(2011) 15 BPR 29,411
Spencer v The Commonwealth (2010) 241 CLR 118
[2010] HCA 28
Suncorp-Metway Limited v Nam Property Holdings Pty Limited [2010] NSWSC 1078
Source
Original judgment source is linked above.
Catchwords
(2011) 15 BPR 29,411
Spencer v The Commonwealth (2010) 241 CLR 118[2010] HCA 28
Suncorp-Metway Limited v Nam Property Holdings Pty Limited [2010] NSWSC 1078
Judgment (3 paragraphs)
[1]
Solicitors:
Summer Lawyers (Plaintiff)
Unrepresented (First & Second Defendants)
Madison Marcus Law Firm (Third Defendant)
File Number(s): 2018/395918
[2]
Judgment
In these proceedings the plaintiff seeks judgment for possession of the whole of the land in folio identifier 701/1231641 being the land situated at and known as 5A Clareville Avenue, San Souci. Proceedings were commenced on 24 December 2018 and the present iteration of the claim is an amended statement of claim filed 18 March 2019.
The plaintiff relies on default under a mortgage given by the defendants as guarantors of a loan agreement made 11 May 2018 between Pacific 8 Pty Ltd (Pacific) and Spartan Sport Services Pty Ltd (Spartan). The third defendant was the sole director and company secretary of Spartan. Pursuant to that loan agreement, Pacific lent to Spartan the sum of $1,125,000.00. The defendants guaranteed Spartan's obligations and provided a registered mortgage over the Sans Souci property by way of security.
Charub Pty Ltd v Triandafyllou [2019] NSWSC 487 | Case summary | Zoe
On 7 June 2018 Pacific's interest in the loan agreement and mortgage was transferred to the plaintiff by Deed of Assignment. On 13 June 2018, the transfer of the mortgage from Pacific to the plaintiff was registered in the NSW Land Registry Services. No notice of the assignment was given to Spartan or to the defendants. The plaintiff accepts that Pacific did not provide a notice of assignment in accordance with the Deed of Assignment, with the result that the earliest date that the defendants became aware of the Deed of Assignment was on 19 March 2019 when it was served as part of exhibit SP-1 to the affidavit of Samantha Gabrielle Parsons sworn 19 March 2019.
On 23 April 2018 each of the first and second defendants appointed the third defendant as their attorney pursuant to general powers of attorney executed on that day. In each case the power of attorney was said to operate whilst the donor was overseas. The condition attached to each power of attorney was as follows:
My Attorneys [sic] powers pursuant to this Attorney are limited to matters pertaining to the mortgaging, refinancing and subdivision of the real properties situate at 5 and 5a [sic] Clareville Avenue, San Souci (being the whole of the lands contained within Certificates of Title 700/1231641 and 701/1231641).
The loan agreement and mortgage were relevantly executed by the third defendant for himself and pursuant to the powers of attorney given by the first and second defendants. The third defendant received independent legal advice prior to executing the documents.
The loan agreement was executed on 11 May 2018 and the mortgage was executed on 14 May 2018. The period of the loan agreement was for six months after the commencement date, being 11 May 2018.
On 11 November 2018 Spartan failed to repay the principal and thereby became in default of the loan agreement and the mortgage. The proceedings were then commenced.
A defence was filed by the third defendant on 7 February 2019 and by the first and second defendants together on 14 March 2019.
The first and second defendants, in their defence, apart from admitting and denying various paragraphs of the statement of claim, plead that they had no knowledge of the agreement with Pacific, that they at no time agreed to provide any guarantee, indemnity or security by way of registered mortgage, and at no time executed any of the documents. They also answer many paragraphs in the amended statement of claim by pleading that they "cannot admit or deny" the paragraph. Such a pleading is embarrassing. Some of the allegations are within the knowledge of the defendants. The affidavit annexed to the pleading requires enquiries to be made before it can be pleaded that an allegation is not admitted: see also Duke Group Ltd (In Liq)) v Arthur Youn (Reg) and Peat Marwick Hungerfords (Third Party) (No 13) (1991) 5 ACSR 212 at 222.
The third defendant pleads three substantive defences. The first is that he was not notified of the assignment and he asserts that s 12 of the Conveyancing Act 1919 (NSW) has not been complied with. Secondly, he says that Spartan is attempting to refinance the loan, that the refinance is expected to settle in the near future, and that Spartan would be ready, willing and able to repay the principal. In that regard the third defendant pleads that he has a right to redeem under the equitable principle of redemption to prevent the plaintiff from exercising its right to take possession of the property. Thirdly, the third defendant pleads that the plaintiff is not entitled to relief as it has not pleaded the requirement to issue a s 57(2)(b) notice under the Real Property Act 1900 (NSW).
