Equititrust v SLJM - [2010] NSWSC 1059

CITATION: Equititrust v SLJM [2010] NSWSC 1059

HEARING DATE(S): 2-3 September 2010

JUDGMENT DATE :
22 September 2010

JUDGMENT OF: Gzell J

DECISION: Consumer Credit Code not applicable. Interest not a penalty. Judgment for possession and leave to issue writ of possession. Orders for sale of mortgaged properties to be conducted by the lender. Judgment for outstanding amount including interest up to judgment.

CATCHWORDS: CONSUMER CREDIT - Credit Protection - loan facility to trustee company - whether sham or pretence and individuals the real debtors - whether Consumer Credit Code, s 6(1)(a) satisfied - whether interest rate included a penalty - whether should be set aside - second mortgage finance - whether an order for possession and leave to issue a writ for possession should be made - whether the lender should conduct sale of mortgaged properties

LEGISLATION CITED: Consumer Credit Code
Consumer Credit Act 1974 (UK)

CASES CITED: Jones v Dunkel (1959) 101 CLR 298
Snook v London and West Riding Investments Ltd [1967] 2 QB 786
Hadjiloucas v Crean [1988] 1 WLR 1006
Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471
Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; (2005) 221 CLR 249
Raftland Pty Ltd v Commissioner of Taxation [2008] HCA 21; (2008) 238 CLR 516
Street v Mountford [1985] AC 809
AG Security v Vaughan [1990] 1 AC 417
Burdis v Livsey [2003] QB 36
Wallingford v Mutual Society (1880) 5 App Cas 685
Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71; (2005) 224 CLR 656
AMEV–UDC Finance Ltd v Austin (1986) 162 CLR 170
King Investment Solutions v Hussein [2005] NSWSC 1076

PARTIES: Equititrust Limited (Plaintiff)
SLJM Pty Limited (First Defendant)
Mick Bechara Hakim (Second Defendant)
Yvonne Hakim (Third Defendant)
HI-TEK Communications Pty Limited (Fourth Defendant)
Perpetual Trustees Victoria Limited (Fifth Defendant)
National Australia Bank Limited (Sixth Defendant)
Westpac Banking Corporation (Seventh Defendant)

FILE NUMBER(S): SC 2009/288092

COUNSEL: J White (Plaintiff)
M Young (Defendants)

SOLICITORS: Bransgroves Lawyers (Plaintiff)
Klonis & Co Lawyers (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

WEDNESDAY 22 SEPTEMBER 2010

2009/288092 EQUITITRUST LIMITED V SLJM PTY LIMITED & ORS

JUDGMENT

1 The subject of these proceedings was a loan of $2,650,000 made on 13 December 2007 of which the first defendant, SLJM Pty Limited, was the named borrower. Also on that day an earlier negotiated loan to the second and third defendants, Mick Bechara Hakim and Yvonne Hakim, of $1,188,000 was advanced. The advances were made simultaneously for the completion of the purchase by Mr and Mrs Hakim of a residence in Woolwich they had contracted to buy for $11,005,000 on 19 March 2007.

Hakim facility

2 $7,000,000 had been raised as first mortgage finance from National Australia Bank Limited, the sixth defendant. Mr and Mrs Hakim needed second mortgage finance to complete the purchase of the Woolwich…

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.

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Details

Case: [2010] NSWSC 1059
Decision Date: 22 September 2010

CaseChat Overview and Summary

In the matter of Equititrust versus SLJM, the case before the court involved a dispute concerning a loan facility provided to a trustee company. The primary issue was whether the loan arrangement was a sham or pretence, with the individuals being the actual debtors. The court had to determine if section 6(1)(a) of the Consumer Credit Code was satisfied, considering whether the interest rate included a penalty that should be set aside. Furthermore, the case also involved second mortgage finance, and the court needed to decide whether an order for possession and leave to issue a writ for possession should be made, as well as whether the lender should conduct the sale of the mortgaged properties.

The court examined the nature of the loan facility provided to the trustee company and assessed whether the individuals were the real debtors or if the arrangement was a mere facade. The court also evaluated whether the interest rate included a penalty, which would warrant its setting aside. The Consumer Credit Code, specifically section 6(1)(a), was a critical point of reference in determining whether the arrangement complied with the requirements of the code. Additionally, the court considered the implications of second mortgage finance and the appropriateness of an order for possession, along with the need for the lender to conduct the sale of the mortgaged properties.

Upon examining the evidence and arguments presented, the court concluded that the loan facility was not a sham or pretence, and the individuals were not the real debtors. The court found that section 6(1)(a) of the Consumer Credit Code was satisfied and that the interest rate did not include a penalty. Consequently, the court ruled against setting aside the interest rate. Regarding the second mortgage finance, the court determined that an order for possession and leave to issue a writ for possession should be made. Furthermore, the lender was directed to conduct the sale of the mortgaged properties.

The final orders of the court mandated that the lender should proceed with the sale of the mortgaged properties, as well as the issuance of a writ for possession. The court's decision clarified the legal issues surrounding the loan facility, the status of the debtors, and the applicability of the Consumer Credit Code. The court's ruling provided a definitive outcome for the parties involved in the dispute, ensuring that the appropriate legal standards were applied to the case.

Orders