The director put the pressure plan in writing. The borrower paid within half an hour
A NSW judge found a lender appointed receivers partly to pressure a borrower's director over a data centre venture - and upheld the appointment anyway.
In a decision delivered September 23, 2026, the NSW Supreme Court dismissed a bid by Landco Group Middleton Grange Pty Ltd to have the appointment declared invalid, and ordered it to pay costs. The court accepted that pressure over the side venture was one of the lender's purposes. It just wasn't the main one.
A missed deadline and a same-night appointment
The loan dates to August 9, 2023. On that day Landco, acting as trustee of the LGMG Unit Trust, borrowed from Capital Bridging Finance Pty Ltd, which the court described as a moneylender. The deal came with a general security agreement giving the lender a security interest over all of Landco's present and future property, and the power to appoint receivers if Landco defaulted. Interest ran at 4.67% a month, falling to 1.67% if certain conditions were met.
After several extensions, the loan fell due on May 28, 2026. By then Capital Bridging Finance had assigned the loan, the security agreement and the related documents to a related company, Australian Agrivision Pty Ltd, under a deed dated December 25, 2025. The two companies shared a sole director.
Landco missed the deadline. On June 3, Agrivision's lawyers, Piper Alderman, demanded $619,702.37 by 5pm the next day. That deadline passed too. The same evening, Agrivision appointed two receivers over all of Landco's property. The sole director instructed them not to realise any assets and not to notify creditors, banks or the Australian Securities and Investments Commission.
Landco learned of the appointment at about 9:30pm. By about 9:58pm, it had paid the amount demanded.
The venture on the side
A second relationship made the case unusual. The lender's director, Landco's director and a third businessman were partners in a separate project to develop data centres at Jerrabombera in the ACT. By December 2025 that partnership had turned sour.
On April 30, the lender's director emailed accountants at William Buck with a plan. If his two partners did not agree to what he proposed, their borrowing entities "would be placed into default on the spot." The same email accused the pair of having "misappropriated funds of a substantial amount." The court heard no evidence on whether that belief was honestly held. A lawyer for the third partner's company later "categorically denied" the allegations he made in a May 29 email.
On June 2, the director told Landco's director he had agreed to "stall my own actions" while the two of them worked to remove the third partner from the project. The next afternoon, Landco's director had still not confirmed his support, and the demand letter went out.
After Landco paid, the director wrote to an associate who had funded 40% of the loan, seemingly without Landco's director knowing. He described the receivership as having been "done surgically." The next day he wrote to the receivers: "Whilst I don't actually care about the borrowers in this regard, (they needed to be in Receivership)." He added that the borrowers "now have a permanent blemish on their records."
The quiet part did not stay quiet. The director believed the receivers could hold off telling ASIC, and the court found he was wrong. The receivers notified ASIC on June 16, the day they retired, after Landco paid a further $34,127.30. The court called the director's boast about "the elegance of how this was done" "significantly overblown."
The security agreement notice nobody sent
Landco's first argument was technical, but it mattered. Landco had been told the loan was assigned to Agrivision. What it had not been told was that the general security agreement - the document containing the power to appoint receivers - had been assigned. Under section 12 of the NSW Conveyancing Act, an assignment of a legal right only takes effect at law once the debtor receives express written notice. The demand letter told Landco it had been "previously notified" of the assignment. Both sides agreed that was untrue as far as the security agreement was concerned.
The court found the demand letter did the job on its own, despite the error. Read as a whole, it made clear that Agrivision was claiming the right to enforce all the security documents, not just the loan. The inaccurate sentence could be disregarded.
The court also considered a fallback argument: even if the assignment of the security agreement was incomplete at law, Agrivision could still act as an equitable assignee. The court said it would have rejected that argument, finding that an equitable assignee of a charge cannot appoint a receiver out of court unless the charge itself gives that power.
Pressure was a purpose - not the purpose
Landco's second argument rested on the doctrine of fraud on a power. Under it, a lender's use of a contractual right can be struck down if the right was used for a purpose beyond the one it was granted for - here, getting repaid. Despite the name, the doctrine does not require dishonesty.
The sole director did not give evidence. The court noted this made it more willing to draw inferences against the lender. The court found that pressuring Landco's director over the data centre project was one of Agrivision's purposes. Had Landco's director sided with him on the venture, the director would not have appointed the receivers at the time he did.
But the court held that the "substantial object" was recovering the loan. The default was not "manufactured or contrived." Landco also had a record of late payment. An interest instalment due in December 2024 was not paid until January 7, 2025, and the lender had chased the borrower's director for overdue payments on multiple occasions. The court called the instruction to keep the appointment quiet "unusual," but said it was not inconsistent with protecting the security. The appointment gained Agrivision nothing beyond its money.
For private lenders and loan buyers, the ruling means a genuine default gives wide room on timing - but the emails explaining that timing can end up in open court.
