Franks v Equitiloan Securities Pty Ltd [2008] NSWSC 33

New South Wales Supreme Court

CITATION : Franks v Equitiloan Securities Pty Ltd [2008] NSWSC 33

HEARING DATE(S) : 10, 11 April, 6 July, 6, 7, 8 November 2007

JUDGMENT DATE : 1 February 2008

JURISDICTION : Equity Division

JUDGMENT OF : Brereton J

DECISION : Mortgagor was entitled to pay interest at lower rate until 26 March 2000, but upon expiry of the loan was no longer eligible for the lower rate as a matter of strict legal right. However, mortgagee was estopped from insisting on its strict legal right to charge higher rate interest, and must make restitution of the sum charged for higher rate interest. Cross-claimant's profit share entitlement was supported by consideration; claim for restitution of profit share previously paid rightly abandoned. Profit share entitlement was not limited to two lots on which houses built, nor contingent on on-going involvement of cross-claimant as financier; and though repudiated, profit share was not terminated as not acceptance of repudiation. Plaintiff entitled to judgment against mortgagee for $252,090; cross-claimant entitled to judgment against cross-defendant for $722,880; no set-off. Direct that parties bring in short minutes to give effect to judgment.

CATCHWORDS : CONTRACT – formation – variation – when ongoing commercial relationship involving series of transactions – identification of operative terms - MORTGAGES – construction – where higher rate of interest payable unless mortgagor satisfies certain conditions obliging mortgagee to accept lower rate – whether mortgagee entitled in events that happened to charge higher rate interest. - EQUITY – estoppel – promissory estoppel – where mortgagee represents that nothing will happen on expiry of loan – whether mortgagee estopped from charging higher rate interest. - RESTITUTION – where higher rate interest to which mortgagee not entitled paid under protest to obtain discharge – where mortgage assigned by original mortgagee to itself and related company – where original mortgagee received benefit of overpayment – whether original mortgagee or assignee liable to give restitution. - CONTRACT – consideration – whether contractual rights to profit share supported by consideration. - CONTRACT – construction – no question of principal. - CONTRACT – termination – repudiation – where mortgagee acts in accordance with strict legal right which it is estopped from insisting upon - whether repudiatory - acceptance – necessity for acceptance - whether repudiation accepted.