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Marsden v DCL Developments Pty Ltd (No. 3)

Marsden v DCL Developments Pty Ltd (No. 3)

Case [2016] NSWSC 1795 16 December 2016

Mortgages & Security Interests

Unconscionable Conduct

Interlocutory Orders

Property Law

Commercial Law

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Supreme Court

New South Wales

Summary available

Medium Neutral Citation: Marsden v DCL Developments Pty Ltd (No. 3) [2016] NSWSC 1795
Hearing dates: 19-21 September 2016; 15 November 2016 & 7 December 2016
Date of orders: 16 December 2016
Decision date: 16 December 2016
Jurisdiction: Common Law
Before: Davies J
Decision:
(1) Judgment for the Plaintiffs for possession of the land known as “Ruby Hill” at 47 Yarrol Road, Kootingal in the State of New South Wales being the whole of the land contained in folio identifiers 1/355485, 2/355485 and 31/635403.

(2) The cross-claim filed 22 July 2016 is dismissed.
(3) The Defendants/Cross-Claimants are to pay the Plaintiffs’/Cross-Defendants’ costs.
Catchwords:
REAL PROPERTY – possession of land – mortgages – loan to company conducting egg farming business – loan partly used to pay out prior mortgagee and partly for working capital – working capital to purchase new flock of birds – failure of borrower to purchase new birds – application for further funds for that purpose – further loan with conditions – whether lender acted unconscionably in imposing conditions – whether lender acted in breach of Banking Code – nature of lender’s obligations - whether enforceable obligation on lender to “try to help” – whether any loss sustained from imposition of conditions – no moral obloquy – no unconscionable conduct – lender entitled to possession
INJUNCTIONS – interlocutory injunction restraining lenders from putting receivers in to run business – conditions on borrower for grant of injunction – obligations on borrower for operation of business – breach of conditions and obligations – excessive payments out of business account, failure to pay interest to lender, misleading financial documents produced - application to dissolve injunction – breach of conditions established – interlocutory injunction dissolved
Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth)
Contracts Review Act 1980 (NSW)
Farm Debt Mediation Act 1994 (NSW)
Cases Cited: Australia and New Zealand Banking Group Ltd v Karam (2005) 64 NSWLR 149; [2005] NSWCA 344
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51; [2003] HCA 18
Australian Securities and Investments Commission v National Exchange Pty Limited (2005) 148 FCR 132; [2005] FCAFC 226
Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44
Foster v Hall [2012] NSWCA 122; [2012] NSW ConvR 56-297
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Kakavas v Crown Melbourne Limited (2013) 250 CLR 392; [2013] HCA 25
Marsden v DCL Developments Pty Ltd (Receivers and Managers appointed) [2016] NSWSC 823
Marsden v DCL Developments Pty Ltd (Receivers and Managers Appointed) (No 2) [2016] NSWSC 1038
Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28; (2016) 90 ALJR 835
Tonto Home Loans Australia v Tavares [2011] NSWCA 389; (2011) 15 BPR 26,699
Walford v Miles [1992] 2 AC 128
Category: Principal judgment
Parties: Peter William Marsden (in his capacity as Joint & Several Receiver and Manager of DCL…

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 Marsden v DCL Developments Pty Ltd (No. 3)

Details

AGLC: Marsden v DCL Developments Pty Ltd (No. 3) [2016] NSWSC 1795
Case: [2016] NSWSC 1795
Decision Date: 16 December 2016

CaseChat Overview and Summary

In the matter of Marsden v DCL Developments Pty Ltd, the dispute involved the possession of land and the terms of a mortgage. The plaintiff, Marsden, had entered into a mortgage arrangement with the defendant, DCL Developments, to fund an egg farming business. The mortgage was used partly to pay off a prior mortgagee and partly for working capital, intended to purchase a new flock of birds. When the borrower failed to purchase the new birds, further funds were requested under certain conditions. The central issue was whether the lender acted unconscionably in imposing these conditions and if the lender breached the Banking Code by doing so. Another aspect of the case was the nature of the lender’s obligations, specifically whether there was an enforceable obligation to “try to help” the borrower and whether any loss was sustained from the imposition of conditions.

The court examined the conduct of the lender, focusing on whether there was any moral obloquy or unconscionable conduct. It concluded that the lender had not acted unconscionably and was not bound by an enforceable obligation to “try to help” the borrower. The court also determined that no loss was sustained from the imposition of conditions. Consequently, the lender was entitled to possession of the property. Additionally, the court dealt with an interlocutory injunction that restrained the lenders from appointing receivers to run the business. Conditions were imposed on the borrower for the grant of the injunction, including certain obligations for the operation of the business. The borrower breached these conditions, making excessive payments out of the business account, failing to pay interest to the lender, and providing misleading financial documents.

Upon establishing the borrower’s breach of the conditions, the court dissolved the interlocutory injunction. This dissolution allowed the lenders to proceed with their rights under the mortgage. The court’s decision highlighted the importance of adhering to the terms of the mortgage and the conditions attached to any interim relief. The final orders of the court provided for the lender to take possession of the property and dissolved the interlocutory injunction, allowing the lender to exercise their rights as stipulated in the mortgage agreement.

Orders