Federal Court of Australia

Arwon Finance Pty Ltd v Wilson (No 2) [2023] FCA 657

ORDERS

THE COURT ORDERS THAT:

1.    The respondent debtor's application for an adjournment of the creditor's petition is refused.

2.    The estate of Frank Cullity Wilson be sequestrated under the Bankruptcy Act 1966 (Cth).

3.    The applicant creditor's costs as agreed, or failing agreement, as taxed on a lump sum basis by a registrar of this Court, be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act.

THE COURT NOTES THAT:

A.    The date of the act of bankruptcy is 1 September 2021.

B.    A consent to act as trustee signed by Ian Charles Francis and Joanne Emily Dunn has been served.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    The applicant, Arwon Finance Pty Ltd, seeks orders on a creditor's petition issued to the respondent, Frank Wilson. Mr Wilson seeks an adjournment of the determination of the petition on the basis that he claims to have a bona fide and reasonable cross claim pending in proceedings issued against Arwon.

2    In support of his adjournment application, Mr Wilson also asserts that Arwon has delayed the progress of the pending litigation; that the outcome of the litigation will make a material difference to his financial position; that there is no evidence of urgency; and that those factors should trump policy considerations.

3    The petition was issued on 18 September 2021, amended on or about 29 December 2021 and has been extended such that it does not expire before 15 September 2023.

4    The petition relies on Mr Wilson's failure to comply with a bankruptcy notice issued 11 January 2021, which in turn relied on an unpaid judgment debt in the sum of $15,210,590.47.

5    The cross claim upon which Mr Wilson relies is for damages for the tort of conspiracy, and is the subject of proceedings in the Supreme Court of Queensland (BS 6451 of 2020) (Conspiracy proceeding).

6    For the reasons that follow, I am not satisfied that the petition should be adjourned.

Background to debt

7    Arwon has pursed Mr Wilson for repayment of a loan for a considerable period of time. The key events are set out in the reasons of McKerracher J in Wilson v Arwon Finance Pty Ltd [2021] FCA 1052 (Wilson v Arwon FCA) and the following background is adopted from his Honour's reasons.

8    The history to the debt is to be found in the sandalwood tree schemes implemented by the Quintis Group of companies. For present purposes, the relevant entities that constitute the Quintis Group are Quintis Ltd and its wholly owned subsidiaries, Arwon and Sandalwood Properties Ltd (SPL) (formerly TFS Properties Ltd).

9    The Quintis Group's business consists of owning and managing Indian sandalwood tree plantations and producing and selling products harvested from those trees. As part of the business, the Quintis Group operates managed investment schemes (MIS) and offers of financial products to sophisticated and institutional investors.

Administrators and receivers appointed to Quintis Group

10    On 20 January 2018 Richard Tucker, Scott Langdon and John Bumbak of Korda Mentha were appointed as administrators of Quintis and certain of its subsidiaries, including Arwon and SPL.

11    On 23 January 2018 BTA Institutional Services Australia Limited, in its capacity as trustee of the trust established under a collateral trust deed dated 21 June 2011, appointed Jason Preston, Shaun Fraser and Robert Brauer of McGrath Nicol as receivers of Quintis and the various subsidiaries.

12    The receivers recapitalised the Quintis Group and this was implemented by way of a deed of company arrangement (DOCA) dated 8 June 2018 and a creditors' scheme of arrangement approved by the Court under Part 5.1 of the Corporations Act 2001 (Cth).

13    In October 2018 the Quintis Group exited external administration and continued trading on a solvent basis.

Arwon's role

14    According to John Louden, general counsel of the Quintis Group, the role of Arwon in the Quintis Group was to provide finance to MIS investors, including offers to sophisticated investors (SIOs). Individual investors in MIS and SIOs, known as 'growers', were required to pay an establishment fee to obtain certain rights over parcels of land on which sandalwood plantations were established by the Quintis Group. Arwon often provided finance to the grower in the form of a loan in order for the grower to pay the establishment fee.

15    Most loans provided by Arwon to growers are at a fixed rate over seven years with monthly repayments of principal and interest. Loans are secured against the grower's trees, with Arwon having contractual rights to enforce its security over the trees in the event of default.

16    Mr Louden said that Arwon has not entered into any new loans with growers since 2016, when the Quintis Group last sold plantation investments to MIS and SIO investors. Plantation sales to MIS and SIO investors do not form part of the business model of the Quintis Group following the 2018 recapitalisation.

17    Arwon manages the full loan portfolio including arrears and legal recovery action as required.

18    Prior to the external administration of the Quintis Group, part of Arwon's loan portfolio was sold to third parties (including Burlington Loan Management Designated Activity Company). Arwon has continued to manage those loan portfolios.

19    Arwon did not and does not have any role in the maintenance of the plantations or make decisions in respect of the plantations.

Mr Wilson's debt

20    Until March 2017 Mr Wilson was at times a director and officer of companies in the Quintis Group. He was chief executive officer of each of Quintis, Arwon and SPL for various extended periods. According to Mr Wilson, during his time within the Quintis Group, Quintis and Arwon were effectively run as one company, with common directors, policies and practices.

21    In 2013 and 2014, Mr Wilson acquired interests in certain sandalwood plantations through an SIO. The structure of the acquisition was as follows:

(a)    SPL as land owner leased certain land to Mr Wilson;

(b)    Mr Wilson engaged the services of Quintis to establish, develop and manage each sandalwood plantation (under Investment Management Agreements);

(c)    Mr Wilson obtained a loan from Arwon to meet establishment costs;

(d)    Quintis sub-contracted the management of the plantation to another subsidiary, Quintis Forestry Ltd; and

(e)    upon maturity, the trees would be harvested and sold by Quintis and the net proceeds of sale (less any interest accrued by a Quintis entity) would be payable to Mr Wilson.

22    On 30 June 2014 Mr Wilson borrowed approximately $13,200,000 from Arwon pursuant to a written Loan Agreement for the purpose of the acquisition.

23    Mr Wilson stopped making repayments under the Loan Agreement from around January 2017. In March 2017 he resigned from his various positions within the Quintis Group.

24    During the 2018 restructure, SIO investors, including Mr Wilson, were offered the opportunity to novate the Investment Management Agreements to a new plantation manger. According to Mr Louden, Mr Wilson declined that opportunity. Mr Wilson terminated the Investment Management Agreements from 6 April 2018 (correspondence was in evidence). The Quintis Group did not manage his SIO plantation interests from that time.

WASC proceedings

25    In July 2017 Arwon commenced proceedings against Mr Wilson in the Western Australian Supreme Court to recover the loan extended under the Loan Agreement (Debt proceeding).

26    The trial in the Debt proceeding was heard by KJ Martin J of the Western Australian Supreme Court on 29 and 30 April 2019, with judgment delivered on 5 July 2019: Arwon Finance Pty Ltd v Wilson [2019] WASC 244 (Arwon v Wilson WASC). Although I will return in further detail to parts of those reasons, in summary, Mr Wilson defended the Debt proceeding on the basis of an asserted promissory estoppel, said to arise from Arwon's alleged practice of pursuing a borrower only for any shortfall after it had first foreclosed on the borrower's interests in the sandalwood trees (grown on the leased plantations) against which the loans were secured. The defence, based on what the primary judge referred to as a 'trees first' policy, was rejected.

27    Mr Wilson unsuccessfully appealed, with judgment delivered on 31 August 2020: Wilson v Arwon Finance Pty Ltd [2020] WASCA 137.

QSC proceedings

Water proceeding

28    On 26 June 2019 Mr Wilson filed proceedings in the Queensland Supreme Court against Quintis and SPL for alleged breaches of the lease agreements and Investment Management Agreements (Water proceeding). Notably, Arwon was not a respondent to those proceedings.

29    Mr Wilson alleged in the Water proceeding that, amongst other things, SPL impeded the supply of adequate water to his plantations by directing water suppliers not to supply water to Mr Wilson and by causing physical damage to water infrastructure on his plantations.

30    The claims are denied by Quintis and SPL, who plead relevantly that Quintis ceased supplying management services when the Investment Management Agreements were terminated, and so withdrew water supply to some of the lots. These matters are addressed further below, as the same claims are made in the Conspiracy proceeding.

Conspiracy proceeding

31    One week after the hearing of the appeal from Arwon v Wilson WASC, Mr Wilson commenced the Conspiracy proceeding, which pleads two conspiracies against Arwon. In Wilson v Arwon FCA, McKerracher J described the conspiracies pleaded against Arwon in these terms:

[19]    … In that proceeding, Mr Wilson alleges that Arwon was party to two conspiracies intended to cause financial hardship and injury to him. The so-called 'first conspiracy' is alleged to have occurred between approximately March 2017, when Mr Wilson resigned from his positions in the Quintis Group, and January 2018, when Quintis entered voluntary administration. Mr Wilson contends that Arwon, together with others in the Quintis Group, took various steps to impose financial hardship on him and to damage his reputation with potential investors in an effort to prevent Mr Wilson from being able to successfully privatise Quintis. The so-called 'second conspiracy' is alleged to have commenced in mid-2017 and to have operated in conjunction with the first conspiracy. It is put that Arwon was involved in the unlawful acts allegedly perpetrated by SPL and Quintis concerning the water infrastructure and supply at Mr Wilson's plantations and the breaching of agreements so as to cause him economic loss. There is significant overlap between the alleged second conspiracy in the Arwon Conspiracy proceeding and the allegations against SPL and Quintis in the Queensland Water proceeding. Mr Wilson does not contend that Arwon itself carried out any of the unlawful acts that are alleged against SPL and Quintis in the Queensland Water proceeding.

