N & M Investments/Properties Pty Ltd v Australian Property Enterprise Pty Ltd [2022] NSWSC 1370

Supreme Court New South Wales

Medium Neutral Citation: N & M Investments/Properties Pty Ltd v Australian Property Enterprise Pty Ltd [2022] NSWSC 1370 Hearing dates: 15 and 16 November 2021; 4 October 2022 Date of orders: 12 October 2022 Decision date: 12 October 2022 Jurisdiction: Equity Before: Darke J Decision: Certain provisions of mortgage held to be unenforceable as penalties. Catchwords: CONTRACTS – mortgages and securities – penalties – where mortgagee seeks to recover two fees from mortgagor and guarantors that become payable upon default of principal obligations in the mortgage – where mortgagor and guarantors contend that fees are unenforceable as being penal in nature – where fees become payable upon the happening of a variety of breaches of mortgage with no regard to whether the breaches are likely to occasion serious or trivial damage to mortgagee – where third party mortgage manager actually incurs certain losses upon default instead of mortgagee – held that the fees sought to be recovered by the mortgagee are unenforceable as penalties Cases Cited: Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30 Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd (2017) 18 BPR 36,683; [2017] NSWCA 99 Clydebank Engineering & Shipbuilding Co Ltd v Castaneda [1905] AC 6 Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79 O'Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50 Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656; [2005] HCA 71 Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 Webster v Bosanquet [1912] AC 394 Category: Principal judgment Parties: N & M Investments/Properties Pty Ltd (Plaintiff) Australian Property Enterprise Pty Ltd (First Defendant) Yufei Bao (Second Defendant) Zion Chan (Third Defendant) Zion Trading Pty Ltd (Fourth Defendant) Westpac Banking Corporation Ltd (Fifth Defendant) ACN 601 158 507 Pty Ltd (Sixth Defendant) Representation: Counsel: Mr A G Martin (Plaintiff) Mr A Di Francesco (First to Third Defendants)