Bank of WA v Hollywood Management [2010] NSWSC 935

This involved a claim for possession of three mortgaged properties and the recovery of $2.2 million. The borrower defended on the grounds the mortgages were “unjust” under the Contracts Review Act 1980 and that she was induced to execute the mortgages by misrepresentations of the lender and its agent. The lender responded by bringing an application to strike out the defence for failure to prosecute with due despatch. The court noted;

In cases involving alleged default concerning secured loan finance, an expeditious determination of proceedings is desirable and, indeed, may be essential in the interests of both or all parties. This is especially so, given that there may be significant ongoing or accruing liability under a loan agreement for the payment of principal and/or interest. The liability continues to operate or accumulate whilst and until the proceedings have been finally determined. The mortgagor’s equity in such cases becomes progressively diminished. That will often work to the detriment of lender and borrower alike. Accordingly, the character of the litigation in question is a matter to be taken into account and these proceedings have at least elements of a commercial aspect and character.

The court then quoted the High Court case of Aon :

Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case, that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees and, in the case of companies, their actual and potential shareholders, order their affairs.

The court sided with the lender and struck out the defence and entered judgment, the judge based his conclusions on the following factors:

1) The defendants have been default under the Facility Agreement over a protracted period of time. No proceedings were instituted by the borrower prior to the filing the defence.

2) The amount of outstanding is substantial (in excess of $2.2 million).

3) The pleading in the cross-claim seeking relief under the Contracts Review Act, the Trade Practices Act, the Fair Trading Act and under the general doctrine of unconscionability was supported by very few particulars of the factual circumstances to support them.

4) The lack of particulars was compounded by the borrower’s failure to provide the evidence in support of her case as directed.

5) No explanation for the defendants’ delay or failure to comply with the Court’s directions was provided.

6) The borrower did not show up to the hearing.

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