PF 473 Pty Ltd v Qasim

Supreme Court of NSW|2024-06-19|Before: Faulkner J

Solicitors: ERA Legal (Plaintiff) Hakki Nami Solicitors (Defendant) File Number(s): 2023/245456

Introduction

These proceedings are brought by a commercial lender, PF 473 Pty Ltd (the Plaintiff), against the Defendant. Consistent with her own approach, I will refer to the Defendant as Ms Qasim and not Dr Qasim. Ms Qasim's company, Rohailla Holdings Pty Ltd (the Borrower), borrowed approximately $2.8 million from the Plaintiff in support of which Ms Qasim gave a guarantee. Ms Qasim's obligations under the guarantee are secured by a registered mortgage over two properties at Randwick in New South Wales. The Borrower has defaulted and the Plaintiff seeks an order for possession.
Ultimately the case is to be decided on a simple basis because the Plaintiff sues on a registered mortgage which is essentially unchallenged by Ms Qasim. The Plaintiff sues on rights which are indefeasible by virtue of ss 41 and 42 of the Real Property Act 1900 (NSW). Ms Qasim disputes the precise date of default alleged by the Plaintiff, but even on her own case there has been a default. The Plaintiff is entitled to an order for possession in accordance with the covenants, conditions and contingencies set forth in the mortgage.
There is a wider dispute which perhaps explains why the case ended up at a hearing. Ms Qasim makes some allegations about the events between the signing and the registration of the mortgage. Although her claims do not rise sufficiently high to affect the Plaintiff's registered interest, they are said to affect the terms upon which the Borrower is liable to repay the borrowed money and, hence, the calculation of the outstanding debt. The Plaintiff does not seek a judgment on the debt, either as against the Borrower or Ms Qasim as guarantor. Nonetheless, the issues have been fully argued and the Plaintiff is about to become a mortgagee in possession of the secured properties, so there is utility in the wider dispute being determined now by the declaratory relief which the Plaintiff seeks.

Facts

As at 5 December 2022, Ms Qasim was (and still is) the registered proprietor of two properties at Randwick in New South Wales.
Up until mid-2023 she was also the registered proprietor of a property at Old Bar in New South Wales.
Rohailla Holdings Pty Ltd (the Borrower) is a company which Ms Qasim describes in par 2 of her Cross Claim as her "company vehicle".
PF 473 Pty Ltd (the Plaintiff) is a commercial lender. It appears that before 5 December 2022 there were some communications between the Plaintiff and Ms Qasim (either directly or through her broker) about the Plaintiff providing a facility through which the Borrower could borrow money. Kingstone & Partners acted for the Plaintiff, where the responsible solicitor was Ms Jemilly Pavlakis.
At all relevant times Cockburn & Co Lawyers acted for the Borrower and Ms Qasim, where the responsible solicitor was the managing partner, Ms Nichola Craven.
On 5 December 2022, Ms Pavlakis emailed a letter to Ms Craven with which she enclosed a number of documents including a form of registered mortgage, a Memorandum of Common Provisions, an unsigned letter dated 5 December 2022 from "Principal Funding" entitled "Finance Offer" and a "Finance Offer Schedule". The letter from Ms Pavlakis stated that the documents were enclosed "for your review and for signing by the relevant parties". The letter also addressed the necessity for independent legal advice and certain procedures for the identification of the mortgagor, including photographic evidence and solicitor certification.
On 6 December 2022 a paralegal at Cockburn & Co sent an email to Ms Pavlakis (copied to Ms Craven) to which she attached documents as executed by the Borrower and Ms Qasim. The documents included: 1. the Finance Offer dated 5 December 2022; 2. Finance Offer Schedule, now dated 6 December 2022 and to which had been added Ms Qasim's email and telephone details and from which had been deleted one of the specified fees; 3. the mortgage in registrable form over Ms Qasim's three properties, now dated 6 December 2022; 4. the Memorandum of Common Provisions; and 5. Cheque Directions.
The Finance Offer Schedule and Cheque Directions as executed by Ms Qasim and the Borrower contained a number of terms which are particularly relevant to the case, namely: 1. "Facility limit" - $3,281,486.15; 2. "Facility term" - "[t]he earlier of 12 months from 9 December 2022 and the date of first drawdown"; 3. "Interest" - 19% higher rate and 14% lower rate; 4. "Retained interest" - $459,408.06; and 5. "AMOUNT TO YOU" - $2,600,000.
There were some other executed documents including a "Borrower's Advice Declaration", a "Guarantor's Advice Declaration" and a document headed "KYC information for individuals" which included information about Ms Qasim's driver's licence, certificate of citizenship and Medicare card. There were also a couple of photographs of Ms Qasim signing documents and holding up her identity documents, each certified by Ms Craven.
The execution of all the documents was witnessed by Ms Craven.
Later on 6 December 2022, the paralegal sent another email to Ms Pavlakis (copied to Ms Craven) in which she requested a change to the application of the proceeds on settlement to allow a further rates notice to be paid for the property at Old Bar.
The last email which was sent on 6 December 2022 was sent by Ms Pavlakis to Ms Craven in which she said the documents were satisfactory and proposed certain arrangements to collect the originals.
On 7 December 2022 at 12:14pm, Ms Craven sent an email to Ms Pavlakis in which she sought a change to the documents. The email included the following text: "Dear Jemilly I understand that my client has discussed the below with her broker who has conveyed the same to your client. My client intends to put the Old Bar property on the market and would like to apply the net proceeds (save for 100k) to pay down the facility. I have told her that unless this is done within 3 months she will not be penalised. She does however wish to retain $100k of the sale proceeds to renovate the bathrooms at the Randwick units. Can you please seek instructions as to whether your client would be agreeable to the inclusion of a special condition: 1. acknowledging my client's above intention; 2. that the proceeds (save for 100k) will be applied to pay down the facility in exchange for the lender to discharge the mortgage over Old Bar; 3. that our client can retain 100k from the sale proceeds to use to renovate the bathrooms of the Randwick properties; 4. that the lender acknowledges that the borrower will not be in default by selling/renovating/retaining 100k. Please give me a call on my mobile if you would like to discuss …"
On 8 December 2022, Ms Craven sent an email to Ms Pavlakis in which she asked whether Ms Pavlakis had received instructions on the proposed special condition.
On 9 December 2022 Ms Pavlakis sent an email to Ms Craven in which she included the following text: "Following the result of an independent valuation of the security properties, we are instructed that the figures of the facility limit will need to be amended in accordance with revised drawdown below. Separately, our client instructs that they are agreeable to the special condition you have proposed subject to the $100,000.00 being no more than 20% of the net proceeds from the sale. Kindly advise your client's position in respect of the revised facility figures. We look forward to your response."
The revised facility figures were set out in a table as follows: Payee Banking details Amounts Key Terms 1 Lender BSB A/C# Highter Rate: $21.5% Establishment fee - $52,539.66 Retained interest $394,047.46 2 Kingston & Partners - Lower Rate: 16.5% Loan Documentation Fee $5,500.00 3 Term (months): earlier of 12 months from 9.12.22 and date of first drawdown Facilitation Fee - $105,079.32 4 Borrower - Facility Limit $2,388,166.40 AMOUNT TO YOU $1,831,000.00

Under the revised facility figures, the key terms were: 1. "Facility limit" - $2,388,166.4; 2. "Facility term" - "[t]he earlier of 12 months from 9 December 2022 and the date of first drawdown"; 3. "Interest" - 21.5% higher rate and 16.5% lower rate; 4. "Retained interest" - $394,047.46; and 5. "AMOUNT TO YOU" - $1,831,000.
As can be seen, the result of the revised terms was the amount which the Borrower would receive in its hands would fall from that which was the subject of the terms agreed on 6 December 2022 ($2,600,000) to $1,831,000. The term of the facility would remain unchanged at 12 months, but the interest rates would be higher.
Although the evidence does not directly address the matter, it is apparent from subsequent events that $1,831,000 was not sufficient for Ms Qasim's purpose. It appears that Ms Qasim's purpose for the facility was to refinance a NAB debt which was more than $2 million.
On 13 December 2022 at 12:25pm, Ms Pavlakis sent an email to Ms Craven with further revised terms. The email included the following text: "…. We understand the parties have agreed to proceed with the loan on the basis of revised terms as follows: 1. The Loan Term is amended to be three (3) months, with three (3) consecutive rollover periods granted to the borrower. Each rollover period will consist of three (3) months; 2. No rollover fee will be applicable, conditional upon the prepayment of all interest in full for each rollover period and nil event of default occurring; 3. The discount interest rate is increased to 17.5% per annum (and accordingly the higher rate is increased to 22.5% per annum); 4. The facilitation fee is amended to be 3.3% of the facility limit; and 5. The figures are revised as per the below updated drawdown. Kindly confirm your client's agreement to the above and the below revised drawdown, and provide us with authority to amend the documents by hand in the interests of expediency. We look forward to your earliest response."
The further revised facility figures were set out in a table as follows: Payee Banking details Amounts Key Terms 1 Lender BSB A/C# Highter Rate: $22.5% Establishment fee - $61,187.46 Retained interest $121,679.61 2 Kingston & Partners - Lower Rate: 17.5% Loan Documentation Fee $6,600.00 3 Term (months): 3 months (3 x 3-month options) Facilitation Fee - $81,781.19 4 Borrower - Facility Limit $2,781,248.20 AMOUNT TO YOU $2,500,000.00

Under the further revised facility figures, the key terms were: 1. "Facility limit" - $2,781,248.2; 2. "Facility term" - 3 months, with three 3-month options (making a total of 12 months); 3. "Interest" - 22.5% higher rate and 17.5% lower rate; 4. "Retained interest" - $121,679.61; and 5. "AMOUNT TO YOU" - $2,500,000.
As can be seen, the result of the further revision was that the amount which the Borrower would receive in its hands went back up to $2,500,000. This was not as high as that agreed on 6 December 2022 but higher than that proposed by the Plaintiff on 9 December 2022. Another material change was that the retained interest was significantly reduced because the Borrower would now be required only to pay 3 months in advance rather than 12 months as agreed on 6 December 2022. The interest rates went up and the facilitation fee went down from the previously agreed 4.4% ($144,385.39) to 3.3% ($91,781.19).
In summary, the terms set out in the email on 13 December 2022 were neither the terms agreed on 6 December 2022 nor those proposed by the Plaintiff on 9 December 2022. They reflected a new commercial deal with changes in favour of each party.
Ms Craven promptly replied to Ms Pavlakis's email on 13 December 2022 by saying that she would seek instructions.
The evidence before the Court, adduced without objection, shows that true to her word, Ms Craven sought instructions from Ms Qasim and that Ms Qasim gave her instructions. About half an hour after she received it, Ms Craven forwarded Mr Pavlakis's email to Ms Qasim. Ms Craven's covering email said: "Dear Shaheen Please see below from the lender's solicitor. You will need to pay 3 months worth of interest, circa $120k, at the beginning of each 3 month period. If Old Bar is sold that should be achievable. If it is not sold then this will be problematic. Did you discuss the possibility of 6 months retained interest with Ed? If not, can you please discuss and let me know what you have decided."
"Ed" was Edward Taffa, Ms Qasim's mortgage broker from Shore Financial who describes himself in his emails as a "credit adviser".
At 1:06pm on 13 December 2022, Ms Qasim replied to Ms Craven's email and copied in Mr Taffa: "I have discussed with Ed just now , What am I getting after payout to Nab? Ed doesn't have the figures . He thinks Old Bar will sell. Otherwise I still have three months to pay in advance, as per information he was given ,"
At 2:38pm Ms Craven sent an email to Ms Qasim in which she said: "NAB has given an indicative payout of $2,265.000.00 2.5 net from loan this leaves you with approx. $235k why don't you do 6 months prepaid?"
At 3:46pm Ms Qasim sent an email to Ms Craven as follows: "Hello Nicola Figures are in order. As discussed. Eddie Taffa has assured me I will have money to prepay 3 months in advance Shaheen"
At 3:49pm on 13 December 2022, Mr Taffa sent an email to Ms Qasim and Ms Craven in which he said that "Shaheen will have surplus funds to pay for additional 3 months in advance".
On 15 December 2022, Ms Pavlakis sent an email to Ms Craven in which she asked, "Can you please advise your client's position on the revised offer?"
On 16 December 2022 Ms Craven responded. In her email she said: "Our client is content with the revised figures. Can you please advise whether your client is agreeable to our proposed special condition."
On 19 December 2022 Ms Pavlakis sent an email to Ms Craven which included the following text: "… our client is agreeable with the proposed special condition on the same basis - being subject to the $100,000.00 being no more than 20% of the net proceeds from the sale".
Later that day, Ms Craven sent an email to Ms Pavlakis in which she included the following text: "Are you content to rely on the email exchange as evidence of our respective clients' agreement to the additional special condition? If not, I authorise you to amend our client's documents by hand by inserting the agreed additional special condition."
Ms Pavlakis replied and said, "We are satisfied inserting the special condition by hand to reflect this".
On 23 December 2022 Ms Craven sent an email to Ms Pavlakis in which she said: "Dear Jemilly we are ready to proceed can you please urgently confirm by email so I can send to nab that you are as well they will then upload payout Sal has told my broker you are waiting on something from me. is that correct? thanks"
In the end nothing which can be called a settlement occurred in December. The evidence does not reveal why, although there were some late emerging caveats. In early January 2023, communications recommenced between Ms Craven and Ms Pavlakis. Ms Craven also recommenced her communications with Ms Qasim. On 3 January 2023, Ms Craven emailed to Ms Qasim some settlement figures which were the same as those which had been put forward by the Plaintiff on 13 December 2022 and which Ms Craven accepted on 16 December 2022. In addition, the figures broke down the "AMOUNT TO YOU" to record that most of it would be paid to NAB. Other sums would be paid to Mr Taffa, caveators and solicitors, including Cockburn & Co Lawyers. After the discharge of these debts, the Borrower would receive $154,282.60. Specifically, the facility limit, the interest rates, the 3-month term, the pre-paid interest (3 months) and the facilitation fee would be the same as those proposed on 13 December 2022.
Shortly after, Ms Qasim replied to Ms Craven and said "Yes. That's fine". She gave Ms Craven details for a bank account in the Borrower's name.
Ms Craven then forwarded Ms Qasim's email to Ms Pavkalis.
About half an hour later, Ms Pavkalis sent an email to Ms Craven in which she asked, "Can you please confirm drawdown approval?". Ms Craven responded by providing Ms Pavlakis with the trust account details for Cockburn & Co Lawyers.
In the end they missed settlement on 3 January 2023. The next morning, Ms Pavlakis sent new settlement figures to Ms Craven which were the same as those provided on the previous day except the amount to be paid to NAB had slightly increased and, hence, the "AMOUNT TO YOU" had slightly decreased. The change was obviously made to account for additional interest due to NAB because of the one day delay. Ms Pavlakis asked, "Can you please confirm drawdown approval for the revised figures below". A couple of minutes later she asked again, having made a minor adjustment for a PEXA fee.
At 11:15am on 4 January 2023, Ms Craven replied to Ms Pavlakis in an email in which she said: "Thank you - we are instructed to authorise you to proceed to distribution of funds in accordance with the below drawdown schedule."
The Plaintiff then disbursed the funds to the Borrower and its creditors in accordance with the agreed drawdown schedule.

Registered Mortgage AS767839

In anticipation of settlement, on 3 January 2023 a mortgage was registered over Ms Qasim's three properties. Ever since, the mortgage has appeared on the titles for the two properties at Randwick as Registered Mortgage AS767839. It also appeared on the title for the Old Bar property until it was sold in mid-2023.
As she explains in her Affidavit dated 6 June 2024, between 6 December 2022 and 3 January 2023 Ms Pavlakis made a number of amendments to the documents which Ms Qasim and the Borrower had executed on 6 December 2022. The amendments were made in red ink which shows the words added and the words deleted. Three documents were amended, namely the Finance Offer Schedule, the mortgage in registrable form and the Cheque Directions.
It is not necessary to set out all the amendments because, apart from one matter, Ms Qasim accepts that the amendments had the effect of bringing the documents executed on 6 December 2022 into conformity with the revised terms put forward by the Plaintiff on 13 December 2022 and accepted by Ms Qasim on 16 December 2022, and again on 4 January 2023. Relevant for current purposes, the amendments had the effect that: 1. the facility limit was reduced from $3,281,486.15 to $2,781,248.27; 2. pre-paid interest was three months ($121,679.61); 3. the Facilitation Fee was calculated at 3.3%, not 4.4%; 4. the facility term was 3 months, with three 3-month options, not 12 months; and 5. the interest rates, both Lower and Higher, were 17.5% and 22.5% per annum respectively.
Specifically, the words used to describe the term of the facility were: "Facility term 3 Months from the date of the first drawdown."
Ms Qasim did not re-execute the documents after Ms Pavlakis amended them. She was not asked to. Nor did Ms Craven ask that the documents be re-executed.
Registered Mortgage AS767839 appears on the Register without any amendments marked on the face of the document, or indeed any signatures. It is a new document which qualifies for registration by virtue of the certification which it contains at the end of the document. Relevantly the certification states: "Mortgage Execution The Certifier has retained the evidence supporting this Registry Instrument or Document. The Certifier has taken reasonable steps to ensure that this Registry Instrument or Document is correct and compliant with relevant legislation and any Prescribed Requirement. The Certifier, or the Certifier is reasonably satisfied that the mortgagee it represents,: (a) has taken reasonable steps to verify the identity of the mortgagor, or his, her or its administrator or attorney; and (b) holds a mortgage granted by the mortgagor on the same terms as this Registry Instrument or Document. …"
In the case of Registered Mortgage AS767839, the Certifier is described at: "Executed on behalf of PF 473 Pty Ltd Signer Name Jemilly Pavlakis …"

Subsequent events

On 7 February 2023, Reegan Piper (for the Plaintiff) sent an email to Ms Qasim in which he said that the loan "matures on the 8th March" and that the Defendant has "the option to extend for a further three months subject to paying 3 months interest". The first part of that statement was incorrect. Whilst it was originally contemplated that drawdown would occur on 9 December 2022, it did not occur until 4 January 2023. The loan would not therefore "mature" until 4 April 2023.
As is apparent from the emails between Ms Qasim, Ms Craven and Mr Taffa in December 2022, the Borrower evidently expected to roll the loan over for a further three months after the expiry of the initial 3 month term. Ms Qasim had sought and obtained Mr Taffa's assurance that the proceeds which she would actually receive (approximately $154,000) would be sufficient to pay a further three months' interest. On 8 March 2023 Ms Qasim sent an email to Mr Piper requesting clarification regarding "the bank details" so that she could transfer the "interest".
On 9 March 2023 Ms Qasim paid a further three months' interest at 17.5% per annum in the amount of $121,679.61. The Plaintiff accepts that by reason of the payment the Borrower exercised its rollover right and extended the loan term by three more months. As such, the facility limit (together with accrued interest and other charges) would thereafter have to be repaid by 4 July 2023.
The facility limit (together with accrued interest and other charges) was not repaid by 4 July 2023.
On or about 14 July 2023 Ms Qasim completed the sale of the Old Bar property. The next proceeds of $431,396.93 were paid to the Plaintiff.
Since 14 July 2023, the Borrower has not made any further payment to the Plaintiff. Nor has Ms Qasim.
The Plaintiff estimates the amount outstanding as at June 2024 as more than $3,000,000.

Default under Registered Mortgage AS767839

There is no dispute that pursuant to the provisions of Registered Mortgage AS767839 the Plaintiff is entitled to an order for possession.
Whether the principle and accrued interest were repayable on 7 July 2023 (as the Plaintiff claims, and taking into account three days' grace under cl 14.1) or on 7 January 2024 (as Ms Qasim claims), they have not been repaid. The mortgage incorporates by reference the Memorandum of Common Provisions. Clause 14.1 provides that there will be an event of default if the Borrower or Ms Qasim (as guarantor) does not pay any amount payable under the finance documents within 3 business days after it is due. The term "finance documents" includes the Finance Offer Schedule and the mortgage itself. Clause 14.3 contains a promise by both the Borrower and Ms Qasim to ensure that no event of default occurs. Clause 42 contains an unconditional guarantee from Ms Qasim for the secured money. Clause 45 provides that the Plaintiff may claim against a guarantor before it exercises any rights against the Borrower.
The front page of Registered Mortgage AS767839 provides that Ms Qasim mortgages the estate and/or interest in the Randwick properties to the Plaintiff as security for the debt or liability described in the terms and conditions set out or referred to in the mortgage. The facility between the Plaintiff and the Borrower is fully described. Clause 14.5(b) of the Memorandum of Common Provisions provides that if an event of default is continuing, the Plaintiff may immediately take legal action including starting proceedings to recover possession of collateral. By virtue of Ms Qasim's mortgage, the Randwick properties are collateral.

