number of financial documents and a valuation of the property for mortgage purposes. The Stage 2 lease was valued at $1,850,000.00. The gross realisation on completion of Stage 2 was valued at $19,862,000.00.
  1. On 28 April 1997, Dale Evans, who was then the Commercial Banking Manager in the Brisbane office of BankWest, sent an indicative offer for a loan to UTC to Mr Haughey of AMW. Among the conditions precedents were:

“• The Bank being satisfied with [UTC’s] capacity to contribute its equity in the development and also to meet any cost overruns during the construction phase.

…

  • [UTC’s] equity to be fully contributed prior to the release of the Bank’s funds.”
  1. On 6 May 1997, Mr Haughey and Mr Evans met. Mr Evans required more documents and other information to make an assessment of the financial viability of a loan to UTC. These were provided by Mr Haughey on 12 May 1997 who said that further information could be provided by UTC’s solicitor, Mr Pugliese. Mr Evans met Mr Pugliese, who was then a member of the firm Sciacca & Associates (“Sciacca’s”), on 14 May 1997. Mr Evans was introduced to Stephen Tam and Jasper Tam in Mr Pugliese’s office.
  1. Mr Evans wrote an internal BankWest credit submission which was approved on 16 May 1997 by Michael Ribbens, Chief Manager for Queensland, and by Don Galbraith, head of Credit Sanctioning, on 20 May 1997. Against the condition precedent referred to earlier with regard to UTC’s equity was hand written:

“If contribution is in the form of loans then these loans are to be subordinated to the bank.”

A schedule showed 20 of the 25 units and villas in Stage 2 had been pre-sold. 

  1. On 20 May 1997, Mr Evans sent a letter of offer to UTC for a draw-down facility of $12,400,000.00 (the “first BankWest loan”). The facility was to be used “only to assist with the Project Costs of Stage 2.” The security for the first BankWest loan was to be a first ranking registered fixed charge over all the assets and undertakings of UTC (the “first BankWest charge”); a first registered mortgage over Stage 2 (the “first registered mortgage”); and a tripartite agreement between UTC, BankWest and the building contractor. In addition, there were to be guarantees from the UTC shareholders: Stephen Tam, Jasper Tam and UTC Investments. The first BankWest loan was to be repayable in full from the net sale proceeds of the individual units in the development within six months from the conversion of the cash advance to a term loan facility or 31 December 1998, whichever was the earlier. A handwritten amendment by UTC to that clause was accepted by BankWest which added the following words:

“Subject however, to unforeseen delays to the practical completion of the project, in which circumstances, the term of the loan shall be extended for the period of the delay.”

  1. The letter of offer for the first BankWest loan was accepted by UTC on 26 May 1997. The first BankWest loan contained a number of conditions precedent in clause 9:

“9CONDITIONS PRECEDENT

 

The obligations of the Bank to make the Facilities available to the Borrower is conditional upon receipt by the Bank, in form and substance satisfactory to it, of the documents listed in Clause 2.1 of the Standard Terms and Conditions attached to this Letter of Offer and of the following:

 

  1. The existing Richard Ellis valuation report is to be updated to address the fact that there are now 27 apartments in the complex as opposed to 25 when the valuation was performed.  The valuation is also to be assigned to BankWest for mortgage security purposes.  (Costs are to be borne by the Borrower).
  1. The Borrowers are to execute a Fixed Price / Fixed Term Building Contract with a Builder whose financial standing and capability is acceptable to the Bank.
  1. A Quantity Surveyor instructed by the Bank is to confirm the development costs and cash flow projections (including timing) for the development.
  1. Satisfactory evidence that pre-sales of the development for at least the loan amount have been executed to end purchasers who are represented by at least 50% Australian residents.  Contracts are to be ‘arms length’ unconditional (save for completion of the building) and at least 10% deposit paid. 
  1. The Bank is to be satisfied with the Borrowers capacity to contribute its equity in the development and also to meet any cost overruns during the construction phase.  The Borrowers equity is to be fully contributed prior to the release of the Bank’s funds (no apostrophes in original).
  1. The Bank is to be satisfied that there are no impediments to the freeholding of the property and in this respect the Bank’s Solicitors are to specifically confirm to the Bank that all the necessary conditions have been satisfied to ensure that the relative statutory authority cannot withdraw or delay the freeholding of the building site.
  1. The Bank’s Solicitors are to confirm that the Joint Venture Agreement does not contain any clauses inimical to the Bank.
  1. The Quantity Surveyor/Solicitors are to confirm that the individual Purchase Contracts are in accord with the design relating to the building contract specifications.
  1. Evidence that all necessary planning, Local Government and State Government approvals have been obtained and are in order is to be provided to the Bank prior to settlement.
  1. Credit Checks on the Borrower and Guarantors are to be carried out by the Bank and are to be satisfactory in all respects.

(k)A signed Asset and Liability Statement from the natural Guarantors to the transaction is to be provided to the Bank prior to settlement.

(l)The Bank’s solicitors are to confirm that all necessary documentation to secure the proposed advance is in place and this is to include the Borrowing, Guaranteeing and Mortgaging powers as required.”

  1. On 12 June 1997, Mr Haughey of AMW wrote to Mr Evans of BankWest saying he was attending to satisfying the various conditions of the offer. With regard to clause 9(e), he asked “What information do you require to satisfy yourself of the Borrowers [sic] capacity?”
  1. On 13 June 1997, Mr Evans replied by facsimile transmission. With regard to Clause 9(e), he said:

“We received a letter from Sciacca & Associates dated 15 May 1997 which satisfies the cost overruns component of this condition.  Please provide evidence that the Borrower’s equity contribution is from their own funds and not borrowed, perhaps by way of Bank Statement etc.”

  1. Mr Evans said in evidence that he was in fact only really concerned about $3,000,000 going into stage 2 from a source other than BankWest, rather than whether the money came from an investor or other lender or from UTC from its own resources. He said that BankWest would not release the funds for the first BankWest loan until it was satisfied that there was $3,000,000 in UTC’s account.
  1. A meeting was held on 15 August 1997 between Mr Ribbens and Paul Smith, a bank officer, on behalf of BankWest, Yolande Wiltshire from Deacons Graham & James (“Deacons”), solicitors for BankWest, Mr Haughey from AMW, Jasper Tam from UTC and Mr Pugliese from Sciacca’s. The purpose of the meeting was said to be to update the progress of Stage 2 with a view to settlement and draw-down of the first BankWest loan. The agenda was the conditions precedent clause of the letter of offer from BankWest. With regard to the equity contribution, the minutes of the meeting made by Mr Haughey record:

“A copy of the settlement of the land component with the JV partners, Consolidated Properties, would be forwarded to the Bank together with a summary by the Quantity Surveyors of the Borrowers’ contributions to date.  This would be required by the Bank prior to drawdown of the funds.  BankWest has previously been provided with a letter from Frank Pugliese to satisfy the Borrowers capacity to meet the cost overruns.  Dale Evans of BankWest confirmed this was acceptable in his memo to Graham Haughey dated 13 June, 1997.” [errors in the original]

  1. On 12 September 1997, Hamilton Stage 2 executed a mortgage over the Stage 2 lease which was signed by the mortgagee on 22 September 1997. On 15 September 1997, Hamilton Stage 2 and UTC both executed a Deed of Settlement with regard to the Stage 2 Joint Venture deed (“JV Variation”). In the JV Variation, Hamilton Stage 2 acknowledged it had been paid the $2,200,000.00 guaranteed under clause 15.2 of the Stage 2 joint venture deed; Jasper Tam and Stephen Tam were appointed attorneys for the execution of contracts of sale of the lots in Stage 2; Hamilton Stage 2 acknowledged that UTC had exercised the option given in the Stage 2 Joint venture deed over Stage 3 and set in place various dates by which UTC was to achieve various targets. The sales threshold was to be achieved on or before 1 March 1998; the payment of a further $200,000.00 deposit was to be made on or before 1 March 1998; and settlement with Hamilton Stage 2 was to be effected on or before 1 May 1998. On the same date, TPC provided evidence to BankWest that UTC had paid $2,202,004.17 to Hamilton Stage 2 and had paid $735,563.00 in expenses to 31 July 1997 which meant that UTC had paid $2,937,567.17 into the project. This satisfied BankWest’s condition precedent that UTC provide $3,000,000 equity.
  1. On 15 September 1997, UTC Investments, Jasper Tam and Stephen Tam executed the Deed of Guarantee and Indemnity in favour of BankWest. On the same date, UTC executed the first BankWest charge. The first BankWest charge was lodged with the ASC on 24 September 1997 and given number 610705.
  1. Mr Pugliese, on that date, sent a letter to Deacons referring to their previous discussions and confirming that UTC was seeking to effect the draw-down of the first BankWest loan urgently “in order to ensure that the development does not stall”. Mr Pugliese referred to the contracts for the sale of lots in Stage 2. Mr Pugliese said he was instructed to confirm that over 50 per cent of the purchasers were Australian residents; that except for the contracts in respect of units 10A and 12A, the stakeholder under each of the contracts was holding a deposit of at least 10 per cent; and that all of the contracts were unconditional with the exception of the freeholding condition.
  1. On 22 September 1997, Deacons certified (“the Deacons’ certification”) that it was in order for draw-down to occur on the first BankWest loan. In the Deacons’ certification, they noted that BankWest was to satisfy itself as to certain of the conditions precedent including clause 9(e). Mr Evans signed the Deacons’ certification with the notation, ‘OK to settle’. Attached to the Deacons’ certification were 20 contracts for sale of lots in Stage 2 – units 1, 2, 3, 4, 5, 6B, 7C, 8, 9, 10, 10A, 11, 12A, 13, 15, 19, 20, 21, 22 and 25. On a number, a deposit was to be held by PRD Realty; but for others it was to be held by LJ Hooker (Hong Kong). The purchasers of units 1, 2, 6B and 7C were disclosed as being foreign persons.
  1. The first draw-down occurred on 22 September 1997. Mr Smith from BankWest was the bank officer responsible for processing most of the draw-downs in favour of UTC once the quantity surveyors confirmed that moneys had been spent. The first registered mortgage was registered on 29 September 1997.

First Loan from Dr Mulherin

  1. The third loan which UTC arranged specifically for Stage 2 was a loan from the plaintiff, Dr Mulherin, (the “first Mulherin loan”) dated 14 July 1997. This was in fact part of the “equity” which UTC represented to BankWest that it was contributing to Stage 2. Dr Mulherin had been approached by Tony Hazell and Mr Haughey of AMW to provide ‘mezzanine’ finance to UTC so that UTC could demonstrate equity in Stage 2 to BankWest. Dr Mulherin knew that UTC had borrowed $1,000,000.00 from Mr Li and would be borrowing $12,400,000.00 from BankWest. Dr Mulherin is a company director who retired to Australia from medical practice in Hong Kong to make and manage investments. The first Mulherin loan was for $1,000,000.00 to be paid from the H.D. Mulherin No. 3 Trust. Dr Mulherin was to receive a return of $400,000.00 interest.
  1. It appears that the introduction of Dr Mulherin was conducted by Mr Hazell and Mr Haughey personally, rather than on behalf of AMW. The introduction was the subject of an agreement between them and UTC dated 22 July 1997 for which Mr Haughey and Mr Hazell were to receive a fee of $100,000.00 upon the payment to Dr Mulherin of his return on the development of Stage 2. That agreement was subsequently lodged with the liquidator of UTC as a proof of debt.
  1. Clause 4.1 of the first Mulherin loan set out how the $1,000,000.00 lent was to be spent. It provided that upon execution of the first Mulherin loan, Dr Mulherin would invest $1,000,000.00 in the trust account of Sciacca’s to be used by UTC solely for the following purposes:

“(a)The amount of SIX HUNDRED THOUSAND DOLLARS (A$600,000.00) to be utilised for the payment of the Joint Venture Partner pursuant to clause 15.2 of the Joint Venture Deed.  This amount should be utilised for land settlement pursuant to clause 15.2 of the Joint Venture Deed only, and subject to the BankWest finance being available, and the conditions precedent set out in paragraph 9 on pages 5 and 6 of the BankWest letter of offer to UTC … having been satisfied …

(b)The sum of FOUR HUNDRED THOUSAND DOLLARS (A$400,000.00) … to be utilised for the payment towards the Development and Building Approval applications, cost of documentation associated therewith, consultants, lodgement fees, and any other associated costs with the said development.”

  1. The first Mulherin loan also granted Dr Mulherin an option to invest in Stage 3 of Bretts Wharf.
  1. The first Mulherin loan was to be secured by a conditional right to register a first mortgage over land situated at 156 Gowan Road, Sunnybank Hills described as Lot 2 on Registered Plan No 110547, County of Stanley, Parish of Yeerongpilly, contained in Title Reference No 15600236 (the “Sunnybank land”). The Sunnybank land was then subject to litigation before this court. Jasper Tam agreed to guarantee the first Mulherin loan. For further security, UTC also agreed in clause 6.1 of the first Mulherin loan agreement to execute contracts for units in Stage 2 to a value of $1,400,000.00. Dr Mulherin said in evidence in chief that he was at that time provided with two contracts over Stage 2 units as security. However, as he conceded in cross-examination, he must have been mistaken as the sale contracts in terms refer to an agreement entered into months later.
  1. The contracts for sale of 2 units in Stage 2 (units 21 and 26) which were signed by Jasper Tam on behalf of UTC and have Dr Mulherin as the purchaser, contained two special conditions as follows:

“(1)The Vendor acknowledges that the full purchase price herein has already been paid by the Purchaser in the form of various advances toward the acquisition and development of this project.  The Purchaser therefore hereby forgives the Vendor all monies outstanding pursuant to the various loan agreements with the Vendor, particularly the Deed dated 12.11.1997 and the Deed dated 14.7.1997 and the monies outstanding under the said Deeds are hereby allocated toward the purchase price of this Unit.

(2)Notwithstanding special Clause (1) herein, the Vendor may at its absolute discretion elect to meet its obligations under the loan agreements dated 12.11.1997 and 14.7.1997 and retain this Unit.”

The references to 12 November 1997 are incorrect.  They should refer to 12 December 1997, the date of the second Mulherin loan.  Although the sale contracts are undated, it is apparent from the special conditions which refer to agreements entered into on 12 November 1997 that the contracts did not come into existence on 14 July 1997.  They were in fact not provided until the time of the second Mulherin loan referred to later in these reasons.   

  1. Dr Mulherin’s initial dealings with UTC were through its solicitor, Frank Pugliese. Amongst other things, Mr Pugliese told Dr Mulherin that the first BankWest charge should be registered before any charge granted to Dr Mulherin. Dr Mulherin deposited $1,000,000.00 into Sciacca’s trust account on 15 July 1997. As I have said, this in part enabled UTC to demonstrate to BankWest that UTC was contributing money into the project not sourced from BankWest.

