Australian Horticultural Finance Pty Ltd v Jekos Holdings Pty Ltd, CJZ Investments Pty Ltd & Ors [1997] QCA 440

IN THE COURT OF APPEAL [1997] QCA 440 SUPREME COURT OF QUEENSLAND Brisbane Appeal No. 4706 of 1996 [Australian Horticultural Finance P/L. v. Jekos Holdings P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: JEKOS HOLDINGS PTY. LIMITED ACN 009 940 738 (Plaintiff) Respondent Appeal No. 4708 of 1996 [Australian Horticultural Finance P/L v. CJZ Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: CJZ INVESTMENTS PTY. LTD. ACN 009 951 062 (Plaintiff) Respondent Appeal No. 4709 of 1996 [Australian Horticultural Finance P/L v. HGT Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: -- 1 of 33 -- HGT INVESTMENTS PTY. LTD. ACN 009 951 080 (Plaintiff) Respondent Appeal No. 4710 of 1996 [Australian Horticultural Finance P/L v. Zinn] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: PETER ZINN Appeal No. 4711 of 1996 [Australian Horticultural Finance P/L v. JMB Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: JMB INVESTMENTS PTY. LTD. ACN 009 951 071 (Plaintiff) Respondent Appeal No. 4712 of 1996 [Australian Horticultural Finance P/L v. Shettleston P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: SHETTLESTON PTY. LTD. ACN 009 905 891 (Plaintiff) Respondent -- 2 of 33 -- Appeal No. 4713 of 1996 [Australian Horticultural Finance P/L v. Dabary Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: DABARY INVESTMENTS PTY. LTD. ACN 009 951 382 (Plaintiff) Respondent Appeal No. 4714 of 1996 [Australian Horticultural Finance P/L v. Theme (No. 3) P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: THEME (N0. 3) PTY. LTD. ACN 009 782 297 (Plaintiff) Respondent Appeal No. 4715 of 1996 [Australian Horticultural Finance P/L v. Erand P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: ERAND PTY. LTD. ACN 010 536 400 (Plaintiff) Respondent -- 3 of 33 -- Appeal No. 4716 of 1996 [Australian Horticultural Finance P/L v. KFA Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: KFA INVESTMENTS PTY LTD ACN 009 951 053 (Plaintiff) Respondent Appeal No. 4717 of 1996 [Australian Horticultural Finance P/L v. ITA Enterprises P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: ITA ENTERPRISES PTY. LTD. ACN 009 979 819 (Plaintiff) Respondent McPherson J.A. Thomas J. de Jersey J. Judgment delivered 9 December 1997 Separate reasons for judgment of each member of the Court; each concurring as to the order made. -- 4 of 33 -- APPEALS DISMISSED WITH COSTS -- 5 of 33 -- CATCHWORDS: CIVIL - Deed of Loan - Definition of “money lent” - Whether money forwarded in a “round robin” of cheques. Lau v. Commissioner of Taxation (1984) 54 A.L.R. 167; Sharrment Pty. Ltd. v. Official Trustee (1988) 18 F.C.R. 449. Counsel: Mr P. Dutney Q.C., with him Mr J. Kimmins, for the appellant Mr D.R. Cooper for the respondents Solicitors: Nicol Robinson Kidd for the appellant Lees Marshall Warnick for the respondents Hearing Date: 11 November 1997 -- 6 of 33 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Brisbane Before McPherson J.A. Thomas J. de Jersey J. Appeal No. 4706 of 1996 [Australian Horticultural Finance P/L. v. Jekos Holdings P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: JEKOS HOLDINGS PTY. LIMITED ACN 009 940 738 (Plaintiff) Respondent Appeal No. 4708 of 1996 [Australian Horticultural Finance P/L v. CJZ Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: CJZ INVESTMENTS PTY. LTD. ACN 009 951 062 (Plaintiff) Respondent Appeal No. 4709 of 1996 [Australian Horticultural Finance P/L v. HGT Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: -- 7 of 33 -- HGT INVESTMENTS PTY. LTD. ACN 009 951 080 (Plaintiff) Respondent Appeal No. 4710 of 1996 [Australian Horticultural Finance P/L v. Zinn] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: PETER ZINN Appeal No. 4711 of 1996 [Australian Horticultural Finance P/L v. JMB Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: JMB INVESTMENTS PTY. LTD. ACN 009 951 071 (Plaintiff) Respondent Appeal No. 4712 of 1996 [Australian Horticultural Finance P/L v. Shettleston P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: SHETTLESTON PTY. LTD. ACN 009 905 891 -- 8 of 33 -- 9 (Plaintiff) Respondent Appeal No. 4713 of 1996 [Australian Horticultural Finance P/L v. Dabary Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: DABARY INVESTMENTS PTY. LTD. ACN 009 951 382 (Plaintiff) Respondent Appeal No. 4714 of 1996 [Australian Horticultural Finance P/L v. Theme (No. 3) P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: THEME (N0. 