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[2009] NSWSC 288
plaintiff. Judgment for Permanent Custodians Limited for possession of the land and the mortgage debt with accrued interest, with the sum to be calculated in accordance with the findings. Judgment for the...
The court found that Leybourne was bound by the signed loan documents and that Permanent Custodians Limited was the proper mortgagee to enforce them. The loan had been advanced, the transaction completed and the defendant's payment default was not disputed. The court rejected the arguments about the agreement's form, the signed pages, the lender's authority, the incorporated mortgage terms and statutory relief. It ordered possession and payment of the mortgage debt with interest, and dismissed the cross-claim. The plaintiff did not prove that its solicitors' accounts could be added to the loan balance as enforcement expenses.
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In Permanent Custodians Limited v Leybourne [2009] NSWSC 288, Michael Grove J considered a mortgagee's claim for possession and the mortgage debt, together with the borrower's cross-claim. The judgment was delivered on 20 April 2009 after a hearing from 23 to 27 March 2009.
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Brett Leybourne applied for a $432,000 loan through the broker Aussie Loans. The application said the funds were for refinancing an existing mortgage, buying his former wife's interest in the property, and making home improvements. The application and supporting valuation described the property as worth $540,000 ([8]-[10]). The loan documents were sent to Leybourne in November 2003. He initialled the pages and signed the acceptance and acknowledgement pages ([11], [14], [20]-[21]). Settlement took place on 2 December 2003, the loan funds were used for the stated purposes, and PCL's mortgage was registered ([17]).
Leybourne later defaulted on the payments. He did not contest that default, and the evidence was that he had made no payment since April 2006 ([18], [52]). He nevertheless challenged PCL's claim on several grounds. He questioned whether PCL was the correct plaintiff, whether the loan documents formed a binding contract, whether their terms had been supplied and incorporated, whether the mortgage documents had been properly executed, and whether the transaction could be challenged under the Consumer Credit Code or the Contracts Review Act. He also disputed the valuation and claimed that the lender's solicitors' accounts should not be added to his debt.
The judge found that PCL was the registered mortgagee and trustee of the relevant funds. The judgment explains that Australian Mortgage Securities Limited managed the lending program, while Mortgage Asset Management Pty Limited, later renamed AFIG, acted as mortgage manager. AFIG used the trading name GE Money Home Lending ([3]-[7]). Grove J found no substance in the contention that PCL was the wrong plaintiff ([6]).
The court entered judgment for PCL for possession and the mortgage debt, with interest. It also entered judgment for PCL as cross-defendant on Leybourne's cross-claim. However, the court did not accept that PCL had proved the legal accounts could be debited to the loan as enforcement expenses ([54]-[59], [67]-[68]).
The court relied on the signed documents and the transaction's completion. Leybourne pointed to the covering letter's statement that sending the documents did not itself comprise an agreement to lend. The judge considered that statement in context: the documents were subsequently executed, the loan funds were advanced, and settlement occurred. He referred to Equuscorp Pty Ltd v Glengallan Investments and Toll (FGCT) Pty Ltd v Alphapharm Pty Limited on the effect of signing documents intended to govern legal relations ([12]-[13]). He concluded that the defendant was bound by the loan agreement.
The judge also rejected the suggestion that initials on the agreement pages were insufficient. Leybourne signed the pages headed “Acceptance of Borrower” and “Borrower’s Acknowledgement”, and the court accepted that the documents were presented as described in the covering letter. The acceptance page invited him to accept the offer on the terms set out above, while the acknowledgement stated that he had read and understood the loan contract and received the mortgage terms ([14], [20]-[21]). The judge treated the signed pages, initials and subsequent performance as parts of the same transaction.
Nor was a deed required. Grove J stated that “[t]here is no obligation for an agreement of this kind to be implemented by deed” ([15]). He also rejected the arguments about the mortgage certification. The substitution of solicitor Ashleigh Powter for the solicitor whose name had originally been typed on the mortgage was, in the judge's view, a change in the person certifying the document, not a relevant variation of the mortgage ([19]). The lender accepted that its solicitor Michelle Dixon had signed on its behalf, and her authority was supported by the solicitor instructions and evidence ([22]-[24]).
The terms incorporated by reference were also found to bind Leybourne. The signed acceptance and acknowledgement referred to the loan terms, while the mortgage acknowledgement referred to the memorandum filed in the Land Titles Office as No 2584554 ([21], [24]-[25]). The judge accepted that the terms had been enclosed with the documents. The judgment also notes that Leybourne had experience with a similarly structured mortgage, including an earlier mortgage involving PCL ([24]-[26]).
The statutory relief arguments failed for separate reasons. For hardship relief under ss 67 to 69 of the Consumer Credit Code, the relevant threshold under s 66(3) excluded credit above the prescribed amount. The amount advanced was $432,000, while the highest ceiling shown in the evidence was $350,570 ([33]). The threshold applied regardless of whether the property's actual value was lower than the original valuation, so the judge did not need to decide whether that valuation was negligent ([37]).
The judge also found no basis for relief for an unjust transaction under s 70 of the Code or under the Contracts Review Act. He found no evidence that the contract was unjust when made, that the interest rates were unjust, or that the terms were unusually burdensome ([34]). Although he accepted that unfair pressure or tactics by a person other than the lender might be relevant under s 70(2)(j), he found no evidence that the valuer had applied such pressure or tactics to Leybourne ([35]-[36]).
Default was established and not contested. The judgment refers to clauses 15 and 23.3 of the incorporated terms, the notices given under the Code and the Real Property Act 1900, and s 60 of that Act. Grove J found that PCL had proved its entitlement to possession and the mortgage debt with accrued interest ([52]-[53]).
The enforcement-expense issue was different. The relevant clauses provided for payment of reasonable enforcement expenses ([55]-[56]). But the plaintiff did not put forward specific evidence identifying which legal accounts, or which parts of them, qualified as enforcement expenses. The judge held that the fact the solicitors had been retained for enforcement did not remove the plaintiff's burden to prove that the amounts fell within the contractual terms ([57]-[59]). He therefore did not find that those accounts could be added to the loan debt.
