Mango Media Pty Ltd v Mertes - [2006] NSWSC 1460

CITATION: Mango Media Pty Ltd v Mertes & anor [2006] NSWSC 1460

HEARING DATE(S): 13 October 2006

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 10/13/2006

DECISION: Orders made for judicial sale

CATCHWORDS: CONTRACT – GENERAL CONTRACTUAL PRINCIPLES – Intention to form legal relations – preliminary or “in principle” agreement – where further formal documentation contemplated – Consideration – promise to perform existing obligation – whether constitutes consideration. MORTGAGES – Remedies of mortgagee – judicial sale

LEGISLATION CITED: (NSW) Conveyancing Act 1919, s 103

CASES CITED: Griffiths v Knight (1959) 60 SR NSW 353
Guardian Mortgages v Miller [2004] NSWSC 1237
King Investment Solutions v Hussain [2005] NSWSC 1076
Wigan v Edwards (1973) 47 ALJR 586
Yarrangah Pty Limited v National Australia Bank Limited [1999] NSWSC 97
J W Carter and D J Harland, Contract Law in Australia, Sydney: Butterworths, 4th Edition, 2002

PARTIES: Mango Media Pty Ltd (plaintiff)
Gerd Rolf Mertes (first defendant)
Westpac Banking Corporation (second defendant)

FILE NUMBER(S): SC 4522/05

COUNSEL: M Young (plaintiff)
G Carolan (first defendant)

SOLICITORS: WKA Legal Pty Ltd (plaintiff)
North Shore Lawyers (first defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Friday 13 October 2006

4522/05 Mango Media Pty Limited v Gerd Rolf Mertes & Anor

JUDGMENT (ex tempore)

1 HIS HONOUR: The plaintiff Mango Media Pty Limited and the first defendant Gerd Rolf Mertes are both engaged in what one euphemistically called the financial services industry, but elsewhere in evidence was perhaps more accurately described as “bottom line lending”. These proceedings arise out of a transaction between them in which Mango lent Mr Mertes a sum of $138,500, and Mr Mertes gave Mango a mortgage over his property at Hill Top securing repayment of that sum. The second defendant Westpac Banking Corporation is the registered first mortgagee of another property, of which Mr Mertes is also the registered proprietor, located at Pennant Hills, the relevance of which will become apparent. Westpac neither consents to nor opposes the relief sought by Mango and has not taken an active part in these proceedings.

2 Mango claims orders for judicial sale of the Pennant Hills property. Its claim to that property arises in this way. The mortgage over the Hill Top property was executed with the benefit of independent legal advice, a certificate of which was given by Mr Adrian Holmes, the solicitor then and now acting for Mr Mertes, on 24 September 2004. It was expressed to secure a principal amount of $138,500, which Mr Mertes as mortgagor covenanted to pay to Mango as mortgagee on December 2004 (the precise date having been left blank) (clause 3), and to pay interest on the principal sum at the rate of 7.5% per month (the higher rate), in arrears by equal monthly payments each and every month, the actual day again being left blank (clause 5). The mortgage further provided that the mortgagor would be entitled to a lower rate of interest, being 4% per month,…

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 Mango Media Pty Ltd v Mertes

Details

AGLC: Mango Media Pty Ltd v Mertes [2006] NSWSC 1460
Case: [2006] NSWSC 1460
Decision Date: 13/10/2006

CaseChat Overview and Summary

The case of Mango Media Pty Ltd v Mertes was heard in the Supreme Court of Queensland. Mango Media Pty Ltd sought to enforce a loan agreement with Mertes. The dispute centred on the validity of the loan agreement and the enforceability of a mortgage over property owned by Mertes, which was granted as security for the loan. The court had to determine whether a preliminary agreement, which outlined terms "in principle", was enforceable and whether the promise to perform an existing obligation could constitute consideration for a new contract.

The primary legal issue was whether the preliminary agreement between the parties was legally binding, despite the intention for further formal documentation to be executed. Additionally, the court needed to determine if the promise to perform an existing obligation, in this case the obligation to repay the loan, could be considered as consideration for the new agreement. The enforceability of the mortgage was contingent on the validity of the underlying loan agreement.

The court held that the preliminary agreement was binding and constituted an enforceable contract. The court found that the parties had demonstrated an intention to be legally bound by the terms outlined in the preliminary agreement. Furthermore, the promise to perform an existing obligation was deemed sufficient consideration for the new contract. The court found that the mortgage was valid and enforceable, and it granted the relief sought by Mango Media Pty Ltd, including the sale of the mortgaged property to recover the outstanding debt.

Orders