Bonanno v Finamore [2021] NSWSC 1558

Supreme Court New South Wales

Medium Neutral Citation: Bonanno v Finamore [2021] NSWSC 1558 Hearing dates: 29 March to 1 April 2021; 6 and 7 April 2021; final submissions received 7 July 2021 Decision date: 01 December 2021 Jurisdiction: Equity Before: Robb J Decision: The defendants have established their case to have the transfer provisions in the deed set aside. See pars [89], [105], [144], [161], [187], [190], [217], [234], [235], [237], [349], [384]-[388]. The parties are required to confer and agree short minutes of order to give effect to these reasons for judgment and to provide draft short minutes of order to my Associate. Catchwords: CONTRACTS — Termination — Breach of term — Where the plaintiff sought enforcement of a deed — Where the defendants argued that there were additional oral terms that operated in conjunction with the deed — Where the defendants argued that the plaintiff seriously breached an additional oral term and that the plaintiff had repudiated the deed — Where the defendants claimed that they terminated the deed in response to the plaintiff's breach or in acceptance of the plaintiff's repudiation — Where the defendants argued that they had effectively communicated termination of the deed — Where the Court found that the defendants had not effectively communicated termination of the deed — Where the Court held that deed had not been terminated EQUITY — Unconscionable conduct — Special disability or disadvantage — Where the defendants argued that a deed should be set aside in its entirety because it was procured by the plaintiff taking unconscientious advantage of special disadvantages suffered by the defendants — Where the Court found that the defendants did suffer from some special disadvantages — Where the Court found that the plaintiff was not in a powerful bargaining position when the deed was entered into — Where the Court held that the conduct of the plaintiff in entering into the deed was not sufficiently unconscientious to justify the Court setting the deed aside MORTGAGES AND SECURITIES — Mortgages — Whether a deed recorded a transaction that was in substance a mortgage — Where the plaintiff argued that the transaction was not a mortgage but rather a loan document with an added facility similar to an option — Where on its face the deed was an amalgam of a loan secured by an option granted to the plaintiff to call for a transfer of a one third interest in property, plus a collateral right to receive one third of the net price of the property on sale — Where the Court found that the transaction was in substance a mortgage — Where the Court held that the obligation to transfer the one third interest in property was a collateral advantage MORTGAGES AND SECURITIES — Mortgages — Mortgage contracts — Clogs on equity of redemption — Where the plaintiff and defendants executed a deed which would give the plaintiff a one third interest in property in consideration of the plaintiff lending the defendants money — Where the deed contained a term that allowed the plaintiff to compel the transfer of the one third interest by way of notice — Where the deed did not provide for the defendants being able to repay the plaintiff the loan without the sale of the property — Where the plaintiff brought proceedings to enforce the transfer provisions in the deed — Where the defendants resisted the claim on several grounds including on the basis that the transfer provisions were a clog on the equity of redemption — Where the Court found that the transfer provisions were a clog on the equity of redemption — Where the Court held that the transfer provisions were void Legislation Cited: Conveyancing Act 1919 (NSW) Real Property Act 1900 (NSW) Supreme Court Act 1970 (NSW) Cases Cited: Amcor Ltd v Barnes [2016] VSC 707 Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30 Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 Baker v Biddle (1923) 33 CLR 188 Biggs v Hoddinott (1898) 2 Ch 307 Bradley v Carritt [1903] AC 253 Charmelyn Enterprises Pty Ltd v Klonis (1980) 2 BPR 9527 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd (in liq) (1998) 71 SASR 161 Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98 Kreglinger (G & C) v New Patagonia Meat and Cold Storage Company Ltd [1914] AC 25 Lift Capital Partners Pty Ltd (In Liq) v Merrill Lynch International (2019) 73 NSWLR 404; [2009] NSWSC 7 Lisle v Reeve [1902] 1 Ch 53 Noakes v Rice [1902] AC 24 Re Funds in Court; Application of Mango Credit Pty Ltd [2016] NSWSC 199 Re Matcove Pty Ltd [2020] NSWSC 625 Sam Management Services (Aust) Pty Ltd v Bank of Western Australia [2009] NSWCA 320 Samuel v Jarrah Timber and Wood Paving Corporation Ltd [1904] AC 323 Santley v Wilde [1899] 1 Ch 747 Sun North Investments Pty Ltd (as Trustee of Sun Development Trust) v Dale [2014] 1 Qd R 369; [2013] QSC 44 Thomas v Silvia; Re Modular Design Group Pty Ltd v CDG (Canberra) Pty Ltd (1994) 35 NSWLR 96 Vernon v Bethell (1762) 2 Eden 110; (1762) 28 ER 838 Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194 Wily v Endeavour Health Care Services Pty Ltd (No 5) [2003] NSWSC 616 Wily v Endeavour Health Care Services Pty Ltd [2003] NSWCA 321 Texts Cited: Heydon, J D, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths) Tyler, E L G, P W Young and C E Croft, Fisher & Lightwood's Law of Mortgage (3rd ed. Aust, 2013, LexisNexis Butterworths) Category: Principal judgment Parties: Salvatore Antonio Bonanno (plaintiff) Nicola Finamore (first defendant) Weisen Zhou (second defendant) Representation: Counsel: G Foster (plaintiff) D A Woods (first and second defendant)