3) PTY. LTD. ACN 009 782 297 (Plaintiff) Respondent Appeal No. 4715 of 1996 [Australian Horticultural Finance P/L v. Erand P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: -- 9 of 33 -- 10 ERAND PTY. LTD. ACN 010 536 400 (Plaintiff) Respondent Appeal No. 4716 of 1996 [Australian Horticultural Finance P/L v. KFA Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: KFA INVESTMENTS PTY LTD ACN 009 951 053 (Plaintiff) Respondent Appeal No. 4717 of 1996 [Australian Horticultural Finance P/L v. ITA Enterprises P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: ITA ENTERPRISES PTY. LTD. ACN 009 979 819 (Plaintiff) Respondent REASONS FOR JUDGMENT - McPHERSON J.A. Judgment delivered 9 December 1997 These are appeals against judgments in favour of the plaintiffs in each of 11 actions for the recovery of money paid to the defendant Australian Horticultural Finance Pty. Ltd. on the faith of a -- 10 of 33 -- 11 prospectus issued in connection with the acquisition of what is defined in the Corporations Law as a prescribed interest. In the case of each of the plaintiffs, the “Participation Interest”, as it was called, was for the grant of a licence in respect of a quarter of a hectare of a macadamia nut plantation and one twentieth of a hectare of a herb plantation on land in northern New South Wales. The scheme, which was called the Okari Plantations Venture, was in a form commonly adopted in enterprises of this kind. In essence, it was that, in association with others, investors would, by subscriptions for participation interests, provide capital to enable the plantations to be established and developed on the land, which, when cultivated and managed, would produce crops to be sold to satisfy expenses and return an income to investors. To carry the project into effect required a series of written agreements, including an instrument designated the Investment Deed, to be executed by an intending investor and by considerable array of other parties. Okari Plantations Limited was to be the Plantation Owner, which was to establish the plantation. Zamane Securities Limited, which was to be the Manager, would be responsible for developing and managing it, which was a function to be carried out under its supervision by Okari Management Pty. Ltd., designated the Contractor. Yet another company Okari Marketing Pty. Ltd. was to purchase and market the produce of the land. There was also to be a Representative of the investors, whose function it was to receive the subscription money from growers, which was to be held in trust until the minimum subscription had been received, and then used for the purpose of paying the licence and management fees for the first year of the venture. Once that stage was reached, the project was expected to be self-sustaining for the remaining 14 years of its intended duration. Permanent Trustee Australia Limited was nominated as the Representative. From the first, the project did not proceed according to plan. The plantation land, or part of it, was under option, and title to the whole of it was never acquired. The underlying reason was lack -- 11 of 33 -- 12 of funds. The scheme involved offering to approved investors a loan, with which to finance acquisition of their interests, on the terms of a Deed of Loan to be executed by the investor. The defendant was to lend an amount described in the Deed as the Principal Sum, on which the borrower was to pay interest at a substantial rate. The Deed provided for repayment in the first instance by prepayment of the interest due for the first year, followed by two principal repayments of specified percentage to be made at 90 and 180 days respectively from the granting of the loan. What went wrong was that, contrary to predictions, a large proportion of investors elected to borrow rather than to pay their subscriptions in cash, with the consequence that the scheme received too little money to carry out acquisition and development of the plantations. The plaintiffs were among those that elected to borrow and who executed deeds of loan. They paid the interest due for the first year together with the two principal repayments, and it is those sums for which judgments was given in the actions. Their right to recover them was rested on various grounds, but principally on the basis on which judgment was given in their favour. This was that, although they were informed that the loans had been made, the fact was, as the plaintiffs alleged and succeeded in establishing, that the loans never were made. Their claims involved a further step, or series of steps, to the effect