The Second BankWest Loan

  1. On 28 October 1997, Mr Ribbens, on behalf of BankWest, offered a single-option facility to UTC Investments for a cash advance of $300,000.00 which was accepted by UTC Investments (the “second BankWest loan”). The finance was offered, according to Mr Evans, to maintain BankWest’s relationship with the UTC Group. The security for the second BankWest loan was a first ranking fixed and floating charge over all the assets and undertakings of UTC Investments and a first ranking registered mortgage over land situated at Lots 2, 5 and 15, Carindale Park Gardens, 15 Epala Street, Carina being lots 2, 5 and 15 on GTP 104205 in the County of Stanley, Parish of Bulimba having the title references 50122586, 50122589 and 50122599 (the “Carina land”).  The mortgage over the Carina land was executed by UTC Investments on 31 October 1997 and was lodged by BankWest and registered under the Land Title Act 1994 on 23 January 1998.  In addition, there was to be a joint and several guarantee and indemnity from Stephen Tam, Simon Tam, Jasper Tam and UTC.  It was further provided that the securities for the second BankWest loan were to be cross-collateralised with the securities for the first BankWest loan.  An event of default under the second BankWest loan was to be taken as an event of default under the first BankWest loan.  The second BankWest loan was finalised on 9 January 1998. 
  1. On 12-13 February 1998, Mr Evans and Mr Ribbens travelled to Singapore and Hong Kong. They met some of BankWest’s clients in Hong Kong including Stephen Tam, saw his LJ Hooker franchise, with its 40-50 employees, and had lunch with him and a number of his business associates. This was essentially a goodwill visit to create and maintain good customer relationships with BankWest’s Asian customers.

The Second Mulherin Loan

  1. In November 1997, after construction of Stage 2 had commenced, Stephen Tam approached Dr Mulherin for further funding to assist with the marketing of Stage 2 and as a preliminary investment in Stage 3. The terms of such funding were negotiated with Mr Haughey. A deed to document the further advance was drafted by John Quinn, a solicitor then acting for Dr Mulherin.
  1. On 12 December 1997 Dr Mulherin, Stephen Tam, Jasper Tam, UTC and UTC Investments entered into a deed in relation to a further advance by Dr Mulherin of up to $400,000.00 (the “second Mulherin loan”). The interest rate was 32 per cent per annum payable on the date of each draw-down. The second Mulherin loan also secured all monies lent by Dr Mulherin to UTC and varied the first Mulherin loan. UTC covenanted in clause D(v) of the covering clauses that it would not increase the sum of $12,400,000.00 borrowed from BankWest without the written consent of Dr Mulherin. This was not, of course, binding on BankWest. Mr Pugliese provided Dr Mulherin with contracts of sale for units 21 and 26 in Stage 2.
  1. Clause 8 of the second Mulherin loan provided for three securities. The first was that UTC should take all steps and make all endeavours to have Hamilton Stage 2 grant a Bill of Mortgage in favour of Dr Mulherin on the terms and conditions of the form of mortgage attached to the deed. The attached form of mortgage was over the Stage 2 land. Clause 8.1 of the second Mulherin loan provided that UTC would make all endeavours to have such a mortgage executed by Hamilton Stage 2 within 14 days, capable of immediate registration after the issue of the Stage 2 freehold title. Such mortgage would cede priority only to the “Stage 2 Development Finance”. The “Stage 2 Development Finance” was the first BankWest loan. That mortgage would not, as Dr Mulherin was aware, cede priority to the Li loan or the Li charge. In other words, he knew that his mortgage would “sidestep” the Li charge. No steps were however taken at that time to have the mortgage executed.
  1. The second form of security, found in clause 8.2 of the second Mulherin loan, provided that UTC would grant a registered mortgage debenture to Dr Mulherin. Dr Mulherin recognised and agreed that such mortgage debenture would cede priority to the mortgage debentures registered in favour of BankWest, charge no 610705, and Mr Li (securing the principal sum of not more than $1,000,000.00) registered against UTC.
  1. The third form of security was a guarantee and indemnity. The guarantors were Stephen Tam, Jasper Tam and UTC Investments.
  1. Pursuant to clause 11 of the second Mulherin loan, Dr Mulherin was irrevocably given power of attorney for UTC.
  1. As promised, UTC granted a mortgage debenture in favour of Dr Mulherin on 12 December 1997 (the “Mulherin charge”). This was registered as a third registered fixed and floating charge on 24 December 1997 which expired on 24 March 1998 and was replaced by ASC charge, no 637605 on 3 April 1998.
  1. On 24 December 1997, Mr Pugliese provided Dr Mulherin’s then solicitors with three executed contracts for sale in favour of Dr Mulherin over units 13, 14 and 16 in the Lancaster Tower in Stage 3. Each contract was subject to the following special conditions:

“a.This Contract is executed strictly to provide security to the Purchaser by the Vendor, for the monies outstanding under the Deed of Agreement dated 12 December, 1997.

  1. In the event that the terms and conditions of the said Deed dated 12 December, 1997 are satisfied, then this Contract shall be null and void. 
  1. In the event however, that the Purchaser under this Contract is not paid under the said Deed, then the Purchaser has the right to have the conditions of this Contract fulfilled, and the consideration hereof is to be accounted for in lieu of any monies outstanding under the said Deed dated 12 December, 1997.  
  2. The Vendor has the right to sell this Unit, the subject of this Contract to any third party without recourse to the Purchaser.  In the event of such sale however, the purchase monies shall be utilised strictly for the satisfaction of any outstanding monies under the said Deed dated 12 December, 1997, that may be outstanding.” 
  1. Advances were made under the second Mulherin loan. On 12 November 1997 Dr Mulherin transferred $100,000.00 to Sciacca’s trust account “for the purpose of the initial funding of the marketing and soft costs of Stage 3”; $48,062.84 in March 1998 to be paid to PRD Realty for marketing costs of Stage 3 and for the payment of other Stage 3 costs; and $1,600.00 on 12 March 1998 for stamp duty on the Mulherin charge. Dr Mulherin was aware of, and indeed involved in, decisions with regard to the marketing negotiations. He authorised payment to PRD Realty for marketing. At the trial of this matter, he expressed extreme dissatisfaction with what he perceived to be the failure by PRD Realty to market Stage 3 effectively.
  1. There was, however, no mortgage executed by Hamilton Stage 2 over the Hamilton Stage 2 land. Dr Mulherin did not pursue the question of obtaining the mortgage with Mr Pugliese, with whom he was in regular contact. He said that was because he was of the view that there was no point in doing so until the building of Stage 2 was completed. He then raised the matter in October 1998 and Mr Pugliese gave him an equivocal reply saying he would get around to it. Dr Mulherin did, however, have the security of three executed sale contracts over units in Stage 3 which provides at least part of the explanation as to why Dr Mulherin did not pursue obtaining a mortgage executed by Hamilton Stage 2.
  1. In March-April 1998, Mr Haughey approached Dr Mulherin for a further loan to UTC of $1,000,000.00 to assist in the acquisition of the Stage 3 land for which Dr Mulherin would receive a profit of $1,000,000.00. That proposal was declined by UTC.

The Third BankWest Loan

  1. In early November 1997, Mr Evans sent an internal BankWest memorandum to Mr Galbraith with regard to a proposal by UTC for BankWest to provide a leasing facility for a luxury yacht. The memo also dealt with the issue of providing finance for Stage 3 and that there was competition from other financiers to provide that finance.
  1. On 10 December 1997, Mr Evans on behalf of BankWest, sent a memo by facsimile transmission to Michael Regan, the principal of Corporate Capital Partners (“CCP”), with regard to requests by Stephen Tam and UTC for further financing. CCP had introduced a number of “deals” to BankWest. Mr Evans had in turn introduced Stephen Tam to Mr Regan as Mr Tam was seeking tax advice and Mr Evans knew that Mr Regan had been a tax partner at Ernst & Young. There had been discussions between BankWest and Stephen Tam with regard to leasing the luxury yacht for the UTC Group for approximately $2,100,000.00. A leasing facility of that type would be cross-collateralised with the then existing securities. There was also a discussion about a bank guarantee for $1,500,000.00. Mr Evans said that if those financing proposals went ahead then the discussion of funding of Stage 3 would have to be delayed until there was further progress with Stage 2.
  1. On 15 December 1997, Mr Evans sent an internal BankWest memorandum to Mr Galbraith with regard to a request from UTC to issue a bank guarantee in the amount of $2,000,000.00 expiring in June 1998 to provide the deposit for a property purchase in Hong Kong. Mr Evans told Mr Galbraith that he had told UTC that if the bank issued the bank guarantee it would not consider the leasing transaction for the yacht until the guarantee expired. Mr Evans said only $1.5 million would be within safe lending margins. Mr Galbraith made a commercial decision to approve a guarantee for the full amount requested of $2 million.
  1. Mr Evans said in evidence that the third BankWest loan was in the form of a guarantee rather than a loan because BankWest was unable to lend money to purchase property overseas. He did not regard it as necessary in those circumstances to identify the particular property. Mr Tam had apparently applied to Ian Rankin of the Hong Kong Bank for a guarantee and overdraft facility for a deposit to purchase a development site in Sai Kung, Hong Kong.
  1. On 16 December 1997, Mr Regan sent Mr Evans a draft copy of the bank guarantee required by HongKongBank. A credit risk assessment was prepared by Mr Evans and approval to issue a bank guarantee in the amount of $2,000,000.00 was recommended by Mr Evans, supported by Mr Galbraith and approved on 17 December 1997.
  1. On 17 December 1997, Mr Evans on behalf of BankWest offered UTC a $2,000,000.00 bank guarantee facility (the “third BankWest loan”). The purpose of the third BankWest loan was to provide a bank guarantee in favour of HongKong Bank of Australia Pty Ltd (“HongKongBank”). The borrower was described as UTC. The third BankWest loan was due to expire on 15 July 1998. The purpose of the third BankWest loan was “to provide a Bank Guarantees [sic] in favour of HongKongBank of Australia Limited”.  It was noted as being in addition to the first BankWest loan.  The securities were said to be the first BankWest charge and the first registered mortgage which were already held and guarantees from Stephen Tam, Jasper Tam, Simon Tam and UTC Investments.  Securities for the third BankWest loan were to be cross-collateralised with the securities for the second BankWest loan and an event of default under the third BankWest loan would constitute an event of default under each other BankWest loan. 
  1. Clause 6 contained the following conditions precedent:

“The bank becomes obliged to make the Facilities available to the Borrower when the Bank has received in a form and substance satisfactory to it the documents and other conditions precedent listed in the General Terms and:

  1. Satisfactory confirmation is to be provided to the Bank for unconditional pre-sales of at least $16,000,000.00 have been achieved for the Brett’s Wharf Stage II development.
  1. The Bank’s solicitors are to confirm that the existing Group securities secure this facility and all documentation is in order.”
  1. On the same date Mr Evans of BankWest received a letter from Mr Regan of CCP enclosing a facsimile copy of a response from Stephen Tam, accepting the offer of the third BankWest loan. The letter from Mr Regan concluded:

“HongKongBank are happy with the form of the document.  They advise that the borrower is in fact Stephen Shu Wing Tam and the object of the guarantee is simply ‘a borrowing’.”

Mr Regan also requested that the third BankWest loan expire in August rather than July to “overlap with a 30 June settlement in case there are delays”.  Mr Evans annotated BankWest’s copy of the CCP letter of 17 December 1997 noting that the extension to August was acceptable and that expiry date for the guarantee would be 15 August 1997.  Mr Evans also noted that “a borrowing” would be inserted before “contract”.  Accordingly Mr Evans amended the offer of 17 December 1997 so that the “facility Expiry Date” was shown as 15 August 1998 rather than 15 July 1998.  However he did not change the name of the borrower.  Although counsel for the plaintiff cross-examined Mr Evans about any ulterior motive he may have had for this omission, it appears that this was merely an oversight. 

  1. On that date UTC provided a letter of request to BankWest signed by Jasper Tam, describing himself as permanent governing director of UTC, requesting on behalf of UTC, (therein described as “the Customer”), a guarantee by BankWest for payment to HongKongBank (therein described as “the Beneficiary”) as follows:

“We, [UTC], (hereinafter described as “the Customer”) DO HEREBY AUTHORISE AND REQUEST [BankWest] to pay on behalf of the Customer to HONGKONGBANK OF AUSTRALIA LIMITED ACN 006 434 162 (hereinafter referred to as “the Beneficiary”) ALL such sums or amounts which may at any time and from time to time be demanded or claimed by the Beneficiary from the Bank under or by virtue of the Security which the Customer hereby requests the Bank to execute and to debit the Customer’s account with the amount of money so demanded and paid and with any costs charges and expenses that may at any time arise in connection with such demand.  As between the Bank and the Customer the demand to be made upon the Bank by the Beneficiary shall be conclusive evidence as to the amount due by the Customer to the Beneficiary and the Bank is not to be under any obligation or necessity to enquire into the correctness or accuracy of any such demand or claim.

The Customer also agrees that this Authority and request shall continue in force and full effect and shall not be revocable by the Customer while the Bank is under any liability under such Security.

The Customer hereby authorises the Bank to debit the Customer’s account with charges as specified by the Bank from time to time for establishing and maintaining the said Security.”

  1. On 18 December 1997, Mr Pugliese, acting on behalf of UTC, wrote to CCP enclosing duly executed offer documents noting that Jasper Tam had executed the documents on behalf of UTC as permanent governing director, rather than Stephen Tam who resided in Hong Kong. Jasper Tam had also executed documents on behalf of Stephen Tam and Mr Pugliese confirmed Stephen Tam’s instructions that Jasper Tam had authority to do so. On 19 December 1997, minutes of a meeting of UTC recorded a resolution that the third BankWest loan and the granting of the securities required under it were for the benefit of UTC. Those documents were passed on to BankWest.
  1. When Mr Pugliese was asked on 22 December 1997 by Blake Dawson Waldron (“Blakes”), solicitors acting for BankWest in this transaction, to advise what was the commercial benefit to each of UTC and UTC Investments in providing unlimited guarantees and indemnities for each other’s BankWest loan and in agreeing to cross-collateralisation, Mr Pugliese replied:

“The Bank Guarantee will provide liquidity to both entities to continue to pursue aggressively their various joint venture pursuits.  As UTC Investments is the major Shareholder in UTC, any commercial activity by one of the entities necessarily benefits the other.”