Real Issues in the case

Against this background, identification of the real issues in this case is not straightforward. This is because: 1. there is no dispute that an agreement was formed on 6 December 2022 on the terms of the documents executed by the Borrower and Ms Qasim on that day; and 2. there is no dispute that upon registration of Registered Mortgage AS767839, the Plaintiff obtained indefeasibility of title in a security over the Randwick properties "in manner and subject to the covenant, conditions and contingencies set forth and specified" in the registered document.
Given the way the case was run at hearing, the reasons for the orders to be made are best explained by reference to the following issues: 1. whether the communications between the parties after 6 December 2022 constituted an agreement to change the original terms to those which were ultimately specified in Registered Mortgage AS767839; 2. if so, whether that change was ineffectual for non-compliance with the formalities specified in s 23C of the Conveyancing Act 1919 (NSW); 3. whether Ms Qasim suffered from any special disadvantage so as to give rise to an issue of unconscionability; and 4. whether s 56C of the Real Property Act is relevant to any entitlement the Plaintiff otherwise has.

An agreement to change the original terms

The detail of the communications is set out above.
All relevant communications between the parties (including the respective solicitors) were contained in emails and attachments to those emails. Ms Qasim does not allege that there was any conversation with the Plaintiff or any officer of the Plaintiff including its solicitor which is relevant to the case. It follows that there is no dispute about what was communicated and the precise words in which it was communicated.
There is no doubt that after 6 December 2022 the parties agreed to change the terms originally recorded in the documents signed on 6 December 2022. Almost immediately after the documents had been signed and exchanged, each side initiated a change, evidently thinking the change would be in that side's interests.
The first change was initiated by Ms Qasim herself. On 7 December 2022, Ms Craven sent an email to Ms Pavlakis seeking the addition of a new special condition which would permit Ms Qasim to sell the Old Bar property and not pay all the proceeds to the Plaintiff. Such a change would weaken the security position of the Plaintiff which had been agreed on 6 December 2022. Thereafter, communications relevant to the Old Bar property occurred on 7, 9 and 13 December 2022, and culminated in the Plaintiff's agreement to Ms Qasim's changes on 15 December 2022, albeit with a qualification that Ms Qasim would not be entitled to retain some of the proceeds if the specified amount exceeded 20% of the total proceeds.
On 19 December 2022, Ms Craven expressly authorised Ms Pavlakis to make handwritten changes to the documents already executed by Ms Qasim to implement this change. Ms Qasim correctly submits the authorisation was expressly limited to the addition of the new special condition, but it reveals an attitude to the finality of the documents which were signed on 6 December 2022 which was consistent with Ms Craven's simultaneous and subsequent communications about other changes.
The second change was initiated by the Plaintiff on 9 December 2022 when Ms Pavlakis sent the email set out in paragraphs [19] and [20] above in which she set out terms which differed from those agreed on 6 December 2022. The email contained the words: "Kindly advise your client's position in respect of the revised facility figures. We look forward to response."
Further terms were emailed by Ms Pavlakis on 13 December 2022. As set out above, the further terms proposed a facility limit which was lower than that agreed on 6 December 2022 but higher than that proposed by the Plaintiff on 9 December 2022. It also proposed a change from 12 months' prepaid interest ($394,047.46) to three months' prepaid interest ($121,679.60), with the result that the amount which the Borrower would receive in its hands would be higher. It would be high enough to enable Ms Qasim to refinance the NAB debt. This email ended with the words: "Kindly confirm your client's agreement to the above and below revised drawdown, and provide us with authority to amend the documents by hand in the interests of expediency."
Ms Craven immediately forwarded the most recently proposed terms to Ms Qasim for instructions. After liaising with her solicitor and her broker, Ms Qasim sent Ms Craven an email in which she wrote "figures are in order".
On 16 December 2022, Ms Craven emailed Ms Pavlakis and wrote "[o]ur client is content with revised figures".
The parties thereby agreed to this second change to the terms originally agreed on 6 December 2022.
At the hearing, Ms Qasim made some criticisms about the process by which the parties communicated about the changes. The criticisms were confined to some (but not all) of the changes which were made, particularly the reduction of the 12-month term of facility. Ms Qasim made no criticisms about the reduction in the amount of the prepaid interest which the Borrower would need to pay or the increase in the amount the Borrower would receive in its hands. She did not criticise the reduction in the rate of the Facilitation Fees. Nor did Ms Qasim criticise the process by which the original agreement was changed in respect of the release of the security of the Old Bar property.