that, either because the loans had not been made or independently of it, the agreements to invest remained conditional and never became binding on the plaintiffs, who in consequence were entitled to and had rescinded, and so withdrawn their applications to invest. On appeal, it was, however, accepted by all counsel who appeared that, if the loans were never in fact made, there was no need to consider other grounds of appeal. The instrument on which the appeal primarily depends is the Deed of Loan ex.2. The example in the appeal record is in the form of an indenture, although it is undated and executed only by the -- 12 of 33 -- 13 plaintiff Jekos Holdings Pty. Ltd. In it, the parties are described as the Lender, which is the defendant, and the Borrower, which is the plaintiff. Recital A records that the Borrower has applied to enter into certain Plantation Agreements in respect of its proposed participation in the Okari Plantations Venture. According to Recital B: “B. The Lender has agreed at the request of the Guarantor to lend to the Borrower and the Borrower has agreed to borrow from the Lender the Principal Sum for the purpose of allowing the Borrower to enter into such Plantation Agreements.” In the case of ex.2, there was in fact no guarantor, so that references to the guarantor may for present purposes be disregarded. Relevant provisions of the Deed of Loan are cll.3 and 4, which are as follows: “3. LOAN The Lender shall at the request of the Guarantor lend the Principal Sum to the Borrower on the date hereof. 4. APPLICATION OF LOAN FUNDS (a) The borrower and the Guarantor direct the Lender to pay the Principal Sum to the Representative within seven (7) days after the date of this Deed (but not later than 30 June 1990) for the purposes of the Borrowers’ Application. (b) If the Manager declines to accept the Borrower’s Application, the Borrower irrevocably authorises and directs the Lender to collect the Principal Sum from the Representative and the Lender shall apply the moneys so received as repayment of the Principal Sum in full satisfaction and discharge of the obligations of the Borrower and the Guarantor in pursuance of this Deed.” The Deed of Loan (ex. 2) bears no indication of having been executed by the defendant and that was said to be so in the case of each Deed. According to oral evidence at the trial, they and other forms of agreement were executed by the plaintiffs and returned to the defendant on 28 and 29 June 1990, together with cheques for amounts of interest which had to be pre-paid. Those cheques were banked on or before 30 June 1990. Clause 4 of the Deed of Loan required payment of the Principal -- 13 of 33 -- 14 Sum to be made by direction of the Lender to the Representative not later than 30 June 1990; but it was not until some time later that the plaintiffs received letters dated 9 August 1990 from the defendants advising that the loans applied for had been approved prior to 30 June 1990 and that “the funds were forwarded to the Permanent Trustee Company in line with your request”. The loan deeds were said to have been lodged for stamping; but they were never returned to the plaintiffs. It later emerged at the trial that they had not been executed by the defendant until 13 July 1990, when they were “back-dated” to 29 June 1990. The critical question on these appeals, which is whether the loans were in fact made at all, turns on the effect of a series of acts or steps some of which were taken on 29 June and others on 4 July 1990. According to the evidence of Lawrence Normand, manager of the ANZ Bank at Bligh Street, Sydney, the promoters of the scheme had originally obtained from the Bank a loan of $495,000 repayable in July 1990 to assist in developing the plantation. When the funds expected from investors were not received, the Bank declined to make a further loan of a much larger sum. In consequence, what is described as a “round-robin” of cheques was arranged. It took place in Normand’s office at the Bank at a meeting attended by representatives of the defendant and other companies involved in the project, together with Permanent Trustee Australia, which was the Representative under the venture. What happened on that occasion was that the defendant gave a cheque to Permanent Trustee Australia for the amount of the loan. The cheque was attached to a deposit slip and handed to the bank manager for crediting to the account of Permanent Trustee Australia. Those representing Permanent Trustee Australia in turn delivered a cheque in favour of Zamane Securities, which was the