32    On 27 July 2020 Arwon gave notice of its intention to defend the Conspiracy proceeding and filed a defence.

33    In terms of the progress of the litigation, I was informed that discovery has been undertaken (discussed further below and which also draws upon the discovery in the Water proceeding) but that otherwise the matter remained subject to case management and it was unclear when it might be ready for trial.

The bankruptcy notice and application to set aside

34    On 11 January 2021 Arwon issued a bankruptcy notice to Mr Wilson in relation to an unpaid debt of $15,210,590.47, being in effect the judgment debt from the Debt proceeding.

35    On 4 February 2021 Mr Wilson applied to this Court to set aside the bankruptcy notice under s 40(1)(g) and s 41(7) of the Bankruptcy Act 1966 (Cth), based on offsetting claims said to arise from the Conspiracy proceeding.

36    Arwon opposed the application on the bases that: the offsetting claims alleged could have been raised in the Debt proceeding; the claim constituted an abuse of process, brought to delay Mr Wilson's bankruptcy; Mr Wilson had not established a prima facie case with a fair chance of success; and Mr Wilson had not demonstrated that the amount of the offsetting claim exceeded the judgment debt.

37    On 1 September 2021 McKerracher J (in Arwon v Wilson FCA) dismissed Mr Wilson's application on the basis that Mr Wilson's offsetting claims could have previously been set up in the Debt proceeding. Having formed the view that the offsetting claim, assuming it to be bona fide, could have been set up in the Debt proceeding, his Honour did not need to resolve the other matters Arwon relied upon.

The creditor's petition

38    On 18 September 2021 Arwon issued the petition seeking a sequestration order against Mr Wilson under s 43 of the Bankruptcy Act.

39    On 14 October 2021 Mr Wilson filed grounds of opposition to the petition, being that: that security with respect to debts due by Mr Wilson in favour of Arwon is valued at over $22 million, exceeding the judgment debt; and that there is other sufficient cause to dismiss the petition under s 52(2) of the Bankruptcy Act, because the damages sought in the Conspiracy proceeding exceed the judgment debt and the Conspiracy proceeding is likely to succeed.

40    On 16 December 2021 the Court granted Arwon leave to amend the petition to include a statement that it was willing to surrender the security for the benefit of the creditors generally and present its petition as if it were an unsecured creditor, pursuant to s 44(3) of the Bankruptcy Act: Arwon Finance Pty Ltd v Wilson [2021] FCA 1599.

41    The amended petition was filed and served on 29 December 2021.

42    Despite the matters relied upon in the grounds of opposition, it became apparent from his submissions before me that Mr Wilson did not maintain that the petition should be dismissed under s 52(2), but rather asked that it be adjourned pending the outcome of the Conspiracy proceeding or further interlocutory steps in that proceeding.

43    It will be necessary to return in some detail to the Conspiracy proceeding, but it is first appropriate to consider the statutory context for the adjournment application.

The statutory context and principles

44    The making of a sequestration order has significant consequences. Therefore, the Bankruptcy Act, unsurprisingly, requires proof of specific criteria before an order is made. These are set out in s 52(1) of the Bankruptcy Act. Section 52(2) empowers the Court to dismiss the petition.

45    Those sections provide:

Proceedings and order on creditor's petition

(1)    At the hearing of a creditor's petition, the Court shall require proof of:

(a)    the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b)    service of the petition; and

(c)    the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

…

(2)    If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a)    that he or she is able to pay his or her debts; or

(b)    that for other sufficient cause a sequestration order ought not to be made;

it may dismiss the petition.

46    The Full Court explained the Court's powers as to dismissal or adjournment of a petition in Endresz v Australian Securities and Investments Commission (No 2) [2015] FCAFC 33; (2015) 228 FCR 334:

[37]    The circumstances which may constitute 'other sufficient cause' are extremely variable, and it is inappropriate to catalogue or circumscribe them (Clyne v Deputy Commissioner of Taxation (1985) 5 FCR 1 at 5 per Fisher, Morling and Wilcox JJ and Cain v Whyte at 645). But even if 'other sufficient cause' has been shown, that merely enlivens the Court's discretion to refuse to make a sequestration order. The power in s 52(2) is permissive, not mandatory. Even if a debtor can bring himself within s 52(2)(b), that does not entitle him to have a sequestration order refused (Russell v Polites at [24] per Flick J).

[38]    But the question of whether the hearing of a petition should be adjourned falls more for consideration under s 33(1) of the Act and generally, rather than under s 52(2)(b). If 'other sufficient cause' is not made out under s 52(2)(b), then the exercise of any discretion under s 52(2) simply does not arise. Alternatively, if 'other sufficient cause' is made out, then the discretion that arises under s 52(2) is a discretion whether to dismiss the petition. If the discretion is exercised not to dismiss the petition, then the question of whether to proceed to make a sequestration order then and there or to adjourn the petition arises under s 33(1) or more generally. But it does not strictly arise under s 52(2), which is only a discretion whether to dismiss the petition. This distinction ought to be kept in mind and has sometimes not been clearly made (cf Clapham).

47    In Rigg v Baker [2006] FCAFC 179; (2006) 155 FCR 531, French J said:

[66]    A distinction has been drawn between a claim against the petitioner creditor which is likely to succeed and which would warrant refusal of a sequestration order and a 'real claim' which has sufficient prospect to warrant the debtor being granted an opportunity to have it litigated. In the latter case an adjournment of the petition may be appropriate: In the matter of Jovanovic [1998] FCA 463 citing Re James, Ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (No 2) (1994) 51 FCR 14 at 22 (Olney J). The existence of a cross-claim against the petitioning creditor which is likely to succeed may support the proposition that the sequestration order ought not to have been made and should be annulled. On the other hand the existence of a real claim which might have warranted adjournment would not necessarily support that conclusion. That is not to exclude the possibility that in appropriate circumstances the registrar or judge hearing the petition ought to grant an adjournment on the basis of a 'real cross-claim'.

48    The position was also addressed in Liang v LV Property Investments Pty Ltd [2015] FCA 1057 (Beach J) as follows:

[58]    Fifth, the existence of a cross-claim may be a 'sufficient cause' if the claim, if successful, well exceeds the judgment debt.

[59]    An important distinction is to be made between a cross-claim which is likely to succeed and a cross-claim which is a bona fide and reasonably arguable claim, but where it is not established by the judgment debtor that it is likely to succeed. In the former case, where it is established that the claim is likely to succeed, such a claim may warrant the refusal of a sequestration order (Rigg v Baker at [66] per French J; Singh v Deputy Commissioner of Taxation [2011] FCA 889 (Singh) at [14] per Collier J). In the latter case, only a basis for adjourning the creditor's petition may be established, but the ultimate refusal of a sequestration order may not be justified (Rigg v Baker at [66] per French J).

[60]    There is a theoretical question. If you have the latter case, do you establish a 'sufficient cause' at all? Some authorities suggest that you do not and that only cases in the former category fit within s 52(2)(b) (St George Bank Ltd v Helfenbaum [1999] FCA 1337 at [13] per Sundberg J; ICM Agriculture Pty Ltd v Young (2009) 260 ALR 515; [2009] FCA1169 at [85] per Lindgren J; Hilellis v Mobil Oil Australia Ltd [2000] FCA 1139 at [8] per Hely J; Singh at [14] per Collier J; Totev v Sfar (2008) 167 FCR 193 at [85] to [87] per Cowdroy J). In my view, these authorities support what was said in Rigg v Baker that cases in the former category support a refusal of a sequestration order, whereas cases in the latter category support only an adjournment of the petition. In such a case, a 'sufficient cause' has not been shown. The discretion to adjourn does not then arise under s 52(2), but rather arises more generally (s 33) as to when the petition should be decided. In any event, there is little doubt that the discretion to adjourn arises in the latter case (Re Schmidt; Ex parte Anglewood Pty Ltd (1968) 13 FLR 111 at 116 per Gibbs J).

[61]    It is important to emphasise that a judgment debtor does not establish a bona fide and reasonably arguable claim by merely producing a statement of claim in a separate proceeding or by pointing to such litigation or indeed by bare assertion; Ms Liang's position falls into that last category. There must be sufficient evidence or other material to show that it is reasonably arguable or of substance. This may require prima facie verification of the key factual elements as well as demonstrating legal tenability.

49    And finally with respect to the principles, in Re Schmidt; Ex parte Anglewood Pty Ltd (1968) 13 FLR 111 at 116, Gibbs J said:

Where … the debtor claims to be entitled to unliquidated damages in tort against the petitioning creditor the position seems to me to be different. As a general rule this Court is not an appropriate forum to decided such a claim and is limited to forming a view as to whether it appears that there is sufficient validity in the debtor's claims to justify a dismissal or adjournment of the petition … If I am satisfied that the debtor has a claim against the petitioning creditor equal to or exceeding the amount of the judgment debt, I should not make a sequestration order.

