Summer Hill Business Estate Pty Ltd v Equititrust Ltd

Summer Hill Business Estate Pty Ltd (the borrower) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales concerning the rate of interest payable under loan agreements with Equititrust Ltd (the lender). The dispute centred on whether the lender had elected to charge interest at a lower rate than that stipulated in the loan contracts, and whether the lender was estopped from claiming interest at the higher rate.

The Court of Appeal was required to determine two principal legal issues. First, whether the lender, by providing account statements to the borrower that debited interest at a lower contractual rate and accepting payments of that interest, had made an unequivocal election to charge interest at the lower rate rather than the higher rate stipulated in the loan agreements. Second, whether the lender's conduct in relation to two specific loan facilities was capable of inducing the borrower to form an assumption that the lender would not charge interest at the higher contractual rate in respect of other loan facilities.

The Court of Appeal dismissed the appeal. It reasoned that the lender's conduct in issuing account statements and accepting payments at the lower rate did not constitute an unequivocal election to abandon its contractual right to charge interest at the higher rate. The Court found that the conduct was ambiguous and did not definitively demonstrate an intention to be bound by the lower rate. Furthermore, the Court held that the lender's conduct in relation to the two loan facilities was not capable of inducing the borrower to form the necessary assumption for promissory estoppel to arise in respect of the other facilities. The appeal was dismissed with costs.