GLENAUCHEN PTY LTD v CIRCUIT FINANCE PTY LTD No. SCCIV-00-285 [2001] SASC 61

1 This is an application for leave to appeal against the judgment of a judge of this court given on 28 February 2001. The judge dismissed an appeal against the decision of a master. The master had refused applications to stay the execution of a warrant for possession of property and alternatively an application to set aside the warrant.

2 By paragraph (3)(b) of the Proviso to s 50(1) of the Supreme Court Act 1935 (SA) a further appeal may not be brought unless leave to appeal is obtained from the judge or from the Full Court. The applicant has elected to seek leave from the Full Court as Rule 94.01(1)(b)(ii) permits.

3 The court's practice has been to grant leave to appeal only if a question of general principle arises. The court will usually consider whether there is reason to doubt the correctness of the decision under consideration. However, in the end the court must act as the interests of justice require.

4 In December 1998 the applicant borrowed $300,000.00 from Circuit Finance Pty Ltd, the respondent ("Circuit Finance"). The terms of the loan required repayment of the principal on 18 December 1999. Interest was payable for the term of the loan at 40 percent per annum reducing to 20 percent per annum if the interest was paid on the due date and the appellant was not otherwise in default. The borrowings were secured by a second mortgage over land owned by the applicant. An amount in excess of $1.3m was due on the first mortgage. Interest was accruing on that mortgage at the rate of approximately $14,000 per month.

5 The applicant fell into arrears in repaying interest. The principal was not repaid on 18 December 1999 as agreed. Circuit Finance commenced proceedings for an order for possession in March 2000. The proceedings culminated in an order for possession being made in August 2000. A warrant was issued some weeks later. For many months the applicant claims to have been attempting to refinance the debt. To date those attempts have been unsuccessful. The position is that the principal has been outstanding for more than fifteen months and interest continues to accrue. The applicant has made no attempt to further secure Circuit Finance.

6 The applicant's submissions primarily raise issues which concern the adequacy of the notice of demand made upon the applicant. It is suggested that the amount of the indebtedness has been grossly understated. Further it was said that the interest provisions amounted to a penalty. There does not appear to be any substantive defence raised in regard to the claim that the principal of $300,000 has been outstanding for more than fifteen months.

7 On appeal the judge dismissed each of the applicant's contentions. He provided detailed reasons dealing with each submission. The judge rejected as untenable a suggestion that there was no present indebtedness. The judge further rejected contentions that the notice of default under s132 of the Real Property Act 1886 (SA) was invalid. The judge took the view that the notice adequately stated the nature of the remedy required - payment of the amount outstanding. He rejected an argument that the notice did not allow the appellant one month in which to remedy the default. The statutory period of one month is subject to the terms of the agreement between the parties. The agreement provided a period of notice of three days. The notice of default specified a longer period.

8 The judge rejected the contention that the notice was flawed as it claimed more than was due. In this respect, the judge was not satisfied that the interest calculation was grossly inaccurate.

9 The judge further pointed out that insofar as an attack was made on the amount due, no attempt had been made to pay into court the amount of the debt or otherwise secure the mortgagee's position. The judge also emphasised the long delay that occurred before the applicant sought relief from the court. No complaint was made about the terms of the notice for many months. In these circumstances, the judge considered that the applicant would not be entitled to equitable relief in any event. The judge rejected the contention that the interest terms amounted to a penalty in the circumstances of this particular matter.

10 Finally, the judge considered that the applicant had not made out a case for a stay. He was not satisfied by the applicant's assertions, that refinancing arrangements were pending and justified an exercise by the court of its general discretion to order a stay.

11 The judge's decisions on these points do not raise issues of principle. There is no obvious error in his reasoning. The decision is not one that departs from what would be expected in the general circumstances. The applicant is indebted to Circuit Finance for a substantial sum. The applicant has been in default of its obligations for an extended period.

12 Any complaint that the applicant has about the payment, calculation or rate of interest can be addressed in other proceedings.

13 We are unanimously of the opinion that the leave to appeal should be refused.