Perpetual Trustee Company Limited and Anor v Agusta Pty Limited

LEGISLATION CITED : Real Property Act 1900 Supreme Court Act 1970

United Starr-Bowkett Co-Operative Building Society (No. 11) Limited v Clyne (1967) 68 SR(NSW) 331 Kolback Securities Limited v Epoch Mining NL (1987) 8 NSWLR 533 Codelfa Construction Pty Limited v State Rail Authority (NSW) (1982) 149 CLR 337 John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 Starceavich v Swart & Associates Pty Limited [2006] NSWSC 960 R & D Holdings Pty Limited v Deputy Commissioner of Taxation [2006] FCA 981 CASES CITED : Commissioner of Taxation v R & D Holdings Pty Limited (2007) 240 ALR 653 Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 R v Moffitt (1990) 20 NSWLR 114 R v Simpson (2001) 53 NSWLR 704 Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348 Capgemini US v Case [2004] NSWSC 674

Tyler Young and Croft, "Fisher and Lightwood's Law of Mortgage" 2nd Australian edn, 2005 TEXTS CITED : Croft and Johannsson, "The Mortgagee's Power of Sale", 2nd edn, 2004 Duncan and Dixon, "The Law of Real Property Mortgages" 2007 Sackville and Neave, "Australian Property Law", 8th edn, 2008

Perpetual Trustee Company Limited (First Plaintiff) PARTIES : Challenger Managed Investments Limited (Second Plaintiff) Agusta Pty Limited (Defendant)

COUNSEL : Mr PM Barham (Plaintiffs) Mr DPM Ash (Defendant)

Deaons (Plaintiffs) SOLICITORS : Ms J Cox (Third Respondent) Colin Biggers & Paisley (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

15032/07 Perpetual Trustee Company Limited and Anor v Agusta Pty Limited

JUDGMENT 1 JOHNSON J: By Statement of Claim filed 3 October 2007, Perpetual Trustee Company Limited ("the First Plaintiff") and Challenger Managed Investments Limited ("the Second Plaintiff"), seek relief, including an order for possession of property at 34 Binney Road, Kings Park, arising from alleged mortgage default by the Defendant, Agusta Pty Limited. 2 The property at 34 Binney Road, Kings Park comprises commercial premises leased to the Australian Steel Company (Operations) Pty Limited ("the tenant"). 3 On 4 October 2007, the First Plaintiff gave notice to the tenant pursuant to s.63 Real Property Act 1900 requiring the payment of all rents and other monies to the First Plaintiff, as mortgagee, from that date until further notice.

The Defendant's Notice of Motion 4 By Notice of Motion filed 13 May 2008, the Defendant seeks interlocutory relief with respect to the s.63 notice. At the hearing of the Notice of Motion, Mr Ash, counsel for the Defendant, refined the relief sought under the Motion to the following: "The Court orders, upon the Defendant giving through counsel the usual undertaking as to damages: 1. That the operation of the notice dated 4 October 2007 and issued by the First Plaintiff to the [tenant] pursuant to section 63 of the Real Property Act 1900, be suspended until further order of the Court.

2. That within twenty-one days, the [tenant] is to pay two amounts, as follows: (a) To the First Plaintiff, an amount of $25,000.00 [or such amount as the Court sees fit].

(b) To the Defendant, the balance of moneys withheld by it as a result of the issue of the notice." 5 Mr Barham, of counsel, appeared for the Plaintiffs at the hearing of the Notice of Motion. The Plaintiffs opposed the relief sought by the Defendant. Ms J Cox, solicitor, appeared for the tenant. Ms Cox did not actively participate in the hearing, the interests of her client being the identification of the party to whom rent should be paid with respect to the subject property.

