Constructions Loans

Westpac v ZH International [2015] NSWSC 607

A developer borrowed money from the bank to develop some apartments and granted the bank a first mortgage. Towards the end the developer sold the builder one of the units at a large discount in lieu of payment. The sale price of the remaining units failed to discharge the debt to the bank and the …

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ANZ v Fink [2015] NSWSC 506

This case involved a businessman’s dream home that went pear-shaped due to cost overruns. When the bank sought possession the borrower sought to blame the bank. Improvidence / Non-English speaking The borrower argued the bank should never have made the loan as it was improvident and they were vulnerable people:  There was no reason for …

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Investec Bank v Naude [2014] NSWSC 165

The bank sued a guarantor. By way of defence, the guarantor alleged that his guarantee was induced by the bank’s misleading conduct as to future second stage development finance, the first stage was for acquisition of the properties. The bank did not call the officer who allegedly made the representation. The judge noted the bank …

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Kovarfi v BMT [2014] NSWSC 100

Developers borrowed money to fund a development, the project over-ran and according to a valuation report would have required more money to complete than the undrawn loan moneys. The bank called in the loan and sold the property at a loss. The developers who gave personal guarantees went bankrupt. The developers sued the valuer for …

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Settlement Group v Purcell Partners [2013] VSCA 370

There were several properties being refinanced. The solicitor for the incoming lender did not obtain a payout figure for the entirety of the properties. The solicitor prepared a cheque for this lower sum. At settlement, the outgoing lender handed over discharges of mortgage for all properties and accepted the cheque. Immediately following settlement, the outgoing …

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Shepparton Projects v Cave Investments [2013] VSCA 152

The loan agreement was for a substantial sum, for the purpose of a subdivision of land. When it became clear that the project was taking longer than expected to complete, the parties renegotiated. It was a condition of the renegotiated loan agreement that in absence of default the lender would accept repayment by 14 blocks …

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Industry Funds Management v Bellspin [2011] NSWSC 41

The lender advanced funds to develop a hotel in World Square. The loan went bad and the guarantor was sued. The guarantor lodged a defence claiming that the interest only period was two years (not six months) and therefore the loan was not in default. The Judge disbelieved the guarantor because: The guarantor took no …

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Momentum Mortgages & Equity Trustees v Elmowy & Meehan [2010] NSWSC 950

Momentum and Equity Trustees jointly loaned money for a development. The loan went into default and they sued the guarantors. The guarantors alleged that Momentum procured their signatures by misleading and deceptive conduct. They asserted that Momentum failed to disclose that it was about to become insolvent, and so was unlikely to be able to …

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Donovan Oates v Reid [2009] NSWSC 221

This case involved a construction loan for $7,300,000. The lender took a mortgage over the development site, a guarantee from the sole director of the development company, and a mortgage over the director’s home. After several progress payments geotechnical investigation disclosed the need to amend the DA. The council dithered so the developer went to …

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