This proposition stated by Harman J was repeated with approval, as I understand it, by Brooking JA in SEAA Enterprises Pty Ltd v Figgins Holdings Pty Ltd [1998] 2 VR 90 at 94.25.
14 It is argued for the plaintiff that if a date is set in the mortgage, it does not operate as a provision requiring repayment on that date; it operates merely to prevent the mortgagor redeeming before that date: Teevan v Smith (1882) 20 Ch D 724 at 729; Twentieth Century Banking Corporation Limited v Wilkinson [1977] Ch 99; Hyde Management Services Pty Ltd v FAI Insurances Ltd (1979) 24 ALR 435. The setting of a date did not, in the absence of a further covenant, prevent the mortgagee calling in the mortgage moneys before that date.
15 If no time is fixed for repayment, the plaintiff submits, the mortgagor can repay the mortgage at any time. No date being fixed for repayment of the principal, the mortgage is repayable on demand. The plaintiff is criticised by the defendant for reproducing a statement from the Australian edition of Fisher & Lightwood's Law of Mortgage (1995) at p 80, paragraph 312. When one reads the learned editor's commentary on the law antecedent to that simple statement, it does not stand alone, in my view, and represents an ample and available conclusion for the authors to state in that context. The statement is described, for the plaintiff, as an application of the ordinary rule that a debtor must seek out his creditor and pay, and "the mortgagee is in a position without formal demand to call in and sue for the debt" at any time: Coote on Mortgages (9th ed, 1927) at pp 731-2; see also Fitzgerald's Trustee v Mellersh [1892] 1 Ch 385 at 389 per Chitty J; c.f. Bovill v Endle [1896] 1 Ch 648 (these cases are useful guides, as to the former, to an equitable mortgage by deposit, and as to the latter, to a right in the mortgagee who makes a demand by entering into possession).
16 As has already been stated, demands for repayment under the mortgage were by letter dated 19 April 2002 (being annexure D to Rimmer's affidavit of 6 September 2002) and pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW) by Notice dated 21 May 2002 (annexure H). I permitted a very late amendment to the Further Amended Ordinary Statement of Claim to correct the date of the letter of demand from 22 to 19 April 2002.
17 Section 57(3) of the Real Property Act 1900 states as follows:
" 57 Procedure on default
…
(3) A notice referred to in subsection (2) complies with this subsection if:
(a) it specifies that it is a notice pursuant to section 57 (2) (b) of the Real Property Act 1900
(b) it requires the mortgagor, charger or covenant charger on whom it is served:
(i) to observe, except in relation to any time expressed in the covenant, agreement or condition for its observance, the covenant, agreement or condition in respect of the observance of which the mortgagor, charger or covenant charger made default, or
(ii) as the case may be, to pay the principal, interest, annuity, rent-charge or other money in respect of the payment of which the mortgagor, charger or covenant charger made default,
(c) if the costs and expenses of preparing and serving the notice are to be demanded, it requires payment of a reasonable amount for those costs and expenses and specifies the amount, and
(d) it notifies the mortgagor, charger or covenant charger that, unless the requirements of the notice are complied with within one month after service of the notice (or, where some other period exceeding one month is limited by the mortgage, charge or judgment for remedying the default referred to in the notice, within that other period after service of the notice), it is proposed to exercise a power of sale in respect of the land mortgaged or charged."
18 I am satisfied that the plaintiff made a proper and, if necessary, reasonable demand. I am satisfied that the Notice complies with this section in relation to the requirements as to what is to be specified in the Notice, the demands to be made and which in fact were made relating to principal and interest payments sought by way of costs and expenses being reasonable and the requirement under s 57(3)(d) of notice of the exercise of the power of sale.
19 For the reasons that constitute the principal matter in issue between the parties, Bourke did not respond to the demands and was therefore in default, whereupon the plaintiff became entitled under cl 6 of the memorandum to exercise the statutory powers under the Real Property Act and the Conveyancing Act, including of course the right to bring proceedings for the recovery of possession under s 60 of the Real Property Act.
20 The parties are not in dispute about the principal not being repaid under the mortgage (otherwise than by payment into Court). The central issue in the proceedings is the extent to which Bourke has paid interest under the mortgage since the advance was made on 13 December 1991.
