Both the appellant and respondent held a mortgage parts of land comprising the Port Hinchinbrook Resort in North Queensland. After the owner of that land was wound-up in insolvency the appellant entered into possession of the land in exercise of its right to do so under its mortgage and a Deed of Priority and Subordination in place between the two mortgagees.
The respondent challenged the appellant’s right to take possession and sell the land questioning whether any money was owed to the appellant under its relevant loan agreement. The primary judge found the appellant’s loan agreement was a sham and no money was owed to the appellant under that agreement.
Issues considered on appeal were that the primary judge failed to apply the legal test for a sham, mischaracterised the burden of proof, procedural fairness, apprehension of bias and drew the inference that the failure to call a witness was evidence of a sham.
Claire Schneider (with K Morgan SC) appeared on behalf of the appellant, instructed by Carmody Lawyers.