Commercial N Pty Limited v Huang & Ors [2024] NSWSC 23

Supreme Court New South Wales

Medium Neutral Citation: Commercial N Pty Limited v Huang & Ors [2024] NSWSC 23 Hearing dates: 14, 15, 16 and 17 March, 24 August, 7 September, 27 October and 7 December 2022 Date of orders: 31 January 2024 Decision date: 31 January 2024 Jurisdiction: Equity Before: Henry J Decision: See [364]–[377] Catchwords: CONTRACTS – penalty – relief against penalties – whether penalties doctrine engaged – differential interest rates – where loan agreement provided for "Lower Interest Rate" and "Higher Interest Rate" – where "Lower Interest Rate" operated as a concessional rate payable whilst there was no default – principle in Kellas-Sharpe v PSAL Ltd [2013] 2 Qd R 233 – penalties doctrine not engaged CONTRACTS – unconscionable conduct – Australian Securities and Investments Commission Act 2001 (Cth), s 12CB – whether interest rates in loan agreement unconscionable – where Higher Interest Rate stated to be 70.02% per annum – where interest provisions in contract exceedingly complex – where outstanding interest capitalised – effective annual interest rate by date of hearing of 417% per annum – where borrowers had benefit of legal advice – interest "utterly crushing" – capitalisation provisions unconscionable – loan agreement void in part CONTRACTS – unjust contracts – Contracts Review Act 1980 (NSW) – whether business contract – whether contract unjust CONTRACT – construction – where literal application of formula for calculation of interest would result in very low rate of interest – whether literal construction absurd – provision construed in accordance with commercial common sense NEGLIGENCE – legal practitioners – professional negligence – scope of oral retainer – whether solicitor adequately explained complex terms in loan agreement – whether breach causative of loss Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), ss 12BB, 12CA, 12CB, 12CC, 12DA, 12GM Civil Procedure Act 2005 (NSW), s 98 Contracts Review Act 1980 (NSW), ss 6, 7, 9 Competition and Consumer Act 2010 (Cth), s 139B, Sch 2 – Australian Consumer Law, ss 18, 20, 21, 22, 243 National Consumer Credit Protection Act 2009 (Cth), Sch 1 – National Credit Code, s 13 Civil Liability Act 2002 (NSW), Pt 4 Uniform Civil Procedure Rules 2005 (NSW), r 42.1 Cases Cited: Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45 Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30 Arab Bank Australia Ltd v Sayde Developments Pty Ltd (2016) 93 NSWLR 231; [2016] NSWCA 328 Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99; 18 BPR 36,683 Australian Competition and Consumer Commission v Geowash Pty Ltd (subject to a deed of company arrangement) (No 3) [2019] FCA 72; (2019) 360 ALR 441 Awad v Twin Creeks Properties Pty Limited [2012] NSWCA 200 Balagiannis v Balagiannis [2022] NSWCA 18 Bank of Western Australia Ltd v Luo [2010] NSWSC 733 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 Commercial Bank of Australia v Amadio (1983) 151 CLR 447; [1983] HCA 14 Commercial N Pty Ltd v Huang (Supreme Court (NSW), Henry J, 7 December 2022, unrep) Custom Credit Corporation Ltd v Lynch [1993] 2 VR 469 David Securities Pty Ltd v Commonwealth Bank of Australia (1990) 23 FCR 1; [1990] FCA 186 Dodds v Kennedy (No 2) (2011) 42 WAR 16; [2011] WASCA 131 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 First Mortgage Capital Pty Ltd v Westpac Banking Corp Ltd [2021] NSWSC 1143 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Guardian Mortgages Pty Ltd v Miller [2004] NSWSC 1236 HomeSec Finance Express Pty Ltd v Richardson [2012] NSWSC 1375 Jin Lian Group Pty Ltd (In Liq) v ACapital Finance Pty Ltd [2021] NSWSC 931 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 Kellas-Sharpe v PSAL Ltd [2013] 2 Qd R 233; [2012] QCA 371 Kowalczuk v Accom Finance Pty Ltd (2008) 77 NSWLR 205; [2008] NSWCA 343 Lauvan Pty Ltd v Bega [2018] NSWSC 154; 330 FLR 1 Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297 Morlend Finance Corporation (Vic) Pty Ltd v Westendorp [1993] 2 VR 284 N & M Investments/Properties Pty Ltd v Australian Property Enterprise Pty Ltd [2022] NSWSC 1370 Nitopi v Nitopi (2022) 109 NSWLR 390; [2022] NSWCA 162 O'Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359; [1983] HCA 3 Oak Capital Mortgage Fund Ltd v Dlakic [2019] NSWSC 1538 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Oxygen Funding Solutions Pty Ltd v Dick-Telfar [2020] NSWSC 582 Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28 Perpetual Trustee Co Ltd v Burniston (No 2) [2012] WASC 383; 271 FLR 122 Perpetual Trustee Co Ltd v Khoshaba (2005) 14 BPR 26,639; [2006] NSWCA 41 Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 Quikfund (Australia) Pty Ltd v Airmark Consolidators Pty Ltd (2014) 222 FCR 13; [2014] FCAFC 70 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656; [2005] HCA 71 Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; [2019] NSWCA 11 Steele-Smith v Liberty Financial Pty Ltd [2005] NSWSC 398 Stubbings v Jams 2 Pty Ltd [2022] HCA 6; 96 ALJR 271 Studer v Boettcher [2000] NSWCA 263 Superannuation & Corporate Services Pty Ltd v Turner [2020] NSWCA 246 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 Taylor v Stav Investments Pty Ltd as trustee for the Stav Investments Family Trust (No 2) [2023] NSWCA 322 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389; 15 BPR 29,699 Watson v Foxman (1995) 49 NSWLR 315 Texts Cited: NC Seddon & RA Bigwood, Cheshire & Fifoot Law of Contract (LexisNexis Butterworths, 11th ed, 2017) Category: Principal judgment Parties: Commercial N Pty Limited (Plaintiff/First Cross-Defendant) Connie Hsing-Yi Huang (First Defendant/First Cross-Claimant) Stephanie Wen-Jen Chien (Second Defendant/Second Cross-Claimant) National Australia Bank Limited (Third Defendant) Equity Lenders Pty Limited (Fourth Defendant) Peter Ronis trading as Shanahans Butlers Solicitors (Second Cross-Defendant) Representation: Counsel: HW Somerville (Plaintiff) JR Young (First and Second Defendants/Cross-Claimants) D Talintyre (Second Cross-Defendant)