The judgment does not purport to establish a broad new rule about loan documentation. Its reasoning applies existing authorities to the facts: in particular, the principles in Equuscorp and Toll concerning signed documents and contractual commitment ([12]-[13]). The judge's treatment of the covering letter is fact-specific. Although the letter said that document submission was not itself an agreement to lend, later execution and performance showed that the parties entered into legal relations ([40]-[41]).
Likewise, the ruling about initialled pages is not that initials always bind a signatory. The judge expressly treated the circumstances as important. Leybourne had signed the acceptance and acknowledgement pages, the court accepted that the documents were supplied together, and the parties carried out the transaction ([14], [20]-[21], [63]). In discussing Charles v Parkinson, Grove J said it did not establish that a party could never be bound by a document initialled but not signed in full; the circumstances and the parties' conduct had to be examined ([63]).
The decision also illustrates how a court may assess the incorporation of mortgage terms by reference. Here, the lender relied on signed acknowledgements and a specific reference to the filed memorandum, alongside evidence about the documents sent to the borrower ([24]-[25]). The judgment does not decide that every reference to a filed memorandum will be sufficient in every transaction.
On consumer-credit relief, the judgment applies the threshold described in s 66(3) to the credit amount advanced. Because the amount exceeded the relevant limit, the hardship provisions in ss 67 to 69 were unavailable on these facts ([32]-[33]). Separately, the court considered the evidence of injustice under s 70 and the Contracts Review Act and found it insufficient ([34]-[36]).
Finally, the court distinguishes entitlement to the principal mortgage debt from proof of particular enforcement expenses. Although the contractual documents contemplated reasonable enforcement expenses, the lender still had to establish that the claimed accounts came within those provisions ([55]-[59]). The judgment's result thus included the mortgage debt and interest, but did not treat the solicitors' accounts as automatically part of that debt.
At [13], Grove J states: “The defendant's contention that he is not bound by the Loan Agreement is rejected.” In context, this follows the court's consideration of the signed documents, the defendant's acceptance and the performance of the loan. In plain English, the court did not accept that the covering letter or the form of execution prevented the agreement from binding the parties.
At [15], the judge says: “There is no obligation for an agreement of this kind to be implemented by deed.” This rejects the argument that the loan agreement was ineffective because it was not executed as a deed. It does not establish a rule about every kind of contract; it addresses the agreement before the court.
At [33], Grove J states that the $432,000 credit “is inevitably excluded from relief under those provisions.” The provisions in question are the Code's hardship provisions in ss 67 to 69. The reason was the credit amount's relationship to the threshold in s 66(3), not a finding about the merits of Leybourne's hardship circumstances.
At [36], the court concludes: “There is no relief available to the defendant pursuant to s 70 of the Code.” The preceding reasoning is evidentiary: the judge found no evidence of the unfair pressure, undue influence or unfair tactics alleged to support relief.
At [59], the judge says: “I am not satisfied that the plaintiff has demonstrated that these accounts are amounts which it can, as enforcement expenses, add to the defendant's debt account.” In plain English, the contract's enforcement-expense clauses did not relieve the plaintiff of proving that the specific bills qualified.
At [67], the judge records that judgment would be entered for possession and a sum calculated to include the mortgage debt and default interest, as well as for the cross-defendant on the cross-claim. The exact monetary amount was to be calculated in accordance with the court's findings.
The judgment is most relevant to fact patterns where a borrower disputes a loan agreement after signing an acceptance and acknowledgement, despite the loan having been advanced and the transaction having been completed. Its analysis may be useful where the borrower says that a covering letter made the documents provisional, that initials rather than full signatures appear on some pages, or that terms were incorporated through a separate document. The court's reasoning depends on the particular documents, the evidence about delivery, and the conduct of the parties. It should not be read as making initials or a general reference to terms conclusive in every case.
The decision also concerns a mortgagee that is a trustee within a managed lending arrangement. The plaintiff's identity was supported by the title, the trust and servicing documents, and evidence identifying the roles of the related entities ([3]-[7]). It may therefore be relevant where a borrower questions which entity holds the mortgage or has authority to enforce it, but the outcome depended on the evidence in this case.
For Consumer Credit Code arguments, the judgment is relevant where a debtor seeks hardship relief but the amount of credit may exceed the statutory threshold described in s 66(3). The court treated the amount advanced as decisive for access to ss 67 to 69, without needing to resolve the disputed property valuation ([33], [37]). For an unjust-transaction argument, the case shows the importance the judge placed on evidence of the circumstances at the time of contracting, including unfair pressure, undue influence, unfair tactics or unusually burdensome terms ([34]-[36]).
The expenses ruling is relevant where a mortgagee relies on a contractual clause allowing recovery of reasonable enforcement expenses. The case illustrates that a contractual right to such expenses does not itself prove that every legal account can be added to the secured debt. The plaintiff still had to provide evidence connecting the amounts claimed to the contractual description ([55]-[59]).
The supplied judgment contains no account of later judicial treatment of Permanent Custodians Limited v Leybourne. It therefore does not establish whether later courts followed, distinguished, approved or questioned its reasoning. No later case can be identified from the judgment text itself, and none is added here.
The authorities discussed within this judgment are earlier authorities, not later treatment of this decision. Grove J applied or discussed them to resolve the issues before him. For example, he relied on Equuscorp and Toll in considering signed loan documents ([12]-[13]), distinguished Pianta in relation to the lender's acceptance of its solicitor's signature ([23]), and distinguished Kingsley's Chicken and Riganese based on differences in their facts ([64]-[65]). Those relationships explain the reasoning in this case, but do not show how later courts treated this case itself.
The court did not decide whether the original $540,000 valuation was negligent. It found that the credit amount exceeded the hardship threshold regardless of the property's value, and stated that it was unnecessary to decide negligence for that purpose ([30]-[38]). The judgment therefore does not determine the separate valuation claim Leybourne had commenced against the valuers.
The court also did not determine the final dollar amount of the mortgage debt in the judgment itself. It directed that the amount be calculated in accordance with its findings, including mortgage debt and interest at the default rate ([67]-[68]). It did not accept that the legal accounts had been proved as amounts addable to the debt, while making an order for costs instead ([58]-[59]).
The judgment reserved the possibility of submissions about a stay of execution of the writ for possession ([68]). It does not record the outcome of any such later application.
More generally, the decision does not lay down a universal rule about when initialled pages, a covering letter or a filed memorandum will bind a borrower. Its conclusions depend on the wording and arrangement of the documents, the evidence of their delivery and execution, and the completion of this particular transaction. Nor does it resolve all possible applications of the Code's unjust-transaction provisions. It decides only that the evidence presented in this case did not establish the claimed grounds for relief.
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CITATION : Permanent Custodians Limited v Leybourne [2009] NSWSC 288
DECISION : Judgment for Plaintiff Judgment for Cross Defendant on Cross Claim
CATCHWORDS : POSSESSION OF LAND - Claim by mortgagee - Identity of entity with whom borrower dealt - Whether deed necessary to implement loan agreement - Sufficiency of acknowledgement by initials on parts of documents - Authority of solicitor to sign agreement on behalf of lender - Whether mortgage relevantly altered - Incorporation of conditions by reference to memorandum filed in Land Titles Office - Property valuation submitted by borrower now challenged as to assessment - Amount of advance excluding relief under hardship provisions of Consumer Credit Code - Agreement and terms neither unjust in terms of Code or Contracts Review Act - Debit of enforcement expenses to borrower's account - Untenable cross claim - Entitlement of plaintiff to judgment demonstrated
LEGISLATION CITED : Australian Securities & Investments Commission Act 2001 Real Property Act 1900
Beneficial Finance Ltd v Karibas (1991) 25 NSWLR 256 Charles v Parkinson [2000] FCA 1467 Equuscorp Pty Ltd v Glengallan Investments (2004) 218 CLR 471 Jones v Dunkel (1959) 101 CLR 298 Kingsley's Chicken Pty Ltd v Queensland Investment Corporation [2005] ACTSC 117 Masters v Cameron (1932) 91 CLR 335 CASES CITED : New Hart Builders Ltd v Brindley 1975 1 All ER 1007 Nguyen v Taylor (1992) 27 NSWLR 48 Pianta v Nation Finance & Trustees Ltd (1964) 180 CLR 146 Provident Capital Ltd v Printy [2008] NSWCA 131 Riganese v M & B Farmer Nominees [2008] SADC 99 Riz v Perpetual Trustees Australia Ltd [2007] NSWSC 1153 Toll (FGCT) Pty Ltd v Alphapharm Pty Limited (2004) 219 CLR 165 West v AGC (Advances) Ltd (1986) 5 NSWLR 610
PARTIES : Permanent Custodians Limited - Plaintiff Brett Leybourne - Defendant
COUNSEL : S Docker - Plaintiff In person - Defendant
IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION
15297/06 - PERMANENT CUSTODIANS LIMITED v BRETT LEYBOURNE
JUDGMENT 1 HIS HONOUR: The plaintiff seeks judgment for the possession of land and for a sum of indebtedness calculated by reference to a Loan Agreement. I use that expression in harmony with the title on the document but I note the contention by the defendant that its true character is that of a pre-contractual statement. The plaintiff is the holder of a mortgage secured upon the land. It is not contested that the defendant is in default of payments due under the mortgage but he contends that it is either unenforceable or, for various reasons, he should be relieved in whole or in part from the consequences of default. The pleadings include a cross claim by the defendant against the plaintiff. 2 The defendant has represented himself in the proceedings. The evidence shows that at the relevant time of obtaining the loan the defendant was in practice as a solicitor and it was accepted that he remains the holder of a current practising certificate. He has stated that he has no particular expertise in conveyancing nor in civil litigation of this nature. I see no reason not to accept his assertions in those regards. I should note at the outset the defendant chose not to give evidence himself. 3 Before turning to some detail of the transaction out of which the claim arises, I should deal with some complaints which the defendant articulated in a variety of ways concerning the identity of the plaintiff. The plaintiff, Permanent Custodians Limited (PCL) is the mortgagee registered on Real Property Act title to the subject land. The defendant stated that he had not dealt with PCL (although he did not deny that he signed the mortgage in its favour) and he drew attention to the specification of other corporations in documents and correspondence during the course of his dealings in the matter. These included Mortgage Asset Management Pty Limited (MAM), Australian Mortgage Securities Limited (AMS), AFIG Wholesale Pty Limited (AFIG) and "GE Money". 4 The general thrust of the defendant's submissions seemed to culminate in a suggestion that, in some way, PCL was not a plaintiff who could bring these proceedings particularly, as I understood him, the claim for money due under the Loan Agreement. The opening words of the Loan Agreement are "Permanent Custodians Limited ACN 001426384 in its capacity as Trustee is pleased to offer you (etc)". 