Ask Funding v Magyari [2010] NSWSC 572

Default judgement was entered in favour of the lender for the amount of $293,054.38.

The lender later sought to a declaration that pursuant tot a loan contract the borrower had agreed to give the lender a first ranking registered mortgage (the Mortgage) over the whole of her interest in certain land as security for the loan, and an order that the agreement be specifically performed.

An agreement to provide a mortgage is a contract that the courts will enforce by granting specific performance: Takemura v National Australia Bank Ltd [2003] NSWSC 339. That is particularly so where the lender has performed the contract by providing the loan.

No defence was filed. The borrower was allowed to give evidence. Her main complaint was against her solicitor for not explaining the detail and effect of the loan contract to her which included the terms of the mortgage. Justice Bergin (CJ in Eq) pointed out that that was a matter between her and her solicitor and not relevant to her dispute with the lender.   

The proposed mortgage was in these terms:

This mortgage is given in consideration of the Mortgagee at the request of the Mortgagor (which request is testified by its execution hereof) in respect of advances or accommodation already granted or afforded or presently granting or affording advances or accommodation or at any time or from time to time hereafter granting or affording advances or accommodation and in each such case whether such advances or accommodation are at the discretion and during the pleasure of the Mortgagee or otherwise to the Mortgagor.

FOR CONSIDERATION AFORESAID the Mortgagor hereby irrevocably appoints the Mortgagee and each of the officers of the Mortgagee jointly and each of them severally the attorney of the Mortgagor for the purpose of signing all documents and doing all acts on behalf of and in the name of the Mortgagor necessary to perfect the within security and immediately on or at any time after any breach or default by the Mortgagor hereunder to exercise in the name of the Mortgagor all rights, powers and remedies of the Mortgagee expressed or implied herein or to deal with the Mortgaged Land in any way which the Mortgagee may in its absolute and unfettered discretion deem fit and to receive any moneys payable to the Mortgagor in respect of the Mortgaged Land whether in respect of insurance compensation or otherwise and to do all things required to be done by the Mortgagor hereunder and to execute all documents and to do all things necessary in regard to any such matters.

In this Mortgage unless the contrary intention appears “the principal sum” means all monies now or hereafter actually or contingently payable to the Mortgagee by the Mortgagor under Loan Contract dated 7 March 2007 between the Mortgagee as lender and the Mortgagor as borrower.

Justice Bergin observed the mortgage terms were in standard form. Her Honour was prepared to amend the principal sum to limit it to the specific figure of the judgement debt and ordered the lender to provide the amended mortgage to the borrower by a certain date. Her Honour ordered that if the borrower failed to sign and return the mortgage by a certain date, a Registrar of the Court was authorised to execute all such instruments and do all such things in the name of and on behalf of the borrower as may be necessary to grant to the lender the amended mortgage.    

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