Bonanno v Finamore

The appeal concerned a dispute between Bonanno and Finamore regarding a Deed that recorded a transaction involving an interest in property. The primary legal question before the Court of Appeal of New South Wales was whether the Deed, on its face, constituted a mortgage, or whether an obligation to transfer an interest in property was an unconscionable collateral advantage.

The Court was required to determine the substantive nature of the transaction recorded in the Deed. Specifically, it had to consider whether the obligation to transfer an interest in property was an integral part of a mortgage transaction, or if it represented an unconscionable collateral advantage that could be severed from the primary obligation. The Court's analysis was guided by the principles established in *Kreglinger (G&C) v New Patagonia Meat and Cold Storage Company Ltd* [1914] AC 25, particularly Lord Parker’s three propositions concerning the nature of mortgages and collateral advantages.

The Court reasoned that the Deed did not, in substance, create a mortgage. It found that the obligation to transfer the interest in property was not a clog on the equity of redemption, nor was it an unconscionable collateral advantage. The Court applied the principles from *Kreglinger* to conclude that the transaction was not a mortgage and that the collateral obligation was valid. Consequently, the Court granted leave to appeal but dismissed the appeal with costs.