5 To counter what seemed to be being alleged, counsel for the plaintiff tendered a collection of documents which evidenced the structure of arrangements whereby a pool of funds was available for specified purposes including lending money on mortgage security. The relevant pool was named the "ARMS II Program". In his written outline of submissions counsel for the plaintiff has referred with precision to the enabling provisions within the documentation whereby the investment of funds was managed and the program operated. It was obviously a more sophisticated arrangement than might be necessary to conduct, say for example a contributory mortgage, but in essence what was created was a typical scheme for making finance available to borrowers from pooled money. It is not necessary to recapitulate the detail of counsel's submissions but I will mention the role of some of the corporations about which the defendant has expressed is his disturbance. 6 PCL became the Trustee of the Funds. AMS was the Manager and Master Servicer with powers of administration and day to day investment. AMS was required to comply with obligations pursuant to a Master Organization and Servicing Agreement (MOSA). Pursuant to the Trust Deed and MOSA, obligations included AMS instructing approved solicitors to settle loans in accordance with instructions contained in an AMS Solicitors Pack, which was supplied when the occasion arose. MOSA contained provisions giving AMS authority to delegate its powers and it engaged MAM to act as mortgage manager for distribution of loan products and servicing the loans on behalf of itself and PCL. On 1 December 2003 MAM changed its name to AFIG. AFIG trades as GE Money Home Lending and the evidence shows that a shortened form "GE Money" was used in letterhead and some correspondence. Exhibit K consists of a historical organizational extract from the database of the Australian Securities and Investments Commission. The information there is entirely consistent with the stance of the plaintiff and there is no substance in the complaint by the defendant that he has been sued by "the wrong plaintiff". 7 It is convenient to interpolate that there are erroneous references to Wizard Home Loans or Wizard in some documentation and correspondence. As I will recount, the defendant sought financial accommodation through a broker using the title Aussie Loans. In a letter dated 7 January 2004 addressed to the firm under which the defendant then practised (Langley Wright & Associates) the solicitors for the lender (Turnbull Hill) drew attention to the error and also to a mis-statement that Wizard would pay for preparation of the mortgage documents and an adjusted account was sent to the defendant. It was not suggested that he did not settle this account and an endorsement on the copy letter indicates "Paid 19/4/04". The mistaken references to Wizard instead of Aussie Loans as introducing the defendant as an applicant for a loan have no effect upon any issue in this litigation. 8 The origin of the dealing is recorded in a fax dated 3 October 2003 to MAM from Mr Rob Smith of Aussie Loans which attached a "Standard Mortgage Application" on behalf of the defendant. The application contained details about his occupation, income and current liabilities. It is not disputed that it is the defendant's signature appearing in the appropriate parts of the documentation. On the page headed "Security offered for the loan" the estimated value or purchase price of the owner occupied property (20 Duperry Street, Wentworth Falls) is stated to be $540,000. The loan amount asked for is $432,000. Also forwarded was a property valuation dated 11 September 2003 made by Mr Gregory Wickham of Messrs Megaw & Hogg, which assessed a market value of $540,000. I note that the valuation states the address to be 20-26 Duperry Road, Wentworth Falls although elsewhere it is referred to simply as No 20. However, it appears to be a very large block and it is correctly detailed in the valuation as Lot 1 in DP 1027426. 9 By letter dated 7 November 2003 Aussie Loans wrote to the defendant confirming that the loan which he sought had been approved in principle. The lender was specified as PCL. Throughout the documentation the purpose of the loan has been consistently represented to be that the defendant wished to refinance an existing mortgage which had been taken by himself and his former wife, that he wished to purchase the interest of his ex-wife from her and to undertake some improvements to the property. 10 On 11 November 2003 Turnbull Hill, an approved firm of solicitors, was instructed to implement the loan and security in accordance with instructions conveyed in the AMS Solicitors Pack. The instructions to the solicitors broke up the loan into stated purposes of refinance $234,100; payment to ex-wife $130,000 and home improvements $67,900. 11 Accordingly on 13 November 2003 Turnbull Hill wrote a letter addressed to the defendant enclosing documents as scheduled in the letter. The firstnamed enclosure is described as "loan contract including declaration by borrower and borrower's acknowledgement (x 2)". 12 The defendant has made repeated reference to the statement in the letter following the schedule of documents which reads "the submission of the above documents does not comprise and is not intended as an agreement to lend". This has led to a number of submissions by the defendant including that the letter demonstrates that there was no intention to create legal relations, there was no contractual offer and that the document entitled "Loan Agreement" does not constitute a contract (see defendant's Statement of Issues). These submissions ignore what happened subsequently, namely the execution and the exchange of the necessary documents and the performance of the agreement by payment to the defendant of the money which he requested. In Equuscorp P/L v Glengallan Investments 2004 218 CLR 471 it was said, with particular reference to contentions of the respondents in that case which it is not necessary to detail: "The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it" - at 483 per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ. 13 Relevant observation is also made in Toll (FGCT) P/L v Alphapharm P/L (2004) 219 CLR 165, viz: "It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it."
