Penalties

Perpetual Trustee Company v Mitchell [2010] NSWSC 825

The central issue in this case was whether a default provision in the terms of a settlement agreement was a penalty, given that the lender had agreed to accept a lesser sum if certain conditions were met. Justice Davies decided that the default provision was not a penalty. The key condition was for the payment …

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Imperial Tarmacadam v St George Bank [2009] NSWSC 1287

This case was a dispute over a “break costs” clause. The borrower refused to pay the break costs clause arguing that it was a penalty. The bank sought that the defence be struck out as it was “bound to fail”. The break costs clause in question quantified the break costs as being: “An amount equal …

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Secure Funding v Patane [2009] NSWSC 845

Default judgement was entered and the writ stayed three times before the borrowers brought an application to set aside the default judgement and file a defence weeks before the property was due to be auctioned by the lender. The lender resisted on the grounds: the borrowers were legally represented throughout the proceedings; the motion to …

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Kowalczuk v Accom Finance [2008] NSWCA 343

In this appeal court case the borrower claimed the loan was unjust under the Contracts Review Act. Quite surprisingly the appeal court held the higher rate of interest was impermissible on the grounds that it was a penalty. For hundreds of years lenders have been able to charge a higher rate, without it being struck …

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King Investment Solutions v Hussain [2005] NSWSC 1076

This was an appeal by the Hussains from an order made by an Associate Justice for sale of the land subject to the lender’s second mortgage. The Hussains granted a second mortgage to the plaintiff to secure a loan of $95,000 for a period of two months. Interest was payable at $118.8% per annum, reducing …

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Dong v Monkiro [2005] NSWSC 749

A loan deed was entered into whereby the plaintiff agreed to lend the defendant $1.1 million for the purpose of a townhouse development. The issue arose of whether it was open for the loan agreement to operate retrospectively (in respect of payments already made) and whether interest payable on those amounts was a penalty. There …

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