Salloway Pty Ltd v Barlow [2019] NSWSC 1234

Supreme Court New South Wales

Medium Neutral Citation: Salloway Pty Ltd v Barlow [2019] NSWSC 1234 Hearing dates: 9 September 2019 Date of orders: 19 September 2019 Decision date: 19 September 2019 Jurisdiction: Equity Before: Darke J Decision: Declaration made that mortgage loan from the defendant to the first plaintiff has been forgiven. Orders made for specific performance of defendant's obligation to provide a discharge of mortgage. Catchwords: LAND LAW – mortgages – construction – time stipulations – where first plaintiff granted to the defendant a registered mortgage in respect of a property in North Avoca – mortgage granted pursuant to special condition under a contract for sale of property in Central Mangrove entered into between the second plaintiff as purchaser and defendant as vendor – where Central Mangrove property the subject of a Clean-Up Notice issued by the Environmental Protection Agency – where mortgage secures obligation to repay $250,000 loan made by the defendant in the nature of vendor finance – where clause in mortgage requires the defendant to forgive the loan if notice stating that the Clean-Up Notice has been complied with is not received by mortgagor within 12 months of the date of the mortgage – where notice not received by mortgagor within 12 months – whether the 12 month time period is essential – time period held to be essential – the $250,000 loan held to be forgiven

EQUITY – equitable remedies – relief against penalties – mortgage given in connection with a contract for the sale of land – whether clause in mortgage requiring the defendant to forgive a $250,000 loan in the event that a notice is not received within 12 months of the date of the mortgage attracts the penalty doctrine – whether clause requiring the forgiveness of the loan out of all proportion to the legitimate commercial interests of the parties to the transaction – clause part of arrangements made for the setting of the consideration to be paid for the transfer of the land – clause not characterised as penal