Relevant Provisions in Real Property Act 1900 6 Division 3 of Part 7 of the Real Property Act 1900 (ss.56-66) concerns mortgages, charges and covenant charges. Section 56 provides for the manner in which Torrens Title land is mortgaged or encumbered. A mortgage, charge or covenant charge under the Act has effect as a security, but does not operate as a transfer of the land mortgaged or charged: s.57(1). 7 Section 57(2) provides for circumstances in which a registered mortgagee may exercise the powers conferred by s.58 of the Act. In the case of a mortgage, powers conferred by s.58 may be exercised by a registered mortgagee if default has been made in the observance of any covenant, agreement or condition expressed or implied in the mortgage or in the payment, in accordance with the terms of the mortgage, inter alia, of the principal or interest or other money, the payment which is secured by the mortgage of any part of that principal or interest: s.57(2)(a). 8 Section 58 permits a mortgagee authorised by s.57(2) to exercise power of sale of the mortgaged land or any part thereof. Service of a notice under s.57(2)(b) of the Act is a condition precedent to the exercise of power of sale under s.58. 9 Section 60 Real Property Act 1900 is in the following terms: "60 In case of default, entry and possession, ejectment The mortgagee, chargee or covenant chargee upon default in payment of the principal sum or any part thereof, or of any interest, annuity, or rent-charge secured by any mortgage, charge or covenant charge may: (a) enter into possession of the mortgaged or charged land by receiving the rents and profits therefor, or

(c) bring proceedings in the Supreme Court or the District Court for possession of the said land, either before or after entering into the receipt of the rents and profits thereof, and either before or after any sale of such land effected under the power of sale given or implied in the mortgage, charge or covenant charge, in the same manner in which the mortgagee, chargee or covenant chargee might have made such entry or brought such proceedings if the principal sum, interest, annuity, or rent-charge were secured to the mortgagee, chargee or covenant chargee by a conveyance of the legal estate in the land so mortgaged or charged." 10 Section 63 provides as follows: "63 Suspension of mortgagor's rights as landlord (1) Whenever a mortgagee, chargee or covenant chargee gives notice of demanding to enter into receipt of the rents and profits of the mortgaged or charged land to the tenant or occupier or other person liable to pay or account for the rents and profits thereof, all the powers and remedies of the mortgagor, charger or covenant charger in regard to receipt and recovery of, and giving discharges for, such rents and profits, shall be suspended and transferred to the said mortgagee, chargee or covenant chargee until such notice is withdrawn, or the mortgage, charge or covenant charge is satisfied, and a discharge thereof duly registered.

(2) In every such case, the receipt in writing of the mortgagee, chargee or covenant chargee shall be a sufficient discharge for any rents and profits therein expressed to be received, and no person paying the same shall be bound to inquire concerning any default or other circumstance affecting the right of the person giving such notice beyond the fact of the person's being duly registered as mortgagee, chargee or covenant chargee of the land.

(3) Nothing herein contained shall interfere with the effect of any judgment or order of the Supreme Court in regard to the payment of rent under the special circumstances of any case, nor shall prejudice any remedy of the mortgagor, charger or covenant charger against the mortgagee, chargee or covenant chargee for wrongful entry or for an account."

Factual Background 11 Mr Ash read the affidavit of Angelique Notaras sworn 13 May 2008 and the affidavit of Tiziana Ferella sworn 11 June 2008. Neither deponent was required for cross-examination. Exhibited to these affidavits were a substantial volume of documents. 12 The Plaintiffs did not adduce evidence on the application, nor did the tenant. 13 For present purposes, the factual background to the application may be stated shortly. 14 At all material times, the Defendant has been the registered proprietor of the subject property, which is worth in excess of $2 million. By letter dated 1 September 2006, the Second Plaintiff offered a loan facility to the Defendant in the sum of $2 million on certain conditions:

(a) the facility was for 12 months commencing on the first day of the month following settlement and, at maturity, the lender might be willing to renew the facility, subject to satisfactory conduct of the loan and the lender's lending policy at that time;

(b) interest was payable monthly in arrears on an interest-only basis calculated on daily balances and, by accepting the offer, the mortgagee was acknowledging that monthly interest payments would be made by direct debit to the Defendant's nominated bank account using a direct debit authority;

(c) the facility was to be collaterally secured by registered first mortgage of the subject property by the Defendant in favour of the First Plaintiff, as mortgagee and custodian on behalf of the Second Plaintiff;

(d) an annual fee equal to 0.22% per annum (or $4,400.00) was payable in advance every six months (in an amount of $2,200.00) by way of administration fee. 15 The Defendant accepted the offer of the facility. On 29 September 2006, the Defendant executed the Second Plaintiff's standard form direct debit authority. 16 On 4 October 2006, the Defendant executed the balance of the loan documentation including a mortgage incorporating Memorandum 6321899 in favour of the First Plaintiff (Exhibit TF1, page 8) and a Deed of Loan naming the Second Plaintiff as lender (page 77). By execution of the balance of the loan documentation, the parties' obligations were more fully particularised, and there were further conditions relevantly to the effect that the rate applicable, in the event of default in payment by the Defendant was four per cent per annum higher than the usual rate. 17 Following execution of the loan documentation, the Defendant drew down on the facility to a sum of $725,000.00. 18 The Defendant and the tenant entered into a six-year lease of the subject property, commencing on 1 October 2006 with an initial annual rent payable in the sum of $192,671.00 plus GST (page 2).

Issues Raised by the Proposed Pleadings 19 The application was argued before me by reference to a draft Amended Statement of Claim and draft Defence which, although presently unfiled, were said to represent the current positions of the parties with respect to the claim for relief. 20 Paragraph 10 of the draft Amended Statement of Claim provides the following particulars of the alleged failure of the Defendant to pay instalments, giving rise to default under the mortgage:

(a) the first default is said to have occurred on 2 November 2006 when the Defendant failed to pay $4,143.42;

(b) the arrears unpaid as at 10 September 2007 were said to total $18,456.14, with a loan balance calculated in accordance with the mortgage in the sum of $727,678.34;

(c) there was said to have been a continuous arrears balance, and therefore monetary default, from 2 November 2006 to 10 September 2007. 21 It is alleged that, on or about 31 July 2007, the Plaintiffs sent a default notice to the Defendant requiring the Defendant to remedy the defaults within 31 days, but that the defaults had not been remedied within 31 days or at all (paragraphs 13, 14). 22 Paragraph 16 of the draft Amended Statement of Claim incorporates the following amendment: "Further and in the alternative, in default of the Loan and Mortgage the defendant failed to pay the principal sum at the expiry of the term of the Mortgage being by 1 November 2007." 23 The draft Amended Defence contends that certain conditions ought be implied requiring the Second Plaintiff to give reasonable notice to the Defendant with respect to direct debit difficulties, a condition that the Second Plaintiff would act reasonably and in good faith in respect of charging additional fees and interest and would apply any payments on account of interest to the interest first due (paragraph 1(e)-(g)). 24 The Defendant denies any failure on its part to pay the Second Plaintiff either interest or the principal on maturity, thus also denying the First Plaintiff's entitlement to relief under the mortgage (paragraph 2). 25 The Defendant denies any default in payment of interest, on any one of three alternative bases (paragraph 3):

(a) because there had never been a relevant default;

(b) because, even if there had been a relevant default, it was cured prior to 10 October 2007, being the date on which these proceedings were brought;

(c) because, even if there had been a relevant default which had not been cured prior to 10 October 2007, it would, in the circumstances of the case, be unconscionable for the First Plaintiff to insist upon its legal rights. 26 The Defendant provided particulars in the draft Amended Defence concerning these alternative bases for denial of default of payment of interest. With respect to the seven separate occasions (between 1 November 2006 and 1 May 2007) where it is said that interest was not paid in accordance with the loan contract, the Defendant alleges that the Second Plaintiff failed to procure the direct debit for the relevant monthly interest payment. The Defendant says that it made the relevant monthly payment on four out of the seven occasions within the seven-day period allowed. With respect to the remaining three payments, the Defendant says that the Second Plaintiff was in breach of an implied term of the contract so that the Defendant was not in default for those payments. Alternatively, the Defendant says that, if there was a prima facie default, then, in the circumstances of this case, there is unconscionability. 27 The Defendant says that, from June 2007, the Second Plaintiff got its direct debit system working and the Defendant's payments have been made since without further incident. The Defendant says that the First Plaintiff ought to have applied any payment by the Defendant on account of interest to the interest first due, but that it has not done so. Instead, on 31 July 2007, the First Plaintiff issued a demand for what it wrongly asserted was $13,515.16 of overdue interest, together with interest on interest of $79.67 per day. By the time the proceedings were commenced, the overdue amount was said to be $18,456.14. The Defendant asserts that the appropriate forum for resolution of the dispute was the Local Court of New South Wales, and not the Supreme Court, having regard to:

(a) the quantum giving rise to the alleged default being suitable for resolution in the Local Court;

(b) the Defendant's further advice that the amount was disputed;

(c) the fact that the Defendant has been making monthly interest payments since June 2007; and

(d) that the Second Plaintiff has since affirmed that the facility has been renewed for another year. 28 With respect to the claim based on failure to repay the principal on maturity, the Defendant says that, on 1 November 2007, the Second Plaintiff charged the usual administration fee of $2,200.00 pursuant to the facility condition and, since that time, has procured the direct debit of monthly interest payments as though the one-year facility was renewed by it, in accordance with the renewal condition in the loan agreement. To the extent that the Defendant would otherwise have been in default of an obligation to pay the principal on 1 November 2007, the Defendant says that the Second Plaintiff's actions, on and since that day, have extinguished the default. 29 In answer to the whole of the proposed Amended Statement of Claim, the Defendant denies that it has committed a default under the mortgage entitling the First Plaintiff to bring the proceedings or to obtain possession of the land. Accordingly, the Defendant denies any default giving rise to the underlying right to possession and submits that, if there is no right to possession, there is no ancillary right to rent under s.63.

Submissions of the Parties 30 Mr Ash submitted that the jurisdiction (or power) to make the order sought by the Defendant arose under s.63(3) Real Property Act 1900. If need be, he relied as well upon s.23 Supreme Court Act 1970. 31 Mr Ash submitted it was necessary to read ss.60 and 63 together. Section 60(a) allows a mortgagee, in case of default, to enter into possession of the mortgaged land by receiving the rents and profits therefore. Service of a s.63 notice operates, as the heading to the section states, by way of suspension of the mortgagor's rights as landlord. On default by the mortgagor, the mortgagee obtains the rights defined by s.60 "as amplified by section 63": United Starr-Bowkett Co-Operative Building Society (No. 11) Limited v Clyne (1967) 68 SR(NSW) 331 at 343-343 (per Sugerman JA). 32 Mr Ash could not point to any authority where this Court had granted interlocutory relief of the type sought here by the Defendant. He submitted, however, that the words in s.63(3) whereby nothing in s.63 shall interfere with the effect of any judgment or order of this Court in regard to the "payment of rent under the special circumstances of any case" were broad enough to accommodate, in an appropriate case, the relief here sought by the Defendant. 33 It was submitted that the principles applicable to such an application were analogous to an application for an interlocutory injunction. However, there was a difference. The service of the s.63 notice suspended the mortgagor's rights as landlord. Thus, the s.63 notice altered the status quo. On the present application, the Court is asked, effectively, to suspend the s.63 suspension. 34 Counsel submitted that there is a serious issue to be tried on the proposed Amended Defence that no default has occurred in this case. As default under the mortgage is the statutory trigger for the issue of s.63 notice, Mr Ash submitted that the basis for interlocutory relief had been demonstrated in this case. He developed an argument, by reference to the documentary evidence, in support of the Defendant's case that it was failures or defects, of one type or another, on the part of the Second Plaintiff and its direct debit system which caused the problems in this case. Thereafter, the Defendant submits that the difficulties have been compounded by other acts or omissions of the Second Plaintiff. 35 The Defendant submits that there is a strong argument that there was no default at all under the mortgage or, if prima facie default is demonstrated, that it would be unconscionable for the Plaintiffs to be allowed to rely upon these matters. The Defendant submits that there is a serious issue to be tried concerning the default alleged from non-payment, on 1 November 2007, of the principal sum, in circumstances where the Second Plaintiff claimed and was paid an administration fee and where the Defendant has continued to make interest payments as if the loan facility had been renewed. 36 Mr Ash submitted that the balance of convenience strongly favours the grant of interlocutory relief sought by the Defendant. The s.63 notice was served on the tenant in October 2007. Since that time, the tenant has withheld rent, advising both parties that it is willing to pay any and all amounts properly payable, but that it does not want to be embroiled in the dispute. The rent owing by the tenant at the present time exceeds the sum of $120,000.00. All of this, Mr Ash submitted, arose from the claim that the Defendant had defaulted prior to 1 November 2007 in the payment of a little more than $18,000.00. The Defendant continues to pay all amounts of interest due under the loan facility on a regular monthly basis. 