21 The plaintiff's course of submissions is the one I propose to follow. Rimmer's evidence is in paragraphs 6, 7 and 8 of her affidavit sworn 10 November 2004 and in exhibit "B". Exhibit B is a document that represents amendments made to what was an exhibit to an affidavit of Mrs Rimmer, namely "PR 12". It is to some extent evidence, and to some extent a submission document. It is complex in all its manifestations, purporting to represent payments, their source and their allocation in the various transactions. As I understand it, it founds certain tables relied upon by the plaintiff as setting out for various periods, to which I will come shortly, the amount of arrears under the Binnaway mortgage. Those tables themselves are the subject of amendment in submissions which continued until 1 March 2005.
22 It is desirable to clarify that in addition to the Binnaway transaction, which is the mortgage, the subject of this action, "Windbid" is referable to what the plaintiff says is an advance of $190,000 by her to a company called Windbid on 9 August 1994; "Poswan" is a reference to an investment of $93,000 by KJ Rimmer Pty Ltd in Poswan, another company, on 28 and 1 October 1993. Insofar as there is reference made in the documents to which I have referred, namely exhibit B, PR 12 and various tables, to "Normanhurst", that is a reference to an advance of $100,000 made by KJ Rimmer Pty Ltd to Oaktwig Pty Ltd, a company associated with the defendant in April 1991, which was secured by the property owned by Oaktwig at Normanhurst.
23 In any event, each time Rimmer received a payment, it was banked into one of two KJ Rimmer accounts. Records do not exist for either party in relation to the period up until July 1992 and the plaintiff does not seek to establish any default before July of that year.
24 By reference to exhibit B in the form that it was at the time of tender, various amounts are shown as representing the extent of default for various periods. The first period was July to December 1992, and I will note that the sum initially claimed was $3,416.70. The next period was the 1993 calendar year: $6,868.02. For the 1994 calendar year: $5,601.43. Between 2 December 1994 and 21 October 2002, no interest was paid, leaving a default each year to the extent of $16,000. Finally, since the payment of $200,186 on 21 October 2002 (which discharged $171,000 of the Windbid principal and $29,186 of interest pursuant to a judgment of Windeyer J on 5 August 2002 in Windbid v KJ Rimmer), the plaintiff concedes that the payments by Windbid or Bourke to KJ Rimmer may be allocated to the Binnaway account.
25 The defendant asserts that he paid the interest due under the mortgage and "frequently in advance" (paragraph 8 of Bourke's affidavit sworn 20 September 2002). From 9 August 1994, it is asserted that it was agreed between the parties that payments of $800 per week were to be made by Windbid to KJ Rimmer (under an agreement between those companies made on 8 August 1994) and those payments would also serve to discharge Bourke's personal obligation to pay $250 interest per week under the Binnaway mortgage. It is further asserted for the defendant that Binnaway was a "preferred" creditor, thus enabling Bourke to allocate more than $250 of the $800 payments made under Windbid to KJ Rimmer. Five of what is known in the proceedings as "Poswan" payments made to KJ Rimmer between 29 December 1997 and 15 July 1999 totalling $6,030.80 should be allocated to Binnaway. Finally, since October 2002, payments in various amounts ($800, $183, $250 and $1000) have discharged his interest obligations under the Binnaway mortgage. That those payments were in discharge of interest obligations to Binnaway are not in dispute.
26 Throughout the cross-examination of the defendant, counsel for the plaintiff sought to obtain the defendant's agreement as to what in fact was in issue between the parties in this litigation. It was an appropriate exercise on counsel's part, though not necessarily met with the answers he desired. In the end, however, I accept the analysis of the plaintiff as to the four areas of contention.
