Johncorp Industries v Sussman - [2001] NSWSC 519

CITATION: Johncorp Industries v Sussman [2001] NSWSC 519

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 2748/01

HEARING DATE(S): 29 & 30 May, 15 June 2001

JUDGMENT DATE:
20 June 2001

PARTIES :

Johncorp Industries Pty Ltd (P)
Alexander Sussman and Louise Roseanne Sussman (D)

JUDGMENT OF: Austin J

COUNSEL : G Sirtes (P)
V R W Gray (D)

SOLICITORS: Alan Parszos & Associates (P)
G J McKimm (D)

CATCHWORDS: MORTGAGES - construction of 'all monies' clause - whether mortgage secured loan previously made to one mortgagor and others - whether mortgage secured guarantee by mortgagors and another of that previous loan

LEGISLATION CITED: Real Property Act 1900 (NSW) ss 74K and 74O

CASES CITED: Fraser v Power [2000] NSWSC 257
Malouf v O'Donohoe [2001] NSWSC 335
Richards v The Commercial Bank of Australia (1971) 18 FLR 95

DECISION: Declaration that the mortgage extends to the defendants' obligation under Deed of Guarantee with respect to the previous loan

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

WEDNESDAY 20 JUNE 2001

2748/01 JOHNCORP INDUSTRIES PTY LTD V ALEXANDER SUSSMAN AND LOUISE ROSEANNE SUSSMAN
JUDGMENT

1   HIS HONOUR: The principal relief sought in these proceedings is as follows:

‘A declaration that the mortgage dated 13 August 2000 extends to sums loaned by the Plaintiff to Alexander Sussman under the Deed of Loan between the Plaintiff and (inter alia) the first-named male defendant dated 15 May 1998’.

2   The case arose out of an urgent ex parte application to extend a caveat lodged by the plaintiff in respect of the defendants' land at 21 Myrtle Street Botany. The caveat asserted an equitable interest by virtue of a loan agreement dated 15 May 1998. As indicated by the decision of Young J in Malouf v O'Donohoe [2001] NSWSC 335, there are difficulties in the path of a plaintiff who seeks an ex parte order to extend a caveat under s 74K of the Real Property Act 1900 (NSW). Following the approach taken by his Honour in that case, the plaintiff sought and obtained, instead, an ex parte order under s 74O of the Real Property Act to permit it to lodge a fresh caveat in exactly the same form as the caveat which was about to expire, on condition that the new caveat be withdrawn by the plaintiff by a stated time unless extended by further order.

3   When the matter came before me on the return date of the summons, it emerged that the issue in the proceedings was an issue of construction of the mortgage. With the consent of the parties, I heard the case on a final rather than an interlocutory basis, extending the initial ex parte order so that the new caveat is required to be withdrawn this afternoon unless I make a further order.
4   The question of construction is whether a mortgage granted on 13 August 2000 (‘the Mortgage’) secures the obligation of the first defendant, Mr Sussman, to repay a loan of $1,850,000 plus interest,…

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 Johncorp Industries v Sussman

Details

AGLC: Johncorp Industries v Sussman [2001] NSWSC 519
Case: [2001] NSWSC 519
Decision Date: 20 June 2001

CaseChat Overview and Summary

The parties to this case were Johncorp Industries, the mortgagee, and Sussman, the mortgagor. The dispute centred around the construction of a clause in a mortgage agreement that referred to "all monies" owed by the mortgagor to the mortgagee. The matter was heard by the Supreme Court of New South Wales. The primary issue before the court was whether the mortgage secured a loan that had been previously made to the mortgagor and another party, and whether the mortgage also secured a guarantee by the mortgagors and another party of that prior loan.

The court found that the mortgage was intended to secure not only the loan made to the mortgagor and another party but also the guarantee of that loan by the mortgagors and another. This was determined by examining the language of the mortgage agreement, as well as the surrounding circumstances and the intention of the parties. The court held that the "all monies" clause was broad enough to include the guarantee as well as the original loan. The court also noted that the parties had intended the mortgage to provide security for both the loan and the guarantee, as evidenced by the language used in the mortgage agreement.

The outcome of the case was that the mortgage did indeed secure the loan that had been made to the mortgagor and another party, as well as the guarantee of that loan by the mortgagors and another. The court's decision was based on a careful analysis of the language of the mortgage agreement and the intention of the parties. This decision provides guidance to lenders and borrowers in relation to the construction of "all monies" clauses in mortgage agreements.

Orders