Franks v Moribund Pty Limited

Judgment 1HODGSON JA: On 24 June 2010, Pembroke J gave his decision on an application brought in proceedings which had been commenced in October 2000 by a company Windy Dropdown Pty Limited (WDD) against the first respondent (Moribund), then named Equitiloan Securities Pty Limited. By that application the appellant, Mr Franks, to whom the relevant rights of WDD had been assigned in 2005, sought to enforce an undertaking to the Court given in the proceedings on 13 November 2000 by the second respondent (Equititrust), then named Equitiloan Limited, at a time when Equititrust was joined as a second defendant in the proceedings. 2By that decision the primary judge dismissed with costs an Amended Notice of Motion that had been filed in court that day, and ordered Mr Franks to pay to Equititrust on an indemnity basis costs thrown away and wasted by the abandonment of the original Notice of Motion: see Franks v Equitiloan Securities Pty Ltd [2010] NSWSC 693. Mr Franks appeals from that decision. 3The proceedings arose out of a development in Curl Curl carried out by WDD, which was financed by a loan from Moribund and secured by a mortgage. The financing agreement relevant to the proceedings was one made in March 1999, under which a loan of $6.25 million was repayable to Moribund on 26 March 2000. The agreed interest was 10.25 per cent, and interest was payable in the event of default at a rate of 16.25 per cent. 4Also in about March 1999 a Profit Share Agreement was made whereby WDD agreed that Equititrust should have a share in the profit of the project. 526 March 2000 passed without repayment of the loan. 6In October 2000, WDD advised Moribund that it wished to discharge the mortgage and requested the preparation of the Discharge of Mortgage and a payout figure. In the absence of a response, WDD commenced these proceedings on 26 October 2000, seeking redemption of the mortgage. 7On 27 October 2000, Moribund served on WDD a Notice of Default asserting default inter alia in failing to repay the mortgage on 26 March 2000. Moribund asserted that the amount outstanding under the mortgage was a little over $5 million, including interest at the default rate from 26 March 2000, this amounting to $252,090 more than interest at the lower rate. 8In order to obtain a discharge, WDD then arranged to pay this amount under protest; and it amended its claim in the proceedings to being a claim against Moribund for the additional interest overpaid, and a claim against Equititrust for an amount which WDD had paid to Equititrust under the Profit Share Agreement. 9In connection with these developments, on 13 November 2000 the following orders were made and undertakings given in the proceedings: