Ginelle v Singh [2010] NSWSC 1166

In this case the lender sold the property, and retained $25,000 of the surplus as security for its costs in meeting two appeals the borrower had on foot. The borrower protested and the lender’s actions could not be justified by its contractual rights (it had used the basic – some would say useless Q86000 public memorandum). Nor could the retention be justified on the basis of the principle in Project Research v Permanent Trustee of Australia Limited . That case was distinguished as applying only to a dispute over accounts with the judge commenting:

The dispute here is about whether the provisions of the Consumer Credit Code governed the loan. That litigation would go to whether the mortgage was ever enforceable. The lender can have no expectation that it would be entitled to its costs of that litigation regardless of the result.

As a result the lender will now have to fight on in the Court of Appeal with no realistic possibility of recovering its costs should it win. The moral of the story is that there is no substitute for well drafted security documents.

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