Bathurst CJ, Gleeson JA, Payne JA. The Court of Appeal has dismissed an appeal against a decision that Beefeater Sales. International Pty Ltd (Beefeater) was ...
Judgment Summary Supreme Court New South Wales Court of Appeal Beefeater Sales International Pty Ltd v MIS Funding No 1 Pty Ltd [2016] NSWCA 217 Bathurst CJ, Gleeson JA, Payne JA The Court of Appeal has dismissed an appeal against a decision that Beefeater Sales International Pty Ltd (Beefeater) was liable to pay MIS Funding No 1 Pty Ltd (MIS) $650,282.90 under a loan agreement related to a failed forestry investment scheme. Willmott Forests Limited (WFL) was the manager of the forestry investment scheme. Under the scheme, participants purchased “Hectares” either through an upfront payment of $8,250 per hectare or through a finance option, whereby the participant would pay a deposit of $1,650 per hectare and the balance would be financed through WFL’s wholly owned subsidiary, Willmott Finance Pty Limited (WFIN). Beefeater applied for 67 hectares under the scheme, which involved entering two agreements with WFL: a forestry management agreement and a lease agreement. The application also gave WFL a power of attorney to execute project documents on behalf of Beefeater. Beefeater elected to take the finance option. To support this financing, Beefeater entered a loan agreement with WFIN, and Mr Woodland, a director of Beefeater, signed a guarantee. Under the loan agreement, cl 11 authorised WFIN to pay the loaned money to WFL in payment for the hectares and to make payments on Beefeater’s behalf under the forestry management and lease agreements. “Hectares” was defined as the 67 hectares for which Beefeater had applied pursuant to its application form including Beefeater’s right, title and interest under the forestry management and lease agreements. Clause 14 enabled “You”, defined as WFIN, to issue a certificate about an amount payable under the agreement. The effect of the certificate was to place the onus on Beefeater to prove that the certificate was incorrect. The forestry management agreement and lease agreement were signed by WFL on behalf of Beefeater under its power of attorney. However, the power of attorney was not registered, nor was the lease registered. As a result, a lease was not created. WFIN then assigned the loan to MIS. Under the transfer agreement, MIS was assigned WFIN’s entire right, title and interest in, to and under the loan agreement. WFL and WFIN were placed into receivership and the forestry management scheme failed. MIS alleged that Beefeater fell into default under the loan agreement and demanded payment of outstanding principal and interest. A business client manager of MIS purported to issue a certificate under cl 14 stating that the amount due by Beefeater was $644,153.43.
This summary has been prepared for general information only. It is not intended to be a substitute for the judgment of the Court or to be used in any later consideration of the Court’s judgment.
The issues on appeal were: first, whether cl 11 of the loan agreement did not authorise WFIN to pay the money to WFL, unless and until a lease was granted in respect of the 67 hectares applied for; second, whether MIS, as assignee of the loan agreement, was entitled to rely on a certificate issued under cl 14; and third, whether WFIN in fact advanced the money to WFL. On the first issue, the Court found that WFIN was authorised to pay the money to WFL. There was nothing in the loan agreement that stated that payment was conditional on Beefeater being granted a lease. Furthermore, “Hectares” was defined to include contractual rights. Finally, in terms of timing, Beefeater was liable to pay under the forestry management agreement before a lease was to be granted. Even though it was most likely the intention of WFL and Beefeater that a lease be granted, this did not affect MIS’s ability to sue under the loan agreement. On the second issue, the Court found that the right to issue the certificate was assignable and that the right was in fact assigned under the broad terms of the assignment. On a proper construction of the clause, the right was not found to be personal to WFIN. On the third issue, the Court found that the evidence showed that the money had in fact been advanced by WFIN to WFL. The available evidence demonstrated that the scheme was operating as intended and the records documented a loan. Absent any evidence to suggest that the records were incorrect, this was sufficient to show that the advance had been made.
This summary has been prepared for general information only. It is not intended to be a substitute for the judgment of the Court or to be used in any later consideration of the Court’s judgment.