Manager, which, along with a prepared deposit slip, was handed to the bank manager for crediting to the account -- 14 of 33 -- 15 of Zamane Securities. Cheques drawn by Zamane Securities in favour of Okari Management for its management fee and to Okari Plantations for its licence fee, accompanied by appropriate deposit slips, were then handed to the bank manager for the credit of the accounts of those companies. They in turn delivered cheques in favour of the defendant, which were handed to the bank manager for depositing to the credit of the account of the defendant. In this way the amounts supposedly credited by depositing the cheques delivered in each instance were returned to the source from which they had originally come, which was the defendant. On the bank statement (ex. 39) issued in respect of the defendant’s account with the Bank, these transactions are represented by a credit entry on 29 June 1990 of $836,562 followed by a debit entry of the same amount, which is said to constitute the loan by the defendant to the investors pursuant to the deeds of loan. In point of chronological sequence, the notional withdrawal of that amount was shown on the bank statements as having been preceded by a credit in the same amount; but that is because, in respect of banking transactions effected on the same day, the Bank follows a practice of entering credits in the account before entering debits. The same sequence of entries appears in ex.39 in relation to the transaction on 4 July 1990, where a deposit of $2,746,920 is shown as having been credited before debiting the same amount. Again, however, the true sequence was that the defendant’s cheque or cheques in favour of Permanent Trustee Australia were delivered to and deposited in favour of Permanent Trustee Australia before the cheques from Okari Plantations and Okari Management were delivered and deposited to the credit of the defendant’s account at the end of the sequence. It was by this means that the defendant claimed to have lent to the plaintiffs the principal sums. The precise chronological order in which it was carried out may now not matter much; but from the standpoint of the Bank, its object, according to Mr Normand, was to ensure that the cheques being -- 15 of 33 -- 16 drawn on each account were in every instance matched by corresponding deposits for the credit of those accounts. It comes as something of a surprise to discover that the Bank was prepared to actively assist in enabling its facilities to be used in that artificial manner. In the end, however, the question is whether the defendant as Lender did, in terms of cl.3 of the Deeds of Loan, “lend” the Principal Sums to each investor or Borrower and “pay” those sums to Permanent Trustee Australia as Representative in terms of cl.4(a) of those Deeds. Unless there was in fact a payment to the Representative, there was no loan capable of satisfying cl.3 of the Deed. The Deed of Loan does not define the term “lend”, and it must therefore receive its ordinary meaning considered in the context of the transaction it was designed to serve. A distinction exists between an agreement to lend, such as that comprised in the Deed of Loan in this case, and the actual lending that constitutes performance of such an agreement, which is what the defendant asserts is the effect of the “round-robin” of cheques delivered, credited and debited on 29 June and 4 July 1990. There are surprisingly few judicial statements as to the meaning of the word “lend”; but it may be noticed that in Kinney v. Hynds (1897) 49 P. 403, 404 (Wyo.), it was said that: “Money lent is an expression which is popularly quite well understood, and it has no different legal or technical definition. It means a delivery of money to another, to be returned or repaid.” That accords with the meaning given to the expression by C.L. Pannam, The Law of Money Lenders in Australia, at 6, which is “a payment of money to or for someone on the condition that it will be repaid”. One must be cautious in applying definitions from other places, decisions, or texts because so much depends on the statutory or contractual context in or for which the expression “lend money”, or in this instance, “lend the Principal Sum”, is being construed. Something which, for some purposes, may -- 16 of 33 -- 17 be regarded by statute or by the parties as a lending may not be so for some other purposes. For example, the unpaid price of goods sold and delivered would ordinarily not be considered a loan; but the parties may by their agreement or conduct treat it as such, either