The plaintiff, by notice of motion filed 19 March 2019, seeks summary judgment pursuant to r 13.1 Uniform Civil Procedure Rules 2005 (NSW), alternatively, that the defences filed by the defendants be struck out pursuant to r 14.28 UCPR.
I am satisfied of the following matters from the affidavit of Samantha Gabrielle Parsons sworn 19 March 2019 and from the documents in SP-1 exhibited to her affidavit:
(a) The execution of the general powers of attorney by the first and second defendants in favour of the third defendant;
(b) The absence of the first and second defendants whilst they were overseas from 24 April 2018 until 23 May 2018;
(c) The entry into the loan agreement by Spartan and the three defendants, executed by the third defendant as the sole director and sole company secretary of Spartan, as the attorney of the first and second defendants and for himself;
(d) The entry into the mortgage by the defendants by the execution of the third defendant as attorney for the first and second defendants and for himself;
(e) The default by Spartan in repaying the loan by 11 November 2018 or at all;
(f) That a demand was made to Spartan and the defendants together with the service of a notice under s 57(2)(b) of the Real Property Act on 3 December 2018;
(g) The right of the plaintiff to possession of the land pursuant to cl 18.3 of Memorandum AM544278P incorporated into the mortgage.
The principles in respect of summary judgment are well established and are well known. In terms of what has been said in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129, Spencer v The Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 at [20]-[25] it would have to be shown that the defences were so obviously untenable that they could not possibly succeed, that they were manifestly groundless or that their prospects of success were only fanciful. It is further accepted that the power to enter summary judgment should be exercised with great care and an order should only be made where it is clear that there is no real question to be tried.
In relation to the defence of the first and second defendants, although those defendants may establish that they had no knowledge of the loan agreement and mortgage and that they did not execute the documents, in the face of the powers of attorney, the specific matter to which those powers of attorney were directed, and the execution of the loan agreement and mortgage by the third defendant pursuant to the specific power in the powers of attorney, the first and second defendants do not establish any defence to the claim. In substance, the first and second defendants expressly authorised the third defendant to enter into the loan and mortgage arrangements which he did. Indeed, the express limitations on his authority lead to a strong inference that the arrangement he entered into, or some similar arrangement, was expressly contemplated by the defendants before the first and second defendants left for overseas.
The remaining matters denied in the first and second defendants' defence are proved by the affidavit of Ms Parsons and the documents which she exhibits.
As far as the third defendant's defence is concerned, the second matter relied upon (the proposed refinance) is now widened, since the filing of this defence, to rely on the fact that the third defendant has put the property on the market for sale. This matter was relied upon by the third defendant at the outset of the hearing of the motion for an adjournment so that the auction process could be completed. I refused the adjournment, and said that I would give reasons in my judgment on the motion.
The evidence disclosed that a Sales Inspection Report and Exclusive Agency Agreement was signed by the third defendant with McGrath on 11 April 2019. The Agreement provides that the property is to go to auction on 25 May 2019 and the agent estimates a selling price of between $1.8 million and $1.9 million.
The third defendant said this in an affidavit sworn 20 April 2019:
5. In or around February 2019 I started to consider selling 5A Clareville Avenue, Sans Souci (Property) due to inability to refinance funds required to satisfy the loans to the Company secured by way of mortgages and caveats on the Property.
6. In or around early to mid March 2019, I was still thinking about selling the Property, although I had not made a decision.
7. In or around mid to late March 2019 I spoke to my agent Bill Tsounias about selling the Property.
8. On or about 10 April 2019, I rang my agent Mr Tsounias. We a had conversation to the following effect:
Me: Hi Bill, can you please arrange to bring paperwork to my house
tomorrow for the sale of the property?
Bill: Ok.
9. On 11 April 2019, Mr Tsounias visited me at my house with a Sales Inspection Report and Exclusive Agency document. I, along with the other vendors, Mrs Sevasti Triandafyllou and Chris Triandafyllou, also the first and second defendants, executed this document. Annexed hereto and marked "A" is an executed copy of this document.
