Equuscorp Pty Ltd v Haxton

What happened?

Investors borrowed money to pay management fees in tax-driven blueberry farming schemes. The investments were "prescribed interests" offered without the prospectus the applicable Companies Code required, so the loan agreements were connected with contravening conduct. The schemes failed, the loans were assigned to Equuscorp, and it sued — on the agreements and, in the alternative, for money had and received.

What did the Court decide?

Equuscorp failed on both. The loan agreements were unenforceable, and the restitutionary claim also failed: allowing recovery would have stultified the statutory policy the prospectus requirement exists to serve. On a separate question the Court accepted that a right to restitution of this kind was capable of being assigned, but divided evenly on whether the deed in this case had in fact transferred it.

Why does this case matter?

It is the case to reach for whenever a contract has been struck down and somebody is out of pocket, which happens far more often than the illegality cases suggest — consumer credit, licensing, financial services. The instinct is that unwinding the transaction must be the fair result, and here it was not.

It is also a useful reminder that who is suing can be a question in its own right. Rural advanced the money; Equuscorp arrived later as purchaser of a failed loan portfolio, and a good deal of the argument was about what it had actually acquired.

Exam and application relevance

Do not begin with "unjust enrichment" and work backwards. Name the qualifying factor you rely on — failure of consideration, mistake — and only then ask what the relevant statute was for and whether ordering restitution would frustrate that purpose. Where illegality is in play, treat it as going to the claim itself rather than as a defence bolted on at the end.

Check your understanding

Rural advanced the money; Equuscorp bought the loan portfolio and sued. Why did neither fact help it recover?