immediately or at some time after the sale has taken place. That is what serves to distinguish cases like Lau v. Commissioner of Taxation (1984) 54 A.L.R. 167 (affirmed as Commissioner of Taxation v. Lau (1984) 6 F.C.R. 202) and Sharrment Pty. Ltd. v. Official Trustee (1988) 18 F.C.R. 449, on which the defendant relied in these appeals. In the first of those decisions, Connolly J. declined to treat an arrangement or transaction, which involved a financing by an exchange of cheques similar to this, as a nullity or “sham” for the purpose of the Income Tax Assessment Act 1936. His Honour said (54 A.L.R. 167, 172-173) that, if all the parties to the transaction intended that the instruments in question “should take effect and operate according to their tenor and that they should respectively have the rights and be bound to the obligations thereby created, then, whatever else may be said about the transaction, it is not a sham”. In Sharrment Pty. Ltd. v. Official Receiver (1988) 18 F.C.R. 449, 454-455, Lockhart J. cited with approval statements to the effect that the artificiality of a transaction does not give rise to its characterisation as a sham, so long as each document “had the effect that it purported to have”, and so long as none of the documents purported “to do something different from what the parties had agreed to do”. What distinguishes those decisions, and makes them irrelevant for present purposes, is that in each of them the parties to the transactions in question agreed to be, and so were, bound by the course adopted. In contrast, where, as Dowsett J. observed in his reasons in the court below: “the parties to a transaction agree that the mutual discharge of obligations should be effected in a particular way, it may be very difficult for an outsider to assert that the purported discharge was of no effect. That is not the present case. The defendant had an obligation to each plaintiff, which obligation could only have been discharged in -- 17 of 33 -- 18 accordance with the terms of the agreements, unless the parties agreed to vary those terms. As a matter of common understanding, what each plaintiff had contracted for was the advance of funds to the Representative. No funds were advanced, and in those circumstances, it is clear to me that the defendant did not discharge its obligations pursuant to the various agreements, nor does the defendant now offer to do so.”. His Honour’s conclusion to that effect is a finding of fact which the defendant invites us now to reverse on appeal. Far from being persuaded that it is wrong, we are satisfied that it is correct. The success of the plantation venture depended upon its promoters obtaining enough money to carry it out by acquiring the land, preparing it, and planting and cultivating it to the stage of crop production. Their expectations were disappointed by the course which events took at a very early stage. Instead of furnishing the funds with which the plantation would be developed, the investors elected, as they were entitled under the scheme to do, to call on the defendant to provide them in the form of loans in exchange for their promises to repay the amounts being borrowed under the Deeds of Loan. Contrary to the expectations of the promoters, the venture turned out not to be funded by the contributions of the investors, but required the infusion of capital from sources of their own. They could not, and in fact did not, obtain money by adopting the expedient of writing cheques which they knew would not produce the funds needed to finance the project. They ought at that stage to have confessed the failure of the project through inability to obtain the means needed to carry it out. Instead, they elected to create a facade by writing on pieces of paper, which they proceeded to pass around at the Bank, knowing that, as a source of the money they needed, it would have signified nothing. The defendant submitted that it was not open to the plaintiff and the Court to go beyond the terms of the Deeds of Loan as self-contained instruments. Reliance was placed on the provisions of cl.1.1 of the Deed, which provides that it contains the entire understanding and agreement of the parties as to the subject matter of the Deed; as well as on cl.1.2, which sets out to exclude all prior -- 18 of 33 -- 19 negotiations, understandings, representations, etc. in any way affecting the subject matter, the Participation Interest, the Borrower’s rights and obligations, and so on. But, whatever significance those provisions might have had if the Deeds of Loan had stood