First Mortgage Capital Pty Ltd v Westpac Banking Corporation Ltd [2021] NSWSC 1143

Supreme Court New South Wales

Medium Neutral Citation: First Mortgage Capital Pty Ltd v Westpac Banking Corporation Ltd [2021] NSWSC 1143 Hearing dates: 23-24 August 2021 Date of orders: 9 September 2021 Decision date: 09 September 2021 Jurisdiction: Equity Before: Darke J Decision: Exercise of power to redeem first mortgages and charge interest of 60% p.a. on amounts paid out held to be unfair and unconscionable. Parties ordered to bring in Short Minutes of Orders. Catchwords: MORTGAGES AND SECURITIES – powers of mortgagee – clogs on equity of redemption – collateral advantages – plaintiff advanced $289,915 to mortgagors – second ranking mortgages held over various properties – mortgage charged Lower Rate of Interest at 30% p.a. and Higher Rate of Interest at 60% p.a. in event of default – clause 18.3(h) which operates following default allowed plaintiff to pay out other mortgages – any money so paid to form part of the "Secured Money" – plaintiff pays out first ranking mortgages over three of mortgagors' properties for total of $487,000 – plaintiff seeks to pay out first ranking mortgages over a further two properties – whether clause 18.3(h) provides a collateral advantage and is an impediment to redemption – held that plaintiff's power to pay out first mortgages and charge interest at 60% p.a. on amounts paid out can be regarded as a collateral advantage and an impediment to redemption – whether clause 18.3(h) is unfair and unconscionable – held that reliance on power to charge interest at 60% p.a. on amounts paid out to first mortgagees is unfair and unconscionable – reliance on clause 18.3(h) in that fashion amounts to an unconscientious exercise of a contractual right – plaintiff entitled to rely upon clause 18.3(h) to redeem or acquire first mortgages but is confined to charging interest at the rate provided for in the first mortgage Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 12CB Cases Cited: Almona Pty Ltd v Parklea Corporation Pty Ltd [2019] NSWSC 1868 Charmelyn Enterprises Pty Ltd v Klonis (1981) 2 BPR 9527 Cityland and Property (Holdings) Ltd v Dabrah [1968] 1 Ch 166 G. and C. Kreglinger v New Patagonia Meat and Cold Storage Company Ltd [1914] AC 25 Guardian Mortgages v Miller [2004] NSWSC 1236 Re Modular Design Group Pty Ltd (1994) 53 NSWLR 96 Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194 Category: Principal judgment Parties: First Mortgage Capital Pty Ltd (Plaintiff/First Cross-Defendant) Westpac Banking Corporation Ltd (First Defendant/Second Cross-Defendant) Zufaidah Binte Juri (Second Defendant/First Cross-Claimant) Sheik Taleb Bin Sheik Husain (Third Defendant/Second Cross-Claimant) Jude Thaddeus Albert (Fourth Defendant) Commonwealth Bank of Australia Ltd(Third Cross-Defendant) Representation: Counsel: Mr A W Smith (Plaintiff/First Cross-Defendant) Mr B Zhao (First Defendant/Second Cross-Defendant) Mr M D Tehan (Second and Third Defendants/Cross-Claimants) Mr C Hudson (Third Cross-Defendant)