  1. On 22 December 1997, Blakes provided a solicitor’s certificate with regard to the third BankWest loan. However, Blakes also sent a letter to Mr Evans on the same date with certain qualifications to that certificate. Mr Evans went through each of those matters and satisfied himself that each qualification had been dealt with. He was satisfied that if the guarantee was called up, BankWest would be adequately secured based on its valuation of its securities from UTC.
  1. On 23 December 1997, CCP sent to BankWest a list of sales of Stage 2 as at 18 December 1997 which showed sales of units 1-10, 10A, 11, 11A, 12A, 13, 15, 17, 19 and 21-25. The total sale price was $16,176,000.00. This was noted by Mr Evans as satisfying the condition precedent of $16 million pre-sales.
  1. On 23 December 1997, Mr Evans received a telephone call from Mr Pugliese who said there was a problem with the bank guarantee facility which needed to be resolved urgently. Later that day, Mr Pugliese, his brother Ross Pugliese, and Jasper Tam met with Mr Evans in BankWest’s boardroom. They informed Mr Evans that the guarantee in its present form was not acceptable to the HongKongBank and if it were not finalised that afternoon they would lose the block of land UTC wished to purchase as the bank guarantee was to be the deposit for that purchase. Mr Evans telephoned Mr Rankin from the HongKongBank who confirmed that story and advised Mr Evans to change the name of the customer from UTC to Stephen Tam, as Stephen Tam was their customer, not UTC. Mr Evans realised that it was unlikely that UTC, ie United (T & C) Bretts Wharf Pty Ltd, would have a bank account in Hong Kong and agreed to make that change.
  1. The third BankWest loan was then finalised on the same day. Jasper Tam, for UTC, initialled certain changes to the letter of request of 17 December. The changes had been handwritten by Mr Evans. It was changed so that UTC is referred to as “the Borrower” rather than as “the Customer” and “the Customer” is then described as Stephen Tam. The previous letter of request was subsequently marked as cancelled. Mr Evans did not seek any legal advice as to whether a bank guarantee in favour of Stephen Tam was to the benefit of UTC. However he was reassured by the presence of and the agreement to, indeed the active encouragement of, the changes by Jasper Tam, who was the permanent governing director of UTC, and Mr Pugliese who was its solicitor. Mr Evans could have referred the proposed change to head office or back to Blakes but, because of the urgency and the lack of anything to suggest that the change was in any way untoward, he approved it as he apparently had authority to do.
  1. On 10 August 1998, Paul Smith, who had become Commercial Banking Manager, sent an internal BankWest memo to Mr Galbraith, through Grant Dowsett, who had taken over from Dale Evans as Senior Manager, Commercial Banking, in May – June 1998, regarding the third BankWest loan. In that memo Mr Smith said that the third BankWest loan had been used as a deposit for a property acquisition by “the Group” in Hong Kong. Mr Smith said that settlement of the Hong Kong property was to coincide with the settlement of the units in the Bretts Wharf project, which had been expected by the end of July. He recommended granting an extension of the third BankWest loan to 1 October 1998 to “align” with settlement of the Stage 2 units. Mr Dowsett supported it but added “Bank’s solicitors to confirm documentation is in order to secure Bank’s position for extension period”. The extension was approved and UTC was advised of this by letter of 14 August 1998.
  1. The guarantee which was the subject of the third BankWest loan was further extended each month to 31 December 1998. In return Mr Dowsett, on behalf of BankWest, required an undertaking from UTC to deposit the full net sale proceeds of units in the Bretts Wharf development in a set-off account with BankWest until the bank guarantee was returned or cancelled. Mr Dowsett gave evidence, and I accept, that he had no concern, when he was signing the documentation for the guarantees, about UTC’s solvency.
  1. On 13 January 1999, BankWest wrote to Mr Pugliese saying that they understood that the HongKongBank would be calling the bank guarantee in the near future and that the funds would be used to repay loan facilities held with the HongKongBank. Mr Ribbens informed Mr Pugliese that if BankWest was required to make a payment under the bank guarantee, the bank required either:
  1. immediate payment of that amount to be deposited with BankWest; or
  1. a cash advance facility with UTC for $2,000,000.00.

On 29 January 1999, the bank guarantee was called on by HongKongBank which demanded immediate payment of $2,000,000.00.

  1. The third BankWest loan, together with UTC’s facility (referred to later in these reasons as the fifth BankWest loan), was the subject of the claim by the liquidator (the “liquidator’s action”).

Matter/de Pasquale/Pandora Tam Transaction

  1. On 17 April 1998, Stephen Tam and Jasper Tam, as directors of UTC, resolved that UTC would enter into an agreement titled “Loan Agreement and Guarantee” with Mr and Mrs de Pasquale for the sale of the de Pasquales’ unit in Stage 1 and the acquisition of that unit by UTC, in exchange for a unit in Stage 2.
  1. That was given effect to in the following way. On 19 April 1998, Matter Pty Ltd (“Matter”) as trustee for the VDP Trust entered into a written contract with Hamilton Stage 2 to purchase a unit (Unit 30A and B) in Stage 2 (“Lot 26 in Stage 2”) for $2,050,000.00 (the “Matter contract”). On the same date, Mr and Mrs de Pasquale agreed to sell Villa 39 “Windermere”, 11 Harbour Road, Hamilton, which was Lot 2 on BUP 102 926 (“Lot 2 in Stage 1”) of the Bretts Wharf development to Stephan Tam’s wife, Pandora Lai Kuen Tam, for $1,100,000.00 (the “Pandora Tam contract”). It was further agreed by the parties to the Matter contract and the Pandora Tam contract that the purchase price of Lot 2 in Stage 1 owed by Pandora Tam to Mr and Mrs de Pasquale would be deducted from the price paid by Matter to Hamilton Stage 2 for the Matter contract. Accordingly Pandora Tam did not pay any money for the unit at Lot 2 in Stage 1 and Matter paid only $950,000.00 (approximately) to Hamilton Stage 2 for the Stage 2 unit.
  1. On 27 April 1998, BankWest offered to lend $770,000.00 to Pandora Tam to assist with the acquisition of the Stage 3 land (the “Pandora Tam loan”). That decision was taken by Mr Ribbens on Mr Tealby’s recommendation as Mr Evans had, by then, left the employment of BankWest. The security was to be a first ranking registered mortgage over Lot 2 in Stage 1 (the “Pandora Tam mortgage”). The mortgage was executed by Pandora Tam on 30 April 1998 and registered on 11 May 1998. The Pandora Tam loan was available from 6 May 1998.
  1. On 1 May 1998, Mr and Mrs de Pasquale signed the transfer form for Lot 2 in Stage 1 (the “Pandora Tam transfer”). The adjusted sale price was $1,103,773.63. The agreement between the de Pasquales and Mrs Tam was that the sale price would be deducted from the balance of the purchase price of Lot 26 in Stage 2. BankWest was not informed by Mrs Tam or UTC that this was a “unit swap” transaction. There was no caveat lodged on the title by Mr and Mrs de Pasquale and there was therefore nothing, in the absence of disclosure by Mrs Tam or UTC, to alert BankWest to the nature of the transaction.
  1. On 11 May 1998, Deacons lodged for registration with the Department of Natural Resources:
  1. the certificate of title for Lot 2 in Stage 1;
  1. the Pandora Tam transfer; and
  1. the Pandora Tam mortgage.
  1. On 2 October 1998, the Matter contract settled. Lot 26 in Stage 2 was transferred to Matter with $1,103,773.63 taken from the purchase price of $2,050,000.00 as “adjustment with respect to Villa 2 (Lot 2) Windemere Tower (pursuant to Barwicks’ letter of 24.09.98).” Sciacca’s received $8,000.00 on the settlement. As a result, BankWest received only $941,806.43 on the settlement of Lot 26 in Stage 2 although the purchase price was $2,050,000.00.
  1. BankWest knew nothing of the way in which the transaction had been structured until 2 October 1998 when the Matter contract settled. This was in spite of the fact that the solicitors acting for Mr and Mrs de Pasquale drew the attention of Sciacca’s to the need to obtain the bank’s approval as early as 10 March 1998.

The Fourth BankWest Loan

  1. In April 1998, UTC applied to BankWest to advance $1,200,000.00 to assist it to acquire land adjacent to the Stage 2 land, known as the Bretts Wharf Stage 3 development site being Lot 4 on CP 867290 in the County of Stanley, Parish of Toombul and bearing Title Reference 17744250 (the “Stage 3 land”).[1]  On 14 April 1998 Mr Evans asked a number of questions of Mr Pugliese about this application.  He also mentioned to Mr Pugliese on-going negotiations with CCP about $2,000,000.00 finance for a yacht, previously referred to.  Mr Pugliese replied on the same day with regard to the questions about the application with regard to the Stage 3 land including the information that an existing investor was providing $800,000.00 for the acquisition of the Stage 3 land. 
  1. On 15 April 1998, Mr Evans and Geoff Tealby, a commercial banking officer, sent an internal BankWest memorandum to Mr Galbraith with regard to the application for a further loan of $1,200,000.00 for the purchase of the Stage 3 land. The exposure would then be $15,900,000.00 with the security being $22,212,000.00. Mr Evans hand wrote beside that, that the securities would be cross collateralised. Mr Evans and Mr Tealby said that due to the success of Stage 2, the borrowers, UTC and UTC Investments, were currently being marketed to by other lenders. They said that, if Bank West provided funding to assist with purchase of the Stage 3 site that would ensure priority was given to BankWest to consider additional funding for the development of Stage 3. They also said that the Chief Manager Queensland and the Commercial Banking Manager visited Stephen Tam during their recent visit to Hong Kong. As previously mentioned, Mr Ribbens and Mr Evans had travelled to Hong Kong and visited Mr Tam’s LJ Hooker office. Mr Tam had spent about half a day showing them various properties in Hong Kong. It appeared to be a successful business with about fifty people working there. After preparation of a credit risk assessment by Mr Ribbens and Mr Tealby, the loan was approved internally on 21 April 1998 (the “fourth BankWest loan”).
  1. BankWest sought a valuation of Stage 3 from a registered valuer for mortgage purposes on 20 April 1998. Richard Ellis provided the valuation on 22 April. It said that the market value of the leasehold interest in Stage 3 was $1,700,000.00. As a result, BankWest reduced the amount it proposed to lend on the fourth BankWest loan from $1,200,000.00 to $1,020,000.00. Mr Evans left the employment of BankWest at about that time to work for another bank.

The Priority Deed

  1. On 21 April 1998, after being given instructions by BankWest to prepare documentation for the fourth BankWest loan, Ms Wiltshire, from the solicitors for BankWest, Deacons, conducted a company search of UTC that recorded the registration of a charge in favour of Mr Li, charge no 590350, registered on 13 May 1997 and discharged on 24 September 1997; the first BankWest charge, charge no 610705, registered on 24 September 1997; the Li charge, charge no 624089, registered on 22 December 1997; and the Mulherin charge, charge no 624459, first registered on 24 December 1997 and later registered as charge no 637605 on 3 April 1998. That showed that the first ranked charge was the first BankWest charge, the second was the Li charge and the third ranked was the Mulherin charge. Ms Wiltshire did not, however, sight copies of the charges themselves.
  1. On 22 April 1998, Ms Wiltshire wrote to Mr Pugliese with regard to the securities for the fourth BankWest loan. The Deacons’ letter said that as there were two subsequent company charges to the first BankWest charge, BankWest required a priority agreement to be entered into with the subsequent chargees, Mr Li and Dr Mulherin, to ensure that BankWest had priority for any further advances, such as the fourth BankWest loan. Ms Wiltshire enclosed a draft deed of priority for execution (the “draft Deacons’ priority deed”). The draft Deacons’ priority deed was designed to give priority to a fixed and floating charge (“the second BankWest charge”) to be given by UTC in favour of BankWest at about the same time as the draft Deacons’ priority deed.
  1. Dr Mulherin gave evidence that Mr Pugliese raised the subject of a priority deed with him. At first, it was suggested that Dr Mulherin’s priority would be ‘diminished’, but subsequently Mr Pugliese told him that his security would be given priority over the Li security. Dr Mulherin expressed some scepticism to Mr Pugliese because he was concerned that Stephen Tam wished to use the money to buy a yacht which he had shown Dr Mulherin when Dr Mulherin had visited him in Hong Kong in March 1998. Although he did not give evidence to this effect, he must have also regarded it as somewhat unusual that Mr Li would be prepared to allow his security to cede priority to the Mulherin security.
  1. On 23 April 1998, Mr Pugliese told Ms Wiltshire that Dr Mulherin would not be likely to agree to having his priority diminished. Mr Pugliese proposed that the order of priority be: $14,700,000.00 for BankWest; $1,500,000.00 for Dr Mulherin; $1,200,000.00 for BankWest and then Mr Li. Ms Wiltshire told Mr Pugliese that she would take instructions from BankWest. She spoke to Mr Tealby on the following day. Later on 24 April 1998, Ms Wiltshire spoke again to Mr Pugliese. Mr Pugliese told her that he did not want to approach Dr Mulherin to change as he was difficult to deal with. Mr Pugliese told Ms Wiltshire that Mr Li was prepared to give priority to BankWest but that that would mean that BankWest would go in front of Dr Mulherin as Mr Li had priority over Dr Mulherin and Dr Mulherin would not agree to that. Mr Pugliese said he would approach Dr Mulherin and that Dr Mulherin may be able to be advanced in front of Mr Li but before BankWest’s $1,200,000.00. Therefore Mr Pugliese proposed the following order of priority: firstly BankWest $14,700,000.00; secondly Mulherin’s loan; thirdly BankWest $1,200,000.00; and fourthly Mr Li’s loan. Mr Pugliese asked her to double check with BankWest if they were prepared to go behind Mr Li for their $1,200,000.00.
  1. On 27 April 1998, Mr Pugliese wrote to Dr Mulherin’s solicitor, Mr Quinn, saying that the present priority arrangement would have to change and such a change would require Dr Mulherin’s consent. The present priority arrangement was said to be:

(1)BankWest$14,700,000.00;

(2)Mr Li$2,000,000.00;

(3)Dr Mulherin.

The new priority arrangement which Mr Pugliese said had been reached with BankWest and Mr Li was:

(1)BankWest $14,700,000.00;

(2)Dr Mulherin;

(3)BankWest$1,200,000.00;

(4)Mr Li$2,000,000.00.

  1. On the same date, Mr Pugliese communicated to Ms Wiltshire, asking her to prepare the priority agreement urgently for settlement on 1 May 1998 and saying that the priority of the charges would be:

(1)BankWest$14,700,000.00;

(2)Dr Mulherin$1,500,000.00;

(3)BankWest$1,200,000.00;

(4)Mr Li.

  1. On 28 April 1998, Ms Wiltshire sent a number of documents to Sciacca’s for execution including the deed of priority (the “priority deed”). Mr Pugliese telephoned Ms Wiltshire and said that he would not be able to have the priority deed sent over to Hong Kong to be signed by Mr Li to be returned by 1 May. She agreed to his request that she accept a faxed signed copy and an undertaking from Sciacca’s that they would forward the original in due course.
  1. The recital of the priority deed provided that:

“The parties have agreed to regulate the priorities between the First Security, and the Second Security and the Third Security in the manner set out in this Deed.”

  1. Clause 2.1 of the priority deed set out the following order of priority:

(1)The first security, which consisted of the first BankWest charge and the second BankWest charge (the “BankWest security”), up to a principal amount of $14,700,000.00 plus interest and costs.  The $14,700,000.00 was made up of the first BankWest loan of $12,400,000, the second BankWest loan of $300,000.00 and the third BankWest loan of $2,000,000.00.