There is a lack of clarity and precision in the criticism which Ms Qasim makes about the way the changes were made. The criticisms may be described as variations on the following themes: 1. the further terms which the Plaintiff put forward (ie, the reduction in the facility limit) were the result of the Plaintiff obtaining valuations of Ms Qasim's three properties, valuations which Ms Qasim did not see; 2. the assertive language in Ms Pavlakis's email on 9 December 2022 (but not her email on 13 December 2022); 3. the changes did not conform to Ms Qasim's subjective understanding and intention because she thought that the term of the facility would be 12 months rather than three months with three 3- month options; and 4. to that extent, the matters communicated by Ms Craven to Ms Pavlakis did not accord with Ms Qasim's instructions.
None of these matters is capable of affecting the legal effect of the agreement to change the terms originally agreed. There is no dispute that the Plaintiff unilaterally obtained valuations, which prompted it to seek a lower facility limit. That fact does not affect the parties' respective rights. The letter emailed from Ms Pavlakis on 9 December 2022 contains some language which is assertive, and it does not expressly acknowledge the terms of the agreement which had already been made. However, Ms Pavlakis's email was clear. It was an offer of revised terms which Ms Qasim could accept or reject. Evidently Ms Qasim chose to reject the offer. There were further discussions following which further revised terms were put forward by the Plaintiff on 13 December 2022. Those terms were evidently acceptable to Ms Qasim. By Ms Craven's emails on 16 December 2022 and 4 January 2023 the revised terms were accepted.
Having regard to the objective theory of contract, Ms Qasim's subjective understanding is irrelevant. Nor is there any basis, either factually or legally, to doubt that Ms Craven acted entirely in accordance with the instructions given to her by Ms Qasim. Even if Ms Craven acted contrary to her instructions, Ms Qasim has not advanced any argument as to why the Plaintiff would be deprived of its right under the agreement on that account.
It follows that after 6 December 2022, the parties agreed to change the original terms.
A review of the revised terms set out in the Plaintiff's solicitor's email on 13 December 2022, and accepted by Ms Qasim on 16 December 2022 and again on 4 January 2023, shows that Registered Mortgage AS767839 is relevantly identical to those terms. Specifically, the term of the loan (three months with three 3-month options), and the interest rates (17.5% and 22.5%) are the same in both documents.
At the hearing, Ms Qasim identified only one difference between the terms in the email dated 13 December 2022 and the terms in Registered Mortgage AS767839. It was submitted that in the email, paragraph 1 gave the Borrower an absolute entitlement to exercise each option and paragraph 2 provided that there would be no rollover fee if interest for the new period of three months was prepaid. In Registered Mortgage AS767839, exercise of each option is conditional upon the prepayment of interest for the new period of three months. As a matter of construction, there is some force in that submission. However, even if it is correct, the conditionality of the three options does not affect the parties' rights and obligations in a way which is relevant to the dispute which has arisen. The facility term and the interest rate are the only terms of Registered Mortgage AS767839 which are relevant to the rights now asserted by the Plaintiff and the default which it is alleged has occurred.
In further support of her criticism of the process by which the changes were agreed after 6 December 2022, Ms Qasim relies on cl 61.11 of the Memorandum of Common Provisions which provides as follows: "Variation and Waiver A provision of this agreement, or right, power or remedy created under it, may not be varied or waived except in writing signed by the party or parties to be bound."
A provision such as cl 61.11 will not invalidate an otherwise enforceable agreement to amend: Hawcroft General Trading Co Pty Ltd v Hawcroft [2017] NSWCA 91 at [35] (Leeming JA); GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 at 7; [2003] FCA 50 at [217]-[218] (Finn J). Even if the emails exchanged between the solicitors do not satisfy the requirements of "signed" "writing" (which they do - see below), cl 61.11 does not preclude the Plaintiff from relying upon the agreement formed by those emails in the circumstances of this case.
As a counter to cl 61.11 the Plaintiff placed reliance on cl 57.2 which provides: "Complete blanks (a) You and the guarantor agree that we may complete and fill in any blanks in this agreement or a document connected with it (such as financing statements, financing change statements or transfers of the collateral). (b) You and the guarantor agree and authorise us to make fully effective any instrument or document relating in any way to financial accommodation provided by us to you, including: (i) dating any such instrument or document with the date of settlement or such other date we consider appropriate; (ii) correcting any typographical, grammatical or other manifest errors in any document or instrument; and (iii) inserting any outstanding information in such instrument or document." Given the other findings I have made, it is not necessary to decide the outer limits of the authorisation given to the Plaintiff by the Borrower and Ms Qasim in either cl 57.2(a) or cl 57.2(b). Ms Qasim submits that neither authorisation permitted the Plaintiff to amend the core terms of the further agreement, including the facility amount, the facility term or the interest rate. Had it been necessary, I would have accepted that submission.
Ms Qasim has not demonstrated any basis to impugn the changes which were agreed on 16 December.
It is important to point out that Ms Qasim does not allege that the process by which the documents were amended after 6 December 2022 constituted fraud for the purposes of s 42 of the Real Property Act. On the evidence before the Court, there is no basis for such an allegation and Ms Qasim was right not to make it.