The defendant's contention that he is not bound by the Loan Agreement is rejected. 14 The original Loan Agreement is Exhibit A. It bears a New South Wales duty stamp dated 16 December 2003. The defendant's submission that the agreement is not enforceable because duty has not been paid is also rejected. The defendant points out, as is the fact, that the document is not paginated. He drew attention to the fact that the last two pages (titled "Acceptance of Borrower and Borrower's Acknowledgement) bore his full signature whereas all the other pages bore only his initials. I understood him to invite consideration as to whether at the time he initialled those pages the signed pages were attached. He tendered no evidence that that was the case. The attachment of the documents is entirely consistent with the content of the covering letter. The defendant does not explain how he could have had the pages which he signed in full on some occasion separate from that upon which he placed his initials. I note that the coversheet of the document has a pencilled request "please initial all pages". Each page (including the coversheet) has a pencilled x which is accompanied by the defendant's initials except the last two pages which were signed in full in the spaces marked "signature of borrower". I am satisfied that the document was presented in accordance with the schedule in the covering letter. 15 The defendant submitted that, in any event, the Loan Agreement on its face was not executed in accordance with the requirements for execution of a deed. There is no obligation for an agreement of this kind to be implemented by deed. The circumstance that a loan agreement was constituted by a deed in a case referred to by the defendant (Provident Capital Ltd v Printy [2008] NSWCA 131) does not establish that a deed is obligatory in order to render a loan agreement enforceable. 16 In his address the defendant referred to Turnbull Hill's letter to him with enclosures giving the appearance of having been forwarded by mail. This deduction appears to be based solely upon the circumstance that the document is a letter. The address of the person who witnessed, in particular the mortgage in favour of PCL, gave the same address as the practice of Turnbull Hill. The defendant said that he attended at that office and received the letter by hand rather than in the mail. I see no reason not to accept this assertion but again it is not clear what he claims would turn upon that circumstance as affecting any issue in the litigation. The witness Patricia Wade described herself as "JP" and the evidence shows that the building in which Turnbull Hill conducted its practice was occupied by other businesses. There was no evidence that the witness was an employee of Turnbull Hill, although even if she had been it is not shown how this might have been of significance. He claimed that he did not receive the Terms and Conditions which were stated to be one of the enclosures but, as I will observe, this is inconsistent with a signed acknowledgement which he made. 17 The correspondence shows that Turnbull Hill were content for the defendant, obviously in his capacity as a solicitor, to act as their agent for the settlement which took place on 2 December 2003. Turnbull Hill's offices are in Charlestown, near Newcastle and the defendant's practice at the time was in Warrimoo in the Lower Blue Mountains area. Turnbull Hill had forwarded the loan funds to the defendant's trust account pending settlement. Settlement required the delivery of documents including a discharge of the existing mortgage over the property, a transfer to the defendant of his ex-wife's interest, the Certificate of Title, an executed mortgage in favour of PCL and a withdrawal of a caveat which had been placed over the title. The settlement duly took place, the necessary documentation was forwarded to Turnbull Hill and the defendant disbursed the loan funds as required. The mortgage which he entered provided for payment of interest only for the first five years and payment of interest and reduction of capital over a thirty year term. 18 Initially the payments due by the defendant were made as required pursuant to a direction given by the defendant to his bankers. However, he eventually fell into default and, as I have said, this is not contested. The defendant said that he suffered a major heart attack and was admitted to hospital for surgery. I do not disbelieve the defendant but I note that there was no evidence called in relation to these matters. There is some correspondence subsequent to default, in which the plaintiff declined proposals by the defendant seeking to vary terms relating to his indebtedness. 19 I should deal with two particular matters raised by the defendant concerning the documentation. The mortgage document itself (part of Exhibit J) was obviously prepared in anticipation that it would be certified correct for the purposes of the Real Property Act by Kenneth Michael Hill, solicitor for the mortgagee, as his name was typed on the form. In the event his name was struck out and the name Ashleigh Powter substituted, and a signature appearing to be that of Mr Powter was endorsed. The defendant signed as mortgagor and the witness was Patricia Wade, the abovementioned Justice of the Peace, whose address is the same building in which Turnbull Hill solicitors practice. It is the defendant who is acquiring obligation pursuant to the mortgage and the mortgagee is obviously acquiring a benefit. As the document shows, it is not a requirement for the beneficiary to sign as such but what is required is certification as indicated. This has been done by a solicitor acting on behalf of the mortgagee. The defendant pointed to the absence of initialling where the alteration of Mr Hill's name to Mr Powter's occurred and claimed that there has therefore been a variation to the document. This is not an amendment to the document as such and is not something about which the Solicitors Pack required Turnbull Hill to obtain approval from AMS. In no sense was there any relevant variation to the mortgage but what happened was merely the deletion of the name of one solicitor who at the time of preparation was apparently anticipated to be going to certify its correctness and the substitution of the name of another solicitor who in fact made the certification. 20 Second, the defendant claimed that in some way (apart from his contention that it was no more than a pre-contractual statement) he was not bound by the Loan Agreement because he had only initialled the pages as I have indicated and had not placed his full signature on them. The page before the page entitled Acceptance by Borrower has a space for signature by the lender but no designated space on that page for signature by the borrower. Again, this is consistent with the document containing all the pages including the Acceptance by Borrower which is the page which he was required to sign. 21 That page of acceptance commences with the express invitation "If you want to accept the offer to enter into a Loan Contract on the Terms and Conditions set out above, please sign in the space below and return to Turnbull Hill Lawyers". The defendant did sign as invited. It can only make sense if the "above" refers to the initialled pages and the documentation including expressly the Terms and Conditions specified in the covering letter. I reject the intimation by the defendant that his initials are insufficient to incorporate the Loan Contract into the agreement which he entered. The defendant also signed the following page which amongst other acknowledgements stated "I have read and understand the nature and effect of the Loan Contract and the Security referred to in the contract" and "I have received a copy of the terms which will apply to my Mortgage". 22 The defendant has complained that the solicitors now acting for PCL in the litigation (Messrs Kemp Strang) have been reluctant to identify the signatory on behalf of the lender which appears on the Loan Agreement. The correspondence relating to this is Exhibit 3 and is self explanatory. There is no issue about the Loan Agreement having been signed on behalf of the lender by Ms Michelle Dixon, a solicitor in the employ of Turnbull Hill. 23 The AMS Solicitors Pack makes provision for authorized signatories. PCL does not assert that it is not bound by what Ms Dixon signed on its behalf, quite the contrary. The case referred to by the defendant, Pianta v Nation Finance & Trustees Limited (1964) 180 CLR 146 concerned parties who did not wish to be bound by what their solicitor had done. As I have said, PCL accepts that it is bound by what Ms Dixon signed. Turnbull Hill is an AMS panel solicitor. It is for them to provide AMS the details concerning any solicitor "working on AMS matters". Ms Dixon's evidence that she was authorized by a partner of Turnbull Hill to sign when required is uncontradicted. There is no basis upon which the defendant can assert that he is not bound because of some lack of authority on the part of Ms Dixon. Were it necessary to turn to it, the ratification by the plaintiff of what she had done is indisputable. Ms Dixon did not sign in the capacity of an officer of a corporation and references to statutory provisions in that respect are irrelevant. 