(2)The third security (the “Mulherin security”), which was the Mulherin charge, up to a principal amount of $1,500,000.00 plus interest and costs;

(3)Security over the fourth BankWest loan up to a principal amount of $1,020,000.00 plus interest and costs;

(4)The second security (the “Li security”), which was the Li charge, up to a principal amount of $2,000,000.00 plus interest and costs;

(5)The BankWest security for the balance of money and liabilities secured by the BankWest security; and

(6)The Li security for the balance of the money and liabilities secured by the Li security.

  1. Clause 10 dealt with the duties between the three chargees, BankWest, Mr Li and Dr Mulherin. It provided:

“10.1Upon request by another Chargee, a Chargee must inform the other Chargee of the amount of the principal, interest and other money owing under its Security.

10.2The Chargor agrees that a Chargee may provide any information requested pursuant to clause 10.1.

10.3A Chargee must notify each other Chargee in writing as soon as practicable after it becomes aware that an event of default has occurred under its Security or if it intends exercising any right of enforcement under its Security.”

  1. Clause 12.1 of the priority deed provided that:

“If a Chargee is granted an additional Security interest to secure the money and obligations secured by its Security the additional Security interests must be treated in all respects as part of the Chargee’s Security and is subject to the priority provisions set out in clause 2.”

  1. Mr Pugliese sent a copy of the priority deed to Mr Quinn who was acting on behalf of Dr Mulherin on 29 April 1998. Mr Pugliese had previously sent a copy of it to Dr Mulherin directly. On the same day Mr Pugliese faxed a copy of the priority deed to Stephen Tam in Hong Kong saying it was to be signed by Mr Li and how it was to be witnessed. On 1 May 1998, Sciacca’s sent a number of execution pages for signing by Stephen Tam and others including a copy of the execution page of the priority deed for signing by Mr Li. These were all apparently signed by the relevant persons and faxed back to Sciacca’s after settlement had occurred with BankWest of the fourth BankWest loan. There are, however, two problems which arise with the execution by Mr Li of the priority deed. Firstly, Mr Li was never sent a copy of the priority deed as amended by Dr Mulherin to which reference will be made later in these reasons. Secondly, as Mr Morris conceded at the end of the plaintiffs’ case, there is no reliable evidence that Mr Li ever signed the priority deed.
  1. Mr Pugliese added the execution page apparently signed by Mr Li to the priority deed amended and signed by Dr Mulherin, even though Mr Li had never seen that amendment, to make it appear that there was one document to which all the parties agreed, when there was not. That was what was returned to BankWest by Mr Pugliese. It was not obvious that Mr Pugliese had done that; he did not tell BankWest; nor was there anything which should have put them on suspicion that the document had been amended by one of the parties and that the execution page by another party was added to the copy of the priority deed which he had not sighted and which was different from the original.
  1. On 30 April 1998, Dr Mulherin executed the priority deed. He also initialled each page. Dr Mulherin added in handwriting to clause 2.1:

“(7)The third security has seventh priority for the balance of the money and liabilities secured by the third security.”

His evidence about how he came to write that in was that he thought it was necessary to cover the balance of moneys lent by him over $1,500,000.00.  Dr Mulherin sent a copy by facsimile transmission of the priority deed executed and amended by him to Mr Quinn and Mr Pugliese on 30 April 1998. 

  1. Dr Mulherin said he raised his handwritten amendment with Mr Pugliese who rang back the following day and said that BankWest’s solicitors had agreed to that amendment. In a letter written by Mr Pugliese to Mr Quinn on 30 April 1998, however, Mr Pugliese merely said that his client, ie UTC, had no objection to the emendation being added by Dr Mulherin. Mr Pugliese deposed in an affidavit sworn on 3 August 2000 that he had a “clear recollection” of discussing the amendment with the solicitors for BankWest and they had agreed, on behalf of BankWest, to the insertion of the amendment in those terms. In his evidence at the trial of this matter, however, he was no longer able to confirm that that was the case. He kept no notes of any telephone conversations whereas BankWest’s solicitors did keep careful notes and had no record or recollection of such a conversation. I am satisfied that the question of Dr Mulherin’s handwritten amendment was never raised with BankWest or their solicitors by Mr Pugliese or anyone else. At the close of the plaintiffs’ case, Mr Morris QC formally conceded that there was no credible evidence from which the court could find that Mr Pugliese was informed by the bank or the bank’s solicitors that BankWest consented to those handwritten amendments. I am satisfied on balance that he told Dr Mulherin that BankWest had agreed to his amendment; but in fact BankWest had not agreed. They had not even been informed of it.
  1. Thereafter Dr Mulherin believed at all relevant times that he was protected by the priority deed as amended by him. Had he thought otherwise, his evidence was that he would have taken urgent steps to obtain and register his mortgage. However Dr Mulherin’s mortgage would always have ranked after BankWest’s and there were problems with its form to which reference will be made later in these reasons. He had taken steps to obtain and register a mortgage but had been unable to do so, despite his best efforts, by April 1999, by which time, as he conceded in cross-examination, he had no belief that BankWest was representing to him that the priority deed was still binding. Dr Mulherin also said that if he had known of any unreasonable or unprofessional activity within UTC he said he would have used his power of attorney given in the second Mulherin loan to find out the state of the books, both of BankWest and of UTC. This was always open to him and his failure to do so could not be said to be as a result of the priority deed.
  1. He was confident that he was protected by the priority deed as amended by him and yet he had no confirmation in writing from anyone, and certainly nothing from BankWest, to indicate that the bank agreed to the amendments made by him. That was notwithstanding the distrust Dr Mulherin expressed about Mr Pugliese’s control of documents; the importance he attached to the priority deed and his amendments to it; and the fact that it was he who changed it.
  1. Deacons continued to operate under the belief that no amendment was necessary to the priority deed and that none had been made. Indeed after amendments were required to the mortgage documentation, they confirmed with Mr Pugliese that no amendments were required to the other documents, which included the priority deed. Settlement of the fourth BankWest loan occurred on 6 May 1998.
  1. Dr Mulherin’s evidence was that he expected BankWest to comply with the terms of the priority deed as amended by him by applying all the proceeds of sales to reduce the Bank’s debt and notifying Dr Mulherin of any breach of the conditions. While BankWest had the latter duty pursuant to clause 10.3 of the priority deed, if it was binding, nothing in the priority deed required it to apply all the proceeds of sales to reduce its debt.
  1. On 5 June 1998, Mr Pugliese sent to Deacons the Pandora Tam offer, the guarantee and indemnity and the priority deed. The priority deed sent was the original copy signed by Jasper Tam and Dr Mulherin as amended by Dr Mulherin. With regard to those documents, Mr Pugliese wrote:

“Please note these were the original faxed documentation that were executed by Mr Stephen TAM [sic] and Dr Henry MULHERIN, and were previously forwarded to you.”

In fact no priority deed executed by Stephen Tam, or indeed Jasper Tam, and Dr Mulherin, had been previously faxed to Deacons.  Mr Pugliese did not draw Ms Wiltshire’s attention to the fact that Dr Mulherin had made a handwritten amendment to clause 2.1 on page 3 of the priority deed.  She did not notice it which is hardly surprising since she had no reason to suspect that such a change had been made to the deed.  Mr Pugliese also sent to Deacons a faxed copy of the priority deed to which he had appended a copy of the execution page apparently signed by Mr Li.  Mr Pugliese knew, but did not tell Deacons, that Mr Li had not sighted the alterations made by Dr Mulherin and had not even apparently signed a copy of the priority deed with those alterations.  Mr Pugliese did not tell Deacons, because he himself did not know, that the signature which purported to be that of Mr Li, was a forgery. 

  1. On 6 July 1998, Deacons sent Mr Pugliese copies of the second BankWest charge and the guarantees provided by Stephen Tam, Jasper Tam, Simon Tam, UTC Investments and UTC. As it had not yet been provided, Deacons asked Mr Pugliese for “the Deed of Priority originally signed by Kam Ming Li.”
  1. On 7 July 1998, Deacons sent a number of security documents, stamped or registered where appropriate, to BankWest for safekeeping. Included amongst them was:

“Deed of Priority (2 counterpart copies) dated 30 April 1998 between the Bank and Kam Ming Li, Henry Desmond Mulherin and United (T & C) Bretts Wharf Pty Ltd.  Please arrange for the bank to execute both copies.  We also enclose a photocopy of the deed signed by Kam Ming Li.  We have not yet received the original counterpart from the Borrower’s Solicitors.”

Mr Tealby filed the documents.  From that time, until it discovered that Dr Mulherin had amended the priority deed without its knowledge and that Mr Li’s signature was a forgery, BankWest believed there was a valid priority deed in place and that it had obligations as well as rights under that priority deed.  The priority deed which it believed applied was the priority deed which Ms Wiltshire had sent to Mr Pugliese for execution on 28 April 1998 and which it believed had been returned to Deacons executed by all the relevant parties.  As I have observed, neither BankWest nor its solicitors knew that it had not in fact been executed by Mr Li and did not know, as it was not drawn to their attention by those who did know, that it had been amended by Dr Mulherin.  There was therefore no binding contractual priority deed. 

Stage 3

  1. On 27 April 1998, while the negotiations were continuing with regard to the priority deed, BankWest offered UTC two facilities: the first was a repetition of the first BankWest loan and the second, $1,020,000.00 for the acquisition of Stage 3. The security for the fourth BankWest loan was to be a first ranking registered debenture mortgage over all the assets and undertakings of UTC; the first registered mortgage over Stage 2 which was already held; and guarantees from Stephen Tam, Jasper Tam and UTC Investments. The securities for the fourth BankWest loan were to be cross-collateralised with the securities for the second BankWest loan. An event of default under the fourth BankWest loan would constitute an event of default under each other BankWest loan. Mr Ribbens informed Mr Pugliese that the fourth BankWest loan was to be reduced from $1,200,000.00 to $1,020,000.00 after BankWest received a valuation of the Stage 3 land. The fourth BankWest loan was available from 6 May 1998.
  1. On 1 May 1998, Hamilton Stage 2 executed a mortgage over the lease on the Stage 3 land (the “Stage 3 mortgage”) in favour of BankWest to secure the fourth BankWest loan. The Stage 3 mortgage was registered on 12 June 1998. On 1 May UTC executed a second company charge in favour of BankWest, earlier referred to as the second BankWest charge. This was registered with the Australian Securities Commission (ASC) on 18 May 1998 and given the number 643624.
  1. On 6 May 1998, settlement of Stage 3 was effected. $967,000.00 was drawn under the fourth BankWest loan. Under the priority deed, were it legally binding, the security for the repayment of this loan would have ranked below the security for the payment of the Mulherin loan up to a principal amount of $1,500,000.00 plus interest and costs. This would include the Stage 3 mortgage because it was an additional security which was, pursuant to cl 12.1 of the priority deed, to be subject to the provisions set out in cl 2 of the priority deed. Absent the priority deed, it retained its primacy as first registered mortgage over the Stage 3 land. This mortgage has, as mentioned later, been discharged by the owner of the Stage 3 land, Hamilton Stage 2.
  1. On 8 May 1998, Hamilton Stage 2 and UTC executed a joint venture deed (the “Stage 3 joint venture deed”) for the development of Stage 3 of Bretts Wharf.
  1. On 30 July 1998, CCP applied to BankWest on behalf of UTC to raise a loan of $14,000,000.00 for the construction of Stage 3. An indicative offer was made by BankWest on 19 August 1999. By letter of offer dated 11 September 1998, BankWest offered to provide UTC with a loan of $14,104,000.00 to assist with the development of Stage 3. A number of conditions precedent to the obligation to provide the moneys were set out and a number of securities were required. As they were not satisfied, the loan did not proceed.

UTC’s Financial Position

  1. Completion of Stage 2 was held up by a dock strike which occurred in about April 1998. By early July 1998, BankWest expected practical completion would be certified relatively soon to be followed by settlement of the pre-sold units. The first BankWest loan was to be repaid from the sale of the units in Stage 2. In late August or early September 1998, the titles for the units in Stage 2 were issued. From then on, TPC started sending monthly reports to UTC, Mr Stephen Tam, Mr Pugliese, Mr Chan and Dr Mulherin.
  1. On 16 August 1998, Dr Mulherin had sent a memo to Mr Pugliese with regard to the payment he expected at settlement. In that memo he characterised the moneys lent under the second Mulherin loan as being a “capital advance” for Stage 3. On 7 September 1998, Dr Mulherin sent another memo, saying he wanted his capital and stamp duty repaid on 24 September 1998 and deferring his interest entitlement for Stage 2 into Stage 3.
  1. The sale of a number of units in Stage 2 settled in late September 1998 – lot 15 on 23 September; and lots 4, 10, 11, 12, 13, 17 and 25 on 24 September. BankWest carefully monitored the reduction made to the first BankWest loan by these settlements and the Loan Value Ratio (LVR) remaining after each. As previously mentioned, Lot 26 in Stage 2 settled on 2 October 1998. Three other, lesser priced, units settled on that day. On 5 October, Dr Mulherin received an updated copy of the settlement schedule which had been sent by Mr Pugliese to Mr Quinn on 1 October 1998. Mr Pugliese said that by 2 October 1998, the total amount paid to BankWest would be $5,500,000.00.
  1. On 2 October 1998, as previously mentioned, Lot 26 which was purchased by Matter, a company associated with Mr and Mrs de Pasquale, settled. Ms Wiltshire received a phone call about the settlement from Sam Sciacca from Sciacca’s. As a result, Ms Wiltshire telephoned Paul Smith from BankWest to enquire whether the fees of $8,000 said to be due to Sciacca’s on the settlement of this lot were acceptable to BankWest. Ms Wiltshire received a settlement statement from a clerk at Sciacca’s at about 2.50 pm. The settlement statement showed a purchase price of $2,050,000. However, it also showed that that price was:

‘LESS Adjustment with respect to Villa 2 (Lot 2) Windemere Tower (pursuant to Barwicks’ letter of 24.09.98) $1,103,773.63.’

As a result, only $941,806.43 was to be paid to BankWest from the sale proceeds of $2,050,000.00.  Ms Wiltshire then rang Mr Smith on his mobile phone about that matter.  He was having lunch with Mr Dowsett, Mr Tealby and another bank employee, Alison Rice at Rivers Restaurant.  Mr Smith told Ms Wiltshire that BankWest wanted $2,000,000.  She passed these instructions on to Sam Sciacca.  Mr Pugliese then rang Mr Smith who told him that the contract between the Tams and the de Pasquales involved $1,000,000.00 in cash and the swap of a unit in Stage 1.  Mr Smith discussed the matter with Mr Dowsett who authorised settlement to proceed in accordance with the contract.  Ms Wiltshire had a third conversation with Mr Smith later on the same day where he said that the matter was too difficult to explain to her but that she should proceed to settlement. 

