Integrated Securities No 3 Pty Ltd v Creatrix Web Development & Online Marketing Solutions Pty Ltd [2021] NSWSC 596

Supreme Court New South Wales

Medium Neutral Citation: Integrated Securities No 3 Pty Ltd v Creatrix Web Development & Online Marketing Solutions Pty Ltd [2021] NSWSC 596 Hearing dates: 6 and 7 April 2021 Date of orders: 2 June 2021 Decision date: 19 May 2021 Jurisdiction: Equity - Real Property List Before: Rein J Decision: See [122] Catchwords: CONSUMER LAW — Consumer credit — National Credit Code — Application — Application for a loan by an individual yet issued to a company owned and controlled by the individual — Loan agreement entered into by the company as borrower — Mortgage given by the individual applicant's de facto wife to the lender to secure the amount loaned pursuant to the loan agreement — Guarantees given by the individual applicant and the individual applicant's de facto wife pursuant to the loan agreement — Whether the individual applicant and his de facto wife are "debtors" under the National Credit Code so as to enliven its provisions — Whether the individual applicant and his de facto wife have incurred primary liabilities to pay or repay a deferred debt — Held: individual applicant and his de facto wife are "debtors" within the meaning of the National Credit Code as they have incurred primary liabilities to pay or repay a deferred debt pursuant to the loan agreement — Loan agreement set aside CONTRACTS — Construction — Interpretation —Issue of whether, on the terms of the loan agreement, the individual applicant and his de facto wife have incurred primary liabilities to pay or repay a deferred debt — Loan agreement to be given a businesslike interpretation, yet also to be interpreted in light of the presumption mandated by s 13(1) of the National Credit Code — Onus on the Plaintiff to prove that the loan agreement is one to which the National Credit Code does not apply — Held: pursuant to the terms of the loan agreement, the individual applicant and his de facto wife have incurred primary liabilities to pay or repay a deferred debt — Alternatively, the Plaintiff has not discharged its onus of establishing that the National Credit Code does not apply to the loan agreement CONSUMER LAW — Unconscionable conduct — In connection with goods or services — Unconscionability under the Australian Securities and Investments Commission Act 2001 (Cth) — Asset-based lending — Failure by lender to obtain financial statements of the borrower — Attempt by lender to preclude the operation of the National Credit Code — Interest rates applicable under the loan agreement exceptionally high — Substantial fees payable upfront — Lack of financial advice — Held: the conduct of the lender was, in the circumstances, unconscionable — Loan agreement set aside to prevent or reduce loss or damage pursuant to s 12GM(1) of the Australian Securities and Investments Commission Act 2001 (Cth) Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth) Civil Procedure Act 2005 (NSW) Consumer Credit Code (NSW) National Consumer Credit Protection Act 2009 (Cth) National Consumer Credit Protection Regulations 2010 (Cth) National Credit Code Real Property Act 1900 (NSW) Cases Cited: ACCC v Quantum Housing Group Pty Ltd [2021] FCAFC 40 APS Satellite Pty Ltd (formerly known as "SkyMesh Pty Ltd") v Ipstar Australia Pty Ltd [2016] NSWSC 1898 Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1 Bahadori v Permanent Mortgages Pty Ltd (2008) 72 NSWLR 44 Commercial Funds Pty Ltd v Fraval [2020] VCC 1787 Devon v Thirteenth Kaysan Pty Ltd [2016] FCA 357 Director of Consumer Affairs (Vic) v Scully (No 3) [2012] VSC 444 Edmund-Jones Pty Ltd v Australian Women's Hockey Association Inc [1999] NSWSC 1014 Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640 Equititrust Ltd v SLJM [2010] NSWSC 1059 Geeveekay Pty Ltd v Director of Consumer Affairs Victoria (2008) 19 VR 512 Gooley v NSW Rural Assistance Authority [2020] NSWCA 156 Hawkins v Bank of China (1992) 26 NSWLR 562 Ippin Textiles Pty Ltd v Winau Aust Pty Ltd [2021] NSWCA 9 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 Jams 2 Pty Ltd v Stubbings (No 3) [2019] VSC 150 Jowitt v Callaghan (1938) 38 SR (NSW) 512 Kay v KRM (Vic) Pty Ltd; Classic Bet (NSW) Pty Ltd v Kay & Ors [2020] NSWCA 92 Kenxue Pty Ltd ATF The Susan Investment Trust v Westpro Finance Pty Ltd [2020] NSWSC 1146 KRM (Vic) Pty Ltd v Classicbet Pty Ltd [2019] NSWSC 1773 Lakeman v Mountstephen (1874) LR 7 HL 17 Nicola Properties Pty Ltd v Vie De L'eau Pty Ltd [2020] VSC 728 Ozzy Loans Pty Ltd v New Concept Pty Ltd & Zhong [2012] NSWSC 814 Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50 Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41; (2005) 14 BPR 26,639 Perpetual Trustees Australia Ltd v Schmidt [2010] VSC 67 Rafiqi & Thomas v Wacal Investments Pty Ltd (1998) ASC 155-024 Re Golden Key Ltd [2009] EWCA Civ 636 Stubbings v Jams 2 Pty Ltd [2021] HCATrans 23 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 Violet Home Loans Pty Ltd v Schmidt [2013] VSCA 56 Winau Aust Pty Ltd & Ors v LCC Property Development Pty Limited & Ors [2020] NSWSC 434 Zhu v Treasurer (NSW) (2004) 218 CLR 530 Texts Cited: Nil Category: Principal judgment Parties: Integrated Securities No 3 Pty Ltd (Plaintiff/First Cross-Defendant) Creatrix Web Development & Online Marketing Solutions Pty Ltd (First Defendant/First Cross-Claimant) Milijana Pejkic (Second Defendant/Second Cross-Defendant) Cai Valerio (Third Defendant/Third Cross-Claimant) Westpac Banking Corporation (Fourth Defendant) David James Cacciola (Second Cross-Defendant) Representation: Counsel: A Djurdjevic (Plaintiff//Cross-Defendants) P Horobin (First-Third Defendants/Cross-Claimants)