50    Other examples of the application of the principles include Barton v Malcolm Johns Legal Pty Ltd (No 2) [2015] FCA 166 at [112] (Gleeson J); and Ghosh v Miller [2016] FCA 1293 at [63] (Markovic J).

51    In the end Mr Wilson did not seek to make out 'sufficient cause' within the meaning of s 52(2)(b) of the Bankruptcy Act, and sought only that the petition be adjourned.

52    Therefore, I have proceeded on the basis that the cross claim by way of the Conspiracy proceeding is one of the matters relevant to the exercise of my judicial discretion under s 33 of the Bankruptcy Act. There is no exhaustive catalogue of the matters to be taken into account in deciding whether that discretion should be exercised, and that question will always depend upon the particular circumstances: Endresz at [59]; and Clapham v Commonwealth Bank of Australia [2013] FCAFC 84 at [40].

Matters relied upon by Mr Wilson in support of adjournment

53    Mr Wilson relies on the following in support of the adjournment application:

(a)    he has a bona fide and reasonably arguable cross claim;

(b)    the claim relates to the litigation that gave rise to the judgment debt;

(c)    Arwon has been responsible for delay in the progress of the claim; and

(d)    there is no evidence of particular urgency.

Affidavit evidence relied upon

54    Mr Wilson relied on the following affidavits: first affidavit of Frank Wilson filed 14 October 2021; second affidavit of Frank Wilson filed 20 January 2022; third affidavit of Frank Wilson filed 28 January 2022; affidavit of Geoffrey Daniels (labourer who did work for Mr Wilson and his family trustee company) filed 20 January 2022; first affidavit of Graeme Scott (retired accountant) filed 21 April 2021 (originally filed in separate proceedings); and second affidavit of Graeme Scott filed 20 January 2022.

55    Counsel for Mr Wilson stated that despite that significant body of evidence (some 889 pages), the material that Mr Wilson relied on for the purpose of the adjournment application was that identified in particular paragraphs of the written submissions.

56    Leaving aside a number of affidavits that establish the formalities to be proved under s 52(2)(a) of the Bankruptcy Act, Arwon relied on: first affidavit of John Louden (Quintis Group general counsel) filed 2 November 2021; second affidavit of John Louden filed 28 January 2022; and affidavit of Chris Prestwich (partner at Allens acting for Arwon) filed 1 February 2022.

The tort of conspiracy

57    Conspiracy may be by 'unlawful means' or 'lawful means': Central Exploration Pty Ltd v Zuks [2020] WASC 46 at [119].

58    Mr Wilson accepts that for him to establish a claim for tortious conspiracy, he must prove that:

(a)    there was a combination or agreement between two or more persons;

(b)    there was an intention to injure, which must be the sole or predominant purpose (for conspiracy by lawful means), but need not be the predominant purpose (for conspiracy by an unlawful act);

(c)    the combination or agreement was executed in whole or in part; and

(d)    some pecuniary loss as a result of the defendants' acts in furtherance of the combination or agreement.

59    As to the relevant principles, counsel for Mr Wilson adopted McKerracher J's summary in Wilson v Arwon FCA:

[42]    There must be a combination or agreement between the conspirators. To be a party to the alleged combination or agreement, each party must be sufficiently aware of the surrounding circumstances and share the same purpose or intention: Australian Wool Innovation Ltd v Newkirk [2005] FCA 290 per Hely J at ([62]).

[43]    As conspirators will ordinarily conceal their combination or agreement, it will often be the case that there is no direct evidence of the same. The combination or agreement can therefore be proved as a matter of inference from the overt acts of the relevant parties done in pursuance of the apparent common purpose between them. It is the weight which is to be given to the united force of all of the circumstances which must be considered: Chong v CC Containers Pty Ltd [2015] VSCA 137 (at [133]-[134]).

Mr Wilson's case against Arwon

The inferred conspiracy agreement

60    In March 2017 Mr Wilson resigned as chief executive officer of Quintis for the purpose of pursuing a proposal to privatise Quintis. The conduct of which he complains commenced after that time.

61    Mr Wilson's pleaded case in the Conspiracy proceeding is that after he resigned, Arwon, Quintis and SPL entered into an agreement pursuant to which each, where able, would take steps to cause Mr Wilson loss or economic hardship and harm his reputation so as to maximise the prospects of preventing any attempts by Mr Wilson to privatise Quintis (First conspiracy).

62    He pleads that subsequently, the parties entered into a further agreement to implement a process whereby Arwon would continue to engage in litigation (being the Debt proceeding) and Quintis and SPL would breach agreements with Mr Wilson to cause him financial harm and economic loss, such that Mr Wilson would eventually be in a financial position whereby he could no longer conduct his sandalwood plantations, or manage or be involved in a co-operative that operated in direct competition with the Quintis Group (Second conspiracy).

Matters relevant to inference

63    Mr Wilson contends that the First and Second conspiracies are to be inferred from six matters (and see also Arwon v Wilson FCA at [45]).

64    First, Mr Wilson submitted that Quintis gave false information to CMIG (a Chinese private equity firm) about Mr Wilson during a first takeover attempt so as to leave Mr Wilson out of the proposal. Quintis ultimately rejected an offer from CMIG that Mr Wilson considered to be commercially attractive.

65    In support of this contention, Mr Wilson gave affidavit evidence about his dealings with CMIG. He said that in the weeks following his resignation from Quintis, he met with Christophe Xang, a CMIG executive, in Perth. Mr Xang said that he would return to China to consult with his executive team about a formal proposal to 'take Quintis private'. Mr Wilson said he started to receive telephone calls from the CEO of Quintis and its corporate adviser, asking when CMIG might make a formal approach to the company. In May 2017 Mr Wilson accompanied Mr Xang to India to meet several potential large buyers of sandalwood oil and wood. Upon returning to Australia he received a call from Mr Xang in which he indicated that the CMIG Investment Committee had resolved to make a formal offer to invest in Quintis, and that he and his colleague, Rachel Forbes, would be travelling to Perth to meet with the Quintis board. According to Mr Wilson, after they met with the board, Mr Xang and Ms Forbes met with him again over breakfast and indicated that the Quintis persons they had met with had encouraged them to deal with the board, rather than Mr Wilson, and had asked about issues including loans due by Mr Wilson to Arwon and other litigation in which his family company was involved. Mr Wilson said that based on subsequent discussions, he understands that CMIG made a formal offer that was rejected by the board, and CMIG did not proceed with an investment in Quintis.

66    Second, Mr Wilson submitted that Quintis included redacted board minutes in a data room for due diligence on potential investors during the second attempted takeover which accused Mr Wilson of being in default of his loan obligations and discussed that Arwon would be instituting legal proceedings against Mr Wilson, but without mention of discussions showing the substantial dispute between Mr Wilson and Arwon over those matters.

67    In support of this contention, Mr Wilson said that in October 2017 and during a due diligence undertaken by the Steynton consortium (described further below), he 'became aware' that documents had been placed in the due diligence data room to disclose allegations about his conduct in his time at Quintis which he considered to be 'false, misleading and defamatory', and that did not refer to discussions where he had denied the allegations. The pleading goes somewhat further than this, alleging that the documents in the data room accused Mr Wilson of being in default of the Loan Agreement and advised that proceedings would be instituted against him, and did not refer to the so-called 'Group recovery policy' (which is in effect the 'trees first' policy addressed by the primary judge in Arwon v Wilson WASC), or to other matters relevant to his financial position.

68    Third, Mr Wilson submitted that Quintis announced to the ASX that Arwon intended to take legal proceedings against Mr Wilson, despite never having announced previously that a debtor was being pursued.

69    As to the evidence relied upon in support of this contention, Mr Wilson states that on or about 17 July 2017 Quintis issued an ASX release which stated that Arwon was launching legal action against him because his loan was in default. I note that the ASX announcement stated that Arwon had resolved to commence enforcement action against two existing SIO investors who were in default of their repayment obligations, including Mr Wilson, 'the company's former Managing Director'. The announcement separately referred to a put [and call] option agreement revision. The pleading alleges that no member of the Quintis Group had ever instituted legal proceedings against an investor, whether in default or otherwise.

70    Fourth, Mr Wilson submitted that Arwon commenced legal proceedings against him on 24 July 2017, despite its longstanding policy of first foreclosing on the plantation interests that secured the loan and despite the statements made to Mr Wilson by representatives of Quintis.

71    In support of this contention, Mr Wilson deposed to a meeting with the Quintis CEO, Julius Matthys, in June 2017 when he asked Mr Matthys whether Arwon intended to commence proceedings against him and he asked why he was 'being singled out'. He said that Mr Matthys denied Arwon was going to take proceedings against him 'just because it had got in the position to do so', but Mr Wilson said he subsequently saw board minutes that indicated that, contrary to what Mr Matthys told him, Arwon had decided by then to pursue him. Mr Wilson also deposed to a conversation with Dalton Gooding in July 2017 during which Mr Gooding said that he could mediate a commercial settlement but 'could not make any promises', and that the CMIG offer had been rejected because it was too low.

