ASIL Foundation (Lending) Pty Ltd v Blue Mountains Development Pty Ltd

In this matter, ASIL Foundation (Lending) Pty Ltd sued Blue Mountains Development Pty Ltd for the repayment of a deposit secured by a mortgage over a property. The dispute arose after Blue Mountains Development, the purchaser, terminated the contract for sale of the property in response to the vendor's purported notice of termination, despite not having provided a land tax certificate. The central legal issues involved whether the obligation to repay the mortgage was contingent on the deposit being owed under the contract for sale and whether an acknowledgement of receipt of a sum contained in the mortgage established an estoppel by convention.

The court examined the terms of the contract and the mortgage to determine if the obligation to repay the deposit was contingent upon the continuation of the contract for sale. It concluded that the obligation to repay the mortgage was not dependent on the deposit being owed under the contract. Furthermore, the court found that an acknowledgement in the mortgage of receipt of a sum did not establish an estoppel by convention. The court held that the acknowledgment was a mere recital and did not create a mutual assumption that the mortgagor would not seek repayment of the mortgage.

Consequently, the court ruled in favour of ASIL Foundation (Lending) Pty Ltd, determining that Blue Mountains Development Pty Ltd was liable for the repayment of the deposit. The court found that the acknowledgment in the mortgage did not prevent the mortgagor from repaying the mortgage and that the purchaser was still obligated to repay the deposit despite terminating the contract for sale. The court ordered Blue Mountains Development Pty Ltd to repay the deposit to ASIL Foundation (Lending) Pty Ltd.