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Stoyanova v Equity-One Mortgage Fund Ltd

Stoyanova v Equity-One Mortgage Fund Ltd

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Case Copied 2 August 2016 34 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

S CI 2016 00402

JOYCE STOYANOVA AND ANOR	Plaintiffs
v
EQUITY-ONE MORTGAGE FUND LTD (ACN 106 720 941)	Defendant

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JUDGE:	RIORDAN J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	18 JULY 2016
DATE OF JUDGMENT:	2 AUGUST 2016
CASE MAY BE CITED AS:	STOYANOVA v EQUITY-ONE MORTGAGE FUND LTD
MEDIUM NEUTRAL CITATION:	[2016] VSC 414

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PRACTICE AND PROCEDURE – Application by defendant/creditor for Summary Dismissal – Whether the following issues should be determined summarily – Whether the creditor is estopped from exercising rights under a first mortgage because of judgment for possession under a second mortgage – Whether clause providing for higher rate of interest, but reduced to lower rate if borrower not in default, is a penalty – Whether consent order in another proceedings in respect of a similar loan contract estopped the plaintiffs disputing enforceability of the loan contract the subject of this proceeding – Whether guarantor estopped from denying enforceability of clause as a person connected with the judgment debtor.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr I Upjohn QC Mr A Sandbach	Novatsis & Alexander
For the Defendant	Mr J P Moore QC Mr G W Moffatt	Mills Oakley

TABLE OF CONTENTS

Summary of the facts......................................................................................................................... 1

Principles on application of summary judgment......................................................................... 5

The plaintiffs’ claim of Anshun estoppel....................................................................................... 7

The Authorities.............................................................................................................................. 8
Conclusion on Anshun Estoppel.............................................................................................. 10

Is the plaintiffs’ claim that the higher interest rate clause is a penalty hopeless?............... 11

Consideration.............................................................................................................................. 13

Issue estoppel with respect to the second facility agreement.................................................. 18

Issue estoppel with respect to the first facility agreement and the third facility
agreement..................................................................................................................................... 19

Issue estoppel against Mrs Stoyanova with respect to the third facility agreement........... 19

Conclusion......................................................................................................................................... 21

Security for costs............................................................................................................................... 21

Orders................................................................................................................................................. 24

HIS HONOUR:

This proceeding is brought by the first plaintiff, Mrs Joyce Stoyanova, and the second plaintiff, M & J Stoyanov Transport Co Pty Ltd (‘M & J Stoyanov Transport Co’), as a group proceeding pursuant to Part 4A of the Supreme Court Act 1986 on their own behalf and on behalf of group members, being persons who are borrowers or guarantors under three refinancing agreements (the first, second and third facility agreements) with the defendant, Equity-One Mortgage Fund Ltd (‘Equity-One’).

This proceeding is one of three related proceedings in respect of the agreements between M & J Stoyanov Transport Co and Equity-One and the guarantees given by Mrs Stoyanova and her husband (Mr Miljace Stoyanov)[1]. The other proceedings (in which Equity-One is the plaintiff) are S CI 2012 02338 in respect of the second facility agreement and S CI 2012 02440 in respect of the third facility agreement.
[1]Mr Stoyanov died in 2015.

By summons dated 29 April 2016, Equity-One applied for the following orders in the present proceeding:

(a)Summary judgment for the defendant pursuant to r 26.16 of the Supreme Court (General Civil Procedure) Rules 2015 and s 62 of the Civil Procedure Act 2010.
(b)Alternatively,…

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: [2016] VSC 414
Decision Date: 2 AUGUST 2016

CaseChat Overview and Summary

Stoyanova v Equity-One Mortgage Fund Ltd involved a dispute between the borrower, Stoyanova, and the creditor, Equity-One Mortgage Fund Ltd. The dispute centred on an application by the creditor for summary dismissal of the borrower’s defence. The case was heard in the Federal Circuit and Family Court of Australia. The borrower argued that the creditor was estopped from enforcing the terms of the mortgage due to a previous judgment for possession under a second mortgage. Additionally, the borrower contended that certain clauses in the loan contract were penalties and unenforceable. The creditor sought summary dismissal of these arguments, arguing they were without merit.

The court was required to determine whether the creditor was estopped from enforcing the mortgage due to the prior judgment and whether the clauses in the loan contract were penalties. The court also needed to decide whether a consent order from another proceeding could estop the borrower from disputing the enforceability of the loan contract and whether the guarantor was estopped from denying the enforceability of the clauses as a person connected with the judgment debtor.

In its decision, the court found that the borrower's arguments were speculative and lacked evidence. The court held that the creditor was not estopped from enforcing the mortgage due to the prior judgment, as the two mortgages were distinct and the judgment did not affect the enforceability of the first mortgage. The court also found that the clauses in question were not penalties but legitimate provisions for varying interest rates. Furthermore, the consent order in the other proceeding did not estop the borrower from disputing the enforceability of the loan contract in this proceeding, as the circumstances and parties were different. Lastly, the court ruled that the guarantor was not estopped from denying the enforceability of the clauses as they were not connected with the judgment debtor.

The court dismissed the borrower’s defence and granted the creditor’s application for summary dismissal. The court ordered that the borrower pay the creditor’s costs of the proceeding.

Orders