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Mizzi v Reliance Financial Services Pty Ltd

Mizzi v Reliance Financial Services Pty Ltd

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CITATION: Mizzi v Reliance Financial Services Pty Ltd & Ors [2007] NSWSC 37
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 14, 15, 18 December 2006

JUDGMENT DATE :
15 February 2007

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

DECISION: Declare that upon proper construction of agreement and in events which have happened, the plaintiff was released from any obligation which she owed to the first defendant in respect of moneys advanced by first defendant to her, and in particular all obligations which she had under Loan Agreement and Mortgage. Order that first defendant execute and deliver to plaintiff discharge of mortgage and certificate of title.

CATCHWORDS: CONTRACTS – Unjust contracts – where mortgage of pensioner's sole asset to secure refinance of earlier mortgage in default was an unjust contract - whether as a matter of discretion relief should be granted – EQUITY – Unconscionable dealings – whether mortgage was unconscionable dealing - CONTRACT – Termination – accrued rights where mortgagee had agreed with mortgagor’s son to release mortgagee upon provision by son of alternative security – where alternative security provided but other obligations of son not performed - whether mortgagee obliged to release mortgagor – accrued contractual right before termination - Privity – whether release enforceable at the suit of mortgagee - whether trust of benefit of contractual promise in favour of a third party – where son obliged in contract and in equity to procure release. - COSTS – where plaintiff ultimately succeeds by reason of success on one issue but fails on issue occupying much of trial.

LEGISLATION CITED: (NSW) Contracts Review Act 1980, ss 7, 9

CASES CITED: Anderson v Martindale (1801) 1 East 487, 102 ER 191
Antonovic v Volker (1986) 7 NSWLR 151
Beneficial Finance Corporation Limited v Karavas (1991) 23 NSWLR 256
Bennett v ES&A Chartered Bank (1888) 9 LR (NSW) 554
Birmingham v Renfrew (1937) 57 CLR 666
Cabell v Vaughan (1669) 1 Wms Saund 290a
Chappuis v Filo (1990) 19 NSWLR 490
Coulls v Bagots Executor and Trustee Co Limited (1967) 119 CLR 460
Dunlop Pneumatic Tyre Co Limited v Selfridge & Co Limited [1915] AC 847
Ettridge v Vermin Board of the District of Murat Bay [1928] SASR 124
Finance Corp of Australia Ltd v Bentley (1991) 5 BPR 11,833
Howden v Yorkshire Miners’ Association [1903] 1 KB 308
Hyundai Heavy Industries Co Limited v Papadopoulos [1980] 1 WLR 1129
Jennings v Credit Corp Australia Pty Ltd (2000) 48 NSWLR 709
Johnson v Agnew [1980] AC 367
Kendall v Hamilton (1879) 4 App Cas 502
Les Affreteurs Reunis SA v Leopold Walford (London) Ltd [1919] AC 801
Matthews v Doctrieve Corp Pty Ltd [2003] FCA 459
McDonald v Dennys Lascelles Limited (1933) 48 CLR 457
Meldrum v Scorer (1887) 56 LT 471
Moody v Condor Insurance Limited [2006] 1 WLR 1847
Nguyen v Taylor (1992) 27 NSWLR 48
Norbury, Natzio & Co Limited v Griffiths…

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: [2007] NSWSC 37
Decision Date: 15 February 2007

CaseChat Overview and Summary

The case of Mizzi v Reliance Financial Services Pty Ltd involved a dispute over the validity and enforcement of a mortgage taken on the plaintiff's sole asset to secure a refinance of an earlier mortgage that was in default. The plaintiff, Mizzi, was a pensioner whose only asset, a property, was used as security for the new mortgage. The dispute reached the court to determine whether the mortgage was unjust and whether the defendant, Reliance Financial Services, could enforce it. The court was also asked to consider whether the mortgage constituted unconscionable conduct and if the mortgagee was obliged to release the mortgage upon the provision of alternative security by the mortgagor's son. Additionally, the court had to determine the effect of the son's failure to perform other obligations under the agreement on the mortgagee's rights.

The legal issues before the court included whether the mortgage was an unjust contract warranting equitable relief, whether the mortgage constituted unconscionable conduct, and the enforceability of the mortgagee's right to release the mortgage upon provision of alternative security by the mortgagor's son. The court had to consider the nature of the agreement between the mortgagee and the son, the existence of a trust of the benefit of the contractual promise in favour of a third party, and the implications of privity on the enforceability of the release. The court also needed to determine the appropriate allocation of costs given the plaintiff's partial success in the trial.

The court found that the mortgage was indeed an unjust contract and that the plaintiff was entitled to relief on that ground. The court also determined that the mortgage constituted unconscionable conduct. Regarding the son's obligations, the court found that the mortgagee was obliged to release the mortgage upon the provision of alternative security by the son, despite the son's failure to perform other obligations. The court held that the accrued right to release the mortgage existed before its termination. Additionally, the court found that the release was enforceable at the suit of the mortgagee and that there was a trust of the benefit of the contractual promise in favour of a third party, in this case, the mortgagor's son. Finally, the court ruled on the costs, ordering that the plaintiff be awarded costs on the issue where they succeeded, despite failing on a significant issue during the trial.

Orders