JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: AUSTRALIAN SECURITIES LTD -v- EHRENFELD [2023] WADC 121
CORAM: BARONE DCJ
HEARD: 30 SEPTEMBER, 1-2 OCTOBER, 24 & 27 NOVEMBER 2020
25 JANUARY, 3, 9 & 18 MARCH, 1 APRIL & 28 JUNE 2021
2 FEBRUARY 2022
21 SEPTEMBER 2023
DELIVERED : 17 OCTOBER 2023
PUBLISHED : 20 OCTOBER 2023
FILE NO/S: CIV 1960 of 2018
BETWEEN: AUSTRALIAN SECURITIES LTD
Plaintiff
AND
DANIEL EHRENFELD
Defendant
DANIEL EHRENFELD
Plaintiff by counterclaim
AUSTRALIAN SECURITIES LTD
Defendant by counterclaim
Catchwords:
Construction of contract - Finance facility agreement - Guarantee and indemnity
Characterisation of claim - Mitigation of loss
Statutory unconscionable conduct - Unfair contract terms - Applicability of the small business and unfair contract terms amendments - Redemption - Implied contractual terms - Duty of cooperation - Co-extensiveness of guarantor - Interest - Merger of causes of action in judgment
Legislation:
Australian Consumer Law (Cth)
Australian Securities and Investments Commission Act 2001 (Cth)
Civil Judgments Enforcement Act 2004 (WA)
Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)
Supreme Court Act 1935 (WA)
Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth)
Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 (Cth)
Result:
Plaintiff's claim allowed in part
Defendant's counterclaim dismissed
Representation:
Counsel:
| Plaintiff | : | Ms E C Hensler, Mr L Y T Lee (27 November 2020) |
| Defendant | : | Mr T O Coyle, Ms C P Fierro (3 & 9 March 2021) |
| Plaintiff by counterclaim | : | Mr T O Coyle |
| Defendant by counterclaim | : | Ms E C Hensler |
Solicitors:
| Plaintiff | : | Lavan Legal |
| Defendant | : | McNally & Co |
| Plaintiff by counterclaim | : | McNally & Co |
| Defendant by counterclaim | : | Lavan Legal |
Case(s) referred to in decision(s):
Almona Pty Ltd v Parklea Corporation Pty Ltd [2019] NSWSC 1868
Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424
Australian Competition and Consumer Commission v Geowash Pty Ltd [No 3] [2019] FCA 72; (2019) 368 ALR 441
Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40, (2021) 285 FCR 133
Australian Security and Investments Commission v Kobelt [2019] HCA 18; (2019) 267 CLR 1
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
Bofinger v Kingsway Group Ltd [2009] HCA 44
Bonanno v Finamore [2022] NSWCA 276
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Cargill Australia Ltd v Viterra Malt Pty Ltd [No 28] [2022] VSC 13
Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 7] [2009] WASC 390
Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337
Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd (In Liq) and Starmarker (No.51) Pty Ltd [1998] SASC 6616
GE Capital Australia v Davis [2002] NSWSC 1146; (2002) 180 FLR 250
Keep reading for free
Create a free CaseChat account to read Australian Securities Ltd v Ehrenfeld and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
- Case
- [2023] WADC 121
- Decision Date
CaseChat Overview and Summary
The court considered the well-established principles of equity, which recognise and enforce a right in a mortgagor to redeem the mortgage if the mortgagee fails to deliver a discharge upon the tender of the mortgage debt. It was necessary for Ehrenfeld to have made an open and unconditional tender to pay the outstanding amount, which must extend to the principal amount, interests, and costs. The court also took into account the recognised principle that a mortgagee can require payment of a reasonable sum to cover anticipated costs of proceedings regarding a disputed payout figure. However, the mortgagee takes the risk that requiring security for costs may be unreasonable and amount to misconduct depending on the circumstances. The court had to examine all the relevant circumstances to determine if there was an impermissible clog on redemption.