27 Was there an agreement between the plaintiff and defendant in August 1994 that the $800 weekly payments to be made by Windbid to KJ Rimmer would also discharge the personal obligation of the defendant to pay interest to Rimmer under the Binnaway mortgage? Was there an agreement between Rimmer and Bourke that the Binnaway mortgage interest payments were "preferred" or had priority by comparison to the position of Rimmer under the Windbid agreement? Or, as it is put, in other words, where Bourke has allocated an amount greater than $250 (usually $500 and sometimes $800 of the $800 weekly Windbid payments) to the Binnaway account, should those surplus amounts be allocated as Binnaway interest payments? Where the defendant allocated payments by Poswan to KJ Rimmer to the Binnaway accounts, should such payments be allocated as Binnaway interest payments? Finally, taking into account all payments found to be on account of Binnaway interest, does the total sum satisfy the obligation that Bourke has had to pay interest under the mortgage?
28 I also accept the approach adopted by the plaintiff as to the examination of the dispute as to payments of interest under the Binnaway mortgage being considered in respect of four periods. The first of those periods is between 12 December 1991 (the date of the Binnaway mortgage) and 9 August 1994 (the date of the KJ Rimmer / Windbid agreement). The second period is between 10 August 1994 and 5 July 1995 (being the date of the first payment entry in annexure A to the defendant's affidavit sworn 18 March 2004). Annexure A is what the defendant then (as at 18 March 2004) asserted to be a schedule of payments that he had caused to be made in respect of the Binnaway mortgage from 6 July 1995 to 20 December 2003. The third period is 6 July 1995 to 21 October 2002 (being the date when Windbid paid KJ Rimmer $200,186 under the statutory demand pursuant to the judgment of Windeyer J referred to above). The final period is between 21 October 2002 and February 2005, in relation to which the plaintiff concedes that all payments proved in this period are to be allocated to the Binnaway interest account.
29 As to the first period (12 December 1991 - 9 August 1994): the only issue is whether the defendant made sufficient payments to satisfy the payment of $13,000 per annum, or $16,000 at the default rate. Whilst the plaintiff does not seek to establish a default prior to July 1992, it is her position that a default by the defendant is established immediately in July 1992, as the monthly payments of interest, calculated on the basis of $13,000 per year, were $1,083.33, yet Bourke made only five payments in the six-month period of July to December 1992, each in the sum of $916.66.
30 On the probabilities Bourke was in default to the extent of varying amounts for the years 1992, 1993 and for the period 1 January - 9 August 1994, those varying amounts were arrived at by reference to pp 2 and 3 of exhibit B and Mrs Rimmer's affidavit evidence (10 November 2004). The defendant asserts that there have been payments made, but no evidence in support has been provided. The plaintiff has taken into account all the payments which Bourke claims were made in respect to the period, and that is set out in a document which is exhibit D. The document was provided by the defendant's solicitors to the plaintiff's solicitors in 2002, and sets out payments made between 24 December 1992 and 22 June 1995.
31 The written submissions of the plaintiff, to the extent that they contain tables that are amended that lead to the calculation of what the plaintiff says is due, I will have marked as MFI 4. I will have marked as MFI 5 the amended tables that accompanied supplementary submissions from Mr Stirling of counsel for the plaintiff on 25 February. MFI 6 will be the defendant's response to the plaintiff's submissions of 25 February 2005. The amended submissions of the defendant / cross-claimant will be marked MFI 7 by reason of the tables attached thereto, prepared by Mr S Bell of counsel for the defendant.
32 At the end of the day, for the first period just referred to, by reference to MFI 5, the amount claimed for the period is $13,898.47.
33 As to the second period, 10 August 1994 - 5 July 1995: the defendant's position is, by reference to annexure A to his affidavit sworn 18 March 2004, that the interest due under the Binnaway mortgage was being paid within the $800 weekly Windbid payments. The first question was whether there was an agreement reached between the parties, and secondly, even if there was, whether Windbid / Bourke made sufficient $800 payments in the period to satisfy the obligation under the Binnaway mortgage.
34 Exhibit A in the proceedings is one of the most contentious, and indeed unusual, documents in the case. On its face, it is described as a joint-venture agreement between Windbid Pty Ltd and KJ Rimmer Pty Ltd. It bears the signature of the defendant as the director and secretary of Windbid and on its face is said to have been signed on 23 June 1994. In its preamble, it states "the parties have held discussions and it is agreed that…".