72    Mr Wilson also relied heavily upon the so-called Group recovery policy. He pleads that it was Arwon's policy that in the event of default on a loan, Arwon was required to first have recourse to security before seeking to recover the balance debt from a borrower, and could only seek to recover personally from a borrower if the value of the security was less than the sum due. He also pleads that the policy was applied from 2001 without exception, and that if he was in default of the Loan Agreement with Arwon, then the secured property would have been sufficient to discharge any indebtedness. In his affidavit evidence, Mr Wilson states that he knew about the policy when he entered into the Loan Agreement.

73    Fifth, Mr Wilson submitted that Quintis frustrated the attempts of the Steynton consortium, advised by Goldman Sachs, to perform due diligence and put forward a proposal to privatise Quintis (Mr Wilson, Mr Scott and a third person formed the Steynton consortium in August 2017 for the purpose of seeking to acquire all the shares in Quintis). Mr Wilson submitted that Quintis frustrated those attempts by:

(a)    delaying and inserting unduly restrictive terms in a confidentiality agreement;

(b)    making representations that Mr Wilson and his associates were threatening Quintis employees, were a potential danger to Quintis employees and were preventing Mr Wilson from participating in due diligence site visits; and

(c)    refusing to allow the Steynton consortium to deal with Davidson Kempner (a creditor of Quintis that held a put option exercisable in January 2018 for $35 million) with respect to its proposal for Quintis.

74    Mr Wilson contends that Quintis did not emerge with an agreement with another party following this conduct, but instead appointed administrators after Davidson Kempner exercised its option, which Quintis could not fund.

75    As to this fifth contention, Mr Wilson relies on evidence from Mr Scott. Mr Scott states that the Quintis board requested evidence of Steynton's financial capacity and execution of a confidentiality agreement. He states that his lawyers told him that the terms of the confidentiality agreement were unduly restrictive. He complained to Mr Tim Day of Quintis who told him the terms were the same as those in other confidentiality agreements it had required. Mr Scott said that Quintis took too long (over three weeks) to finalise the confidentiality agreement and that he later saw another confidentiality agreement purportedly provided to another potential investor that was simpler and shorter.

76    Mr Wilson in his affidavit stated that, in September 2017 there had been a dispute involving Mr Daniels (as noted above, a labourer retained by Mr Wilson and his family trustee company). Mr Wilson asked Mr Daniels to deliver some documents about one of his loans (due to Burlington, rather than Arwon) to Quintis reception. There was a dispute as to whether Mr Daniels intimidated the person at reception called Kerry. Mr Daniels was asked in writing by Quintis not to attend again. About three years later Kerry left Quintis. Mr Wilson met with her after she left and during that meeting she denied that Mr Daniels had threatened her. Mr Wilson considered the event was fabricated to portray him as someone who might intimidate people and was designed to foil, relevantly, the Steynton consortium's involvement.

77    Mr Wilson also relays various disputed altercations that he said resulted in him being banned by Quintis from attending sites to undertake due diligence.

78    Mr Wilson also refers to a request by Goldman Sachs, as part of the Steynton proposal negotiations, to speak directly to Davidson Kempner and asserts that the request was denied by Quintis. According to Mr Scott, Quintis had foreshadowed in a due diligence process letter that no one from the Steynton consortium was to contact Davidson Kempner direct (this allegation is not pleaded in the Conspiracy proceeding).

79    According to Mr Wilson, he was informed by Quintis on 19 January 2018 that Davidson Kempner was going to exercise its put option. It did so, and it was announced later that day, such that Quintis had 30 days to pay it $35 million. The following day Korda Mentha partners were appointed administrators of Quintis.

80    Sixth, Mr Wilson alleges, specifically in furtherance of the Second conspiracy, that SPL took various actions to damage Mr Wilson's plantations by:

(a)    ceasing supplying water to land on which Mr Wilson's plantations were growing;

(b)    attempting to prevent water being supplied to Mr Wilson's plantations including by third parties; and

(c)    intentionally damaging water infrastructure, including infrastructure provided to SPL by Sunwater Limited (a water service supplier) and fluming so as to prevent trees being irrigated.

81    According to the pleading, the matters at (b) and (c) above involved Quintis as manager.

82    These allegations (which do not involve Arwon) are the subject of the Water proceeding against SPL and Quintis.

More on the sixth matter - the water access issue

83    Mr Wilson pleads that it was an implied term of the two leases he entered into (as lessee) with SPL (as lessor) that SPL would provide water and access to irrigation during the course of the lease agreements. I focus here on the parts of the pleaded case referred to by Mr Wilson in his submissions.

84    Mr Wilson pleads that from about February 2018 and in relation to his lease relating to Queensland, SPL prohibited him from having access to the local water supply; directed Sunwater not to supply him with access; sent a letter to Duane Storey (a subcontractor retained by Mr Wilson) demanding him to stop using infrastructure to deliver water to Mr Wilson's plantations; and intentionally cut fluming so water escaped before it reached Mr Wilson's plantations. Some similar allegations are pleaded with respect to his lease in the Northern Territory, although this did not feature in argument before me.

85    To give context to the evidence upon which Mr Wilson relies for the purpose of this application in support of these allegations, and to which I will shortly turn, it is useful to first refer to Arwon's pleaded defence to these allegations.

86    In summary, Arwon pleads that SPL held water allocation or licences for the leased properties, but says that a different entity, Quintis Forestry Limited, used infrastructure to channel water or installed drip systems to the leased properties where management services were being provided by Quintis. Arwon denies there is any basis upon which a term as to water supply is implied in the leases with SPL.

87    Arwon pleads that from 3 May 2018 Quintis ceased to maintain Mr Wilson's plantations and did not permit him to access its water or its irrigation infrastructure. It pleads that after that time, Mr Wilson, through Mr Storey, ordered water on SPL's account with Sunwater without SPL's authority, and that Mr Storey installed a valve on SPL's land without permission. Arwon denies it damaged any fluming and in any event says the relevant fluming belonged to SPL.

88    Arwon pleads that from late September 2018, Mr Wilson made arrangements for water to be provided to the Queensland leased properties.

89    It pleads that on 7 March 2019, the leases between SPL and Mr Wilson were terminated by SPL by notices of termination, upon his breach by non-payment of rent.

90    Arwon pleads that despite having no obligation to do so, SPL permitted Mr Wilson to have access to the water infrastructure on the lots, which infrastructure was capable of providing for the irrigation of the sandalwood trees, until termination of the leases on 7 March 2019.

91    It pleads that in the alternative, even if there were some obligation on SPL's part to provide access to water, such obligation ended upon termination of the leases and all obligations to Mr Wilson as an investor were in any event compromised by the terms of the DOCA.

92    Mr Wilson, in support of his pleaded allegations, relies on certain paragraphs from the affidavit of Mr Daniels who deposed to visiting the Queensland plantations to assist with maintenance (such as pruning trees) and to assist Mr Storey to manage water supply to the plantations. Mr Daniels stated that on a visit in late August 2018 he saw damage to fluming and a star picket that appeared to be in a position that stopped a waterwheel from turning.

93    The other evidence upon which Mr Wilson relies in support of his allegations is primarily a bundle of certain emails (attached to his third affidavit) passing between Mr Wilson's son (Ben Wilson), Mr Storey, the Quintis CEO and staff, the receivers, the receivers' staff from McGrath Nicoll and others, between around 1 September 2018 and 5 September 2018, about water supply to Mr Wilson's lots in Queensland.

94    The interposition of the external receivers in these events and communications is not to be ignored in the context of the conspiracy allegations against Arwon.

95    Through Mr Prestwich's affidavit, additional email exchanges on the relevant days were also in evidence. Some of these emails included portions that were redacted to reflect legal professional privilege claims by Arwon that were accepted by Mr Wilson or upheld by the Queensland Supreme Court.

96    It is not necessary to set out the full content of the various communications, reflected in email exchanges. Nor can I be sure that they are in accurate chronological order, as some are incomplete chains and the time stamps are not necessarily reliable, as potentially some emails were received across different time zones. Nor were the emails analysed in the submissions. However, any inaccuracies as to chronological order do not impact the narrative or the result.

97    It is to be recalled that these email exchanges follow the termination of Quintis' obligations under the Investment Management Agreements from 6 April 2018 (see [24] above). It is also relevant to bear in mind the difference between the supply of water and access to water infrastructure when considering these email exchanges. Having reviewed them, they can be fairly summarised as follows.

98    On 1 September 2018 Ben Chesneau (Queensland regional manager for Quintis) emailed Mr Matthys (Quintis CEO), informing him that Mr Storey had said words to the effect that he was turning on water to most of Mr Wilson's blocks, and that if Quintis staff turned it off they would be prosecuted.

99    Mr Chris Johnson of McGrath Nicol (the receivers' firm) asked Mr Chesneau if Quintis infrastructure outside Mr Wilson's leased blocks was needed in order for Mr Wilson to water his blocks, and Mr Chesneau informed him that Mr Storey needed to use a Quintis valve outside Mr Wilson's blocks to get water running - Mr Johnson told Mr Chesneau he would confirm a position and come back to him.

100    Mr Johnson later replied to Mr Chesneau, informing him that to the extent the water could be turned off using Quintis infrastructure without accessing Mr Wilson's lots, or lots licensed from Sunwater, then he should arrange to turn it off.