When the motion was first listed for hearing before me on 29 March 2019, counsel for the third defendant sought an adjournment on the basis that there was a lender who was willing to lend sufficient money to pay out the plaintiff and a caveator within two weeks. Mr Soon of counsel for the third defendant said that if his client was given the opportunity to pay out the loan, and it did not happen, complete fairness had been shown to him.
On that occasion, nothing was said about any desire on the third defendant's part to sell the property himself. Nor does the affidavit dealing with that desire say anything about what happened to the lender in respect of whom I granted the adjournment on the last occasion.
Default occurred on 11 November 2018 and the statement of claim was filed on 24 December 2018. The third defendant has had ample opportunity to sell the property so that the money could be repaid. The third defendant was given an adjournment so that the loan could be repaid. That did not come to fruition, and there is no further evidence about the matter. The plaintiff has moved for summary judgment. Where the third defendant's own evidence is that he could not seemingly make a decision about selling the property until April 2019, no basis is shown for adjourning the matter further.
The third defendant, nevertheless, relied upon the same material to suggest that summary judgment ought not to be given because of the third defendant's right to redeem the mortgage. The third defendant accepted that it was unusual for the matter to be raised by way of defence rather than by the seeking of an injunction to prevent a mortgagee's sale. The third defendant accepted, however, that if he was permitted to raise the matter by way of defence, he would need to establish the two requirements for the obtaining of an interlocutory injunction, namely, that there was a serious question to be tried and that the balance of convenience favoured the defendant.
Even if it were to be accepted that there was a serious question to be tried because a genuine agency agreement had been entered into by the defendants for the property to be sold, the matters I have dealt with above concerning my reasons for refusing an adjournment point against the balance of convenience favouring the defendant. The plaintiff was entitled to the repayment of its loan in November 2018. Failures on the defendants' part to repay the loan whether by way of refinancing or sale of the property, especially when viewed in the light of the apparent indecision on the third defendant's part to embark on a particular course, means that the matter should be brought to a head as soon as possible to enable the plaintiff to take expeditious steps to recover what is owing to it. The amount now outstanding is $1,314,964.62 on a loan of $1.125 million.
The defendant is not in any position to redeem the mortgage at the present time and has not been in such a position since default occurred. A mere desire by the defendant to sell the property himself on the basis that he would try harder to obtain the best price (according to his counsel's submission) cannot alter the fact that there is no immediate prospect of his being able to redeem the mortgage. I accept that an ability to redeem may in some circumstances enable the granting of an injunction to prevent a sale or completion of a sale (Harvey v Perpetual Nominees Ltd [2009] NSWSC 1379), but that is not the position here. The defendants do not have the ability to redeem. The position might have been different if a contract for sale had already been entered into for an amount that would pay out the amount owing to the plaintiff.
The desire to redeem does not constitute a defence.
As to the defence that the plaintiff did not plead the requirement to issue a s 57(2)(b) notice, two things may be said. First, service of a s 57(2)(b) notice is not a pre-condition to the bringing of proceedings seeking possession for mortgage default: Suncorp-Metway Limited v Nam Property Holdings Pty Limited [2010] NSWSC 1078; (2010) 16 BPR 30,859 at [40]; Commonwealth Bank of Australia v ACES Sogutlu Holdings Pty Ltd [2013] NSWSC 1184 at [37]. Secondly, if it were necessary to serve a s 57(2)(b) notice, it would not be necessary to plead the service of such a notice because it would be condition precedent necessary for the party's case: see r 4.11 UCPR. I note that, in any event, a s 57(2)(b) notice had been served.
As far as the defence concerning the lack of notice of the assignment, it may be accepted that no notice of the assignment was given by Pacific.
Sections 51 and 52 of the Real Property Act relevantly provide:
51 Interest and rights of transferor pass to transferee
Upon the registration of any transfer, the estate or interest of the transferor as set forth in such instrument, with all rights, powers and privileges thereto belonging or appertaining, shall pass to the transferee, and such transferee shall thereupon become subject to and liable for all and every the same requirements and liabilities to which the transferee would have been subject and liable if named in such instrument originally as mortgagee, chargee or lessee of such land, estate, or interest.
52 Transfer of mortgage or lease transferee's right to sue
(1) By virtue of every such transfer, the right to sue upon any mortgage or other instrument and to recover any debt, sum of money, annuity, or damages thereunder (notwithstanding the same may be deemed or held to constitute a chose in action), and all interest in any such debt, sum of money, annuity, or damages shall be transferred so as to vest the same at law as well as in equity in the transferee thereof.