35 The plaintiff's evidence is to the effect that she had a series of discussions with the defendant in the few months leading up to 8 August 1994 (paragraph 19 of her affidavit of 10 November 2004). She says she was prepared to invest $200,000 and that the defendant promised a return of weekly payments in the sum of $800. Further, she says she borrowed a sum of $200,000 at 10 per cent in order to be able to effect the investment, and that after various financial and legal expenses were taken into account, she was in a position to invest $190,000. That sum Bourke was prepared to accept and indeed to treat as an investment of $200,000. He would issue 200,000 shares (paragraph 21 of the affidavit referred to at T8.54 and T21.28).
36 It is tolerably clear that the defendant was prepared to concede in cross-examination that $190,000 was to be invested by KJ Rimmer (although with a rider to the effect that $175,000 was to be applied to Windbid and $15,000 to Poswan) and agreed here that he was not prepared to let the Windbid investment fall through simply because of KJ Rimmer's investment being $190,000 rather than $200,000 (T8.54 and T21.28). I am prepared to accept that the plaintiff was concerned to have some documentation reflecting what had been agreed before she in fact advanced the sum of $190,000, not an inconsiderable amount of money. I accept that more probably than not the defendant said he would provide a written document and made a request of the plaintiff that she make a cheque payable to him for $100,000, and a further cheque payable to Poswan for $90,000. The plaintiff's evidence was that Bourke wrote exhibit A in her presence and "there is no doubt in my mind that the document was created earlier on 8 August 1994, the same day that the cheques for $190,000 were provided to Bourke". Mrs Rimmer said that each of the points in exhibit A were discussed, and it accurately reflected the discussions which she had had with the defendant.
37 It is argued for the plaintiff that there are varying accounts of the Windbid "arrangement" and exhibit A in the evidence of the defendant. In an affidavit sworn 24 July 2002 in the Equity proceedings, the defendant said in paragraph 5:
"5. The said sum of $175,000 was advanced in separate amounts to Winbid Pty Ltd by KJ Rimmer Pty Ltd during the financial year 1994-1995. At the time of the first advance in or about August 1994 Mrs Rimmer said "I am not getting enough interest at the bank. If I put my funds with Windbid Pty Ltd as long as I get $800 per week interest for all the funds I am investing, I will be prepared to leave my money in the Company."
I said "All right. The $800 will need to include the $250 per week already being paid for the secured funds (meaning an existing mortgage of $100,000)".
Mrs Rimmer said "Yes, a total of $800 per week".
Thereafter Windbid Pty Ltd has paid $800 per week to KJ Rimmer Pty Ltd and is continuing to make such payments. I believe that, although the interest payments being paid were equivalent to a high interest rate, the fact that funds were being lent to the Company on an unsecured basis for an indefinite term made the payments not unreasonable in the circumstances."
38 In his affidavit of 20 September 2002, the defendant said (paragraph 11):
"11. I continued my business relationship with Mrs Rimmer as an architect involving the development of her property and in or about June 1994 I had a further conversation with her concerning her investments. Mrs Rimmer said to me words to the effect "I am still not getting a reasonable interest rate on money I have with the Advance Bank". I said words to the effect "I have an interest in a Company called Windbid Pty Limited ("Windbid") which owns a caravan park at Wilberforce which is in need of working capital. Would you be interested in investing in it?"
Mrs Rimmer replied in words to the effect "I need to get $800.00 per week to cover my living expenses. I can't get that through the Bank". I said words to the effect "The Company needs $175,000. If you were to invest $175,000 in Windbid it would pay you interest of $550.00 per week which is about 16%, which, together with what I am paying you on the Binnaway mortgage, would be $800.00 per week."
Mrs Rimmer replied in words to the effect "I will see if my solicitor says that is all right". Over the next few weeks Mrs Rimmer and I attended the office of her solicitor, Mr David Thompson, and Mrs Rimmer advanced $175,000 to Windbid. Thereafter Windbid has paid Mrs Rimmer (via her Company KJ Rimmer Pty Limited) $550.00 per week interest on account of such advance and continues to do so which is usually paid as part of a cheque for $800.00 per week which includes $250.00 per week on account of the Binnaway mortgage interest."