101    Mr Johnson and Mr Chesneau were dealing with a similar issue with lots owned by a third party at the same time, and Mr Johnson's advice to Mr Chesneau about those lots was the same.

102    Mr Johnson told Mr Chesneau that he had offered to speak to Mr Storey but Mr Storey had said he did not wish to speak to him.

103    Mr Chesneau told Mr Johnson that he informed Mr Storey that the Quintis valves were being shut off.

104    On 3 September 2018, Mr Chesneau reported to Mr Johnson and Mr Matthys that Mr Storey, Mr Daniels and Mr Wilson's son (Ben Wilson) had visited and made certain threats that the water was to be left alone, and said a court injunction was on its way. Mr Chesneau sought advice, including as to whether the leasehold interest included the Quintis infrastructure.

105    Mr Johnson replied to Mr Chesneau to the effect that if he felt unsafe at any time, he should leave site. Mr Johnson said that he would speak to the receivers (at McGrath Nicol), and provided copies of the relevant leases, emphasising the description of the leased areas under the lease. Mr Johnson sought the views of each of Mr Chesneau, Brett Blunden (head of Forestry for Quintis) and Matt Barnes, all of Quintis. Mr Prestwich (Allens) was also copied in on the email.

106    Separately, Mr Barnes emailed (relevantly) Mr Johnson and Mr Matthys asking whether access by Mr Wilson to his blocks included access to water, and noting that Mr Wilson was already watering some of his blocks directly from a channel without using Quintis infrastructure, which was 'likely acceptable' if he was paying his lease fees. Mr Barnes asked for a list of blocks for which lease fees were paid or unpaid, and asked for confirmation of the position generally.

107    Later that day Mr Barnes emailed Mr Johnson to the effect that he was not entirely sure about boundaries of the leased area, and that they should check that they were 'in the right' before doing anything further.

108    On the same day Ben Wilson sent a text message to Mr Chesneau stating that he was not entitled to enter the leasehold land to tamper with watering operations, and that he would be held personally responsible if he did so and legal action would be taken against him personally.

109    Mr Chesneau informed the receivers about the text message. The receivers informed Mr Chesneau that they would discuss it with their solicitors and that if Ben Wilson contacted Mr Chesneau again, Ben Wilson should be told to direct any questions to Quintis' head office or Mr Johnson.

110    Mr Johnson also emailed Mr Chesneau again, stating that it would be helpful to have as much detail as possible on the infrastructure options, including distances of the infrastructure from leased areas, photographs and surveys. He requested a discussion with Mr Chesneau and the other Quintis personnel.

111    Also on 3 September 2018 there was correspondence between Mr Johnson, the receivers and Quintis staff which is partially redacted, but asks about what is involved in adding removable padlocks to valves.

112    Mr Fraser (receiver) asked Mr Johnson whether there were maintenance defaults on the properties, noting that it would be better if the trees were not dead if the ongoing defaults under either the Arwon loan or maintenance defaults lead to termination or repossession.

113    Mr Johnson replied, stating that he agreed and that there was a way forward to cease the access to water, but that they 'may not want to damage the trees (or infrastructure) too much, particularly where we have security'. Mr Johnson said there were other defaults on some of the areas (weeds, fire risk, pests), although each lot had to be considered, and that alternatives might be to 'let him water (obviously) or water ourselves'.

114    On 4 September 2018 Mr Johnson contacted Ben Wilson and asked him not to contact Quintis staff.

115    On the same date Mr Johnson emailed the receivers noting what he described as some key issues about the irrigation issues with Mr Wilson. He stated that there was a method to stop water supply to Mr Wilson's lots from outside the lots, but the method varied according to the lots. He noted that the trees were under stress and that staff were uncomfortable watching the trees decline. Mr Johnson said he had requested information about site surveys 'so we understand the position completely' and said the sooner the termination letters go out the better. Mr Johnson said that:

We will need to form a view as to whether we want to continue stopping the water supply. We may wish to consider on a lot by lot basis having regard to whether we have security over lots, other continuing breaches etc.

(I have included this particular quote because Mr Wilson places some weight on it - and I will return to it).

116    Finally, in the same email Mr Johnson asked one of the McGrath Nicholl staff members to prepare a summary of 'the current breaches existing on each of Mr Wilson's lots'. I note that part of the email is redacted, presumably because it would otherwise disclose privileged legal advice.

117    On 5 September 2018 Mr Chesneau told the receivers that Ben Wilson had again contacted him and asked whether his earlier message 'was clear', and whether Mr Chesneau could assist with a police investigation into some vandalism on 'their' [Mr Wilson's] fluming.

118    Mr Johnson, having been informed of Ben Wilson's contact, told Mr Chesneau that the infrastructure belonged to Quintis, as did the water that Mr Wilson [or his contractors] had sought to order on Quintis' account.

119    A separate email exchange from 29 October 2018 and 30 October 2018 is also relied upon by Mr Wilson. Mr Johnson states in the email that he is responding to a letter from Mr Wilson's solicitors about the estimated percentage of sandalwood trees 'on Cadell' that are either dead or dying, and seeks that information from Mr Blunden. Mr Blunden replied to the effect that for accuracy there would need to be a survey, but he estimated 10-15% of trees were to the point of no return and this will increase weekly.

Mr Wilson's submission on the six matters

120    Mr Wilson submitted that it is the weight of these six matters considered together, and in sequence, that proves as a matter of inference a combination or agreement dating back to April 2017, with the purpose of causing harm to Mr Wilson to maximise the prospects of preventing his attempts to privatise Quintis and his involvement with the co-operative that was apparently competing with Quintis. Mr Wilson also relies on these matters in support of his assertion that there was an agreement to cause him damage by embarking on litigation and breaching agreements with him so that he would not be in an economic position to keep his plantation interests.

121    In this regard Mr Wilson also emphasises that Arwon has security over the sandalwood plantations for the debt, but has not sought to exercise its rights to enforce the security, and instead has indicted its willingness to surrender its security for the benefit of creditors generally.

Intention to injure

122    As to the element of the tort of an intention to injure, Mr Wilson adopted McKerracher J's reasons as his submissions. His Honour said:

[49]    The intention to injure must be the sole or predominant purpose of a conspiracy by lawful means: McKernan v Fraser [1931] HCA 54; (1931) 46 CLR 343 (at 361-362). For a conspiracy by unlawful means, it must be an intention but need not be the sole or predominant purpose: Fatimi Pty Ltd v Bryant [2004] NSWCA 140 Handley JA (at [14]-[17], McColl JA agreeing at [83]). In general, a person uses unlawful means if they are doing an act which they are not at liberty to commit: Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169.

[50]    On Mr Wilson's case, the damage and destruction to his plantations were unlawful acts undertaken with the intention of causing economic damage to him. Even if those acts are held not to have been unlawful, Mr Wilson's case is that the summary above shows the respondents' actions, in all the circumstances, could only have been taken with the sole or predominant intention of causing economic damage to Mr Wilson. …

123    Mr Wilson contends, applying Fatimi Pty Ltd v Bryant [2004] NSWCA 140; (2004) 59 NSWLR 678, that to the extent the damage and destruction to Mr Wilson's plantations was caused by unlawful acts undertaken with the intention of causing economic damage to Mr Wilson, Mr Wilson need not show that the acts were taken with the predominant purpose of causing such damage.

Combination or agreement wholly or partly executed

124    As to the third element, Mr Wilson submitted that while it is accepted that there must be some overt act which can be pleaded as having been done in execution or furtherance of the agreement, referring to Australian Wool Innovation Ltd v Newkirk [2005] FCA 290 at [68], he submitted that the acts to which he has referred were done in furtherance of the conspiracies.

Pecuniary loss that equals or exceeds the debt owed to Arwon

125    As to the fourth element, Mr Wilson accepted that it will be necessary to provide full particulars of the damages claimed by Mr Wilson in the Conspiracy proceeding, and that expert evidence will be required.

126    For the purpose of this application, Mr Wilson relied on his own calculations.

127    He seeks damages for the expenditure he has incurred in acquiring water, equipment and labour to irrigate his plantations, and for the alleged destruction of and damage to his sandalwood plantations caused by the failure to supply irrigation to his plantations.

128    He estimates the economic loss he has suffered based on the destruction of approximately 113 hectares of his plantations, and based on the 'SGARA' method for valuing sandalwood plantations. He contended that this method was used by the Quintis Group, and that he has used materials prepared by Quintis. He estimates his loss is in the quantum of at least $17,578,014.40, am amount which exceeds the judgment debt. He also asserts there has been further economic loss from plantations that were damaged but not destroyed by the alleged failure to supply irrigation, and he estimates a further loss of at least $40,000,000.

Arwon's position on the cross claim

129    Arwon submitted that there should be no adjournment of the petition because the strength of the cross claim is so lacking that no adjournment is justified. It submitted that the history of years of litigation by Mr Wilson to avoid payment of the debt (now a judgment debt) indicates that Mr Wilson continues to seek to delay payment; that no payment has been made at all towards satisfaction of the debt; and that it is entitled to payment. All such matters, Arwon submitted, are relevant to the exercise of the Court's discretion, and weigh heavily against an adjournment.