24 The pro forma of the loan agreement has a printed space for signature underscored as "Permanent Custodians Limited by an authorized officer". The authority of a solicitor of an approved firm to sign is manifest in the terms of the Solicitors Pack. Ms Dixon has written the word "per" in front of the printed word "Permanent". She does not recall whether she wrote that at the time she signed or later. As I understand the defendant, he contends that the addition of the word "per" must have been to obscure the fact that Ms Dixon was not an officer of PCL and he seeks to draw the inference that she was therefore not a solicitor authorized to sign. The addition of the word "per" does nothing to add to or detract from the obligations entered into by the parties nor does it operate to render the agreement in some way unenforceable. The substantial Terms and Conditions of the mortgage are specified by incorporation of a memorandum filed in the Land Titles Office No 2584554. I am satisfied that, as stated in the Acceptance of the Borrower page signed by the defendant those Terms and Conditions were part of the offer which the defendant was invited to accept and he was supplied with the appropriate documentation. Although he has made submissions to the contrary, he gave no evidence that he did not receive the documentation specified. In the absence of evidence to the contrary I accept the accuracy of the statement in the schedule of the letter to the defendant of 12 November 2003 that a copy of the Terms and Conditions "to be retained by the borrower/s" was enclosed. 25 Further, annexed to the mortgage itself and signed by the defendant and witnessed by Patricia Wade, JP, is an express agreement including "you acknowledge that you received, read and understood a copy of the memorandum before signing this mortgage". The memorandum is identified as No 2584554 filed in the Land Titles Office. 26 In the course of the hearing the defendant made some references to the oblique nature of incorporation of terms of a mortgage by reference. Leaving aside his qualifications as a solicitor, there is evidence that the defendant is experienced in entering mortgage arrangements similarly structured. Exhibits R and S contain samples, coincidentally Exhibit S includes a mortgage incorporating Terms and Conditions in a Land Titles Office filed memorandum entered by the defendant and his then wife in July 2000 in which the mortgagee was PCL. 27 In accordance with the Practice directions both parties have filed statements of issues. The defendant's document recognizes that reference to mediation was declined on 16 March 2009. On that day Johnson J, the List Judge with the responsibility for these types of action dealt with a number of applications by the defendant and I do not need to recapitulate his Honour's rulings. I note that inter alia, an application by the defendant for jury trial was declined as I did when the defendant sought to renew that application. 28 The defendant's statement asserts that there are three "preliminary questions to be dealt with". First, he refers to the admissibility "with regard to the mortgage memorandum 2584554Q". For reasons above set out the memorandum filed at the Land Titles Office No. 2584554 was incorporated in the mortgage. The tender of its terms was clearly admissible. The reference number on the document does finish with a letter "Q" but it was not suggested that anything turned upon its omission in some references. There was no issue about the identification of the incorporated memorandum. 29 Second, it was stated that there was a question of admissibility of the s 57 (2) (b) default notice. The notice is sufficient as to form and the evidence of service is unchallenged. The document is not inadmissible. 30 Third, the defendant stated "question of correct property valuation amount by below the threshold amount, enabling defence to properly present hardship application". Reference is intended to be made to the Consumer Credit Code. In oral submissions the defendant sought to stress the importance of this "issue". The valuation by Mr Wickham abovementioned was obtained by Aussie Loans the broker through whom the defendant made application for the loan. Obviously the plaintiff acted upon it as it loaned the defendant $432,000 against the estimated market value of $540,000 of the property. If confirmation that the defendant (as opposed to the lender) was the source of the valuation supplied to the plaintiff be needed, Exhibit N is a fax from the defendant to fax number 97131155 which is the number for facsimile transmission to the valuer firm Megaw & Hogg. In his transmission the defendant requests that the valuation be sent urgently to Mr Rob Smith at Aussie Loans and as I said at the outset, Mr Smith originated the application on behalf of the defendant. 31 The defendant has commenced an action against the valuers alleging that their valuation was negligent. That action is not yet ready for trial and I confirm that I refused to order consolidation of that action with the present litigation which would inevitably have delayed the determination of the plaintiff's claim. I note that Johnson J had also refused a similar application. 32 Nevertheless I permitted the defendant to call evidence from a valuer, Mr Begg who recently made a retrospective valuation of the property. He said that his search for comparable sales was limited to a ceiling of $350,000 (T 211) which is the valuation (as at September 2003) which he placed on the property. The significance which the defendant seeks to attach to the alleged over valuation by Mr Wickham is to seek to bring his transaction within the ambit of Part 4 Division 3 of the Consumer Credit Code, in particular the powers of the Court to change the terms of a credit contract. He also seeks implementation of the Court's powers to reopen an unjust transaction. 33 The barrier which the defendant obviously recognizes is that there is a threshold provision in the Code in s 66 (3) which excludes application of ss 67 to 69 (relief for hardship) when the amount of credit exceeds an amount now prescribed by the regulations. The evidence of Ms Fraser about this was not challenged and this showed that the highest prescribed amount was for the period between 10 October 2005 and 9 November 2005 when the ceiling was $350,570. With that exception, the limit was always below $350,000. The credit obtained by the defendant was $432,000 and his transaction is inevitably excluded from relief under those provisions. 34 So far as s 70, which deals with unjust transactions is concerned there is no evidence to support the proposition that, at the time it was entered into, the contract was unjust. The observations which I presently make are equally applicable to the defendant's attempt to rely upon the Contracts Review Act and seek relief against an unjust contract and I will not repeat the observations. There is no suggestion that the rates of interest were unjust in the sense of being usurious or similar. A useful summary of the sorts of circumstances which may render a contract unjust was made by McHugh JA in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620. It suffices to observe that nothing in the evidence concerning the transaction into which the defendant entered showed that it was affected by any of the suggested sources of possible injustice. The Terms and Conditions incorporated by the memorandum are obviously in common use and the defendant has pointed to no unusually burdensome term. I recognize that he has complained about the addition of his legal fees asserted to be incurred as enforcement expenses to the debt but no authority was cited for the implication that this is inherently or otherwise unjust. I shall deal with that aspect of the claim later. 35 Reference was expressly made to s 70 (2) (j) of the Code which specifies a criterion of unjustness to be whether the credit provider or any other person exerted or used unfair pressure, undue influence or unfair tactics on the debtor. I accept the proposition that the words in subsection (j) can apply to exertions of others not necessarily acting on behalf of the lender: cf Beneficial Finance Limited v Karavas (1991) 25 NSWLR 256; Nguyen v Taylor (1992) 27 NSWLR 48. These authorities, whilst recognizing the availability of remedy even though the administrator of pressure or the like was not acting on behalf of the lender, do not take the further step of making relief available when the administrator was acting on behalf of the debtor. That proposition has obvious internal logical difficulties. In Riz v Perpetual Trustees Australia Limited (2007) ANZ Conv R 615 Brereton J observed that: "To hold the undetected provision of false information by or on behalf of a borrower to a lender in an attempt to obtain a loan resulted in the loan contract being unjust against the lender would be to invert commonsense, logic and justice by protecting the wrongdoer against the victim".
