Equitiloan Securities Pty Ltd v John Francis Mulrine & William Owen O'Mara [2000] ACTSC 49 (16 June 2000)

Last Updated: 16 October 2000

Equitiloan Securities Pty Ltd v John Francis Mulrine & William Owen O'Mara [2000] ACTSC 49 (16 June 2000)

CATCHWORDS

DEBT - Judgment for creditor on default in repayment of loan.

INDEMNITY - Third party indemnifies debtor for loan repayments.

IN THE SUPREME COURT OF )

) No SC 601/1997

AUSTRALIAN CAPTAL TERRITORY

1. BETWEEN: EQUITILOAN SECURITIES PTY LTD (formerly MC Mortgage Service Pty Ltd)

Plaintiff

AND: JOHN FRANCIS MULRINE

Defendant

1.1 ERRATUM

Coram: Master T Connolly

Date of Order: 16 June 2000

Where Made: Canberra

On page 2 of the Judgment delivered on 16 June 2000 delete "Judge Making Order: Master T. Connolly" and insert "Coram: Master T. Connolly".

Jacqueline Ralph

Associate to Master Connolly

17 July 2000

No. SC 726 of 1997

Coram: Master T Connolly

Supreme Court of the ACT

Date: 16 June 2000

IN THE SUPREME COURT OF THE )

) No. SC 726 of 1997

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: EQUITLOAN SECURITIES PTY LTD (formerly M C MORTGAGE SERVICES PTY LTD)

Plaintiff

AND: JOHN FRANCIS MULRINE

Defendant

AND: WILLIAM OWEN O'MARA

Third Party

ORDER

Judge Making Order: Master T Connolly

Where Made: Canberra

Date of Order: 16 June 2000

THE COURT ORDERS THAT:

1. The plaintiff has leave to enter a final judgment against the first defendant with costs.

2. Judgment be entered for the defendant against the third party to the full extent of any judgment and costs be awarded against the defendant in favour of the plaintiff in this matter.

3. The third party pay the defendant's costs.

2. This is a claim for debt for the repayment of a loan in the sum of $85,000 taken out by the defendants in about September 1993 and secured by a mortgage over the residential property owned by the first defendant. It is common ground a loan was advanced, and that the first defendant guaranteed that loan by way of a mortgage document and that the mortgage document was executed, monies advanced, and that the monies have not been repaid. A default judgment has been obtained in respect of the second defendant, who is bankrupt.

3. The debt claim was litigated in parallel with matter 601 of 1997, being a claim for possession of the land the subject of the mortgage. The substantial defence and cross claim filed by the first defendant was in similar terms to the defence and cross claim filed in that matter, and on which I have published my reasons in that matter. For the reasons set out in Equitiloan Securities Pty Ltd CAN 051 165 587 (formerly MC Mortgage Services Pty Ltd) v John Francis Mulrine [2000] ACTSC 48 I am not satisfied that the defence is made out, and I dismiss the counter claim. The plaintiff is entitled to judgment against the defendant in the sum claimed in the Statement of Claim, being $92,348.62 and interest pursuant to the mortgage at $42.01 per day from 29 August 1997 and increasing on the 10^th day of each month as interest is compounded to the principal. I will give leave to the plaintiff to bring in a final order to give effect to this decision.

4. The first defendant has filed a third party claim against the second defendant, claiming that the second defendant undertook to indemnify the defendant against any losses arising from the guarantee. The Third Party Claim also sets up a claim based on the alleged unconscionable conduct of the second defendant. I have found in Equitiloan Securities Pty Ltd ACN 051 165 587 (formerly MC Mortgage Services Pty Ltd) v John Francis Mulrine [2000] ACTSC 48 that the second defendant did tell the first defendant the nature of the transaction, and I reject the claim that he acted unconscionably for the reasons therein set out. In those reasons I did find that when the transaction was being proposed, the second defendant did tell the first defendant that he, Mr O'Mara would make all of the repayments and Mr Mulrine did not have to make any contributions. It seems to me that this is sufficient to make out the contractual claim that the second defendant agreed to indemnify the first defendant, and thus to entitle the first defendant to the relief claimed in the Third Party Claim. As a default judgment for the full debt was entered against Mr O'Mara on 5 May 1998 in the sum of $103,116.44 and remains unsatisfied due to the bankruptcy of Mr O'Mara it may provide the first defendant with no real comfort, but I nevertheless make the order sought by the first defendant, that is, that judgment be entered for the defendant against the third party to the full extent of any judgement and costs awarded against the defendant in favour of the plaintiff in this matter, and costs of this action.

I certify that this and the three (3) preceding numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master, Mr T Connolly.

Associate:

5. Date: 16 June 2000

Counsel for the Plaintiff: Mr Crowe

Instructing Solicitors: Minter Ellison

Counsel for the Defendant: Mr Anforth

Instructing Solicitors: Welfare Rights & Legal Centre

Dates of hearing: 1 May 2000

Date of judgment: 16 June 2000

6.