The court found that Ehrenfeld had made an open and unconditional tender to pay the outstanding amount. It also considered that ASL's request for information about the nature of the disputes before providing a payout figure was reasonable, as they needed to assess the potential costs of the proceedings. The court held that there was no impermissible clog on redemption as the contractual provision had been freely assented to by Ehrenfeld. The court noted the competing views on the matter but did not find it necessary to resolve the issue, as it was comfortably satisfied that the principle stated was correct.
The court ordered that ASL was required to deliver a discharge of the mortgage upon Ehrenfeld's tender of the mortgage debt. This decision provided clarity on the redemption of a mortgage and the circumstances in which a mortgagee can require payment of reasonable costs for the proceedings.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Equity recognises and enforces a right in a mortgagor to redeem the mortgage, if the mortgagee fails to deliver a discharge of mortgage upon tender by the mortgagor of the mortgage debt.[92] It is well established that a party seeking redemption must have made an open and unconditional tender to pay the outstanding amount and that tender must extend to the principal amount, interests and costs.[93][92] Almona Pty Ltd v Parklea Corporation Pty Ltd [2019] NSWSC 1868 [508].[93] In the matter of Matcove Pty Ltd [2020] NSWSC 625 [76]; Almona Pty Ltd v Parklea Corporation Pty Ltd [512]. However, it has been recognised that a mortgagee can require payment of a reasonable sum to cover anticipated costs of proceedings regarding a disputed payout figure.[94] Of course, the mortgagee takes the risk that requiring security for costs may be unreasonable and amount to misconduct depending on the circumstances.[95] [94] Project Research Pty Ltd v Permanent Trustee of Aust Ltd (1990) 5 BPR 11,225, 11,230.[95] Project Research Pty Ltd v Permanent Trustee of Aust Ltd (11,230). ASL submits these risks necessitated their conduct of asking the borrower for information about the nature of the disputes before providing a payout figure for the secured money. Further, ASL submits there has been no suggestion that the borrower did not freely enter into the loan agreement on terms including cl 8.3(a). Whilst equity will prevent reliance on contract terms if that reliance is unconscientious, it cannot be said that a contractual provision freely assented to by a mortgagor is void or unenforceable just because it allows the mortgagee to resist the mortgagor's attempt to redeem.[96] A court must examine all of the relevant circumstances.[97][96] Lift Capital Partners Pty Ltd v Merrill Lynch International [2009] NSWSC 9 [136] (Lift Capital Partners).[97] Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd (In Liq) and Starmarker (No.51) Pty Ltd [1998] SASC 6616. Accordingly, ASL submits there has been no impermissible clog on redemption. The defendant relies upon Sun North Investments Pty Ltd v Dale[98] in support of its submissions. The court in Sun North Investments declined to follow what was termed the 'Westfield approach' in reference to Westfield Holdings Ltd v Australian Capital Television Pty Ltd[99] and subsequent decisions including Lift Capital Partners.[98] Sun North Investments Pty Ltd v Dale [2013] QSC 44 (Sun North Investments).[99] Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194. Unhelpfully the parties did not engage in any substantive way with each other's arguments, nor the competing authorities. Since the closing of submissions in this matter, the competing views were referred to by the New South Wales Court of Appeal in Bonanno v Finamore[100] without resolution by the plurality. Neither party has had the opportunity to make submissions regarding this decision, particularly the reasoning of Basten AJA (who was not in the plurality) at [56]: As a matter of principle, the modern doctrine of unconscionability should be the touchstone of invalidity, in the manner identified with clarity and reference to authority by Barrett J in Lift Capital Partners Pty Ltd (in liq) v Merrill Lynch International, adopting the approach of Young J in Westfield Holdings Ltd v Australian Capital Television Pty Ltd. Although the trial judge expressed some reticence in applying that approach, the principles were cited with apparent approval by the Full Court of the Supreme Court of South Australia in Epic Feast Ltd v Mawson KLM Holdings Pty Ltd (in liq). That gave the support of an intermediate court of appeal which should generally be followed by trial judges. Indeed, it should be followed by this Court, unless comfortably satisfied that the principle stated is wrong. (citations omitted)[100] Bonanno v Finamore [2022] NSWCA 276.