  1. Mr Ribbens was not consulted about this settlement at the time it occurred. He became aware of it later and thought that the bank officers had made the right decision. He gave the reasons for that in evidence: Mr and Mrs de Pasquale had given fair consideration; the unit Mr and Mrs de Pasquale purchased had been customised for them; and the Asian financial crises meant that finding an alternative buyer might be difficult. As the contract which the de Pasquales had for the purchase of the unit appeared to be valid, BankWest was not in a position to prevent settlement of the unit sale and would subject itself to litigation if it intervened to stop settlement.
  1. Mike Ribbens, Mr Dowsett and Mr Smith on behalf of BankWest, met with Stephen Tam and David Wing on behalf of UTC on 7 October 1998 with regard to the current level of “pre-sales and expected settlement dates.” There was still $6,824,784.00 owing under the first BankWest loan and $2,000,000.00 owing under the third BankWest loan. However the security, which was over 18 unsold units, was valued at $13,060,000.00. BankWest agreed to pay $100,000 owing to CCP from the net sale proceeds. CCP had stepped in to assist the borrower, UTC, with the orderly sale of the units in Stage 2.
  1. With regard to the Matter contract, Mr Smith’s note of the meeting, dated 14 October 1998, says:

“The agreement for the sale of this unit included a swap of a unit in stage 1.  The swap occurred earlier in the year when the Tam’s [sic] settled on the land for stage III.  BankWest holds a mortgage over this unit which is currently encumbered to $770,000.00.  There is a contract of sale for this unit for a consideration of $1,185,000.00.  Settlement is scheduled for late December/early January 1999.  Net sales proceeds will payout the loan in the name of Pandora Tam ($770K) and United (T & C) Investments ($300K).”

The pay out of these loans did occur.  Mr Ribbens gave evidence that, while BankWest’s security had been diminished by this transaction, there was still an acceptable level of security as far as the bank was concerned.  Mr Dowsett’s evidence was that there had not been any default by UTC under its BankWest loans at that stage.  He was not aware of all of the history of the transactions when he approved settlement on 2 October 1998 but even after all the facts were known the bank took the view that it was correct to approve the settlement.  That view was justified.  It diminished the moneys available to pay out the BankWest loans but BankWest was still adequate security.  It did not require BankWest to inform Dr Mulherin pursuant to clause 10.3 of the priority deed. 

  1. As the defendant submitted, there was no persuasive evidence that the Pandora Tam/Matter/de Pasquale unit swap transaction constituted a breach of the bank’s charge nor any evidence to support the proposition that Ms Tam was either a de facto director of UTC such that the unit transfer was financial accommodation to a director within the meaning of Dr Mulherin’s charge or that anyone relevantly formed an opinion that a default under the bank’s charge had occurred. In these circumstances, no situation arose for the notification pursuant to clause 10.3 of the priority deed even assuming the priority deed was binding on BankWest. That, with the benefit of hindsight, Mr Dowsett agreed that there may have been a default, is in those circumstances, irrelevant.
  1. On 18 October 1998, Dr Mulherin received a further settlement schedule for Stage 2. As a result he suggested to Mr Hazell of AMW that he be given a second mortgage over units 26 (lot 22) and 35 (lot 31). Dr Mulherin had been provided with contracts for the sale of units 21 and 26 in Stage 2 with himself shown as the purchaser in December 1997 at the time of the second Mulherin loan. In lot 22, Dr Mulherin was shown as the purchaser and in lot 31, Stephen Tam was shown as the purchaser. Mr Hazell sent that suggestion to Mr Pugliese. To this time, Dr Mulherin had still not received any mortgage over the Stage 2 land from UTC. On the same day, Dr Mulherin sent a facsimile to his solicitor, John Quinn, with regard to Stage 2 saying:

“The Bank will probable be paid out by the coming Friday.  I met with Steven Tam & Tony Hazell of Ashe Morgan Winthrop last Friday & we agreed a couse of action Tony Hazell will arrange for a Mortgage over the appropriate units to be prepared by Bernie McGowan of Cranston McEachern of the same address Bernies Fax # is 32210095.  He asks that you fax him the appropriate portions of the loan documents so that he can incorporate them in the mortgage documents.”  [errors in the original]

At this stage, Dr Mulherin was pursuing mortgages over individual lots rather than a second registered mortgage over the whole of the Stage 2 land. 

  1. In accordance with a recommendation made in Mr Smith’s note of 14 October 1998, $100,000.00 was paid to CCP on 30 November 1998 for fees accrued for work CCP had done for UTC. CCP had “stepped in to ensure the settlements occur in a timely fashion.” Mr Smith said that the inclusion of CCP in the settlement process had “added comfort to a process which was being loosely managed.”
  1. On 30 November 1998, Lot 30 of Stage 2 settled and, on the following day, Lot 2 of Stage 2 settled. On 16 December, Lot 3 of Stage 2 settled. On 1 December, Mr Smith sent a memorandum to Mr Dowsett attaching a statement of the settlements which had already taken place and assessing the Loan Value Ratio given the amount which remained owing under the first and third BankWest loans. He said in evidence that he did not have any concerns about their financial position. He did not advert to the position of the other creditors and did not consider the question of UTC’s solvency.
  1. The plaintiffs claimed that, by not later then 1 December 1998, UTC was insolvent and that BankWest was aware of UTC’s insolvency. Bradley Hellen, a registered liquidator, gave evidence that in his opinion UTC was insolvent as at 2 October 1998 and thereafter and as at 1 December 1998 and thereafter. However, when the basis for that opinion was examined, it became clear that he did not consider the usual test of whether or not UTC was able to pay its debts as and when they fell due. On that approach, the only unpaid creditors of UTC identified as being due and unpaid as at 1 October were $2,000.00 in respect of a consultant of Stage 2 and $61,775.00 owed to consultants for Stage 3 and no factual basis was proved for Mr Hellen’s assumption that the debts were then owing. No factual basis was provided for the debts said to be owing and payable as at 1 December 1998 to support the opinion of Mr Hellen as to insolvency as at that date. Mr Hellen undertook a profit and loss approach. This may be useful in determining the overall solvency of a company such as UTC which undergoes many of the expenses of building before receiving the income from selling units. However Mr Hellen’s approach was flawed because, as the defendant showed, it took into account all the expenses of Stage 3 while treating UTC’s interest in the joint venture or the Stage 3 land as being of no value, because he failed to consider whether at that time it might have been valuable or saleable. I am unable to conclude that Mr Hellen’s evidence establishes that UTC was insolvent as at 2 October or 1 December 1998. Certainly if UTC was insolvent, BankWest was not aware that it was insolvent at either of those times.
  1. It was alleged by Dr Mulherin that a meeting took place on 15 December 1998 in Brisbane between Dr Mulherin, Mr O'Rorke on behalf of Hamilton Stage 2, and Mr Haughey from AMW on behalf of UTC. Dr Mulherin said in evidence that the meeting took place at Bar Merlo in Queen Street. They discussed the progress of the Stage 3 development. Dr Mulherin expressed interest to Mr O'Rorke in investing in Stage 3 if it was undertaken by Hamilton Stage 2 rather than UTC. Dr Mulherin said that Mr O'Rorke agreed on behalf of Hamilton Stage 2 to grant Dr Mulherin a mortgage over the Hamilton Stage 2 land on the condition that Hamilton Stage 2’s liability would not exceed its interest in the land. Mr O'Rorke had no recollection of the meeting and accordingly no recollection of any such alleged agreement. Mr Haughey recalled the meeting but not its date. In cross-examination he agreed that it was possible that the meeting took place on 15 December 1999, rather than 1998. As Mr Haughey recalled, Mr O'Rorke agreed to give Dr Mulherin the mortgages he needed, subject to terms being settled by their lawyers. He was unsure what mortgages they were. I conclude that those mortgages were the two Dr Mulherin had previously sought over lots 22 and 31 on 18 October 1998 and which he subsequently pursued. Dr Mulherin’s assertion that a mortgage over the whole of the Stage 2 land was discussed is a reconstruction which is not supported by the events that preceded or followed it. If a second mortgage in favour of Dr Mulherin over the whole of the Stage 2 land was discussed, I am not satisfied that any agreement was reached to the effect that Hamilton Stage 2 would grant such a mortgage. Certainly there was nothing in writing to any such effect at or arising out of that meeting which would satisfy the requirements of s 11 of the Property Law Act.  The terms of any mortgage would still have to be settled by their lawyers before any agreement could be finalised. 
  1. An internal BankWest memorandum dated 29 December 1998 by Mr Smith which was sent through Mr Ribbens and Mr Dowsett to Mr Galbraith set out in detail the settlements that were taking place and those that were delayed and sought an extension of the existing facilities until 28 February 1999. He observed that BankWest’s solicitors would obtain the “subsequent mortgagee’s consent for the above action”. The extension was granted by BankWest. Mr Ribbens was transferred to BankWest’s head office in Perth at about this time so his involvement in transactions involving UTC ceased.
  1. A report dated 6 January 1999 sent by TPC to Dr Mulherin and others, showed that by 31 December 1998, settlement on 14 of the 30 units in Stage 2 – 1, 2, 7-12, 14, 16, 18, 27, 30 and 34 had taken place. Another four units, 6, 19, 33 and 35 were occupied by their purchasers.
  1. On 24 December 1998, Mr Pugliese wrote to Dr Mulherin’s solicitor saying that he had sent the mortgage documentation to Hamilton Stage 2 for execution by its directors but that they were on annual leave from 18 December until 12 January. Dr Mulherin knew at that time that Mr Li was also seeking to obtain mortgages.
  1. On 4, 7 and 8 January 1999 meetings were held between Paul Smith and Grant Dowsett on behalf of BankWest and Stephen Tam and Anthony Conomos from UTC and David Wing from CCP with regard to the unsold units in Stage 2. Of the 19 unconditional contracts on Stage 2 units, seven had not proceeded to settlement. They were worth in total $5,770,000. Five of the contracts which were terminated were to overseas Asian buyers and UTC returned all the deposits held for these units. This was done apparently to generate good will so that those purchasers might purchase units from Stephen Tam in the future. There were 15 unsold units remaining with a total value of $11,175,000.
  1. A file note made by Mr Smith on 15 January 1999 of the meetings referred to in the previous paragraph concludes that a letter should be prepared, under advice from BankWest’s solicitors, to UTC indicating that UTC was technically in default under its loans and the Bank had reserved its rights in relation to that default; expressing BankWest’s disappointment that UTC returned deposits on contracts which BankWest relied upon as a source of repayment, without BankWest’s consent; that BankWest expected UTC to market the remaining units aggressively to facilitate the speedy repayment of its loans; and that a timetable of sales per month was to be agreed between UTC and BankWest, and failure to meet debt reduction milestones would be viewed by BankWest most seriously. This file note was countersigned, as noted, by Mr Ribbens.
  1. On 15 January 1999, Mr Dowsett on behalf of BankWest, determined to notify UTC that UTC had committed an event of default under the BankWest security. BankWest did not notify Dr Mulherin that it had determined to give such notice to UTC. Dr Mulherin alleged that the failure by BankWest to do so was in breach of clause 10.3 of the deed of priority. BankWest denied that there was any efficacious deed of priority by which it was bound, but admitted that if it was bound by the deed of priority then it was in breach of clause 10.3.
  1. Even though Dr Mulherin had not been informed by BankWest that it intended to issue a notice of default to UTC, Dr Mulherin was well aware that the financial affairs of UTC were deteriorating, that Stephen Tam was preoccupied with problems in Hong Kong, and that marketing of Stage 2 was going badly. He knew that settlements of units sold to buyers in Hong Kong were not occurring and were unlikely to occur. He knew that UTC had to commence construction of Stage 3 by 1 February 1999 or it would have to pay $200,000.00 for a six months’ extension.
  1. On 19 January 1999, Cranston McEachern, solicitors acting for Dr Mulherin, wrote to Mallesons Stephen Jaques, solicitors acting for Hamilton Stage 2, referring to a telephone conversation between them on 12 January 1999 agreeing with the points raised by Mallesons Stephen Jaques but saying that Cranston McEachern were presently satisfying themselves that if the mortgage did not secure moneys owing by the mortgagor, it was nonetheless enforceable against the property. Against point 5 it was said:

“As previously mentioned by Mr Graham Haughey on behalf of our client, this point is in conflict with agreements that our client has already executed.  Our client will reluctantly agree to this provided that the date is not earlier than 1st October, 1999.”