Of course the defence allegation is that the valuation was wrong as a result of negligence rather than false for any sinister reason but the principle is applicable. 36 It is not necessary to dilate upon that possible paradox because there is no evidence that the valuer exerted or used unfair pressure, undue influence or unfair tactics on the defendant. There is no relief available to the defendant pursuant to s 70 of the Code. 37 Having reached that conclusion there is no necessity for me to make a finding about whether Mr Wickham was negligent and his valuation therefore wrong to the extent that the defendant can call in aid the hardship provisions of the Code. Irrespective of the value of the property the credit obtained exceeded the threshold. However, I observe that Mr Wickham's valuation details comparable sales of properties (all of considerably less land area than the defendant's property but presumably not affected by the electricity easement which runs over the defendant's property) between March and June 2003 at between $500,000 and $547,000. Mr Begg's references were to two vacant blocks and two house sales, one of which, despite his evidence of limiting his search for comparables, was a sale in November 2002 for $450,000. 38 As the defendant asserted the importance of the matter, I will record my finding that I am not satisfied of the dependability of Mr Begg's valuation.
39 The foregoing is intended to deal with what I understand to be the principal complaints by the defendant. It was not easy to follow the thread of his arguments either in writing or orally. A response should be made to some of the matters mentioned in his statement of issues and in his pleadings. 40 The defendant has vigorously contended that the Loan Agreement is no more than a pre-contractual statement in the sense of the use of that term in the Code. Whether it may have been so categorized at some stage or not, it became a contractual document duly executed on behalf of both parties and was performed to a very significant extent by the passing of $432,000 to the defendant in accordance with it. 41 The defendant's statement asserts "no intention to create legal relations". As earlier mentioned I gather this is a reference to the line in the letter from Turnbull Hill and I can only repeat that the evidence is overwhelming that following receipt of the documentation, both parties did in fact enter into legal relations. 42 There is a complaint about the plaintiff declining to call Mr Powter or a Mr Mutford. Mr Powter, I have mentioned earlier, was the solicitor who certified the mortgage document correct in compliance with the Real Property Act requirement. A signature of Alex Mutford, solicitor appears on the application to the Registrar General on behalf of AMS to record the memorandum which was allocated the reference number 2584554. The application was filed by Clayton Utz, Solicitors on 5 November 1996. The plaintiff's case is complete without them. If it was intended to make a reference to Jones v Dunkel (1959) 101 CLR 298 these are not witnesses whom I would have expected the plaintiff to call. 43 The defendant stated that the memorandum was not provided to him. I have already noted, inter alia, the defendant signed acknowledgement to the contrary and my acceptance that it was provided as indicated in the covering letter. The somewhat cryptic observation was made "unlawful memorandum registered. 2584554Q". I do not understand what is meant by "unlawful" in this context but there is not shown to be any invalidity attached to the registration of the memorandum. 44 Referring to the Code, the defendant complained that pursuant to s 15(O) he was given no choice between Form 3A or 3B. Section 15 (O) refers to information or warning required by regulation. Regulation 15 (2) (b) provides that Form 3B is relevant if the document signed by the debtor constitutes acceptance of an offer. The acceptance page signed by the defendant is exactly that and the terms of Form 3B have been faithfully reproduced in the document. 45 The defendant stated that the mortgage secures nothing. I gather this argument was based upon the variability of interest rate and the all monies clause in the documentation. It was said that the law, for centuries has demanded certainty and that in those aspects this agreement is lacking, therefore there is no security. It suffices to observe that agreements of this kind are both lawful and enforceable. 46 The pleadings, inter alia, contain assertions about breach of Rule 45 of the Solicitors' Rules and alterations to documents after signature. The only alteration which I can identify is the substitution of Mr Powter for the typescript of Mr Hill on the mortgage which is not an amendment to the document. It is not entirely clear what the defendant is asserting concerning agency but I can only record that I am unable to identify any relevant defect. 47 By his pleading the defendant incorporates various expressions including "void", "unenforceable", "fraudulent", "illegal", "misrepresentation" and "unconscionable". Nothing in the evidence supports any proposition implied by the use of these words. 48 A somewhat obscure allegation in the cross claim seeks compensation by reference to the Australian Securities and Investments Commission Act 2001 being breached by PCL "misrepresenting mortgage documents that do not belong to" the defendant. Whatever is intended, no cause for relief by ordering the payment of compensation has been established. 49 The cross claim also alleges breach of duty of care in ascertaining the ability of the defendant to service the loan. Leaving to one side the existence of such a duty, I would point to the information supplied by the defendant in the initial Standard Mortgage Application which represented a surplus of assets over liabilities of $397,900 and an income of $170,000 per annum. 50 Finally, I should note paragraph 9 of the cross claim: "The cross defendant has chosen to pursue and litigate against the cross defendant (sic) in a misleading and unconscionable fashion, and without regard to proper legal principles, and in contravention of Australian laws, and regulations, causing pain and suffering to the cross claimant resulting in financial loss, loss of income, and damage to the cross claimant's health."