alone, it is impossible to ignore the fact that each of these Deeds was only one in a complex series of instruments by which Okari Plantation Venture was intended to be carried into effect. Whether that would impair the effectiveness of provisions like those in cll.1.1 and 1.2 does not matter here, because, despite those provisions, the Deed of Loan contains its own internal cross-references to the Okari Plantations Venture and to the other instruments executed by the plaintiffs for the purpose of acquiring their interests in that Venture. Clause 4(a) of the Deed of Loan has already been mentioned. It provides that the Borrower directs the Lender to pay the Principal Sum to the Representative “... for the purpose of the Borrower’s Application”. The word “Application” is defined in cl.2(a) of the Deed of Loan as having the same meaning as that attributed to it in the Investment Deed. The Investment Deed or, to give it its full name, the Okari Plantations Venture Investment Deed, is ex.38. As has been mentioned, it is the instrument which was executed by the intending investor, (who is described in it as the Grower or the prospective Grower) in order to acquire his interest in the Okari Plantations Venture, and is also executed by several other parties including Okari Plantations Limited, as the Plantation Owner, and Permanent Trustee Australia Limited, as the Representative. Clause 6.1 of the Investment Deed required each Prospective Grower to execute and deliver to the manager an Application together with all moneys payable at that time. Clause 6(1)(c) provided that each Application was to be accompanied by a cheque for $12,486 for each unit of Participation Interest applied for. Clause 5.1 of the Investment Deed described the duty of the Representative, which is as follows: “5.1 Growers Application Moneys -- 19 of 33 -- 20 (a) All moneys paid by Prospective Growers shall be held by the Representative in trust for the respective Prospective Grower in a Bank account established and kept by the Representative solely for the purpose of depositing moneys paid by the Prospective Growers.” There is also provision in cl.5.2 requiring the Representative to return to the Grower the moneys paid by him, “together with any interest earned”, within 14 days of written notification by the Manager that a Grower’s Application has not been accepted. It is matched by the provision, previously set out in these reasons, in cl.4(b) of the Deed of Loan, authorising the defendant, in the event that the Borrower’s Application is not accepted, to collect the Principal Sum from the Representative and apply the moneys so received in repaying the Principal Sum in discharge of the obligations of the Borrowers under the Deed of Loan. The expression “Application” is defined in cl.2.1(c) of the Investment Deed, and therefore also for the purposes of the Deed of Loan, as meaning an application to participate in the Okari Plantations Venture in the form set out in Schedule 4 to the Investment Deed. Other definitions in that Deed which are relevant are, in cl.2.1(d), that “Application Money” means “cash provided by an applicant for the purchase of the “Participation Interest” under that Deed; and, in cl.2.1(i), that “cash” includes cheques, Bank cheques and deposits in any trading or savings Bank accounts. The effect of these provisions is that an intending investor was, by cl.6.1 of the Investment Deed, required to execute and deliver an application together with all moneys payable. The application money was to be in cash, which by the definition in cl.2.1(i) might include cheques; but any moneys paid by a prospective grower had to be capable under cl.5.1(a) of being held by Permanent Trustee Australia as Representative in trust in a bank account established and kept solely for the purpose of depositing moneys paid by the Prospective Growers. That money was to be repayable if the application to invest was declined, in which event by cl.5.2 it was to be returned to the grower together with any -- 20 of 33 -- 21 interest it had earned. Under the terms of cl.4(b) of the Deed of Loan, this was to be done by the defendant as Lender collecting it from the Representative and applying the money received as repayment of the Principal Sum borrowed. It would have been difficult, if not impossible, to satisfy the requirements of these provisions if the loan referred to in cl.3 of the Deed of Loan was in the form to which it was sought to reduce it by the “round-robin” cheque transaction. That series of debit and credit entries created no “moneys” capable