Formalities in Section 23C

Ms Qasim submits that an agreement to vary or change the agreement originally entered into on 6 December 2022 had to comply with the formal requirements specified in s 23C of the Conveyancing Act. Section 23C provides as follows: 23C Instruments required to be in writing (1) Subject to the provisions of this Act with respect to the creation of interests in land by parol-- (a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person's agent thereunto lawfully authorised in writing, or by will, or by operation of law, (b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person's will, (c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person's will, or by the person's agent thereunto lawfully authorised in writing. (2) This section does not affect the creation or operation of resulting, implied, or constructive trusts. (3) For the purposes of this section, a requirement for writing may be satisfied in electronic form and a requirement for writing to be signed may be satisfied by electronic signature.
Ultimately it does not matter whether this submission is correct or not. As explained above, for the relief claimed in these proceedings the Plaintiff relies upon its interest under Registered Mortgage AS767839. The Plaintiff does not rely upon a right or interest created by the agreement made on 6 December 2022 as subsequently amended by further agreement. The Torrens system is not a system pursuant to which pre-existing interests are registered. It is a system by which interests are created by registration: Breskvar v Wall (1971) 126 CLR 376 at 385 (Barwick CJ). Absent fraud or one of the other exceptions listed in s 42, the registration of Registered Mortgage AS767839 entitles the Plaintiff to rely upon the terms of that document: Mercantile Mutual Life Assurance Co Ltd v Gosper (1991) 25 NSWLR 32 at 40 (Mahoney JA). As stated above, there is no allegation of fraud in this case and none of the other exceptions apply.
In any event, Ms Qasim's reliance on s 23C is misplaced. Section 23C(1)(a) will apply where an interest in land is created or disposed of. The communications which passed between the parties after 6 December 2022 did not purport to create or dispose of an interest in Ms Qasim's three properties. The communications constituted an agreement to create a security interest in the future, namely when the mortgage was registered. The question whether the Plaintiff can now sue upon the anterior agreement (assuming, contrary to the fact, that is what the Plaintiff is doing in the proceedings) is governed by s 54A(1), not s 23C(1)(a): Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 229 CLR 545 at 562-563 (Gleeson CJ, Gummow, Kirby and Hayne JJ); Baloglow v Konstanididis [2001] NSWCA 451 at [112] (Priestley JA, with whom Mason P agreed) and [162] & [190]-[192] (Giles JA); Khoury v Khouri (2006) 66 NSWLR 241 at 256 (Bryson JA, with whom Handley JA agreed and Hodgson JA substantially agreed); Powercell Pty Ltd v Cuzeno Pty Ltd [2003] NSWSC 600 at [83] (Campbell J).
Section 54A(1) provides as follows: No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.
For the purposes of s 54A(1), the agreement or memorandum or note must be in "writing". That requirement may be satisfied by reference to more than one document: Baloglow v Konstanididis at [99] (Priestley JA, with whom Mason P agreed) and [156] (Giles JA).
For the purposes of s 54A(1), the word "writing" means printing, photography, photocopying, lithography, typewriting and any other mode of representing or reproducing words in visible form: s 3 and sch 4 of the Interpretation Act 1987 (NSW). The emails between Ms Craven and Ms Pavlakis were writing for the purposes of s 54(A)(1).
Thus the agreement to change the terms originally agreed on 6 December 2022 was recorded in a memorandum or note in writing constituted of the original documents, plus Ms Craven's email on 7 December 2022, Ms Pavlakis's email on 13 December 2022, Ms Craven's email on 16 December 2022 and Ms Pavlakis's email on 19 December 2022.
Section 54A(1) further requires that the memorandum or note be "signed" by Ms Qasim or her agent. That requirement is satisfied by Ms Craven's name appearing at the foot of her email on 16 December 2022 because s 9(1) of the Electronic Transaction Act provides: (1) If, under a law of this jurisdiction, the signature of a person is required, that requirement is taken to have been met in relation to an electronic communication if - (a) a method is used to identify the person and to indicate the person's intention in respect of the information communicated, and (b) the method used was either - (i) as reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement, or (ii) proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence, and (c) the person to whom the signature is required to be given consents to that requirement being met by way of the use of the method mentioned in paragraph (a).
The requirements of s 9(1)(a) are clearly satisfied by Ms Craven including her name at the foot of her email. Having regard to the parties' adopted method of communication between their solicitors up until 16 December 2022 and continuing as at 4 January 2024, the exchange of emails was as reliable as appropriate for the purpose of communicating agreement to changes to be made to documents already executed by the parties. Thus s 9(1)(b)(i)I is satisfied. The mutual consent of Ms Pavlakis and Ms Craven is apparent from their use of the emails, both to propose changes and to accept such proposals from the other side.
Unlike s 23C(1)(a), s 54A(1) does not require that the agent to be authorised in writing: Baloglow v Konstanididis [2001] NSWCA 451 at [104] (Priestley JA, with whom Mason P agreed). Nonetheless, there can be no doubt that Ms Craven was fully authorised, and authorised in writing, when Ms Craven sent her email on 16 December 2022. Ms Craven's email followed Ms Qasim's email to Ms Craven at 3.46pm on 13 December 2022 in which she responded to Ms Craven's request for instructions by saying "figures are in order". As the Court of Appeal said in Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd [2012] EWCA Civ 265 at [22], a statutory provision like s 54A(1) must, if possible, be construed in a manner which accommodates accepted contemporary business practice. For the purposes of the Statute of Frauds, there is no objection in principle to the requirement of signed writing being satisfied by an exchange of emails in commercial spheres where such communication methods are commonplace. For the kind of communication which was the subject of the emails passing between Ms Craven and Ms Pavlakis, emails are commonplace.
For these reasons, there is no merit in Ms Qasim's argument about a lack of formality in the agreement to change the documents signed on 6 December 2022.