130    Arwon points to the fact that the conduct referred to by Mr Wilson in the Conspiracy proceeding is not the conduct of Arwon. For example, the assertion pleaded at para 11(a) of the statement of claim that the Quintis Group allegedly told relevant parties (falsely and with intent to injure) that Mr Wilson had mortgaged the shares of his family company is not an act attributable to Arwon, whether in the particulars or otherwise.

131    Arwon also correctly observes that Mr Wilson's claim (para 11(b) of the statement of claim) that Arwon informed third parties that he was 'not a suitable person to be working with' is not supported by any of the matters referred to in the particulars of that claim.

132    However, Arwon principally relies upon the overlap between the allegations against Arwon in the Conspiracy proceeding and the allegations by Mr Wilson that were rejected in the Debt proceeding. Arwon submitted that the primary judge in the Debt proceeding (affirmed by the Court of Appeal) held that Arwon was entitled to enforce the debt owed by Mr Wilson under the Loan Agreement against him without first having recourse to the collateral provided: Arwon v Wilson WASC at [172]-[174], [217(d)]. Arwon submitted that the relevant findings in the Debt proceeding are not susceptible to challenge in this application, or in the Conspiracy proceeding: Blair v Curran (1939) 62 CLR 464 at 510, 531-533; and Jackson v Goldsmith (1950) 81 CLR 446 at 466-467.

133    Arwon further submitted that the primary judge in the Debt proceeding rejected Mr Wilson's characterisations of Arwon's actions relating to the enforcement of the Loan Agreement. For example, Mr Wilson's pleaded claim that Arwon falsely (and with intent to cause harm) notified parties that it would be taking enforcement action against Mr Wilson under the Loan Agreement was not correct and was based on premises relating to the Loan Agreement and the characterisation of the Group recovery policy, premises expressly rejected by the primary judge: Arwon v Wilson WASC at [25], [60]-[64], [126]-[129], [157]-[158], [172]-[174], [217(d)]. No particulars are provided as to Mr Wilson's allegations in this regard (para 11(b) statement of claim in Conspiracy proceeding).

134    In particular, the following paragraphs from the primary judge's reasons are important in this context:

[126]    By my assessment, there has been a strong attempt by Mr Wilson to elevate the stature of this document to advance his cause. The document was simply, I find, an internal procedure document of Arwon. Mr Wilson seeks to make of it something set in stone. But such an approach is illogical. It goes beyond what a rational commercial lender would shackle itself to, in effect, in perpetuity and no matter what might be the prevailing circumstances surrounding a borrower's repayment default were. That is far too extreme a position to reach by reference to the bland commercial content of this document.

[127]    To the extent Mr Wilson contends the arrangements as identified by cl 7 reflect an enforcement procedure approach taken by Arwon, which was incapable of ever being departed from across the time span of years of any loan, then I would reject the contention as commercially untenable. That position is not supported by the text of the Arwon Loan Policy document, read sensibly.

[128]    Furthermore, to the extent Mr Wilson's evidence would also suggest the Arwon Loan Policy document was more than an internal Arwon day to day working procedural guide but, rather, the manifestation of Arwon's so-called inflexible and universally applied 'trees first' recovery policy, then I am left not at all persuaded this was ever the case. Mr Wilson might, of course, over the course of his 20 years of prior work experience as an Arwon and Quintis insider and senior decision maker, have internally convinced himself of Arwon's likely universal application of a 'trees first' loan recovery approach - without potential for any future recovery deviations across the course of a borrower's loan arrangements spanning potentially many years into the future. If Mr Wilson did lead himself into holding such a view, then that was, I would find, an unreasonable state of mind for Mr Wilson to have reached. He did not hold a lifetime appointment as a member of the board of Arwon (as subsequent events confirm).

[129]    Consequently, any assumption(s) that Mr Wilson held concerning a necessary future application to him as a defaulting borrower by Arwon of an inflexible future 'trees first' recourse against himself under the Loan Agreement, should he default in the future, would be unreasonable and self-induced. That state of assumption, if held, would be a case of an assumed position reached in the mind of Mr Wilson by his persuading himself of such a likely future recovery position to be followed by Arwon, more by way of a self-delusion, rather than by acting on a body of underlying rational facts to reasonably support that otherwise uncommunicated (by Arwon) state of mind and assumption concerning the extent of a his future risk exposure as a possible defaulting debtor, should he ever default on his repayments as a borrower years off in future.

…

[157]    Quintis might, as a routine practice, have preferred for a time to first foreclose against a grower's asset, rather than to first pursue the defaulting grower for all their debt personally. But a preference for such an approach is hardly some act of generalised waiver by Arwon as regards limiting any of its recovery options for the future as against all its borrowers generally. Nor can I conclude that Arwon had ever indicated to its borrowers generally some truncation in the ambit of Arwon's potential lender recovery remedies available to Arwon from a future loan recovery perspective as against any particular grower under circumstances of a loan repayment default at some time in the future by the debtor.

[158]    Assuming a standard course of commercial debt recovery approach taken by Arwon, by it usually acting to pursue foreclosure as the first favoured recovery strategy option, and then to obtain some perceived financial benefits for the Quintis Group by then directly owning more trees, is one thing. It is entirely another, and going much too far, to suggest, as Mr Wilson does, that a normative loan recovery approach favoured by Arwon in the period when he was on the board was inflexibly to be the only, invariable debt recovery strategy to be applied forever and with no room for a discretionary application of a different recovery approach should Arwon management see fit to follow a different recovery approach permitted under the terms of the debtor's Loan Agreement as regards a particular defaulting borrower in future.

…

[217]    Hence, on my assessment, Mr Wilson's promissory estoppel case, even on the basis of all his other evidence being accepted, would still fail predicated upon his failure to establish:

(a)    Any representation from Arwon to him communicating the 'trees first' recovery policy he contends for. Indeed, as I assess Mr Wilson's pleading, he has never run an estoppel by representation case.

(b)    Accepting for argument's sake that Mr Wilson at some point had persuaded himself in his mind (based upon his 20 years or so of Quintis Group insider knowledge) the uncommunicated to anyone else assumption that Arwon would not pursue him personally until it had first foreclosed and only then if there was a SGARA value ascertained shortfall - then such an assumption was nevertheless an uncommercial and unreasonable assumption for him to hold in all the circumstances. It was commercially naive for Mr Wilson to make that assumption, absent some clearer express written commitment by Arwon confirming such a future position and issued by someone for Arwon other than himself (due to an obvious conflict of interest). But Mr Wilson never discussed obtaining such a written commitment with anyone else at Arwon/Quintis. He never got one. In truth, he simply ignored or took a gamble on the future, in circumstances where he had already obtained a significant tax benefit arising out of this investment by using the proceeds of the loan he received from Arwon. In such circumstances, a 'trees first' recovery assumption, if held, at 30 June 2014 (but which I would find is not proved) would in any event have been unreasonably reached. If anything, this expressed assumption position, I conclude, has emerged only very much later in the circumstances of Mr Wilson's repayment defaults and his cessation in holding board positions with Quintis and Arwon, after 27 March 2017.

(c)    In any event, I find no reliance proved by Mr Wilson upon such an assumption in all the circumstances.

(d)    I find that Arwon, the corporate entity (absent what would be irrational assumptions made by Mr Wilson as its CEO), made no relevant contributions by reason of its prior recovery conduct actions taken against other defaulting borrowers over time towards the encouraging, acquiescing in, ratifying or providing to Mr Wilson any reasonable basis for him to support a holding by him of the assumption he contends (assuming, contrary to my primary finding such an assumption was ever held by him). Loan recovery actions by Arwon over time against defaulting borrowers as regards favouring asset foreclosure first, relating to other individual defaulting lenders, may be accepted. But such past recovery conduct of itself by Arwon set no precedent. It did nothing to detract against an applicability to Mr Wilson of the Arwon's express full recovery under his Loan Agreement terms. The plenary recovery options thereunder were a matter of discretion for Arwon to pursue as it assessed to be appropriate under the circumstances of Mr Wilson's potential future repayment default as a borrower, should that ever happen.

135    As is apparent from those extracts, the primary judge clearly and categorically considered and dismissed Mr Wilson's claims as to the nature and enforceability of the so-called Group recovery policy. Arwon submitted that accordingly the central premise of the First conspiracy is not tenable. This, it submitted, is significant because the acts specifically alleged against Arwon that are said to constitute the tort of conspiracy relate to the enforcement of the Loan Agreement as part of the First conspiracy. This part of the claim is highly likely to fail, and so the conspiracy cause of action against Arwon is similarly likely to fail.

136    Further, Arwon's decision to sue Mr Wilson for the debt in the Debt proceeding was one of its 'plenary recovery options' (Arwon v Wilson WASC at [217(d)]) - and was a commercial choice that Arwon was entitled to make and which was made for commercial reasons. Arwon submitted that in circumstances where the underlying security over the trees was illiquid and might takes some time to realise (matters apparently said by Mr Wilson himself in evidence in the Debt proceeding - Arwon v Wilson WASC at [218]), the decision to pursue him rather than to take possession of the plantations, and so assume the costs of maintaining, managing and seeking to realise those plantations, was commercially justifiable.