of being held by the Representative in trust for each Grower or of earning interest that, in the event of his application to participate in the venture being declined, was capable of being returned to the intending Grower. It is, of course, true that the plaintiffs’ applications were (or so it was said) not declined; but the question here falls to be tested according to what was contemplated by the parties under the instruments they executed. From the provisions considered, it is evident that, in referring as the parties did in cl.3 of the Deed of Loan to the obligation of the defendant to “lend” the Principal Sum, what they had in contemplation was a loan of something more tangible than a mere entry in a bank statement that was never intended by anyone to be a deposit of money to be held in trust so as to be capable of earning interest before being repaid. -- 21 of 33 -- 22 What was done in Mr Normand’s office on 29 June and 4 July 1990 was nothing more than an exchange of pieces of paper that the Bank required as its authority for making entries in the statements of account which it issued to its customers including the defendant. As against the Bank, those entries no doubt amounted to evidence in favour of its customer of the balance, if any, due, even if momentarily, from the Bank to the particular customer in question. See R. v. Capewell [1995] 2 Qd.R. 64, 67, 71; but, as against the plaintiffs, the entries in the statements of account fail to establish that the Principal Sum, or any other money amount, had in accordance with cl.3 of the Deed of Loan, in fact been lent by the defendant to the plaintiffs. Far less did it show that it had been paid by the defendant to Permanent Trustee Australia as the Representative. A debit entry in the bank account of one customer, and a corresponding credit entry in the account of another, may be evidence in favour of or against the bank or those customers that a payment in that amount has taken place: Re Hardman (1932) 4 A.B.C. 209, 210; but it has that effect because the parties by their banking arrangements have agreed or are conventionally bound in certain circumstances to treat it as such. It has no such consequence as against a person who is not a party to those arrangements or who has not accepted it as having that effect. See Commissioner of Stamp Duties v. Bank of Queensland Limited (App. 2961 of 1996. C.A. Qld. Oct. 4, 1996). It was said, however, that cl.10 of the Deed of Loan incorporated a power of attorney appointing the defendant Lender, as the attorney of each plaintiff Borrower, to do all acts as the Lender deemed necessary for the purpose of certain identified clauses of the Deed of Loan. However, even if cl.3 of the Deed of Loan had been one of those clauses, the power of attorney was necessarily co- extensive with and limited by the terms of clause 3 itself, and by the character of the loan contemplated by the transaction and the associated instruments which brought it into existence. It was not a loan -- 22 of 33 -- 23 made to a borrower at large but one that was to be used for the specific purpose of acquiring a Participation Interest in the Venture. The plaintiffs were not parties to the arrangement involved in the “round-robin” of cheques carried out at Mr Normand’s office, and they were and are not bound by the effect that the defendant and others sought to ascribe to it. The defendant was entitled, if it wished, to make a silk purse out of a sow’s ear; but it could not, by doing so, oblige the plaintiffs to accept it as having that character. No loan of the kind contemplated or agreed on under cl.3 of the Deed of Loan was ever made or provided, nor has the Principal Sum been paid to the Representative; the minimum subscription has not been received; and the plaintiffs are therefore entitled to recover the initial payments which they made to the defendant on account of interest and the prepayment of instalments of principal of loans which were never made. The appeals should be dismissed with costs. -- 23 of 33 -- 24 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Brisbane Before McPherson J.A. Thomas J. de Jersey J. Appeal No. 4706 of 1996 [Australian Horticultural Finance P/L. v. Jekos Holdings P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: JEKOS HOLDINGS PTY. LIMITED ACN 009 940 738 (Plaintiff) Respondent Appeal No. 4708 of 1996 [Australian Horticultural Finance P/L v. CJZ Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: CJZ INVESTMENTS PTY. LTD. ACN 009 951 062 (Plaintiff) Respondent Appeal No. 4709 of 1996 [Australian Horticultural Finance P/L v. HGT Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant -- 24 of 33 -- 25 AND: HGT INVESTMENTS PTY. LTD. ACN 009 951 080 (Plaintiff) Respondent Appeal No. 4710 of 1996 [Australian Horticultural Finance P/L v. Zinn] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: PETER ZINN Appeal No. 4711 of 1996 [Australian Horticultural Finance P/L v. JMB Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: JMB INVESTMENTS PTY. LTD. ACN 009 951 071 (Plaintiff) Respondent Appeal No. 4712 of 1996 [Australian Horticultural Finance P/L v. Shettleston P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 -- 25 of 33 -- 26 (Defendant) Appellant AND: SHETTLESTON PTY. LTD. ACN 009 905 891 (Plaintiff) Respondent Appeal No. 4713 of 1996 [Australian Horticultural Finance P/L v. Dabary Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: DABARY INVESTMENTS PTY. LTD. ACN 009 951 382 (Plaintiff) Respondent Appeal No. 4714 of 1996 [Australian Horticultural Finance P/L v. Theme (No. 3) P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: THEME (N0. 3) PTY. LTD. ACN 009 782 297 (Plaintiff) Respondent Appeal No. 4715 of 1996 [Australian Horticultural Finance P/L v. Erand P/L] BETWEEN: -- 26 of 33 -- 27 AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: ERAND PTY. LTD. ACN 010 536 400 (Plaintiff) Respondent -- 27 of 33 -- 28 Appeal No. 4716 of 1996 [Australian Horticultural Finance P/L v. KFA Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: KFA INVESTMENTS PTY LTD ACN 009 951 053 (Plaintiff) Respondent Appeal No. 4717 of 1996 [Australian Horticultural Finance P/L v. ITA Enterprises P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: ITA ENTERPRISES PTY. LTD. ACN 009 979 819 (Plaintiff) Respondent REASONS FOR JUDGMENT - THOMAS J Judgment delivered 9 December 1997 The appeal should be dismissed with costs for the reasons given by McPherson JA. I would add that no error has been shown in the findings or reasons of the learned Trial Judge, with which I record my agreement. -- 28 of 33 -- 29 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Brisbane Before McPherson J.A. Thomas J. de Jersey J. Appeal No. 4706 of 1996 [Australian Horticultural Finance P/L. v. Jekos Holdings P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: JEKOS HOLDINGS PTY. LIMITED ACN 009 940 738 (Plaintiff) Respondent Appeal No. 4708 of 1996 [Australian Horticultural Finance P/L v. CJZ Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: CJZ INVESTMENTS PTY. LTD. ACN 009 951 062 (Plaintiff) Respondent Appeal No. 4709 of 1996 [Australian Horticultural Finance P/L v. HGT Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant -- 29 of 33 -- 30 AND: HGT INVESTMENTS PTY. LTD. ACN 009 951 080 (Plaintiff) Respondent Appeal No. 4710 of 1996 [Australian Horticultural Finance P/L v. Zinn] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: PETER ZINN Appeal No. 4711 of 1996 [Australian Horticultural Finance P/L v. JMB Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: JMB INVESTMENTS PTY. LTD. ACN 009 951 071 (Plaintiff) Respondent Appeal No. 4712 of 1996 [Australian Horticultural Finance P/L v. Shettleston P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant -- 30 of 33 -- 31 AND: SHETTLESTON PTY. LTD. ACN 009 905 891 (Plaintiff) Respondent Appeal No. 4713 of 1996 [Australian Horticultural Finance P/L v. Dabary Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: DABARY INVESTMENTS PTY. LTD. ACN 009 951 382 (Plaintiff) Respondent Appeal No. 4714 of 1996 [Australian Horticultural Finance P/L v. Theme (No. 3) P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: THEME (N0. 3) PTY. LTD. ACN 009 782 297 (Plaintiff) Respondent Appeal No. 4715 of 1996 [Australian Horticultural Finance P/L v. Erand P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED -- 31 of 33 -- 32 ACN 003 982 027 (Defendant) Appellant AND: ERAND PTY. LTD. ACN 010 536 400 (Plaintiff) Respondent -- 32 of 33 -- 33 Appeal No. 4716 of 1996 [Australian Horticultural Finance P/L v. KFA Investments P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: KFA INVESTMENTS PTY LTD ACN 009 951 053 (Plaintiff) Respondent Appeal No. 4717 of 1996 [Australian Horticultural Finance P/L v. ITA Enterprises P/L] BETWEEN: AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED ACN 003 982 027 (Defendant) Appellant AND: ITA ENTERPRISES PTY. LTD. ACN 009 979 819 (Plaintiff) Respondent REASONS FOR JUDGMENT - de JERSEY J. Judgment delivered 9 December 1997 I agree with the orders proposed by McPherson J.A., and with his reasons. -- 33 of 33 --