Unconscionability

During the course of the hearing, Ms Qasim submitted that she was subject to a special disadvantage in December 2022 for the purposes of the equitable doctrine of unconscionability. I take this to be a reference to the principles set out by the High Count in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.
Paragraph 10 to the Amended Defence filed on 28 February 2024 includes the following: "The defendant further pleads that it would be unfair, unequitable, and unconscionable to allow the Plaintiff to rely upon the said improperly altered documents, being a variation of a mortgage and terms of loan documents as pleaded by the Plaintiff, and to recover any financial benefit from their use."
No particulars are given for paragraph 10. There is no evidence of particulars being sought. Without objection, Ms Qasim contended that she suffered from a special disadvantage in December 2022. Only one matter was identified as constituting that special disadvantage, namely the absence of legal advice. Whether or not the absence of legal advice can, without more, constitute a special disadvantage for the purposes of the equitable doctrine of unconscionability, the submission is contrary to the fact.
In Ms Qasim's case at all relevant times, Ms Qasim was represented by Ms Craven through whom she communicated with the Plaintiff's solicitor. It is not necessary nor appropriate in this case to inquire into the content or efficacy of any advice given by Ms Craven. There is nothing in the evidence to suggest that Ms Craven's advice was not entirely appropriate.
In any event, merely to say that Ms Qasim was subject to a special disadvantage does not attract the equitable principle of unconscionable conduct. The classic formulation of that principle is in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474, where Dean J said: "The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or "unconscientious" that he procure, or accept, the weaker party's assent to the impugned transaction in circumstances in which he procured or accepted it."
No contention was made that Ms Qasim's want of legal advice was sufficiently evident to the Plaintiff so as to make it prima facie unfair or unconscionable for the Plaintiff to accept Ms Qasim's assent to the change to the terms after 6 December 2022. On the contrary, Ms Pavlakis was thorough and diligent in her dealings with Ms Craven to ensure that Ms Qasim was consenting to the revision of the terms. This is most apparent on 3 and 4 January 2023 when Ms Pavlakis repeatedly sought (and received) Ms Craven's consent to the pay out figures. There is nothing in the evidence to suggest that at all times the Plaintiff proceeded on the basis that Ms Qasim had legal representation. Given Ms Craven's involvement in the negotiation, and the Plaintiff's insistence on 5 December 2022 that Ms Qasim provide a certificate of legal advice, the Plaintiff was entitled to proceed on the basis that Ms Qasim did not suffer from the special disadvantage now alleged.
Even if the Plaintiff had engaged in unconscionable conduct and appropriate relief had been sought by Ms Qasim in her Defence or Cross Claims, there is nothing in the facts of this case which would warrant equitable relief being granted. Specifically, equity will not intervene unless Ms Qasim offers to do equity. In this case, that would require the repayment of the money which the Borrower received from the Plaintiff: Maguire v Makaronis (1997) 188 CLR 449 at 474-478 (Brennan CJ, Gaudron, McHugh and Gummow JJ). The money has still not been repaid nor was any offer made at the hearing to repay as a condition of equitable intervention.
There is nothing in Ms Qasim's contentions about unconscionable conduct which deprives the Plaintiff of the relief to which it is otherwise entitled.

Section 56C of the Real Property Act 1900

At trial, apart from the argument based on unconscionable conduct, Ms Qasim accepted that ss 41 and 42 of the Real Property Act 1900 entitled the Plaintiff to an order for possession in these proceedings. The only other submission to the contrary which was put forward was based on s 56C(1) of the Real Property Act. That provision provides as follows: 56C Confirmation of identity of mortgagor (1) Before presenting a mortgage for lodgment under this Act, the mortgagee must take reasonable steps to ensure that the person who executed the mortgage, or on whose behalf the mortgage was executed, as mortgagor is the same person who is, or is to become, the registered proprietor of the land that is security for the payment of the debt to which the mortgage relates.
Section 56C is not relevant to the issues in this case. There is no dispute about the identity of the registered proprietor of the Randwick properties or the mortgagor under Registered Mortgage AS767839. In each case it is Ms Qasim. Nor is there any basis for criticism of the comprehensive process which the Plaintiff and Ms Pavlakis went through in order to identify Ms Qasim at the time the original documents were signed on 6 December 2022. Not without justification, Ms Pavlakis herself described that process as "over the top" and "arduous". In this case, the requirement under s 56C that the mortgagee take "reasonable steps" did not require the same process to be repeated on 16 December 2022 when the parties agreed to the revised terms. Once Ms Qasim had been identified, in part through the certification of Ms Craven, there was no need for further identification given that the Plaintiff had communicated through Ms Craven throughout.
In any event, the only implication of a failure to comply with s 56C(1) is that the Registrar General may take action to cancel a mortgage recorded in the register. Section 56C does not create any private rights. The Registrar General is not a party to these proceedings.
There is nothing in ss 41 or s 42 of the Real Property Act 1900 which makes the fundamental concept of indefeasibility contingent upon compliance with s 56C(1).
For these reasons, Ms Qasim's argument based on s 56C cannot be accepted.

Orders

There is no substance in any of the claims made by Ms Qasim. The Plaintiff is entitled to the relief it seeks.
I make the following orders: 1. Judgment for the Plaintiff against the Defendant for immediate possession of: 1. Unit 3/5 William Street, Randwick, NSW, 2031 being the whole of the land comprised in folio identifier 3/SP11245; and 2. Unit 4/5 William Street, Randwick, NSW, 2031 being the whole of the land comprised in folio identifier 4/SP11245. 1. Declaration that on the proper construction of the mortgage from the Defendant, as mortgagor, to the Plaintiff, as mortgagee, registered number AS767839, and in the events that have happened, the facility term was from 4 January 2023 to 4 July 2023. 2. Declaration that on the proper construction of the mortgage from the Defendant, as mortgagor, to the Plaintiff, as mortgagee, registered number AS767839, interest is payable at the Higher Rate of 22.5% per annum and at the Lower Rate of 17.5% per annum. 3. Cross claim dismissed.

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. Decision last updated: 19 July 2024

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