137    Arwon also relies on particular evidence directed to the fifth matter, being the prospective transaction with Steynton to recapitalise the Quintis Group. Mr Louden gave evidence that Steynton submitted a non-binding and indicative offer on 28 August 2017. Steynton was granted access to a data-room containing 823 documents. The Quintis Group granted access to 17 people associated with the Steynton due diligence process, and 13 people accessed documents in the data room. Steynton submitted 38 questions through the data room, 37 of which were answered by representatives of the Quintis Group. Steynton's representatives performed site visits to various Quintis Group sites in November 2017.

138    Between November 2017 and 18 January 2018, representatives of the Quintis Group and representatives of one of its secured noteholders (Blackrock) made multiple requests of Steynton to provide evidence that it had sufficient funding to complete the proposed transaction. Despite these requests, Steynton did not provide any evidence satisfactory to the noteholders that it had secured finding to complete the transaction. Correspondence from Sarah Thompson of Blackrock to the Quintis Group, McGrath Nicoll and Allens, recording that Mr Wilson had continued to email her 'with no evidence of a commitment', was in evidence. Also in evidence was a letter from Sternship Advisers (advisers to the Quintis Group) to Mr Scott and Mr Wilson seeking evidence of equity support and financial commitment by 17 January 2018, and indicating that absent such evidence, Quintis Group would assume that it does not exist.

139    Arwon also relies on the absence of any conduct on its part with respect to the alleged Second conspiracy, observing that the acts pleaded were alleged to have been undertaken by SPL and Quintis. Arwon's role in the Quintis Group was confined to providing financing to investors and it did not perform plantation management services, nor was it involved in decision making in that regard. I have already referred to the email evidence adduced by Mr Wilson and Mr Prestwich relevant to the water supply and infrastructure issues, and the role of the receivers ([93]-[119] above).

140    As to the quantum the subject of the Conspiracy proceeding, Arwon submitted that it was not necessary for this Court to deal with it, as the other elements of the alleged conspiracy have no prospect of being established, but submitted that Mr Wilson's evidence on quantum should be treated with a degree of scepticism, submitting that the primary judge in Arwon v Wilson WASC had noted the potential range of different valuations referred to by Mr Wilson.

Consideration - the merit of the conspiracy claims

141    Acknowledging (consistently with Re Schmidt) that I am not purporting to determine the Conspiracy proceeding, in my view, for the following reasons the case against Arwon is weak and of insufficient validity to justify an adjournment of the petition.

142    I am not satisfied that the matters relied upon by Mr Wilson are sufficient for a court to infer that there was any combination or agreement between Arwon and any other party to injure Mr Wilson. The matters fall well short of suggesting that.

143    Importantly, no conduct on the part of Arwon is relied upon in support of the claim. To the extent 'group' knowledge is relied upon, Mr Wilson's argument ignores several features. Apart from a cursory reference to the corporate structure of the 'group', there has been no real attempt to address those features: the change of management after Mr Wilson's resignation and the effect it may have had on the former practices of the Quintis Group with respect to any debt recovery policies; why and how there might be any attribution of knowledge across the companies said to be parties to the conspiracies; the separate functions of the companies; and the ramifications of the appointment of external receivers as controllers of the companies. The receivers were also the decision makers with respect to the events of September 2018.

144    There is considerable overlap in addressing the six matters relied upon by Mr Wilson, and the reasons are to be read together.

145    However, attempting to address each, as to the first matter, Mr Wilson's assertion that Mr Xang told him that Quintis representatives had raised with Mr Xang his financial position and the litigation in which his family was said to have an interest is second hand hearsay and has little forensic value. In any event, it is unclear why disclosure to a potential investor of matters that may be relevant to the recoverability of a receivable are to be viewed as inappropriate. The evidence does not provide any foundation for inferring that Quintis did not proceed with CMIG because of any conversations between Mr Wilson and Mr Xang, nor for inferring that CMIG did not proceed with any investment because of any such conversations. According to Mr Louden, the Quintis board rejected CMIG's offer because it was too low. Having regard to the lack of probative weight to be accorded to Mr Wilson's evidence on this issue, there is no reason to doubt Mr Louden's evidence for the purpose of this application. The evidence does not suggest any conspiracy to injure.

146    As to the second matter, the source of Mr Wilson's knowledge about what was allegedly included in the data room is not disclosed. I am unable to give such evidence any real weight. Further, to the extent Mr Wilson complains about an absence of information about the alleged Group recovery policy, any such absence can be accepted as explicable when one considers the detailed examination of this issue in the Debt proceeding, both at first instance and on appeal, and the rejection by the Court of Mr Wilson's claim that a policy in such terms existed. There is no reason to assume that another court would come to a different conclusion on such matters. The allegations about the data room 'misrepresentations' are not, in my view, sufficiently supported by any probative evidence to found an inference of any intention to conspire to injure Mr Wilson.

147    As to the third matter, these allegations are also to be read having regard to the findings made in the Debt proceeding. Even accepting for present purposes that Arwon had not previously instituted proceedings against an investor, whether there was any policy that prevented such a course was determined in the Debt proceeding, and unfavourably to Mr Wilson. The ASX announcement by a public company, which has duties of disclosure, does not, without more, evidence any malevolent intent.

148    The relevance of the fourth matter is also undermined by the detailed assessment and findings in the Debt proceeding about the absence of the alleged Group recovery policy. Further, even accepting for present purposes Mr Wilson's evidence about the alleged conversations with Mr Matthys and Mr Gooding, those conversations are not inconsistent with those which might be undertaken with a creditor that might be assessing its position and which might come to different views at different times. Of itself, such evidence does not, to my mind, indicate any conspiracy to injure.

149    As to the fifth matter, Mr Louden has addressed Mr Wilson's allegations about the allegedly improper dealings with Steynton. The documentary evidence from Blackrock and Sternship Advisers to the effect that Steynton failed to provide evidence that it was in a position to complete undermines Mr Wilson's contentions.

150    Further, and regardless of his allegations about interference with his capacity to participate in due diligence, Mr Wilson also deposed to the fact that he was able to attend site visits for the purpose of undertaking due diligence, subject to conditions including being chaperoned by a Goldman Sachs employee and a security guard. Mr Louden's evidence also indicates that Steynton was able to participate in the due diligence process.

151    Mr Wilson also relied on hearsay and opinion evidence from Mr Scott, who largely records his own conversations with Mr Wilson and his own opinions about the same events. It is not necessary to detail that evidence further. It can be given little weight in the circumstances.

152    Therefore, although the evidence gives rise to a number of conflicting factual disputes, even assuming for present purposes that Mr Wilson has some valid concerns about aspects of alleged restrictions on access to the data room or due diligence process, the weight of the evidence indicates that Steynton in fact participated in due diligence, but was unable to provide Quintis and its advisers and Blackrock with comfort as to its performance. The allegation that Quintis refused to allow Steynton to contact Davidson Kempner is not pleaded in the Conspiracy proceeding, and read with Mr Louden's evidence as to the steps that were taken to permit Steynton to undertake due diligence, is insufficient in my view to point to any intention to harm or defeat Mr Wilson or Steynton.

153    I do not consider that Mr Wilson, relying on the five matters separately or cumulatively, has any sufficient prospect of persuading a court that there is a foundation for drawing the inferences he says should be drawn.

154    Turning to the sixth matter, once it is accepted that the First conspiracy claim is weak, the Second conspiracy claim, resting on those matters and the matters the subject of the Water proceeding, is left similarly weak. It is only the First conspiracy claim that involves any conduct by Arwon. The Second conspiracy claim is founded on conduct on the part of Quintis and SPL. None of the acts or conduct the subject of the Water proceeding, and pleaded by Mr Wilson in the Conspiracy proceeding, are alleged to be conduct on the part of Arwon.

155    It is also important to recall that the termination of Quintis' obligations to provide management services to Mr Wilson in April 2018 preceded the events relating to the alleged cessation of water supply, and the evidence suggests that Mr Wilson assumed watering from late September 2018. Mr Wilson's pleaded case does not allege that he was denied access to the infrastructure from September 2018 to facilitate water supply by him at his own cost. Mr Barnes' email (at [106] above) suggests that Mr Wilson was successfully sourcing a water supply and Arwon's pleaded defence is that despite no obligation on the part of SPL to provide Mr Wilson with access to the infrastructure, it did so until the leases were terminated in March 2019. Mr Daniels recounts that Mr Wilson purchased a pump for the purpose of watering in August 2018 - consistent with Mr Wilson supplying his own water. Any basis upon which it was alleged terms were to be implied into any lease agreements with SPL was not developed before me.

156    Nor do I accept that the email exchanges extracted above would be considered sufficient to evidence a tortious conspiracy. The receivers (and their staff member, Mr Johnson) sought information from Quintis staff on the ground as to what was happening with the water supply and infrastructure. Lawyers were copied into and involved in some of the communications. It appears that the receivers considered they were justified in cutting off water supply (without entering upon Mr Wilson's lots) because Quintis no longer had obligations to Mr Wilson in that regard and Mr Wilson had apparently purported to order water on the SPL account. The evidence also shows that the receivers considered the potential damage to trees if access to water infrastructure was denied, and considered various options that might be available in the circumstances. Nor were they singling out or addressing these issues only with respect to Mr Wilson, but apparently with at least one other grower (see [101] above).

