Burns & v AMP Finance Ltd

NEW SOUTH WALES COURT OF APPEAL

CITATION:      Burns & Ors v AMP Finance Ltd [2004]  NSWCA 469 revised - 15/12/2004

FILE NUMBER(S):
40291/04

HEARING DATE(S):               7 December 2004

JUDGMENT DATE: 17/12/2004

PARTIES:
John Burns - First Appellant
Dolroy Pty Ltd - Second Appellant
O'Malleys Aquariums Pty Ltd - Third Appellant

JUDGMENT OF:       Giles JA Hodgson JA Burchett AJA   

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):          ED 4194/03

LOWER COURT JUDICIAL OFFICER:     Gzell J

COUNSEL:
J W Stevenson SC & E C Muston - Appellants
S White SC & J White - Respondent

SOLICITORS:
Foleys - Appellants
Kemp Strang - Respondent

CATCHWORDS:
Contract - loan agreement - provision for release of two lots from security - request for release - whether in subsequent conversations lots allowed to remain as security until needed by borrower - finding of agreement to that effect - lender excused from performance - no breach of contract - whether finding correct -  finding upheld - no question of principle - order that damages be tried separately - consideration of whether necessary to establish  suffered some damage  - under normal procedure would have been necessary - proposal for "boundary adjustment" - exchange of land over which lender held security - needed lender's endorsement of linen plan - request for endorsement - whether implied obligation that lender would act in good faith in relation to endorsement - whether breach of obligation in failing to consider whether or not to endorse - assuming obligation, breach not established - again no question of principle.  D

LEGISLATION CITED:

DECISION:
Appeal dismissed with costs.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA  40291/04
SC  4194/03

GILES JA
HODGSON JA
BURCHETT AJA

Friday 17 December 2004

BURNS & ORS v AMP FINANCE LTD

Judgment

1. GILES JA:  Dolroy Pty Ltd (“Dolroy”), a company controlled by Mr John Burns, owned land at Duns Creek in the Port Stephens Shire in New South Wales.  It wished to develop the land as a residential subdivision.  It obtained finance for that purpose from the respondent, then known as GIO Finance Ltd.  Mortgage security was provided by Dolroy over the land and by O’Malleys Aquariums Pty Ltd (“O’Malleys”), another company controlled by Mr Burns, over other land.  Repayment was guaranteed by Mr Burns and by O’Malleys. 

2. The finance was provided under a Commercial Equity Facility Agreement (“the Agreement”) dated 16 November 1995. The initial facility limit was $875,000. The course of the development was prolonged. The facility limit was increased from time to time, reaching $4,283,000 in November 2001 including an interest reserve. After the interest reserve was used up Dolroy paid interest for a time, then ceased paying interest. In March 2003 the respondent served notices under s 57(2)(b) of the Real Property Act 1900. In July 2003 it demanded immediate repayment of $4,515,654.29.

3. In August 2003 the appellants Mr Burns, Dolroy and O’Malleys brought proceedings against the respondent.  Their principal claim was that in April 2000 the…