Kellas-Sharpe & Ors v PSAL Limited

[2012] QCA 94

Queensland Court of Appeal

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Interrogate

Catchwords

1. Practice and Procedure
2. › Stay of execution
3. › Pending appeal
4. › Mortgagee's power of sale
5. › Whether arguable case on appeal
6. › Whether balance of disadvantage favours stay
7. › Whether erosion of mortgagee's security outweighs prejudice to mortgagor
1. Equity
2. › Penalties
3. › Interest rate provisions in loan agreements
4. › Whether penalty jurisdiction enlivened
5. › Whether provision stipulating higher rate with reduction for punctual payment attracts penalty doctrine
6. › Whether form over substance distinction remains good law
1. Contract
2. › Penalty clauses
3. › Interest rate provisions
4. › Standard rate with concessional reduction for punctual payment
5. › Whether such provision void as penalty
6. › Whether default rate was genuine pre-estimate of loss

Quick Take

The form over substance distinction in penalty doctrine — whereby a provision stipulating a higher interest rate with a reduction for punctual payment does not attract the penalty jurisdiction, unlike a provision stipulating a lower rate with an increase for default — remains a formidable obstacle to challenge, though it is arguable at appellate level that the rule should be reconsidered. On stay applications in mortgage possession cases, the erosion of a mortgagee's security through accruing interest during the stay period is a significant factor weighing against a stay where the mortgagor cannot offer security to protect against that erosion.