Illawong Village Pty Ltd v State Bank of NSW Ltd [2006] HCATrans 232 (10 May 2006)

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Illawong Village Pty Ltd v State Bank of NSW Ltd [2006] HCATrans 232 (10 May 2006)

Last Updated: 19 May 2006

[2006] HCATrans 232

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S567 of 2005

B e t w e e n -

ILLAWONG VILLAGE PTY LIMITED

Applicant

and

STATE BANK OF NSW LIMITED

Respondent

Application for special leave to appeal

Publication of reasons and pronouncement of orders

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 10 MAY 2006, AT 9.44 AM

Copyright in the High Court of Australia

GUMMOW J: The applicant (“Illawong”) is a property developer which claims that it was overcharged interest by the respondent (“the Bank”) in respect of a facility agreement executed by Illawong on 22 March 1988, under which the Bank agreed to advance the principal sum of $7,750,000 for a term of three years. The funds were drawn down on 8 April 1988, but were not repaid on the date of expiry of the term of the loan. The dispute concerned the rate of interest charged during the period after that due date, namely the period from 8 April 1991 to 26 July 1993.

The Bank contended that the rate of interest for that period remained governed by the terms of the initial securities granted in 1988 (which included an all moneys deed of charge granted on 25 March 1988) under which Illawong covenanted to pay interest on the secured money “at the rate or rates agreed upon from time to time and in default of such agreements as decided by the Bank from time to time”. The Bank charged interest for the whole period at 13.97 per cent as stipulated in the facility agreement, relying during the relevant period upon the term allowing it to stipulate the rate in default of agreement. Illawong contended that the rate of interest was governed during the relevant period instead by additional all moneys real property mortgages securities granted in 1990, the terms of which as regards interest (cl 2.1) were substantially the same save that, failing agreement between Illawong and the Bank, interest would be charged at “the rate determined from time to time by the [Bank] as being applicable to like accounts” (cl 1.1). This was said to produce a lower rate.

In the Equity Division of the Supreme Court of New South Wales, by judgment delivered on 4 February 2004, Campbell J held that no contractual intention could be discerned in support of Illawong’s contention: first, because the 1990 securities were granted in performance of an obligation contained in the 1988 Charge; secondly, because the 1988 Charge expressly provided that later security should not affect it; and, thirdly, because the 1990 securities expressly provided that any earlier “Agreement” should prevail both generally and specifically in terms of the interest provision (and the 1988 Charge was such an “Agreement”). On appeal, the Court of Appeal (Giles and Santow JJA, Hunt A-JA) affirmed the decision of Campbell J on all bases.

We have considered the written material submitted by the parties and the decisions of Campbell J and the Court of Appeal. The first two grounds in the draft Notice of Appeal do no more than attempt to re-agitate the grounds that were advanced before Campbell J and the Court of Appeal on a question of contractual construction of a factual nature which has now been resolved by four judges adversely to the applicant. The third proposed ground formed no part of the proceedings in the courts below, and Illawong should not be at liberty to raise it now. The application raises no question of law of public importance sufficient to justify a grant of special leave. Special leave is refused with costs.

Pursuant to r 41.11.1 we direct the Registrar to draw up, sign and seal an order dismissing the application for special leave to appeal with costs. I publish the disposition signed by Heydon J.

AT 9.47 AM THE MATTER WAS CONCLUDED