…
In Nemeth v Reachcord Pty Ltd (1998) 9 BPR 97729, Young J said at p16,559:
So far as s 12 [of the Conveyancing Act] is concerned, s 6(1) of the Conveyancing Act 1919 provides that the Act is not to apply to Real Property Act land, with certain exceptions. None of these exceptions apply here. Accordingly, prima facie, s 12 does not apply to the transfer of a mortgage of Real Property Act land. There is, in my opinion, no question of a pro tanto repeal of the Real Property Act by s 12 of the Conveyancing Act. This view is reinforced by the fact … that s 52 of Real Property Act 1900 does provide a full regime for the transfer of Real Property Act mortgages.
…
The section does not as compared to s 12 of the Conveyancing Act 1919, refer to any equities. This is understandable because the whole thrust of the Torrens Act is that equities are to be completely disregarded (see s 41).
It is true that because of judicial decisions and later amendments to the Torrens Act this statement is no longer completely true, but it certainly still is the whole flavour of the Act that a person who has a registered title is not to be defeated by equitable interests. There may be situations where a personal equity affecting the actual registered proprietor can be given effect to by the Court, but there is not a case where an equity in the true sense, or some sort of estoppel which affects the assignor, survives a registered assignment under s 52 of the Real Property Act.
In Property Builders Pty Limited v Adelaide Bank Limited [2011] NSWCA 266; (2011) 15 BPR 29,411, Bathurst CJ (Allsop P and Sackville AJA agreeing) said at [40]:
So far as the third proposition is concerned [that no notice of the assignment was given to Property Builders under s 12 of the Conveyancing Act 1919 - see at [32]], it was conceded in argument that notice under s 12 of the Conveyancing Act 1919 was not necessary to vest the chose in action in Adelaide Bank. That concession was correct. Section 52 of the Real Property Act 1900 provides that the debt vests to the transferee at law as well as in equity by virtue of every such transfer. As such, the assignment does not need to be perfected by a notice pursuant to s 12 of the Conveyancing Act 1919. In that regard s 6(1) of the Conveyancing Act 1919 provides that where it is inconsistent with the Real Property Act 1900, the Conveyancing Act 1919 shall not apply to lands coming under the provisions of the Real Property Act 1900. This analysis is consistent with the analysis of Young J in Nemeth v Reachcord Pty Limited [1998] NSWSC 271; (1998) 9 BPR 16,557 at 16,559.
In Gilmour v Pyramid Building Society (In Liq) (1995) 6 BPR 97,531 a mortgagee assigned a mortgage to a building society, but the mortgagee did not give notice of the assignment either to the borrower or to the guarantors. When the building society brought proceedings against the guarantors, one of their defences was the absence of a notice of assignment. The judge at first instance found in favour of the building society. On appeal, Meagher JA (with whom Priestley and Clarke JJA agreed) said (at p.13,982):
The debt secured by the Riverwood mortgages was perfectly regular. There is no reason to impugn its assignment to Pyramid Building Society by the memorandum of transfer on 21 February 1990. No notice of that assignment was given either to the mortgagor or to the guarantors. However, under the Real Property Act, perhaps anomalously, no notice is necessary. On 29 October 1990 that assignment was registered, and, for relevant purposes, that registration constituted notice to all the world. In my view, that assignment was an assignment not only of the mortgaged property and of the personal covenant but also of the guarantee contained in that document, which was an integral part of the mortgage: see Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 423.
The defendant pointed to Meagher JA's statement, that "perhaps anomalously" notice was not necessary under the Real Property Act, to suggest that this cast doubt on what Young J had said in Nemeth. He also made a formal submission that the decision of the Court of Appeal in Property Builders was wrong in upholding Nemeth. He accepted, however, that I was bound by Property Builders and, for that matter, the holding in Gilmour.
Accordingly, the failure of Pacific to serve a notice of assignment is no bar to the validity of the assignment which is perfected by the registration of the Transfer of Mortgage on 13 June 2018.
As with the defence of the first and second defendants, the other paragraphs which are denied or not admitted by the third defendant are proved by the matters in Ms Parsons' affidavit and the exhibited documents.
For the above reasons, the defendants disclose no defence to the claim for possession made by the plaintiff and, accordingly, there is no real question to be tried.
I make the following orders:
1. Judgment for the plaintiff for possession of the whole of the land in folio identifier 701/1231641 being the land situated at and known as 5A Clareville Avenue, San Souci;
2. The defendants are to pay the plaintiff's costs of the proceedings.
[3]
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Decision last updated: 03 May 2019