The test to be applied has been variously expressed: "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not permit of argument"; "discloses a case which the court is satisfied cannot succeed"; "no possibility that there can be a good cause of action"; "manifestly faulty so that to allow the pleading to stand would involve useless expense.""
· as Barwick CJ said in General Steel at 129, the subject expressions occur in cases of different types. However, once it appears, as his Honour pointed out, that there is a real question to be determined, whether of fact or law, and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action.
11 My own view is that the present is a very clear case where against the above principles it is appropriate to give summary judgment in terms of the orders sought in the amended notice of motion. The reasons to be given will make plain why that is so.
The inchoate position of the first mortgagee
12 Before one even moves into the content of the relevant obligation of a mortgagee exercising a power of sale the salient consideration on the notice of motion presently before the Court is that the guarantors failed to:
· plead any contention that the Commonwealth Bank of Australia had agreed to or was prepared itself to accept that a particular sale [being put to Bridgecorp Finance as requiring its acquiescence/discharge of the second mortgage] should be consummated;
· endeavour to put before the Court any evidence to the effect that the Commonwealth Bank of Australia had agreed to or was prepared itself to accept that a particular sale [being put to Bridgecorp Finance as requiring its acquiescence/discharge of the second mortgage] should be consummated.
13 The position of a second mortgagee in such a circumstance is of course quite different to that of a first mortgagee.
14 An essential causal link in any claim which could possibly made to the effect that Bridgecorp Finance breached an equitable duty by refusing to consent to a particular sale of the Botany Road property for a particular amount at a particular point in time and/or by refusing to agree to its second mortgage being discharged to permit such sale, must involve the integer that first mortgagee was prepared to and would have agreed to such a sale.
15 To my mind the allegations here made in the pleading against the second mortgagee simply have no relevant nexus with any suggested claim of breach of duty by Bridgecorp Finance for the simple reason that the position of the Commonwealth Bank of Australia has been and remains totally inchoate. It is inchoate on the guarantors' pleadings. It is inchoate on the evidence before the court. The Court is completely unaware as to what was the indebtedness of Lonhro Developments to the Commonwealth Bank of Australia:
· at any particular point in time;
· at any of the points in time referred to in the defence or cross-claim as being occasions when Bridgecorp Finance is said to have breached its equitable obligations.
The content of the relevant duty of a mortgagee
16 The content of the relevant duty of a mortgagee has been said to be an obligation to act in good faith: cf Fisher and Lightwood, Law of Mortgage, Australian Edition at 458; and cases there cited. In Ultimate Property Group Pty Ltd v Lord (2004) 60 NSWLR 646 Young CJ in Eq at 652 held that a mortgagee owes an equitable duty to act conscionably towards the mortgagor and persons under the mortgagor.
17 The problem for the guarantors in the present proceedings is that:
· the pleadings do not on their face disclose any material capable of sustaining a finding of a breach of any such duty;
· there is not a scintilla of evidence put forward on the summary judgement application to permit it to be said that there is an arguable case which could sustain a finding of a breach of any such duty.
18 In Mailman v Challenge Bank Limited (1991) 5 BPR 11721, the New South Wales Court of Appeal rejected the submission that a creditor must act to enforce a security in the case of a request by a guarantor since even in that situation, the guarantor clearly has the option of paying off the debt and enforcing the security himself.
19 Sheller JA in Mailman at 5 BPR 11727/8 [following Lord Templeman's judgment in China and South Sea Bank Limited v Tan Soon Gin [1990] 1 AC 536 at 545], made the point that if the surety is worried that the mortgage securities may decline in value, the surety may request the creditor to sell and if the creditor remains idle the surety may bustle about, pay off the debt, take over the benefit of the securities and sell them: cf O'Day v Commercial Bank of Australia Ltd (1933) 50 CLR 200 at 224 per McTiernan J.
20 Clearly as Mailman holds, a mortgagee may sell when it considers it appropriate. Clearly also the mortgagee is not bound to postpone the sale in the hope of obtaining a better price later but is required to allow sufficient time to permit matters such as proper advertising so that the best price reasonably obtainable may be obtained. The mortgagee is entitled to look to its own interests but in this country the good faith test has been, as I have already observed, generally applied.
21 Neither the pleaded case nor the evidence adduced on the hearing of the contested motion for summary judgment put forward any question of fact or law by way of a real question to be determined.
22 As I have said a very particular problem facing the defendants in the instant proceedings is that in the face of the evidence as to the existence of the first mortgage there is absolutely no evidence at all before the Court to satisfy the Court as to the position of the first mortgagee at material times nor indeed as to the amount of the indebtedness at material times of Lonhro Developments to that first mortgagee. Mailman points up the other obstacles which presently stand in the defendants' path.
23 Mr Bedrossian, counsel for the defendants, has sought to rely upon a Land and Property Information Title Search identifying the Botany Road property as having a registered proprietor as at 17 March 2005 in the name of Bridgecorp Holdings (Australia) Pty Limited. In order to establish some form of legal wrongdoing by Bridgecorp Finance the guarantors would have to have gone considerably further than they did in tendering this document. The document is of little weight in the attempt to prove a particular association of the names Bridgecorp Finance Limited and Bridgecorp Holdings (Australia) Pty Limited. However even if such an association might be inferred it is difficult to see that this takes the guarantors any particular distance bearing in mind the manner in which the notice of motion has been argued. There is no reference to any such association in the pleadings. The document does not assist the guarantors.
24 Subject to issues of quantification which are consensually to be stood over for further consideration next week the proper exercise of the Court's relevant jurisdiction is to make orders as sought in the amended notice of motion.
25 I stand the proceedings over to Monday at 10.00am before me.