  1. On 16 February 1999, Cranston McEachern sent a draft mortgage to Mallesons Stephen Jaques for execution (“the Mulherin mortgage”). The mortgage was over Lots 22 and 31 in Stage 2. The mortgagor was Hamilton Stage 2 and the mortgagee Dr Mulherin. It was to secure the moneys owing to Dr Mulherin by UTC and the guarantors under the second Mulherin loan. However, Hamilton Stage 2 declined to execute it. Dr Mulherin took legal action against Hamilton Stage 2 which later agreed to execute the Mulherin mortgage.
  1. As referred to earlier, on 29 January 1999 the HongKongBank demanded payment of $2,000,000.00 from BankWest pursuant to the bank guarantee. HongKongBank told Mr Smith that Stephen Tam was not in default but that HongKongBank thought that BankWest should handle all of Mr Tam’s facilities. BankWest paid that sum to the HongKongBank as it was obliged to do and debited UTC with the same sum (the “fifth BankWest loan”). On the same day it sent a letter of offer to UTC with regard to the $2,000,000.00 guarantee which had been the subject of the third BankWest loan. The letter of offer was for a cash advance of $2,000,000.00 due to expire in a month’s time, 28 February 1999. The securities required were a number already held such as the BankWest security, the registered mortgage over Stage 2, the registered mortgage over Stage 3 and in addition a joint and several guarantee and indemnity from Stephen Tam, Jasper Tam and UTC Investments. The securities for the fifth BankWest loan were to be cross-collateralised with the securities for the loan in the name of UTC Investments. An event of a default under the fifth BankWest loan would constitute an event of default under each other loan. That letter of offer was accepted by the borrower and its guarantors on 15 February 1999. UTC was already, in any event, indebted to BankWest for the amount of the fifth BankWest loan because of the obligations it undertook pursuant to the third BankWest loan.
  1. Meanwhile on 2 February 1999, Hamilton Stage 2 informed UTC that because it had not complied with the joint venture agreement to commence construction of building of Stage 3 by 1 February 1999 as construction finance was not available, Hamilton Stage 2 elected to terminate the Stage 3 joint venture agreement. Hamilton Stage 2 proceeded to develop Stage 3 without UTC.
  1. On 11 February a meeting took place between Mr Dowsett and Alison Rice of BankWest and Mr O'Rorke on behalf of Hamilton Stage 2 and Mr Haughey of AMW representing Dr Mulherin. This was the first time that Dr Mulherin, or someone acting on his behalf, made formal contract with BankWest. The discussions centred on how to market the remaining units in Stage 2. Lot 16 had settled on 4 February 1999 but there were a number of units remaining. In March 1999, Hamilton Stage 2 would have the power to take over the sale of any unsold units in Stage 2. Mr Haughey, on behalf of Dr Mulherin, said that Dr Mulherin might be in a position to contribute funds towards the advertising. With regard to Stage 3, Hamilton Stage 2 said that it might complete the development in its own right, as it in fact did.
  1. On 16 February 1999, Mr Dowsett sent by facsimile transmission to Mr Haughey of AMW a copy of the priority deed dated 30 April 1998 drawing attention to the fact that the document had provision for execution in counterparts and saying it had been executed by all parties. The attachment was not in the agreed bundle of documents. As Dr Mulherin executed the priority deed on 30 April 1998, I assume that Mr Dowsett is referring to the copy executed by Dr Mulherin with his amendments and with the purported execution by Mr Li. This facsimile transmission did not cause Dr Mulherin to believe that there was a binding deed of priority on those terms. He had, on his evidence, believed that since 30 April 1998 when he executed it or shortly thereafter, because Mr Pugliese told him that BankWest agreed, even though Mr Pugliese had no authority to make such a representation on behalf of BankWest and Dr Mulherin took no steps to ensure that BankWest did so agree.
  1. Mr Dowsett wrote the UTC expressing his concern about settlements that were due that had not taken place; that some of the unsold units were occupied; and asking for details of UTC’s plan to sell the units as quickly as possible so that BankWest’s debt could be repaid.
  1. On the same date, Dr Mulherin and Mr Haughey met with Mr Dowsett and Ms Rice. This was the first time, apart from a social occasion, that Dr Mulherin personally met with officers from BankWest. Mr Dowsett had obtained Stephen Tam’s authority to disclose details to him about the Bretts Wharf project. Dr Mulherin told BankWest of the loans which had been made by him to UTC; informed BankWest of his concerns about the sale of the units in Stage 2 and that he was considering a number of options including contributing his own funds towards marketing costs for the remaining units or taking over BankWest’s debt in exchange for a number of units; and taking a second mortgage over units 26 and 35 to which Stephen Tam and Hamilton Stage 2 had already agreed. Dr Mulherin said he was concerned that BankWest’s debt appeared higher than he had originally anticipated and requested information with regard to the additional loans provided by BankWest. BankWest provided this information to Mr Pugliese to provide to Dr Mulherin if he wished to do so.
  1. Further meetings took place on 26 February and 5 March 1999. Dr Mulherin was seeking to avoid BankWest becoming mortgagee in possession because this would depress the price of the remaining units. He said in his evidence, “the last thing any of us would want was for [UTC] to go into liquidation”. Dr Mulherin suggested two options: either he and Mr Li would obtain finance to purchase the remaining units; or Dr Mulherin would strike an agreement with Stephen Tam to take over UTC. BankWest told Dr Mulherin on 26 February that the bank’s facility expired on 1 March 1999 and so the situation would need to be resolved urgently. Mr Dowsett added in handwriting to a file note made about the meeting of 26 February 1999: “The issue of BankWest’s security over Stage II for over Stage III debt of $1,020,000 needs to be considered. We rank after Mulherin but before Li Ming for this debt.”  The first BankWest loan, as extended, expired on 1 March 1999 and the third BankWest loan, as extended, expired on 28 February 1999.  Mr Dowsett sought urgent information from UTC in order to determine whether or not to enforce BankWest’s securities. 
  1. By the 5 March meeting, the proposal for Dr Mulherin and Mr Li to purchase the remaining units had fallen through because Mr Li did not want to spend any more money and because of the stamp duty implications. Dr Mulherin said he would put forward a marketing plan which could be jointly funded by himself and BankWest.
  1. On 7 March 1999, Dr Mulherin sent Mr Dowsett a marketing plan for the remaining Stage 2 units. On 25 March 1999, Dr Mulherin’s solicitors put a formal proposal to BankWest for Dr Mulherin to take over UTC and market the units in return for BankWest’s not enforcing its security for a reasonable period and allowing moneys to be deducted from the settlement proceeds for marketing costs. Another proposal was made by Dr Mulherin by memo to Mr Dowsett on 29 March 1999.
  1. Paul Spiro of Gadens Lawyers, then acting on behalf of Dr Mulherin, rang Mr Dowsett saying he was putting together a proposal on behalf of Dr Mulherin to put to BankWest and also advising that Mr Li’s lawyers had rung to advise him that Mr Li was claiming that he had never signed the deed of priority. As it transpires, that claim was correct. All parties accepted at the trial of this action that the relevant signature on the deed of priority was not that of Mr Li. As I have said, this was the subject of a formal concession by the plaintiffs at the end of their case.
  1. On 15 March 1999 in response to Mr Spiro’s request, Deacons sent a copy of the priority deed, which had purportedly been signed by Mr Li, to Mr Spiro. Dr Mulherin said in evidence that that happened because he wished to obtain a copy to give to a Hong Kong handwriting expert. The sending of a copy in these circumstances could not amount to a representation by BankWest that there was a binding deed of priority.
  1. Two days later on 17 March 1999, Bowdens Lawyers acting on behalf of Mr Li, wrote to Deacons saying that Mr Li had not signed the deed of priority. Similar letters were sent to Gadens Lawyers and Sciacca’s.
  1. In March 1999, Dr Mulherin had become aware of the Matter/de Pasquale/Pandora Tam transaction and of the $2,000,000.00 bank guarantee that was the subject of the third BankWest loan.
  1. In answer to a question by his counsel as to what he would have done had he been notified by BankWest of the Matter/de Pasquale/Pandora Tam transaction and the $2,000,000.00 bank guarantee transaction or that BankWest had calculated UTC’s assets in December 1998 as being $11,885,000.00, Dr Mulherin said he would have taken immediate legal advice and approached both BankWest and Mr Pugliese to have a full and frank discussion on an “open book basis”. If they had demurred, he would have instructed his legal adviser to enforce his rights under the second Mulherin loan, as he had a power of attorney, to find out the real facts of the whole situation. Dr Mulherin said he would also have investigated the ability of Pandora Tam to repay the monies borrowed. He would have informed the other major creditors including Mr Li. He said he would have calculated what the Bank was owed along with all the other debts and what the value of the outstanding units was and from that would have realised that the company was technically insolvent. He said he would then have been prepared to apply some funds to keep the company going. He would have retained a different real estate agent from PRD Realty with whom he was not satisfied. He said he would probably have employed LJ Hooker in Brisbane and provided them funds to market the unsold units and he would have looked for a different developer for Stage 3. However, as can be seen, some of these are more or less the steps he took in any event. There is no convincing evidence that anything else would have made any difference to the outcome.
  1. BankWest rejected a proposal by Dr Mulherin that the bank not enforce its security. On 6 April 1999, Deacons wrote to Dr Mulherin saying:

“Pursuant to the Bank’s obligation under clause 10.3 of the Priority Agreement dated 30 April 1998, we advise that there has been default under UTC’s facilities with the Bank and the Bank has now demanded immediate payment of the sum of $8,480,333.20.  If payment is not received as required by the demand, the Bank will take steps to enforce its securities in respect of those facilities.”

Dr Mulherin agreed in cross-examination that he had no belief in April 1999 that BankWest was representing that the deed of priority was still binding. 

  1. On 6 April 1999, Mr Li had appointed Jay Stevenson and Philip Jefferson administrators of UTC. This effectively put an end to any possibility of the bank not acting on its security. On 12 April 1999 BankWest appointed Robert Duff and John Greig receivers and managers of UTC pursuant to the first and second BankWest charges. On 15 June 1999, by resolution of the creditors of UTC, Mr Stevenson and Mr Jefferson were appointed liquidators of UTC.
  1. On 18 May 1999, BankWest offered Hamilton Stage 2 a loan of $1,050,000.00 to pay out the fourth BankWest loan pursuant to the mortgage BankWest held over Stage 3. That facility was completed on 21 May 1999 and the Stage 3 mortgage was discharged and the fourth BankWest loan was repaid.
  1. A number of units in Stage 2 were sold during this period: on 28 April, Lot 23 settled; on 7 June, Lot 5 settled; on 17 September, Lot 18 settled; and on 13 October, Lot 20 settled. The second BankWest loan which had been for $300,000.00 was repaid in full by 13 October 1999. It had been repaid in two tranches. On 11 June 1999 there was a repayment of $296,673.76 and on 13 October 1999 the balance of $10,342.44 was repaid.
  1. The sale of a number of other units settled during the remainder of the year. Lot 24 settled on 20 October; Lot 22 settled on 28 October; Lot 19 settled on 29 October; Lot 31 settled on 1 December; and Lot 14 settled on 13 December 1999. The first BankWest loan was then repaid in full on 13 December 1999.
  1. On 27 January 2000, the sale of Lot 21 settled. On 2 August 2000 Hamilton Stage 2 granted a registered mortgage over Lots 27, 28 and 29 in BUP 106865 in the County of Stanley Parish of Toombul having Title Reference numbers 50233137, 50233138 and 50233139 in favour of Dr Mulherin. The mortgage was registered on 15 August 2000. Those three lots were the last three unsold lots in Stage 2. They were sold with their sales settling as follows: on 12 September 2000, the sale of Lot 28 settled; on 26 September 2000 the sale of Lot 29 settled; and on 3 October the sale of Lot 27 settled.
  1. On 20 October 2000, $501,035.94, being the surplus from the sale of units in Stage 2, was deposited into the trust account of Gateway Lawyers who were then acting for Dr Mulherin, to be invested pending determination of these proceedings.
  1. On 6 June 2001, Dr Mulherin received $14,736.11 from PRD Realty’s trust account. On 3 August 2001, he received a further $32,790.96 from the same source. This repaid the money advanced to PRD Realty as part of the second Mulherin loan.

Dr Mulherin’s action

Was the priority deed binding?

  1. It was common ground by the end of the trial that there was no binding deed of priority validly executed by all the parties. Only UTC had executed the priority deed as amended by Dr Mulherin; BankWest signed the unamended priority deed; and Mr Li did not sign it at all. The plaintiff, Dr Mulherin, however relied on estoppel by convention and estoppel by conduct to say that it was nevertheless binding on BankWest.
  1. Estoppel by convention may arise, as the High Court held in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd[2] in the course of a commercial relationship.  Distinguishing it from the more usual estoppel by representation, the court held:

“Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying.”

It has subsequently been held that the estoppel may arise not just from an assumed state of facts but also of the legal effect of those facts.[3]

  1. It is critical to examine carefully what was the assumed state of facts or the legal effect of those facts giving rise to the common assumption relied upon.[4]  The plaintiff must show some meeting of minds giving rise to a consensus between the parties, encouraging the belief that a particular state of affairs is to be assumed as the correct basis of their dealing. The evidence will need to show this meeting of the minds, as expressed by McPherson JA in the Queensland Court of Appeal:[5]

“The word ‘conventional’ in this context carries connotations of agreement, not necessarily express but to be inferred, or at least a demonstrable acceptance of a particular state of things, as the foundation for the dealings of the parties … Acts done privately by one party without coming to the knowledge of the other can scarcely be capable of affecting their mutual relations or of raising assumptions capable of forming a conventional or accepted basis governing their relations.”

This is sometimes expressed as mutually manifest conduct ‘crossing the line’ between the parties. The conduct must point plainly, if not unequivocally, to the assumption put forward as the conventional basis of relations.

  1. The plaintiff submitted that the assumed state of affairs or “convention” which Dr Mulherin and BankWest adopted as the underlying basis or footing upon which their relations would proceed after 30 April 1998 was that the priority deed was effective and binding between them according to its terms. But that submission begs the question, what were its terms? In this case, Dr Mulherin assumed that BankWest, UTC and Mr Li had agreed to the terms of the deed as amended by him. He was wrong. BankWest assumed, on the other hand, that Dr Mulherin, UTC and Mr Li had executed the deed of priority in the terms drafted by their solicitors. They were wrong. Dr Mulherin and BankWest did not share the same assumptions of fact. BankWest thought it had a legally binding deed of priority; Dr Mulherin thought that he had a different legally binding deed of priority. Again they were both wrong but the assumption between them was not in common. Dr Mulherin’s amendments did not, to use Mr Justice McPherson’s words, come to the knowledge of the other. Neither was therefore estopped by conduct or convention from denying that there was a legally binding deed of priority. The bank did not incur any liabilities or duties pursuant to any binding priority deed. Accordingly it did not incur any duty to inform the later security holders of any default by UTC, as would have been required by clause 10.3 of the deed of priority.
  1. As counsel on behalf of BankWest submitted, the bank is not estopped from denying that the priority deed is binding because Dr Mulherin altered his counterpart; Mr Pugliese was not acting as agent of the bank in relation to the negotiation or execution of the priority deed; Mr Pugliese did not convey any amendment by Dr Mulherin to the priority deed to Deacons, nor was any amendment accepted by Deacons on behalf of the bank; Mr Li was not bound by the deed; the priority deed had to be executed by all parties to be legally effective; there was no conduct of the bank which could constitute a representation to Dr Mulherin, nor any act by Dr Mulherin to his detriment in reliance of the conduct of the bank which could support an argument of estoppel.
  1. None of the conduct of BankWest pleaded in paragraph 30(b) of the statement of claim was referrable to any belief that the priority deed as amended by Dr Mulherin had been executed by BankWest. It could not therefore be properly described as conduct founding an estoppel. The settlement of the fourth BankWest loan took place on 6 May 1998 prior to the return to BankWest of the priority deed. The Stage 3 mortgage and the BankWest priority charge were entered into on 1 May 1998 prior to the return to BankWest of the deed of priority.
  1. Neither could any of the conduct described as “the Bank’s estoppel silence” referred to in paragraph 30(c) of the statement of claim be relied upon to found an estoppel against BankWest. BankWest was unaware at the relevant time and had no way of knowing that Mr Li had not in fact signed the priority deed. It had no reason to suspect that Mr Li had not signed the priority deed until March 1999 when Dr Mulherin also found out that Mr Li was denying that he signed the priority deed.
  1. Although BankWest had the means to find out that Dr Mulherin had amended the priority deed, it did not in fact know. Dr Mulherin did, of course, know, but relied on Mr Pugliese, who did not act for BankWest, to inform BankWest. Not only did Dr Mulherin not tell BankWest of the amendment he made to the deed of priority, he did nothing to ascertain from BankWest or its solicitors whether or not they agreed to the deed as amended. A failure by BankWest to tell Dr Mulherin that the bank attended any significance to amendments made by him, which were not drawn to the bank’s attention, can hardly in these circumstances be said to found an estoppel against the bank. Nor in these circumstances could not be said to be unconscionable for BankWest to depart from any asserted convention.
  1. I am satisfied that there was no binding priority deed as a matter of contract or as a result of any estoppel in equity and neither Dr Mulherin or BankWest can rely on the terms of any such priority deed.

Was the priority deed, if binding, breached?

