Claimant Wins Mortgage Challenge Using Estoppel

The claimant successfully challenged the validity of two mortgages through the legal doctrine of estoppel, arguing that there were sufficient inducements and representations that rendered the mortgages ineffective and unenforceable.

Supreme Court New South Wales

Medium Neutral Citation: [NAME] v [NAME] & Anor [2018] NSWSC 1897 Hearing dates: 4 December 2018 Decision date: 04 December 2018 Jurisdiction: Equity - Expedition List Before: Sackar J Decision: See para [6] Category: Costs Parties: [NAME] (Plaintiff) [NAME] (First Defendant) [COMPANY] (Second Defendant) Representation: Counsel: [redacted] S [NAME] (Defendants)

Solicitors: [redacted] [NAME] (Defendants) File Number(s): 2017/213677

EX TEMPORE Judgment 1. I gave judgment in this matter on 23 November 2018. The plaintiff sought and succeeded ultimately in setting aside and indeed challenging the effectiveness, validity and enforceability of two mortgages. The plaintiff's case was put on a number of bases. I rejected some of those bases, but ultimately the Plaintiff succeeded on the case of estoppel which was always present but somewhat obfuscated by other arguments.

2. Many cases involve many issues and many cases involve alternative cases. It is often as a matter in exercising in any discretion on costs to try, if one is able to do so, to apportion time spent on particular issues when possible it may arguably produce a fairer result. In my view, this is not that kind of case. I do not think it is a simple matter for example of trying to work out the amount of time spent by [NAME] in cross-examination as directed to one issue as opposed to another. If I may say so, in a very professional and direct way, he did cross-examine [NAME] but he was, at each turn of his cross-examination, trying to suggest that Mr [NAME]' credit should not be accepted. I make no criticism of the way in which [NAME] approached that task, indeed, if I may say so, it was very effective because in the end he persuaded me that I could not, to a very large extent, rely upon [NAME]' credit. That said, I formed the view in the end that there was sufficient inducement and representations, accordingly by [NAME] such that in fairness as it were and in accordance with principle, [NAME] should succeed on his estoppel claim.

3. As I have said I do not think, however, it is appropriate to try to break up the issues and apportion time to one issue as opposed to another. Therefore, I think that [NAME] is certainly entitled to his costs, against whom is the next question. The two defendants were joined, not just for convenience but simply because [NAME] wanted to suggest, in both cases as he has done successfully, that neither mortgage should be enforced.

4. The corporate entity [NAME], has [NAME] as one director and his daughter [NAME] as the other director. The shareholding is divided 50 per cent to [NAME] and 50 per cent to [NAME] as a result of his inheritance pursuant to his deceased mother's estate.

5. In awarding the costs, [NAME] on behalf of the defendants, submits that first by reason of the outcome or by reason of the issues upon which the plaintiff did not succeed he should only get 50 per cent of his costs. I am against him on that proposition for the reasons I outlined because I do not think they can be apportioned in that way. Secondly, he submits that of that 50 per cent, 25 per cent should be awarded against [NAME] and the other 25 per cent against the corporate entity. Again, I am against [NAME] on that submission for the following reasons.

6. The Plaintiff, [NAME], has succeeded. It would make a mockery of the outcome of this litigation if directly or indirectly he ended up having to be responsible for some of the costs incurred as a result of his success, but by reason of a shareholding he has inherited. So consequently, I think it is entirely illogical and indeed unfair if he were placed in a situation, either to be confronted with litigation against the corporate entity which is in receivership or bear a burden of costs where he succeeded. 7. [NAME], it is clear beyond any doubt, was the moving party in relation to both mortgages. Although, the corporate mortgage was executed on behalf of [NAME], the corporate defendant, he nonetheless was the moving party. Indeed, he initiated the forensic strategy. In my view, he should bear the costs of this litigation as I think that would be the fair outcome. Therefore in my discretion the Plaintiff should be awarded his costs of the litigation and those costs should be borne by [NAME].

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