White v Timbercorp Finance Pty Ltd (in liq); Collins v Timbercorp Finance Pty Ltd (in liq)

(2017) 123 ACSR 284; [2017] VSCA 361

Victorian Court of Appeal

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For Australian Law.

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Interrogate

Catchwords

1. Contract
2. › Construction
3. › Loan agreement
4. › Meaning of 'payment'
5. › Whether payment may be effected by journal entry in books of account
6. › Whether context including corporate group structure relevant to construction
1. Contract
2. › Formation
3. › Inferred agreement
4. › Agreement between related companies as to mode of performance
5. › Whether agreement permitting payment by journal entry to be inferred
6. › Relevance of corporate group structure, common directors, single operating bank account
1. Corporations
2. › Managed investment schemes
3. › Acquisition of scheme interests
4. › Payment of application money
5. › Whether journal entries constitute payment to responsible entity
6. › Corporations Act 2001 (Cth), ch 5C, ss 9, 601GA
1. Restitution
2. › Unjust enrichment
3. › Ratification
4. › Whether investors precluded from denying payment by subsequent conduct
5. › Whether requisite knowledge for ratification established
6. › Whether analogy to agency law apposite

Quick Take

Payment under a loan agreement requiring one company to pay another can be effected by journal entry in the books of both companies, provided there is an agreement (express or inferred) between the companies permitting that mode of payment. Where companies are wholly-owned subsidiaries in a corporate group with common directors, a single operating bank account, and financial statements subject to annual audit, an agreement permitting intercompany payment by journal entry will readily be inferred. Rocky Castle Finance v Taylor is confined to cases where the financier and responsible entity are not in the same corporate group and the responsible entity has payment obligations to third parties requiring it to be put in funds.