  1. Should I be wrong about there being no binding priority deed, it is necessary to consider whether BankWest could be said to have been in breach of the deed of priority which Dr Mulherin contends was legally binding. I assume for this argument that the priority deed said to be binding on BankWest was that contended for by Mr Morris in his oral submissions: that is, the one that had not been amended by Dr Mulherin, without the purported execution by Mr Li attached. This is not of course the priority deed which Dr Mulherin assumed the bank was bound by. As I have found, the Stage 3 mortgage would have ranked after the Mulherin charge and so BankWest should not have received moneys pursuant to that security from UTC in priority to Dr Mulherin’s if there had been a binding priority deed. However, it did not receive those moneys from UTC but rather from Hamilton Stage 2.
  1. BankWest would have been obliged to inform Dr Mulherin as soon as it was aware of events in default pursuant to cl 10.3 of the priority deed.  This was not however until mid-January when Mr Dowsett formed the view on reasonable grounds that UTC was in default.

What would have been the damage suffered by Dr Mulherin if BankWest had been in breach of a binding priority deed?

  1. The answer with regard to the first breach is that repayment to Dr Mulherin pursuant to the Mulherin charge by UTC would have had priority to payment to BankWest pursuant to the Stage 3 mortgage. Any claim of damage or loss by reason of the latter breach is even more problematic. Dr Mulherin says what he would have done had he been so informed, but there is little to suggest that anything he would have done would have made any difference to the financial outcome for him. What is known is what he did do, which was to try to discourage BankWest from going into possession and selling as mortgagee in possession which it was always entitled to do under its first registered mortgage as soon as it believed that UTC was in default.

The Trade Practices Claim

  1. Dr Mulherin alleged that BankWest engaged in misleading and deceptive conduct even if it was not bound by the priority deed because it did not disclose to Dr Mulherin that UTC was in default under BankWest’s security until 6 April 1999. Silence does not in the usual case amount to a representation. However, silence may be relied upon to show a breach of s 52 of the Trade Practices Act where there is an obligation to disclose relevant facts.[6]
  1. The plaintiff submitted that various of BankWest’s officers believed that BankWest had a duty to notify Dr Mulherin once BankWest became aware that an event of default had occurred under BankWest’s security pursuant to cl 10.3 of the priority deed. That, it was alleged, was a representation by BankWest that it would notify Dr Mulherin in writing as soon as practicable after BankWest became aware that an event of default had occurred under the Bank’s charge. However, there was, I have found, no obligation to do so.
  1. The plaintiff submitted that in giving no such notification to Dr Mulherin between 30 April 1998 and 6 April 1999, BankWest represented to Dr Mulherin that BankWest was not aware of any event of default committed by UTC. Such a representation by silence could not arise unless there was a duty to inform Dr Mulherin, which there was not. In submissions, it was alleged that the failure to disclose events of default was deliberate and not inadvertent. That submission was not supported by the evidence. The claim based on s 52 was plainly misconceived. Absent a legally binding priority deed, there was no obligation on BankWest to so inform Dr Mulherin so as to give rise to a representation by silence.

Equitable Mortgage

  1. Dr Mulherin has advanced an alternative case that additional accommodation was granted by BankWest with knowledge of an equitable mortgage in Dr Mulherin’s favour, which, in the circumstances, ranks in priority over BankWest’s securities.
  1. An equitable mortgage is created when the legal owner of the property constituting the security enters into an instrument or does an act that demonstrates a binding intention to create a security in favour of the mortgagee. It takes effect where the act done or the instrument entered into is insufficient to confer a legal estate or legal title in the property. [7]
  1. Dr Mulherin submitted that he had an equitable mortgage or equitable charge over the Stage 2 land as a result of:

(1)The second Mulherin loan wherein UTC agreed to take all steps and make all endeavours to have Hamilton Stage 2 grant a bill of mortgage in favour of Dr Mulherin on the terms and conditions on the form of mortgage attached to the deed. 

It can immediately been seen that such a contractual provision cannot give rise to an equitable interest in the Stage 2 land.  Importantly the mortgage did not contain any of the limitations provided by cl 8.2(d) of the joint venture deed and cl 8.2(f) of the joint venture deed.  Clause 8.2(d) required that Hamilton Stage 2 must not be liable for the amount secured by the mortgage beyond the extent of any amount recovered from a mortgagee sale of the Stage 2 land and that Hamilton Stage 2’s solicitors must be satisfied with the terms of the mortgage in this respect.  Clause 8.2(f) provided that the financier must agree that: (1) Hamilton Stage 2 was not liable to pay any rates and taxes in respect of Stage 2 or the lots; and (2) any lots still unsold six months after they are created by registration of the plan of sub-division, must be sold as soon as reasonably possible on the basis of reasonable care to obtain market value within the meaning of s 85 of the Property Law Act.

Further, as a consequence of Hamilton Stage 2 and UTC entering into the first registered mortgage, UTC and Hamilton Stage 2 had agreed with BankWest that Hamilton Stage 2 would not provide any other security over the Stage 2 land without BankWest’s prior consent in accordance with cl 6.1 of the mortgage which provided that the mortgagor, Hamilton Stage 2, might not, without BankWest’s prior consent, part with possession of any estate or interest in the mortgage property or create or allow to come into existence any encumbrance which affects the mortgaged property.

(2)The second basis on which an equitable interest in the land is said to have arisen was in the ratification by Mr O'Rorke at the meeting on 15 December 1998 in Brisbane where Mr O'Rorke, on behalf of Hamilton Stage 2, agreed to grant Dr Mulherin a mortgage on the condition that Hamilton’s liability would not exceed its interest in the Stage 2 land.  However as I have already found, what was discussed at that meeting were the mortgages that Dr Mulherin had sought over lots 22 and 31 in Stage 2, not a mortgage over the whole of the Stage 2 land.  If a mortgage over the whole of Stage 2 was discussed, no agreement was reached.

(3)The third basis on which an equitable mortgage is said to have arisen was that in February 1999 Hamilton Stage 2, by its solicitors, agreed with Dr Mulherin, by his then solicitors, to grant such a mortgage.  However, an examination of the agreement which was being negotiated in February 1999 with regard to the Mulherin mortgage, showed that it was over lots 22 and 31 of Stage 2 as previously mentioned and not over the whole of the Stage 2 land. 

(4)The fourth basis was said to be that Hamilton Stage 2, by cl 8.2 of the joint venture deed with UTC, made a promise for the benefit of a third party, Dr Mulherin, which he accepted and which is therefore enforceable by him pursuant to s 55 of the Property Law Act.  This is the pleading found in paragraph 63 of the statement of claim. 

Section 55 (1) of the Property Law Act provides that:

“(1) A promisor who, for a valuable consideration moving from the promisee, promises to do or to refrain from doing an act or acts for the benefit of a beneficiary shall, upon acceptance by the beneficiary, be subject to a duty enforceable by the beneficiary to perform that promise.”

No promise was, however, made by Hamilton Stage 2 whereby it agreed to or ratified any agreement made by UTC with Dr Mulherin that Hamilton Stage 2 would give Dr Mulherin a mortgage over the Stage 2 land.  Hamilton Stage 2 was not obliged to execute a mortgage in favour of Dr Mulherin as cl 8.2 of the joint venture deed had not been satisfied.  Dr Mulherin cannot enforce a promise between UTC and Hamilton to grant a mortgage in reliance on s 55 of the Property Law Act because the requirements of that section have not been satisfied. 

As the defendant submitted, the argument as to s 55 of the Property Law Act could not be sustained because the promise contained in cl 8.2 of the joint venture deed was not unlimited but only a promise in favour of a relevant financier when the terms of the loan satisfied sub-paragraphs (a) to (f) of cl 8.2, which they did not in the case of Dr Mulherin’s draft mortgage.  Execution of the second Mulherin loan was not sufficient to entitle Dr Mulherin to become a person for whose benefit the promise made by Hamilton Stage 2 in cl 8.2 of the joint venture deed was made. 

Even if such a promise were made, Dr Mulherin did not accept it because the second Mulherin loan provided for a mortgage to be granted to Dr Mulherin in terms that did not satisfy cl 8.2 of the joint venture deed.  The oral conversation between Dr Mulherin and Mr O'Rorke was not the acceptance by Mr O'Rorke of an agreement in terms of cl 8.2 of the joint venture deed.  It was merely a conversation about giving a mortgage over particular lots within the Stage 2 land. 

(5)The fifth argument put forward was that Dr Mulherin could, upon UTC’s execution of the second Mulherin loan, exercise as subrogee from UTC the power of UTC under the joint venture agreement with Hamilton Stage 2 to compel Hamilton Stage 2 to grant the mortgage to Dr Mulherin: see paragraph 63A of the statement of claim.  This argument does not deal with the problem that the mortgage in question did not contain the necessary limitations.  Even if this argument were correct, it would not give rise to an equitable mortgage over the land in favour of Dr Mulherin in the absence of Dr Mulherin exercising his power as subrogee. 

(6)Sixthly, it was argued that Hamilton Stage 2 was estopped from denying Dr Mulherin a right, enforceable against it, to have executed by Hamilton Stage 2 a mortgage over the Stage 2 land: see paragraph 63 of the statement of claim. 

It follows from what I have earlier said that I do not accept that Hamilton Stage 2 engaged in conduct which would mean that it was estopped from denying that Dr Mulherin had a right enforceable against it to the execution in his favour of a bill of mortgage over the Stage 2 land in accordance with the second Mulherin loan.  In any event, such an estoppel, if it existed, could not operate against BankWest. 

  1. Contrary to the plaintiffs’ submissions, none of those pleaded bases support the proposition that Dr Mulherin obtained an equitable mortgage or charge over the whole of the Stage 2 land.
  1. As Dr Mulherin was not an equitable mortgagee, the prohibition found in s 82 of the Property Law Act on further advances without the consent of the subsequent mortgagee does not apply.  In any event, BankWest had no knowledge of Dr Mulherin’s interest as a holder of an equitable mortgage at the time it made the relevant further advances.  Unless a first mortgagee with power to make further advances has actual notice of the second mortgage, the second mortgage will not take priority over further advances. [8]
  1. There is no basis for the relief claimed by Dr Mulherin based on the priority deed, estoppel, s 52 of the Trade Practices Act or by reason of his having an equitable mortgage. 

Money claim

  1. There is a money claim made in Part 5, paragraph 139 of the Statement of Claim, whereby Dr Mulherin claimed “an entitlement pursuant to s 88 of the Property Law Act 1974 to any net surplus in the hands of the Bank, including the sum of $503,546.61 (together with interest thereon) held in trust by Dr Mulherin’s solicitors pending the outcome of this proceeding”.  Mr Morris concluded his written submissions by saying that it was “not understood to be a matter of dispute that, if Dr Mulherin’s claim is otherwise unsuccessful, he is … entitled to the money claimed in Part V of the Statement of Claim.”
  1. In its pleading in response in paragraph 147 of the defence, however, BankWest denied the allegations contained in paragraph 139 of the Statement of Claim “because until the litigation is concluded and legal costs cease to be incurred by the defendant, it cannot be determined whether or not the defendant’s secured debt under the Stage 2 land mortgage, which has priority to any amount owing to the plaintiff, has been discharged so as to produce a surplus.”
  1. It is not possible for the court on the facts before it to determine what the amount of net surplus, if any, might be and therefore judgment cannot be given for Dr Mulherin against BankWest in any precise amount. Further Mr Li was not a party to this litigation so his entitlements to any surplus have not been determined. I shall hear submissions as to the precise form of order to give effect to the money claim by Dr Mulherin.

The Liquidator’s Action

  1. The plaintiff in the liquidator’s action is Michael McCann who was appointed liquidator of UTC by order of the Supreme Court on 5 May 2004. He replaced Mr Jefferson and Mr Stevenson who had been appointed liquidators on 15 June 1999.
  1. The liquidator alleged that the third BankWest loan was made for the benefit of Stephen Tam and not for any legitimate purpose of UTC. It is alleged that the transactions were uncommercial transactions, and/or insolvent transactions, and that the bank had knowledge of the relevant circumstances, and that as a consequence the bank is liable to indemnify UTC.
  1. The liquidator brought this proceeding in reliance on Part 5.7B of the Corporations Act 2001 which deals with recovering property or compensation for the benefit of creditors of an insolvent company.  It establishes a procedure under which a liquidator may seek orders having the effect of avoiding certain transactions entered into prior to the commencement of the winding up.[9]
  1. A “transaction” in Part 5.7 is defined in s 9 of the Corporations Act (“the Act”) to mean:

“A transaction to which the body is a party, for example (but without limitation):

  1. a conveyance, transfer or other disposition by the body of property of the body; and
  1. a charge created by the body on property of the body; and
  1. a guarantee given by the body; and
  1. a payment made by the body; and
  1. an obligation incurred by the body; and
  1. a release or waiver by the body; and
  1. a loan to the body;

and includes such a transaction that has been completed or given effect to, or that has terminated.”

  1. The court’s capacity to make orders about voidable transactions on the application of the company’s liquidator is found in s 588FF. The court’s power arises where it is satisfied that a transaction is voidable because of s 588FE. The plaintiff alleges that the third BankWest loan is voidable pursuant to s 588FE (2) or (3). The onus of proving that transaction is so voidable falls on the liquidator.
  1. Section 588FE of the Act provides, inter alia:

“(1)If a company is being wound up:

  1. a transaction of the company may be voidable because of any one or more of subsections (2) to (6) …

(2)The transaction is voidable if:

  1. it is an insolvent transaction of the company; and
  1. it was entered into, or an act was done for the purpose of giving effect to it:
  1. during the 6 months ending on the relation-back day; or
  1. after that day but on or before the day when the winding up began.

(3)The transaction is voidable if:

  1. it is an insolvent transaction, and also an uncommercial transaction, of the company; and
  1. it was entered into, or an act was done for the purpose of giving effect to it, during the 2 years ending on the relation-back day.

…

(7)A reference in this section to doing an act includes a reference to making an omission.”

  1. The circumstances in which a transaction will be considered an “insolvent transaction” are set out in s 588FC of the Act:

“A transaction of a company is an insolvent transaction of the company if, and only if, it is an unfair preference given by the company, or an uncommercial transaction of the company, and:

 

  1. any of the following happens at a time when the company is insolvent:
  1. the transaction is entered into; or
  1. an act is done, or an omission is made, for the purpose of giving effect to the transaction; or
  1. the company becomes insolvent because of, or because of matters including:
  1. entering into the transaction; or
  1. a person doing an act, or making an omission, for the purpose of giving effect to the transaction.”
  1. An unfair preference is defined in s 588FA of the Act as:

“(1)A transaction is an unfair preference given by a company to a creditor of the company if, and only if:

  1. the company and the creditor are parties to the transaction (even if someone else is also a party); and
  1. the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company;

even if the transaction is entered into, is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency.

(2)For the purposes of subsection (1), a secured debt is taken to be unsecured to the extent of so much of it (if any) as is not reflected in the value of the security.

