Ellis v Newton - [2011] NSWSC 117

Supreme Court

New South Wales

Medium Neutral Citation: Ellis v Newton [2011] NSWSC 117
Hearing dates: 7-9 February 2011
Decision date: 25 February 2011
Before: Rein J
Decision:
Judgment for the plaintiff against the first defendant in the amount of $189,224.37 (with an adjustment from 7 February 2011 to date) and a declaration in the terms sought in paragraph 1 of the summons

Catchwords:
GUARANTEE - where plaintiff obtained an unregistered mortgage and consent to caveat from the defendants over their jointly-owned property as security for unpaid rent from a company substantially owned by the first defendant for which the first defendant was guarantor - where the debtor and guarantor failed to pay - where plaintiff seeks to enforce his equitable interest in the property - whether the defendants are entitled to relief under s 9 of the Contracts Review Act 1980 (NSW) - whether the mortgage and caveat were intended to be legally binding
REMEDIES - declarations - where the mortgage in favour of the plaintiff is unregistered and there is a prior registered mortgage over the same property - whether there is utility in making a declaration in favour of the plaintiff
Legislation Cited: Contracts Review Act 1980 (NSW)
Fair Trading Act 1987 (NSW)
Cases Cited: Australian Bank Ltd v Stokes (1985) 3 NSWLR 174
King Investment Solutions v Hussain [2005] NSWSC 1076; (2005) 64 NSWLR 441
Multi-Span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd [2001] NSWSC 696
Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145
Texts Cited: Meagher, Heydon & Leeming, Meagher Gummow & Lehane's Equity Doctrines and Remedies 4th ed (2002) LexisNexis Butterworths
Category: Principal judgment
Parties: Daniel Ellis (Plaintiff)
Richard Newton (First Defendant)
Robyn Laidlaw Newton (Second Defendant)
Representation: Counsel:
R Steele (Plaintiff)
B Levet (Defendants)
Solicitors:
Michie, Shehadie & Co (Plaintiff)
Simmons & McCartney Lawyers & Attorneys (Defendants)

File Number(s): SC 2008/279436; 2009/288200

Judgment

These proceedings concern a lease of premises owned by Mr Ellis, the plaintiff, in Balmain, which premises he leased to Stafford Moor & Farrington Pty Ltd (" SMF "), a company owned substantially by Mr Newton and of which Mr Newton was a director. Mr Newton guaranteed the obligation of SMF to promptly pay rent and other amounts due under the lease. When SMF, and Mr Newton as guarantor, had failed to pay amounts due under the lease from SMF, Mr Ellis sought the provision of a mortgage from Mr Newton and his wife, the second defendant, over their home at Gladesville (" the Gladesville Property "), which mortgage was given (" the Mortgage" ). At the same time, Mr Ellis sought from the Newtons the provision of a consent to the lodgement of caveat (" the Consent" ) and this was provided. Mr R Steele of counsel appears for Mr Ellis and Mr B Levet of counsel appears for Mr and Mrs Newton.

When the matter was called on Monday 7 February, Mr Levet sought to vacate the hearing on the basis…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Ellis v Newton

Details

AGLC: Ellis v Newton [2011] NSWSC 117
Case: [2011] NSWSC 117
Decision Date: 25 February 2011

CaseChat Overview and Summary

In the case of Ellis v Newton, the plaintiff sought to enforce an unregistered mortgage and consent to caveat obtained from the defendants over a jointly-owned property. The mortgage and caveat were intended as security for unpaid rent owed by a company substantially owned by the first defendant, for which the first defendant had acted as guarantor. The debtor and guarantor failed to meet their obligations, prompting the plaintiff to seek to enforce his equitable interest in the property. The defendants applied for relief under section 9 of the Contracts Review Act 1980 (NSW), arguing that the mortgage and caveat were not intended to be legally binding.

The primary legal issues before the court were whether the defendants were entitled to relief under the Contracts Review Act and whether the mortgage and caveat were intended to be legally binding. The court considered the nature of the agreement between the parties, the circumstances in which the mortgage and caveat were obtained, and the intention of the parties at the time of the agreement. Additionally, the court examined the utility of making a declaration in favour of the plaintiff, given that the mortgage was unregistered and there was a prior registered mortgage over the same property.

The court held that the defendants were not entitled to relief under section 9 of the Contracts Review Act. The agreement between the parties was found to be intended to be legally binding, and the court was satisfied that the plaintiff had a valid equitable interest in the property. The court noted that the registration of the mortgage was not a prerequisite to its enforceability, and that the prior registered mortgage did not preclude the plaintiff from seeking a declaration of his equitable interest. The court concluded that it was appropriate to make a declaration in favour of the plaintiff, recognising his equitable interest in the property.

The court ordered that a declaration be made that the plaintiff has an equitable interest in the property, and that the defendants are liable to account for the value of that interest. The court also ordered that the defendants pay the plaintiff's costs of the proceedings.

Orders