Aquamore Credit Equity Pty Ltd v Hung; First on First Development Pty Ltd v Aquamore Credit Equity Pty Ltd [2021] NSWSC 1681

Aquamore Credit Equity Pty Ltd v Hung; First on First Development Pty Ltd v Aquamore Credit Equity Pty Ltd [2021] NSWSC 1681

The Deed of Amendment and Restatement became binding on 28 June 2017. The only non-monetary Event of Default subsisted before that date and did not continue. There was a monetary default on 7 September 2017, but Aquamore failed to serve an effective s 57(2)(b) notice in respect of that default before taking enforcement action. Clause 7.1 of the Facility Agreement, imposing the Higher Rate, is unenforceable as a penalty; only the Lower Rate of interest applies. Although Aquamore acted without authority to exercise the power of sale, the borrower did not prove loss as a result, and Aquamore complied with its equitable and statutory sale obligations.

Jurisdiction
Australia
Judgment Date
21 December 2021
Procedural Posture
Civil / Principal Judgment on Liability and Directions for Judgment Amount and Costs
Outcome
See orders: Parties directed to confer and agree short minutes on the final amount for judgment and costs, with directions for further steps if agreement is not reached.
Legal Topics
['loan Agreements' 'mortgages' 'breach of Contract' 'default Interest Rate as Penalty' 'power of Sale Under Mortgage' 'breach of Equitable and Statutory Duties' 'remedies' 'penalty Doctrine']
['contracts' 'property Law' 'commercial Law' 'equity'] ['loan Agreements' 'mortgages' 'breach of Contract' 'default Interest Rate as Penalty' 'power of Sale Under Mortgage' 'breach of Equitable and Statutory Duties' 'remedies' 'penalty Doctrine']

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Procedural Posture

Civil / Principal Judgment on Liability and Directions for Judgment Amount and Costs

Legal Issues

  1. 1 ['Whether the Deed of Amendment and Restatement became binding' 'Whether there were events of default entitling Aquamore to interest at the Higher Rate' 'Whether Aquamore was authorised to exercise a power of sale' 'Whether Aquamore breached its equitable and statutory obligations in exercising the power of sale' 'Whether the Higher Rate of interest is unenforceable as a penalty' 'What remedies follow from the determination of those issues']

Ratio Decidendi

The Deed of Amendment and Restatement became binding on 28 June 2017. The only non-monetary Event of Default subsisted before that date and did not continue. There was a monetary default on 7 September 2017, but Aquamore failed to serve an effective s 57(2)(b) notice in respect of that default before taking enforcement action. Clause 7.1 of the Facility Agreement, imposing the Higher Rate, is unenforceable as a penalty; only the Lower Rate of interest applies. Although Aquamore acted without authority to exercise the power of sale, the borrower did not prove loss as a result, and Aquamore complied with its equitable and statutory sale obligations.

Court Disposition

See orders: Parties directed to confer and agree short minutes on the final amount for judgment and costs, with directions for further steps if agreement is not reached.

Orders

  • ['Parties to confer and agree, by 5:00pm on 23 December 2021, on short minutes of order giving effect to the reasons for judgment; to be provided to Meagher JA.' 'If parties cannot agree (other than as to costs), proceedings stood over for directions before Meagher JA on 31 January 2022.' 'If parties cannot agree on...