157    There is no evidence as to who caused the alleged damage to the flume or waterwheel and it does not rise above speculation on the part of Mr Wilson or Mr Daniels. And there is a contest as to ownership of the flume in question in any event. It would be surprising if someone on behalf of the Quintis Group caused damage to a flume considered to be the property of SPL or Quintis.

158    As to Mr Johnson's email upon which Mr Wilson has placed some weight (at [115] above), I do not consider that the reference by a receiver's staff member to 'whether we have security' is sufficient to attribute to Arwon knowledge of or participation in any conspiracy or intention to injure. To my mind, the natural reading of the email is that the receivers were considering and informing themselves of the risks, obligations and options associated with the plantations. I am unable to fairly attribute to it the malevolent intent that Mr Wilson suggests it reveals.

159    The email of 29 October 2018 adds little. It does not comprise any concession as to who was obliged to water the trees at that point, whether they were being watered by Mr Wilson, whether Mr Wilson was able to access the infrastructure to continue watering and so on.

160    In summary, there is no doubt that there was a dispute in early September 2018 between the receivers and Mr Wilson as to payment for and access to water supply to Mr Wilson's lots following termination of contractual obligations on the part of Quintis, and a dispute as to whether he was entitled to any ongoing access to water infrastructure. The fact that there was a civil dispute between them does not provide sufficient evidence of a conspiracy by Arwon, SPL and Quintis against Mr Wilson. In my view, the Second conspiracy claim is not sufficiently strong to justify the grant of an adjournment of the petition. I do not consider it to be reasonably arguable.

161    Having regard to all six (overlapping) matters and considering them both separately and having regard to their 'united force', I do not consider that Mr Wilson's cross claim alleging tortious conspiracy is sufficiently strong or has sufficient merit or validity to justify the adjournment of the petition.

162    The actions that Mr Wilson alleges that Arwon undertook to further the so-called First conspiracy are also the actions from which Mr Wilson invites a court to infer the alleged predominant purpose to injure him. On Mr Wilson's case, the alleged damage and destruction to his plantations were unlawful acts undertaken with the intention of causing economic damage to him. It follows from the discussion above that I do not consider that argument has merit.

163    However, Mr Wilson submitted that even if those acts were not unlawful, Arwon's actions, in all the circumstances, could only have been taken with the sole or predominant intention of causing economic damage to Mr Wilson. Again, it follows that this argument is without merit. The primary judge concluded in the Debt proceeding (at [217(d)]) that Arwon was entitled to pursue the proceedings against Mr Wilson without first attempting to realise any security. The subject matter and findings sought in the Conspiracy proceeding that rest on the existence of the alleged Group recovery policy raise for all intents and purposes the same matters that were the subject of the unsuccessful promissory estoppel argument. To my mind this also addresses the matters raised at [121] above. Despite being pleaded under the guise of a different cause of action, it is in my view most unlikely that a different court would come to a different conclusion on the underlying factual and legal matters, particularly having regard to the principles discussed in Blair v Curran.

164    Accordingly, it is unnecessary to address the third and fourth elements of the tortious conspiracy claim (at [58] above), including the quantum of the damages Mr Wilson seeks.

165    Further, in those circumstances any possible frustration of the prosecution of the Conspiracy proceeding is not a matter to be accorded substantial weight.

Other matters relevant to the exercise of discretion

166    I take into account that a sequestration order will have a significant impact on Mr Wilson. A sequestration order should never be made lightly, and I do not make it lightly in this case.

167    As indicated at [53] above, Mr Wilson submitted that Arwon has been responsible for delay in the progress of the Conspiracy claim, and that this weighs in favour of an adjournment. In particular Mr Wilson alleges that Arwon's discovery has been inadequate and that there remain outstanding disputed privilege claims. Mr Wilson asserts that letters seeking further discovery have not been addressed, and that Arwon seeks to delay further discovery pending the outcome of this application. Mr Wilson submitted that outstanding discovery must be completed, and that at minimum the petition should be adjourned until the discovery is finalised.

168    Mr Prestwich addressed discovery in his affidavit. He deposed to the fact that there has been discovery (disclosure) in the Water proceeding, and in the Conspiracy proceeding in respect of the 'second conspiracy'. He states that the disclosure in each proceeding by SPL and Arwon respectively was the same. A privilege dispute was agitated by Mr Wilson in April 2021 in the Water proceeding with respect to some 125 documents. In the end the Court was called upon to determine the claim with respect to only three documents and SPL's privilege claim was upheld. Arwon further submitted that it is justified in refraining from making further disclosure as to the First conspiracy in the Conspiracy proceeding in circumstances where this petition is pending and where it has already made extensive discovery in the Debt proceeding of relevant documents, and pending the outcome of this application, it should not be obliged to make discovery again.

169    Whilst I accept that discovery is not formally complete in the Conspiracy proceeding, Mr Wilson already has access to all documents disclosed to date by SPL in the Water proceeding and, as to the Second conspiracy, by Arwon. Further, Mr Wilson has access to all documents discovered in the Debt proceeding. I accept that, as in any litigation, further discovery might be made at any time up to trial. Leaving aside the privilege dispute, I was not referred to any evidence that he had brought an application for further discovery in the Conspiracy proceeding. Such potential would exist as a matter of case management in those proceedings. As the privilege application reveals, Mr Wilson was able to and did pursue interlocutory applications in those proceedings.

170    Having regard to those matters, and in the circumstances of this case, where there has already been Supreme Court litigation in Western Australia and disclosure made in the Water proceeding and Conspiracy proceeding, it is apparent that Mr Wilson has had access to many records for some time. There are also procedural tools available to him to pursue further discovery. The fact that there is outstanding discovery does not persuade me that the petition should be adjourned. Nor in the circumstances am I persuaded that the petition should be adjourned pending any further discovery, as Mr Wilson requested in the alternative. Nor does Arwon's conduct in asking Mr Wilson to defer further discovery requests indicate in all the circumstances that it is deliberately delaying the resolution of the Conspiracy proceeding, as submitted by Mr Wilson. In that context, its submission that Mr Wilson already has access to tranches of documentation is to be given considerable weight. As the emails that were produced in this application indicate, there has been disclosure of documentation relating to the water supply dispute.

171    I acknowledge and take into account that Mr Wilson is not seeking by the cross claim to pursue a third party, but rather the same party that has secured the judgment against him. It can be accepted that the Conspiracy proceeding relates to the litigation that gave rise to the judgment debt. However, this is a relatively neutral factor in this case, insofar as Mr Wilson relies on it to assist him. The fact that it is related founds much of Arwon's argument that weight is to be given to the findings already made against Mr Wilson when considering the veracity of the Conspiracy proceeding.

172    I also take into account Mr Wilson's evidence that 'the only other material unrelated party debt' is a debt he owes Burlington in the sum of $2,939,614.61, which is reflected in a judgment debt. I do not consider that evidence assists Mr Wilson. What Mr Wilson might mean by 'material' is unclear. But more to the point, prima facie he owes Burlington a significant debt. It is the subject of a bankruptcy notice. I was informed by counsel for Arwon that the judgment is a consent judgment, but that Mr Wilson has since commenced a cross claim against Burlington. Assuming in Mr Wilson's favour that he has no other debts, he has two unsatisfied judgment debts. The asserted absence of other third party debts does not weigh in any substantive way in favour of an adjournment.

173    Mr Wilson submitted that there is no evidence of particular urgency. At a general level, that can be accepted. But Arwon has been kept from the benefit of a significant judgment against Mr Wilson for some time. It is trite to say that a petitioning creditor who has satisfied themselves of the requirements of s 52(1) of the Bankruptcy Act is prima facie entitled to a sequestration order. Mr Wilson has not satisfied me that there is good reason to further adjourn the hearing of the petition and so further delay Arwon's entitlement to a sequestration order.

174    It is not necessary in the circumstances to address Arwon's contention that Mr Wilson is deliberately seeking to defer payment of his liabilities, and that I should look to the timing of and institution of proceedings against Quintis and SPL, and then Arwon, together with the commencement of proceedings against Burlington, in support of such an inference. Although I accept that it may well be open to draw such an inference, the other matters to which I have already referred have persuaded me that the adjournment should not be granted.

175    I have not overlooked the authorities to which Mr Wilson referred where adjournments of a petition were granted by the Court. To my mind the examples referred to in the submissions are distinguishable. Endresz was an unusual case where freezing orders prevented the payment of the relevant judgment debt. In Clapham, the error that persuaded the appeal court to adjourn the petition related to a mistaken view of facts that formed the basis of the primary judge's reasons. It turned on its own facts. I have taken into account the legal principles referred to in Clapham.

Formal requirements made out

176    As indicated at the outset, Mr Wilson does not contest that the formal requirements of s 52(1) of the Bankruptcy Act have been proved by affidavits filed by Arwon. I find that they have been proved. I am satisfied that Mr Wilson failed to comply with the bankruptcy notice and has committed an act of bankruptcy.

Orders

177    It follows that the application for an adjournment of the petition is refused and there should be an order that the estate of Mr Wilson be sequestrated.

Associate:

Dated:    21 June 2023