37 Mr Ash submitted that there is nothing to suggest that the Plaintiffs, if successful, will be prejudiced by a shortfall. The value of the subject property exceeds $2 million, whilst the facility has only been drawn down in the sum of $725,000.00. On the other hand, the actions of the Plaintiffs are keeping the Defendant out of rent. He submits that there is nothing to suggest that the substantive matter cannot be heard promptly, and that the balance favours the making of orders as sought by the Defendant. 38 Mr Barham submitted that s.63(3) does not authorise the making of an order of the type sought by the Defendant. 39 The Plaintiffs submitted that, if the submissions of Mr Ash were correct, so that the existence of a defended action to possession proceedings could be a "special circumstance" for the purpose of s.63(3), then every defended matter could impede a mortgagee's right to receive rent under s.63(1) of the Act. Mr Barham submits that a plain reading of s.63(3) makes it clear that the provisions shall not prejudice or interfere with two categories of events. The first event is where there has been a judgment or order of the Supreme Court. It is to this, he submits, that any "special circumstances" would apply. There has been no such judgment or order in this case. The second proviso under s.63(3) is that the section will not prejudice any remedy of the mortgagor against the mortgagee for wrongful entry or for an account. The Defendant has not sought such a remedy and no cross claim is on foot. 40 Accordingly, Mr Barham submitted that the application under s.63(3) is ill-conceived. He acknowledged that the general power of the Court under s.23 Supreme Court Act 1970, or the power to grant an injunction under s.66 of that Act, may enable the Court to entertain an application for relief of the type sought here. However, Mr Barham submitted, on such an application, it would be necessary for the Defendant to satisfy each and every requirement for the grant of urgent injunctive relief. He submitted that the present Defendant does not fulfil those requirements. 41 Mr Barham submitted that, on an interlocutory application, the Court should not undertake a preliminary trial or forecast the ultimate result: Kolback Securities Limited v Epoch Mining NL (1987) 8 NSWLR 533 at 536. He submits that the Defendant seeks to do just that on the present application. 42 Mr Barham pointed to aspects of the documentary evidence, in support of the argument that there was a clear default by the Defendant both in the payment of interest and in the failure to repay the principal on 1 November 2007. He submitted that the Defendant's argument, in support of implied terms in the loan agreement between the Second Plaintiff and the Defendant, failed the test for implication laid down in Codelfa Construction Pty Limited v State Rail Authority (NSW) (1982) 149 CLR 337. He submitted, further, that on an application for an interim injunction, the question is whether the Defendant has established a sufficiently seriously arguable case for final relief to justify the grant of interlocutory relief, having regard to the balance of convenience. This test emphasises three matters: first, that the Defendant bears the onus of making out a case for interlocutory relief; secondly, that before one comes to the balance of convenience, that there must be a serious question to be tried; and thirdly, that the strength of the serious question to be tried may be relevant to what is required to tip the balance of convenience one way or the other: John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 at [3] (per Brereton J). He relied on delay in bringing the present application: Capgemini US v Case [2004] NSWSC 674 at [32]. 43 Mr Barham submitted that the inescapable fact is that the repayments were not made on time as required by the mortgage and thus the Defendant was, and remains, in default. 44 As to balance of convenience, the Plaintiffs submitted that this involves consideration of the consequences of granting or refusing an interlocutory injunction, when the opposite position prevails on final hearing: John Fairfax Publications Pty Limited v Birt at [50]. In this case, the Plaintiffs submitted that no prejudice to the Defendant had been demonstrated on the evidence. Mr Barham observed that the application presumes that the Plaintiffs will not suffer loss, however, there is no evidence of valuation. 45 He submitted that the preservation of the status quo would necessarily provide for the rental income to be paid to the First Plaintiff pursuant to the s.63 notice. Alternatively, if it was the Court's view that rental income should be subject to a Court order, Mr Barham submitted that the appropriate order would be in terms that it be held in a controlled account pending final determination of the proceedings.