Subsequent paragraphs allege pain and suffering through stress and anxiety and irreparable damage "financially and emotionally by the unconscionable and unlawful behaviour and actions of the cross defendant." 51 No claim for damages is sustainable on the evidence and the claim must be dismissed. 52 It was not contested that the defendant has made no payment to the plaintiff since April 2006. There has been clear default in the obligation to make due payments. The evidence shows that the plaintiff is entitled to sue for the mortgage debt in whole pursuant to clause 15 of the incorporated memorandum. The plaintiff is vested with a similar right pursuant to clause 23.3 of the Terms and Conditions. The service of appropriate notices has not been disputed and the annexure to the affidavit of Mr Edwards shows that notice was given pursuant to both the Code and the Real Property Act. 53 The rights to possession of a property and ancillary rights upon default are also specified in clause 15 of the memorandum. Section 60 of the Real Property Act can also be noted. I am satisfied that the plaintiff has proved entitlement to judgment for possession of the land and for the balance of the mortgage debt with appropriate accrued interest. 54 There is, however, an outstanding issue concerning an addition to the defendant's loan account of a series of charges for legal expenses incurred by AFIG, billed by the solicitors acting for the plaintiff in this action to its trading name GE Money Home Lending. The accounts were not copied to the defendant although it was said by Ms Fraser in her evidence that they would have been supplied to him had he asked. 55 The articles of agreement upon which the plaintiff might rely are these. First, clause 23.6 of the Terms and Conditions: "When you must pay enforcement expenses You must pay us all reasonable enforcement expenses we reasonably incur or expend in exercising our rights under this contract or under any security resulting from any default. We may debit these amounts to your account and they are payable when they are debited." 56 And clause 17 of the memorandum: "17 ENFORCEMENT EXPENSES When we ask, you must pay us any reasonable amount we reasonably incur in enforcing this mortgage after you are in default. These may include expenses incurred in preserving or maintaining the property such as insurance, rates and taxes payable for the property and, if you do any building work on the property, may also include the expenses incurred in completing or varying or stopping that building work." 57 So far as the evidence shows the only demand upon the defendant for these legal costs has emerged in the trial (including pre-trial processes) in the computation of the judgment amount being sought by the plaintiff. No specific evidence was put before me in order to identify whether all of the accounts, or if not all of them, which of them, are enforcement expenses, an expression which is not specifically defined in either of the documents from which I have extracted the above articles. Of course, it is obvious that the solicitors were retained for the purpose of enforcement because the defendant was in default but that does not relieve the plaintiff of discharging the burden of proof that what are claimed are enforcement expenses, light though that may be. 58 The orders sought by the plaintiff alternatively seek declaration of entitlement or costs. In my view of the state of the evidence, an order for costs is appropriate. 59 I am not satisfied that the plaintiff has demonstrated that these accounts are amounts which it can, as enforcement expenses, add to the defendant's debt account. 60 I should record that, at the conclusion of the hearing, leave was granted to send me relevant authorities with an indication of what use was sought to be made of them. In addition to those already mentioned, the defendant forwarded New Hart Builders Ltd v Brindley 1975 1 All ER 1007 which dealt with the consequences of variation of a document after signature by a party. There is no evidence of any relevant variation of a document in this case and I reiterate my remarks concerning the certification by Mr Powter in lieu of the anticipated Mr Hill to which, in the absence of any indication, I assume the defendant wishes to make reference. 61 I can find nothing in the references to other authority supplied which can affect the outcome of this case. 62 Since preparation of the foregoing, I have received some annotated case references upon which the defendant seeks to rely and a response by counsel for the plaintiff. The negative finding which I have just made is unaltered by what has been forwarded but by way of acknowledgement, I will comment upon cases other than those which I have already mentioned. 63 Charles v Parkinson [2000] FCA 1467 did not establish that a party cannot be bound by a document initialled but not signed in full. The circumstances must be examined. The Loan Agreement was, as above recounted, signed on the significant pages in any event and the conduct of the parties at the time manifested an obvious intention to be bound. 64 Kingsley's Chicken Pty Limited v Queensland Investment Corporation [2005] ACTSC 117 was a case where an express requirement for approval (by a lessor) was required and, in its absence, binding agreement did not occur. There was no analogous requirement in the current transaction involving the plaintiff and the defendant. 65 Riganese v M & B Farmer Nominees [2008] SADC 99 was another case determined on facts which are not comparable with the present matter. The correspondence involved itself demonstrated that agreement would not be reached until further aspects were negotiated and agreed. 66 Masters v Cameron (1932) 91 CLR 335 is a well known authority. I have already rejected the notion advanced by the defendant that the Loan Agreement was merely pre-contractual with some formal agreement (the nature or identity of which the defendant did not describe) to follow. 67 There will be judgment for the plaintiff for possession of the land as identified and for a sum calculated to include the mortgage debt and interest at the default rate. There will be judgment for the cross defendant on the Cross Claim. The defendant will be ordered to pay the plaintiff's costs of the action including costs referrable to the Cross Claim. 68 Orders will be made upon calculation in accordance with the findings herein of the appropriate money sum for judgment. At the same time, I will hear any submissions desired to be made concerning any application to stay execution of the writ for possession.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Permanent Custodians Limited
Leybourne
[2005] ACTSC 117
[2008] SADC 99
(1991) 25 NSWLR 256
(2004) 218 CLR 471
(1959) 101 CLR 298
(1932) 91 CLR 335
(1992) 27 NSWLR 48
(1964) 180 CLR 146
(2004) 219 CLR 165
(1986) 5 NSWLR 610
Judgment for Permanent Custodians Limited for possession of the land and the mortgage debt with accrued interest, with the sum to be calculated in accordance with the findings. Judgment for the cross-defendant on the cross-claim. Leybourne was ordered to pay the plaintiff's costs, including costs relating to the cross-claim. The claimed solicitors' accounts were not established as amounts that could be added to the debt as enforcement expenses. Submissions concerning any stay of execution of the writ for possession were reserved.