(3)Where:

  1. a transaction is, for commercial purposes, an integral part of a continuing business relationship (for example, a running account) between a company and a creditor of the company (including such a relationship to which other persons are parties); and

(b) in the course of the relationship, the level of the company’s net indebtedness to the creditor is increased and reduced from time to time as the result of a series of transactions forming part of the relationship;

then:

  1. subsection (1) applies in relation to all the transactions forming part of the relationship as if they together constituted a single transaction; and
  1. the transaction referred to in paragraph (a) may only be taken to be an unfair preference given by the company to the creditor if, because of subsection (1) as applying because of paragraph (c) of this subsection, the single transaction referred to in the last-mentioned paragraph is taken to be such an unfair preference.”
  1. The circumstances in which a transaction will be considered “uncommercial” are set out in s 588FB(1) of the Act:

“(1)A transaction of a company is an uncommercial transaction of the company if, and only if, it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction, having regard to:

  1. the benefits (if any) to the company of entering into the transaction; and
  1. the detriment to the company of entering into the transaction; and
  1. the respective benefits to other parties to the transaction of entering into it; and
  1. any other relevant matter.”
  1. The test is an objective test looked at from the point of view of the company.[10]  The proper approach to be taken to the interpretation of s 588FB was well explained by Windeyer J in Skouloudis v Planet Enterprizes:[11]

“Section 109H of the Act requires a purposive approach be taken and therefore this section should be interpreted in the light of its objectives.  These objectives were set out in the explanatory memorandum to the Corporate Law Reform Bill 1992, paras 1034-5, in the following terms:

‘The provision is specifically aimed at preventing companies disposing of their assets or other resources through transactions which resulted in the recipient receiving a gift or obtaining a bargain of such commercial magnitude that it could not be explained by normal commercial practice’.”[12]

  1. If the court is satisfied that the transaction is an insolvent transaction or an uncommercial transaction then the onus falls on BankWest to establish the defences which are set out in s 588FG(2):

“(2)A court is not to make under section 588FF an order materially prejudicing a right or interest of a person if the transaction is not an unfair loan to the company, or an unreasonable director-related transaction of the company, and it is proved that:

  1. the person became a party to the transaction in good faith; and
  1. at the time when the person became such a party:
  1. the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent as mentioned in paragraph 588FC(b); and
  1. a reasonable person in the person’s circumstances would have had no such grounds for so suspecting; and
  1. the person has provided valuable consideration under the transaction or has changed his, her or its position in reliance on the transaction.”
  1. The liquidator alleged that each of the following documents of the loan was a transaction within the meaning of the term in s 9 of the Act:

(1)The letter of offer from BankWest of 17 December 1997;

(2)The letter of request of 17 December 1997 as amended on 23 December 1997;

(3)Each letter of variation whereby the bank guarantee was renewed;

(4)BankWest’s letter of offer on 29 January 1999.

  1. In my view there were effectively three transactions. The first occurred in December 1997. UTC was involved in a transaction in the relevant sense with BankWest evidenced by the letter of offer by BankWest to UTC of 17 December 1997; and UTC’s letter of request on 17 December 1997 as amended by UTC on 23 December 1997. These documents together with the bank guarantee evidenced the third BankWest loan and were together a transaction of the type referred to in para (e) of the definition under which UTC incurred an obligation.[13]  This transaction was not entered into within 6 months of the relation-back day, which is the day on which the administration began, namely 6 April 1999.  Accordingly it was not voidable under s 588FE(2).  However as it happened during the two years ending on the relation-back day, it would be voidable if it is both an insolvent and an uncommercial transaction of the company.
  1. It could not be said, having regard to the financial position of UTC in December 1997 that the transaction was insolvent as defined in s 588FC of the Act as UTC was not insolvent in December 1997 when the third BankWest loan was entered into. Nor did it become insolvent as a result of doing so. It could not be said that the transaction was “uncommercial”. UTC was of the belief that the transaction was to its benefit in that it assisted in asset acquirement by its principal and thus the business strength of the UTC group and urged the transaction upon BankWest. The liquidator has not been able to demonstrate that a reasonable person in UTC’s circumstances would not have entered into the transaction. BankWest on the other hand did not make an unusual gain from the transaction. It appeared on its face to be a regular commercial transaction. If, in hindsight, it were thought to be otherwise than a commercial transaction, BankWest satisfies all of the elements of the defences to setting aside the transaction set out in s 588FG. BankWest became a party to the transaction in good faith;[14] at the time it became such a party, BankWest had no reasonable grounds for suspecting that the company would become insolvent and a reasonable person in BankWest’s circumstances would have had no such grounds for so suspecting;[15] and BankWest provided valuable consideration under the transaction by its provision of the guarantee. 
  1. The next set of transactions which can be considered together, were the subsequent occasions on which the bank approved a rollover of the guarantee which constituted the third BankWest loan: on 14 August, 1 October, 30 October, 30 November and 30 December 1998. There was no cause at any of those times for any concern about the commercial nature of those transactions. Nor did they create any new liability in UTC.
  1. The last transaction, which might be considered separately, but which was related to the others, was a cash advance of $2,000,000.00 offered by BankWest to UTC to replace the guarantee. It was offered on 29 January 1999 and accepted on 15 February 1999. That was not an uncommercial transaction for UTC as it obtained the benefit of not having to repay the monies immediately. When the HongKongBank called on the guarantee, UTC’s contingent obligation to indemnify BankWest, pursuant to the third BankWest loan entered into in December 1997, crystalised. A reasonable person in the position of UTC would have entered into such an agreement at that time. The detriment it would have suffered if that transaction had not been entered into is that it is likely that it would not have been able to pay the debt and the company would have gone into liquidation. It did not give an uncommercial benefit to BankWest as BankWest was already owed the money by UTC as soon as the guarantee was called upon. The effect of this transaction was that UTC still owed the money to BankWest so it could not be considered an unfair preference. As it was neither an uncommercial transaction nor an unfair preference, it could not be considered an insolvent transaction pursuant to s 588FC.[16] 
  1. It follows that the liquidator’s action must fail. So too must the novel claim for damages made by Dr Mulherin in paragraph 140 of the Statement of Claim which was dependent on the guarantee transaction being declared void, voidable or set aside.

Conclusion

  1. Judgment should be entered for the defendant in the liquidator’s claim. Judgment should be entered for the defendant in Dr Mulherin’s Claim save to the extent Dr Mulherin is able to show a surplus of moneys held by BankWest over UTC’s indebtedness to it. I shall hear submissions as to the precise form of the order to give effect to these reasons and as to costs.

Footnotes

[1] The payment in respect of which funding was sought was not actually a payment for the land; under the joint venture for Stage 3, UTC was required to make the payment and was entitled to require Hamilton to make the land available for the funding to secure the payment. 

[2] (1986) 160 CLR 226 at 244.

[3] Caboche v Ramsay (1993) 119 ALR 215 at 237-8 per Gummow J.

[4] See Queensland Independent Wholesalers Ltd v Coutts Townsville [1989] 2 Qd R 40 at 44-45.

[5] Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd (supra) at 46, followed in Shanemist Pty Ltd v Denmac Nominees Pty Ltd [2003] QSC 373.

[6] Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 95; Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77 at 84, 98-99, 102-103.

[7] Swiss Bank Corp v Lloyds Bank Ltd [1982] AC 584 at 594-5; [1981] 2 All ER 449 per Buckley LJ.

[8]Central Mortgage Registry of Australia Ltd v Donemore Pty Ltd [1984] 2 NSWLR 128, followed in Beachquest Pty Ltd v Interstate Mortgage and Investment Pty Ltd [2003] 2 Qd R 586 per White J.

[9] Derwinto v Lewis (2002) 42 ACSR 645 at 652; [2002] NSWSC 731 at [33].

[10] at 367.

[11] (2002) 41 ACSR 369 at 374; [2002] NSWSC 239 at [14].

[12] See also Demondrille Nominees Pty Ltd v Shirlaw (1997) 25 ACSR 535 at 548.

[13] cf Wily v Bartercard (2000) 34 ACSR 186 at 195; [2000] NSWSC 372 at [48]; upheld on appeal in Bartercard v Wily (2001) 39 ACSR 94; [2001] NSWCA 262; Mann v Sangria Pty Ltd (2001) 38 ACSR 307 at 315; [2001] NSWSC 172 at [31].

[14] Sutherland v Eurolinx (2001) 37 ACSR 477 at 483; [2001] NSWSC 230 at [39]: “The term ‘good faith’ is to be given its natural meaning, namely to act with propriety or honesty.  The requirement of good faith under s 588FG(2)(a) is a subjective test: Re Ermayne; Sims v Tech Holdings Pty Ltd (1998) 30 ACSR 330 at 336; Downey v Aira Pty Ltd (1996) 14 ACLC 1068 at 1075.”

[15] Cook’s Construction Pty Ltd v Brown [2004] NSWCA 105 at [45]-[46]; Sims v Celcast Pty Ltd (1998) 71 SASR 142 at 146.

[16] cf Mann v Sangria (supra) at 316-317.

Close

Editorial Notes

  • Published Case Name:

    Mulherin v Bank of Western Australia Ltd

  • Shortened Case Name:

    Mulherin v Bank of Western Australia Ltd

  • MNC:

    [2005] QSC 205

  • Court:

    QSC

  • Judge(s):

    Atkinson J

  • Date:

    21 Jul 2005

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Bartercard v Wily (2001) 39 ACSR 94
2 citations
Jump To
Cite 1 - (2001) 39 ACSR 94
Cite 2 - (2001) 39 ACSR 94
Bartercard v Wily [2001] NSWCA 262
2 citations
Jump To
Cite 1 - [2001] NSWCA 262
Cite 2 - [2001] NSWCA 262
Beachquest Pty Ltd v Interstate Mortgage And Investments Pty Ltd[2003] 2 Qd R 586; [2001] QSC 512
2 citations
Jump To
Cite 1 - [2003] 2 Qd R 586
Cite 2 - [2003] 2 Qd R 586
Caboche v Ramsay (1993) 119 ALR 215
2 citations
Jump To
Cite 1 - (1993) 119 ALR 215
Cite 2 - (1993) 119 ALR 215
Central Mortgage Registry of Australia Ltd v Donemore Pty Ltd [1984] 2 NSWLR 128
2 citations
Jump To
Cite 1 - [1984] 2 NSWLR 128
Cite 2 - [1984] 2 NSWLR 128
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
2 citations
Jump To
Cite 1 - (1986) 160 CLR 226
Cite 2 - (1986) 160 CLR 226
Cook's Construction Pty Ltd v Brown [2004] NSWCA 105
2 citations
Jump To
Cite 1 - [2004] NSWCA 105
Cite 2 - [2004] NSWCA 105
Demondrille Nominees Pty Ltd v Shirlaw (1997) 25 ACSR 535
2 citations
Jump To
Cite 1 - (1997) 25 ACSR 535
Cite 2 - (1997) 25 ACSR 535
Derwinto Pty Ltd (in liq) v Lewis (2002) 42 ACSR 645
2 citations
Jump To
Cite 1 - (2002) 42 ACSR 645
Cite 2 - (2002) 42 ACSR 645
Derwinto v Lewis [2002] NSWSC 731
2 citations
Jump To
Cite 1 - [2002] NSWSC 731
Cite 2 - [2002] NSWSC 731
Downey v Aira Pty Ltd (1996) 14 ACLC 1068
2 citations
Jump To
Cite 1 - (1996) 14 ACLC 1068
Cite 2 - (1996) 14 ACLC 1068
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83
2 citations
Jump To
Cite 1 - (1988) 79 ALR 83
Cite 2 - (1988) 79 ALR 83
Mann v Sangria Pty Ltd (2001) 38 ACSR 307
2 citations
Jump To
Cite 1 - (2001) 38 ACSR 307
Cite 2 - (2001) 38 ACSR 307
Mann v Sangria Pty Ltd [2001] NSW SC 172
2 citations
Jump To
Cite 1 - [2001] NSW SC 172
Cite 2 - [2001] NSW SC 172
Queensland Independent Wholesalers Limited v Coutts Townsville Pty. Ltd.[1989] 2 Qd R 40; [1988] QSCFC 146
2 citations
Jump To
Cite 1 - [1989] 2 Qd R 40
Cite 2 - [1989] 2 Qd R 40
Re Ermayne ; Sims v Tech Holdings Pty Ltd (1998) 30 ACSR 330
2 citations
Jump To
Cite 1 - (1998) 30 ACSR 330
Cite 2 - (1998) 30 ACSR 330
Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77
2 citations
Jump To
Cite 1 - (1986) 68 ALR 77
Cite 2 - (1986) 68 ALR 77
Shanemist Pty Ltd v Denmac Nominees Pty Ltd [2003] QSC 373
2 citations
Jump To
Cite 1 - [2003] QSC 373
Cite 2 - [2003] QSC 373
Sims v Celcast Pty Ltd (1998) 71 SASR 142
2 citations
Jump To
Cite 1 - (1998) 71 SASR 142
Cite 2 - (1998) 71 SASR 142
Skouloudis v Planet Enterprizes (2002) 41 ACSR 369
2 citations
Jump To
Cite 1 - (2002) 41 ACSR 369
Cite 2 - (2002) 41 ACSR 369
Skouloudis v Planet Enterprizes [2002] NSWSC 239
2 citations
Jump To
Cite 1 - [2002] NSWSC 239
Cite 2 - [2002] NSWSC 239
Sutherland v Eurolinx (2001) 37 ACSR 477
2 citations
Jump To
Cite 1 - (2001) 37 ACSR 477
Cite 2 - (2001) 37 ACSR 477
Swiss Bank Corp v Lloyds Bank Ltd [1981] 2 All ER 449
1 citation
Jump To
Cite 1 - [1981] 2 All ER 449
Swiss Bank Corp v Lloyds Bank Ltd (1982) AC 584
2 citations
Jump To
Cite 1 - (1982) AC 584
Cite 2 - (1982) AC 584
Sydney Appliances Pty Ltd v Eurolinx Pty Ltd (2001) NSWSC 230
2 citations
Jump To
Cite 1 - (2001) NSWSC 230
Cite 2 - (2001) NSWSC 230
Tosich Construction Pty Ltd (in liq) v Tosich (1997) 78 FCR 363
1 citation
Jump To
Cite 1 - (1997) 78 FCR 363
Wily v Bartercard (2000) 34 ACSR 186
2 citations
Jump To
Cite 1 - (2000) 34 ACSR 186
Cite 2 - (2000) 34 ACSR 186
Wily v Bartercard [2000] NSWSC 372
2 citations
Jump To
Cite 1 - [2000] NSWSC 372
Cite 2 - [2000] NSWSC 372

Cases Citing

Case NameFull CitationFrequency
Al Azahri, Azhari and Azhari as trustees of the Australia Islamic Educational Trust v Sheik Al-Maktoum [2020] QSC 2971 citation
Cousins Securities Pty Ltd v CEC Group Limited [2006] QSC 3071 citation
Mulherin v Bank of Western Australia Ltd [2006] QCA 175 1 citation
1

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