Resolution of Competing Submissions 46 An issue of statutory construction arises with respect to s.63(3) of the Act. It is surprising that no authority appears to exist bearing upon this question. One explanation for this (advanced by the Plaintiffs) is that the absence of authority underlines the fact that no such power exists under s.63(3) of the Act. Another explanation is that, in the overwhelming number of claims arising from alleged mortgage default, no good purpose would be served by a mortgagor making an interlocutory application to suspend the operation of the s.63 notice, because of the inability of a mortgagor to make out a case for relief, including satisfying the "special circumstances" test. 47 Sections 60(a) and 63 have been referred to in a number of cases. The right to enter into possession by s.60(a) is expressly confined to a right to enter possession by receiving the rents and profits from the land. The right under s.60(a) is conferred in the same manner as if the mortgagee had a legal estate in the mortgaged land: Starceavich v Swart & Associates Pty Limited [2006] NSWSC 960 at [35]-[36]. 48 Certain (revenue) consequences arising from the service of a s.63 notice were considered by Finn J in R & D Holdings Pty Limited v Deputy Commissioner of Taxation [2006] FCA 981 at [157]-[159], [172] and, on appeal, by the Full Federal Court in Commissioner of Taxation v R & D Holdings Pty Limited (2007) 240 ALR 653 at 663 [55]-[62], 670-673 [96]-[102]. In the latter case, Stone J at 671 [96] observed that the ambit of a mortgagee's rights is circumscribed by the fact that those rights are limited to the vindication of its security, and that the mortgagee is not entitled to ignore the mortgagor's interest where protection of that interest is compatible with its right to protect or realise its security. As to s.63 generally, see Tyler Young and Croft, "Fisher and Lightwood's Law of Mortgage" 2nd Australian edn, 2005 at 445-447; Croft and Johannsson, "The Mortgagee's Power of Sale", 2nd edn, 2004 at 64-66; Duncan and Dixon, "The Law of Real Property Mortgages", 2007 at 94; Sackville and Neave, "Australian Property Law", 8th edn, 2008, at 1165-1168. 49 It is necessary to construe s.63(3) of the Act. The contemporary approach to statutory interpretation is literal, but not literalistic, and requires words to be construed in their total context: Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113 at 141 [115]. The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The duty of the Court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69], 384 [78]. 50 It is necessary to read fairly the words contained in s.63(3) of the Act. I do not consider that the operation of the words should be read down in the manner advanced for the Plaintiffs. In my view, the words "any judgment or order of the Supreme Court in regard to the payment of rent under the special circumstances of any case" in s.63(3) are capable of extending to an order of the type sought by the Defendant in the present application. 51 In my view, the first part of s.63(3) is not to be confined to a judgment or order already made by the Supreme Court at the time when the s.63 notice is served. Nor is the provision to be confined to any judgment or order of the Court made after the service of the s.63 notice (other than on the application of the mortgagor) which may, in some way, have application to payment of rent. I am satisfied that the first part of s.63(3) extends to an application such as this where a mortgagor seeks to contend that, in the special circumstances of the case, the Court should make an order in regard to the payment of rent which operates to suspend or modify the effect of the notice. 52 The words "special circumstances" appear in numerous statutory provisions. They are words of indeterminate reference and will always take their colour from their surroundings: R v Simpson (2001) 53 NSWLR 704 at 717 [59]. The general character and scope of the phrase is determined by the statutory context of both language and purpose in which it appears: R v Moffitt (1990) 20 NSWLR 114 at 115-116. 53 Spigelman CJ said in R v Simpson at 717-718 [60] with respect to the words "special circumstances': "Statutory words of such generality usually lead courts to refuse to identify in advance a list of matters capable of satisfying the statutory formulation. While certain considerations might not often be sufficiently 'special', so that an exceptional justification is required for them to attain the requisite statutory quality, nevertheless there may always be circumstances in which such a factor is of sufficient strength, either alone or in combination with other factors, to justify a conclusion that 'special circumstances' are made out on the facts of a particular case. It will be comparatively rare for an issue to arise in terms of a proposition that a particular circumstance is incapable, as a matter of law, of ever constituting a 'special circumstance'." 54 In Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348, Kiefel J said at 352-353 [19]: "The words 'special circumstances' are not so imprecise as to require judicial gloss: Beadle v Director-General of Social Security (1985) 60 ALR 225, 228. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, 545 I expressed the view that the words require something which distinguishes a person's case from others, something that sets it apart from the usual or ordinary case." 55 I do not accept the "floodgates argument" advanced for the Plaintiffs with respect to this construction. It will be necessary for a mortgagor making such an application to satisfy the "special circumstances" test. In this context, the test must be regarded as a stringent one.

