Re Funds in Court; Application of Mango Credit Pty Ltd [2016] NSWSC 199

Supreme Court New South Wales

Medium Neutral Citation: Re Funds in Court; Application of Mango Credit Pty Ltd [2016] NSWSC 199 Hearing dates: 7 August 2015 Date of orders: 10 March 2016 Decision date: 10 March 2016 Jurisdiction: Common Law Before: Lindsay J Decision: Determination of a mortgagee's application for payment out of funds in court deferred pending allowing the parties an opportunity to address questions relating to principles governing penalties, clogs on the equity of redemption and the effect of a default judgment Catchwords: MORTGAGES – Mortgage contract – Estate, rights and liabilities of mortgagor and mortgagee – Penalty – Clog on equity of redemption – Higher interest rate and enforcement costs on breach – Nature of a mortgage as security

EQUITY - Penalty – Clog on equity of redemption - Construction of contractual documents – Substance – Characterisation of stipulations – Primary and collateral – Nature and purpose of transaction – Mortgage – Loan on security for repayment

PRACTICE AND PROCEDURE – Default judgment – Res judicata – Issue estoppel – Nature and extent of binding operation on rights and obligations Legislation Cited: Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 CTH) Family Law Act 1975 (CTH)

Civil Procedure Act 2005 NSW Contracts Review Act 1980 NSW Fair Trading Act 1987 NSW Real Property Act 1900 NSW Supreme Court Act 1970 NSW Trustee Act 1925 NSW Uniform Civil Procedure Rules 2005 NSW Cases Cited: Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514 Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 Bay Bon Investments Selvarajah [2008] NSWSC 1251 Blair v Curran (1939) 62 CLR 464 Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246 Cavendish Square Holding BV v Makdessi [2015] UKSC 67; [2015] 3 WLR 1373 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Charmelyn Enterprises Pty Limited v Klonis (1981) 2 BPR 9572 Commonwealth v McCormack (1984) 155 CLR 273 Commonwealth v Verwayen (1990) 170 CLR 394 Director General of Fair Trading v First National Bank Plc [2002] 1 AC 481 Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 Economic Life Assurances Society v Usborn [1902] AC 147 Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd (1998) 71 SASR 161 Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131 Ex Parte Fewings; In Re Sneyd (1883) 35 Ch D 338 G and C Kreglinger v New Patagonia Meat and Cold Storage Co Ltd [1914] AC 25 General Credits (Finance) Pty Ltd v Brushford Pty Ltd [1975] 2 NSWLR 786 Gould v Vaggelas (1985) 157 CLR 215 Hall v Nominal Defendant (1966) 117 CLR 423 Henderson v Henderson (1843) 3 Hare 100 Holles v Wyse (1693) 2 Vern 289; 23 ER 787 Howlett v Tarte (1861) 10 CBNS 813 Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd [2007] NSWSC 592 Jackson v Goldsmith (1950) 81 CLR 446 Kellas-Sharpe v PSAL Ltd [2013] 2 Qd R 233 Kok Hoong v Leong Cheong Kweng Mines Limited [1964] AC 993 Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; 14 BPR 26565 Kuligowski v Metrobus (2004) 220 CLR 363 Legione v Hateley (1983) 152 CLR 406 Licul v Corney (1976) 180 CLR 213 Lift Capital Partners Pty Ltd (in liq) v Merrill Lynch International (2009) 73 NSWLR 404 Marquess of Northampton v Pollock (1890) 45 Ch D 190 Mercantile Credit's Limited v McDowell [1980] 2 NSWLR 101 Morling v Morling (1992) 16 Fam LR 161 Multiservice Bookbinding Limited v Marden [1979] 1 Ch 84 Multispan v Portland (No 2) [2001] NSWSC 1047 New Brunswick Railway Co v British and French Trust Corporation Ltd [1939] AC 1 O'Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 Outram v Morewood (1803) 3 East, at p 355; 102 ER, at 633 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Peachy v Duke of Somerset (1720) 1 Str 447; 93 ER 626 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 PT Thiess Contractors Indonesia v PT Arutmin Indonesia [2015] QSC 123 Re Modular Design Group Pty Ltd (Receiver and Manager Appointed) (in liq) (1994) 35 NSWLR 96 Residential Housing Corporation v Esber [2011] NSWCA 25 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656 Sam Management Services (Aust) Pty Ltd v Bank of Western Australia Ltd [2009] NSWCA 320 State of New South Wales v Kable (2013) 252 CLR 118 Strode v Parker (1694) 2 Vern 316; 23 ER 804 Taylor v Taylor (1979) 143 CLR 1 TCN Channel 9 Pty limited v Antoniadis [No 2] (1999) 48 NSWLR 381 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256 Vacuum Oil Pty Limited v Stockdale (1942) 42 SR(NSW) 239 Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194 Wily v Endeavour Health-Care Services Pty Ltd (No 5) (2003) 11 BPR 21,081 Texts Cited: D Browne, Ashburner's Principles of Equity (Butterworth, London, 2nd ed, 1933) Peter Butt, Land Law (Lawbook Co, Sydney, 6th ed, 2010) Fiona Burns' paper "Clogs on the equity of redemption: a story of changing equitable intervention", chapter 3 in J Glister and P Ridge (ed), Fault lines in Equity (Hart Publishing, Oxford, 2012) Fisher and Lightwood's Law of Mortgage (3rd Australian edition, LexisNexis Butterworths, 2014), edited by ELG Tyler, PW Young and CD Croft Meagher, Gummow and Lehane, Equity: Doctrines and Remedies (LexisNexis Butterworths, Australia, 5th ed, 2015) Spencer Bower and Handley, Res Judicata (LexisNexis, UK, 4th edition, 2009) RW Turner, The Equity of Redemption (Cambridge University Press, 1931) Category: Consequential orders (other than Costs) Parties: Applicant: Mango Credit Pty Ltd ACN 156 372 440 First Respondent: Joseph Paul Chalouhi Second Respondent: Yolla Chalouhi Representation: Counsel: Applicant: L Young Second Respondent: P Lange