Chalak v G & G Mikhael Pty Ltd

The applicant, Chalak, sought leave to appeal from orders of the Common Law Division of the Supreme Court of New South Wales, which had granted summary judgment for possession of land to the respondent, G & G Mikhael Pty Ltd. The dispute concerned the enforceability of a mortgage and the rate of interest accruing under it.

The primary legal issues before the Court of Appeal were whether the defence raised by the applicant presented triable issues regarding the enforceability of the mortgage and the applicable interest rate, and whether the evidence presented by the respondent in support of its summary judgment application was sufficient. Specifically, the court considered whether the respondent's affidavit contained inconsistencies and inadequate proof of the sum advanced, and whether the applicant's defence was obviously untenable, particularly in light of an arguable case that the mortgage was unjust or that the respondent's conduct was unconscionable. The transition from a 23-year bank mortgage to one repayable in six months with a daily compounding interest rate increase from 7% to 15% was a central element of this consideration.

The Court of Appeal found that the applicant had raised arguable defences that warranted a full trial. The inconsistencies in the respondent's affidavit and the inadequacy of proof regarding the sum advanced meant that the respondent had not discharged its onus to show that the applicant had no real prospect of success. Furthermore, the court considered that the applicant's defence, alleging unconscionability and unjustness in the mortgage terms, was not obviously untenable and required further investigation. Consequently, the court granted leave to appeal, set aside the summary judgment orders, and dismissed the respondent's motion for summary judgment, ordering the respondent to pay the applicant's costs of the motion. The respondent was also ordered to pay the applicant's costs in the Court of Appeal.