56 Accordingly, I am satisfied that the order sought by the Defendant may be made pursuant to the power in s.63(3) of the Act. In any event, I am satisfied that such an order may be made under the Court's general power in s.23 Supreme Court Act 1970 or the Court's injunctive power under s.66 of that Act. 57 I am satisfied that there are serious issues to be tried in this case on the question whether default has, in fact, occurred under the mortgage. There are some unusual features to the present case. In expressing this view, of course, I am not purporting to express any final or concluded view with respect to the merits of the Plaintiffs' claim nor the Defendant's Defence. I am confining my conclusions to the limited purpose applicable to the assessment of whether there are serious issues to be tried and, if so, the balance of convenience. 58 On the evidence before the Court, there is a serious issue to be tried with respect to the alleged defaults arising by way of direct debits expected to be made by the Second Plaintiff. At least four out of the seven payments which are said to have given rise to default were made soon after, and at a time which arguably was permissible under the loan agreement. There is an arguable case that the three remaining payments did not give rise to default because of an implied term said to have arisen under the contract. Further, there is an arguable case of unconscionability with respect to the seven payments. I note that the Plaintiffs' quantified claim for interest allegedly unpaid amounts to $18,456.14. On the evidence before me, the Defendant has otherwise maintained interest payments on the outstanding debt to the present time. 59 It is clear that the facility extended for 12 months from 1 November 2006 so that the principal was repayable on 1 November 2007, unless the facility was renewed. I am satisfied that, in the circumstances of this case, it is seriously arguable that the facility has been renewed by way of the Second Plaintiff's charging of an administration fee and continued acceptance by the Plaintiffs of interest payments under the loan. I have had regard to the Plaintiffs' submission that the acts of the Plaintiffs, prior to 1 November 2007, were inconsistent with any intention to renew the facility. Nevertheless, in the circumstances of this case, I am satisfied that it is seriously arguable that the facility was renewed (for a further 12 months) arising from the conduct of the Second Plaintiff. 60 I am satisfied that the Defendant has established a sufficiently seriously arguable case for final relief to justify the grant of interlocutory relief. I am satisfied that the balance of convenience strongly favours the grant of relief to the Defendant on this application. The principal advanced to the Defendant was in the order of $725,000.00, a sum well short of the value of the property which exceeds $2 million. Further, the alleged default with respect to interest amounts to a little more than $18,000.00. The rent to be paid by the tenant under the lease with the Defendant exceeds $10,000.00 per month. I do not think delay affects the balance of convenience in this case. 61 In summary, I am satisfied that the "special circumstances" of the present case warrant the making by this Court of the order sought by the Defendant in regard to the payment of rent. In forming this view, I have had regard to the factual circumstances of this case, and the interlocutory tests of serious issues to be tried and balance of convenience. I am satisfied that the Defendant has established that there are serious questions to be tried, and that the balance of convenience strongly favours the making of an interlocutory order in the Defendant's favour.

Orders 62 I propose to make orders as sought by the Defendant, except that the amount to be paid to the First Plaintiff by the tenant will be the amount of $50,000.00, and not $25,000.00 as proposed by the Defendant. In the circumstances of the case, I am satisfied that the greater sum represents the appropriate figure. 63 It is appropriate that these proceedings advance towards a hearing date without delay. I note that the matter is next listed for directions before the Registrar at 9.00 am on 31 July 2008. I expect that the parties will comply with the orders made by the Registrar on 22 May 2008, to prepare the matter for hearing. There ought be no good reason why a hearing date is not fixed when the matter is next before the Registrar on 31 July 2008. In the event that a hearing date is not fixed on that occasion, I will cause this matter to be placed in the call-up before me on 29 August 2008, on which occasion I will consider what orders ought be made in the light of any explanation provided by the parties for delay in the matter being given a hearing date. 64 Upon the Defendant giving through counsel the usual undertaking as to damages, the Court orders:

(a) that the operation of the notice dated 4 October 2007 and issued by the First Plaintiff to the tenant pursuant to s.63 of the Real Property Act 1900 be suspended until further order of the Court;

(b) that within 21 days, the tenant is to pay two amounts, as follows: (i) to the First Plaintiff, an amount of $50,000.00,

(ii) to the Defendant, the balance of monies withheld by it as a result of the issue of the notice. 65 I order the First and Second Plaintiffs to pay the Defendant's costs of the Notice of Motion. 66 I make no order as to costs of the tenant (the Third Respondent). **********

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