Business Finance Pty Ltd - Case Update

The Supreme Court of New South Wales has ruled in favour of a company’s receiver, declaring that a creditor still owed the company $3.57 million in unpaid interest, fees and costs despite the fact that the mortgage has long since been discharged.

Marcus Ayres of Arcis Advisory, the receiver of Business Finance Pty Ltd, brought proceedings seeking to quantify and recover a debt owing by Casula Projects to Business Finance pursuant to a written Loan Agreement executed in October 2017 for $1.23 million, secured by a mortgage (Original Mortgage) over a property located in Surfers Paradise, Queensland (the Property), which was purported to be discharged on in November 2017.

In 2022, the Court held that Casula Projects had repaid the principal amount of the Loan Agreement in March 2019, but that interest and fees remained owing by Casula Projects and so the Original Mortgage over the Property should be restored in favour of Business Finance. The mortgage was reinstated by registration in November 2022 (New Mortgage). The New Mortgage was principally on the same terms as the Original Mortgage. Costs of $1.46 million were later awarded against Casula Projects.

The receiver then sought to have the amount of the debt and the related question of the amount secured by the New Mortgage determined. Justice McGrath had regard to the broad definition of “Secured Money” in the New Mortgage — “all monies which the Debtor is, or at any time may become, actually or contingently liable to pay the Lender” — and found that unpaid interest, monthly management fees, and default fees were all covered, as were the previously awarded costs of $1.46 million and a further $615,305 in legal fees for the current proceedings. Ultimately, the Court ordered Casula Projects to pay approximately $3.57 million to the receiver.

Read the decision HERE.

Professionals involved: Stephen Ipp of Greenway Chambers (instructed by Corrs Chambers Westgarth) for Business Finance Pty Ltd and the receiver