MAGARDITCH and ANOTHER v AUSTRALIAN AND NEW ZEALAND BANKING GROUP LTD [1998] NSWCA 134

MAGARDITCH v AUSTRALIAN AND NEW ZEALAND BANKING GROUP LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY and SHELLER JJA

28 November 1997, 23 September 1998

[1998] NSWCA 134

Leave to appeal — no arguable error in decision of single Judge

In these proceedings, the claimants sought leave to appeal from the decision of a single Judge who had upheld an appeal by the opponent from a decision of a Master in relation to a guarantee and mortgage the claimants had given to secure certain loans made to their company Magic Australia Pty Ltd.

The issue before the Master and Judge was whether the opponent was entitled to apply monies received from the sale of a property, which had been purchased by the claimant's son and mortgaged to the opponent, in first reducing the son's indebtedness rather than reducing Magic's indebtedness. The Master had held that those proceeds should have been applied to reduce Magic's indebtedness and the single Judge reversed this decision.

Held:

1. The only issue before the Court was whether there was arguably an appealable error in the single Judge's decision. The claimants have not shown any such error and the single Judge's decision was correct.

2. There was no evidence of any injustice done by the Bank or the liquidator to the claimants, their son or Magic.

Priestley and Sheller JJA

INTRODUCTION

From about 1984 the claimants, Mr and Mrs Magarditch, and their children conducted a Caltex Service Station at 607 Pacific Highway, Chatswood through a company, Magic Australia Pty Ltd (Magic), which Mr and Mrs Magarditch owned and controlled. One of their children was Mr Jake Sourian who was an employee and, though this was disputed, arguably, a director of Magic. Magic had an overdraft facility with the opponent, Australian and New Zealand Banking Group Ltd (the Bank), and had obtained a loan of $60,000 to assist in the purchase of land at Thornleigh (West Pennant Hills) (the Thornleigh property). To secure these arrangements the Bank required a guarantee by the directors of Magic and on 28 January 1987 Mr and Mrs Magarditch signed a guarantee of the payment of Magic's indebtedness to the Bank. In 1987 Magic borrowed $430,000 by way of a fully drawn advance (FDA 1) from the Bank to buy a property at 136 Victoria Road, Gladesville (the first Gladesville property). At the time of this purchase Mr and Mrs Magarditch gave a mortgage over their home at 2A First Avenue, Willoughby (the Willoughby property) further to secure Magic's indebtedness.