Thambiappah v Commonwealth Bank of Australia

Conveyancing Act 1919 LEGISLATION CITED : Real Property Act 1900 Transfer of Land Act 1958 (Vic)

Adams v Bank of New South Wales [1984] 1 NSWLR 285 Colin D Young Pty Ltd v Commercial & General Acceptance Ltd [1982] NSW Conv R 56 Commonwealth Bank of Australia v Hadfield [2001] NSWCA 440; (2001) 53 NSWLR 614 Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161 CASES CITED : Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361 McGinnis v The Union Bank of Australia Ltd [1935] VLR 161 Nolan v MBF Investments Pty Ltd [2009] VSC 244 Robertson v Deputy Commissioner of Taxation [2010] NSWCA 58 Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd [2002] NSWCA 287 Ultimate Property Group Pty Ltd v Lord [2004] NSWSC 114; (2004) 60 NSWLR 646

PARTIES : Sivamani Thambiappah (Plaintiff) Commonwealth Bank of Australia (Defendant)

COUNSEL : C R Ireland (Plaintiff) J M White (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2007/261543 Sivamani Thambiappah v Commmonwealth Bank of Australia

JUDGMENT 1 HARRISON J: The plaintiff is the former owner of two properties in Cornelia Road, Toongabbie and Millet Row, Werrington. The plaintiff borrowed money from the defendant secured by mortgages over these properties. She defaulted on these loans and in due course the defendant sold Werrington on 2 July 2007 and Toongabbie on 13 December 2009 as mortgagee in possession and pursuant to its power of sale. The defendant also disposed of certain goods that were located upon the Werrington property by taking them to a local rubbish tip. The plaintiff alleges that the goods were valuable and that the defendant breached the terms of the mortgages in dealing with the goods in this way. She claims damages of $217,000, said to represent her loss in these circumstances. This is referred to as "the goods claim". 2 The plaintiff also contends that the defendant failed to serve a notice upon her in accordance with the provisions of s 57(2)(b) of the Real Property Act 1900 before it exercised its power of sale over Werrington. She contended that the notice should have been sent to her at ** Houison Street, Westmead but that it was incorrectly sent to a different address. Accordingly, the sale was illegal and occurred in breach of the Act and the terms of the mortgage. The plaintiff alleges that she has suffered loss as a result of the sale in the sense that she has lost the benefit of her position as a mortgagor who was entitled to retain the property and exploit it as the owner subject only to her obligations to the defendant pursuant to the mortgage. This is referred to as "the ineffective service claim". No similar claim is made with respect to Toongabbie, for the reason that the s 57(2)(b) notice in respect of the mortgage over that property was actually sent to ** Houison Street, Westmead. Nor is any claim made alleging, for example, that either of the properties was sold at an undervalue or that the defendant somehow otherwise failed to act properly as a mortgagee exercising its power of sale. 3 The facts are generally not in issue. However, all of the plaintiff's claims are contested by the defendant on various grounds. These are referred to in detail later in these reasons. Background 4 The plaintiff relied on three affidavits sworn by her brother Thambiappah Satchithanantham on 21 June 2007, 22 June 2007 and 20 October 2009. She also swore an affidavit on 15 December 2009 in which she purported to "verify and confirm" the contents of the amended statement of claim filed on 6 November 2009. In the events that occurred, the plaintiff also read the affidavit of Cassandra Menzies sworn 7 June 2010. Ms Menzies described herself as "Team Manager - Home Loans, Collections and Credit Solutions" for the defendant. For reasons that will become apparent, it is convenient to refer to her evidence first. 5 Ms Menzies said that the defendant employed her in her present role in Sydney in 2007, although her surname was then Luke. In about March 2007 the defendant entered into possession of Werrington. Ms Menzies was then advised that there were goods stored in the garage on the property. She therefore wrote to the plaintiff at ** Houison Street, Westmead on 14 March 2007 in the following relevant terms: "I refer to the above home loan and advise that the Bank has exercised its power of sale and changed the locks on the security property.

The Bank has been advised that certain items remain in the property which will need to be removed immediately.

Accordingly, I request that you please contact with Cassandra Luke of this office immediately on [the number provided] to make arrangements for removal of these goods.

Should I fail to receive a reply within fourteen days the goods will be considered abandoned and will be placed in storage by the Bank. The costs for the first fortnight will be debited to your home loan and if after this period you fail to collect the items, the storage company may have no option but to deem them abandoned and dispose of them to recover costs." 6 A letter in the same terms was also sent to Satish Menon on the same day. Mr Menon was a co-owner of the property. Ms Menzies said that she recalled speaking to Mr Menon on the telephone on more than one occasion after the defendant took possession of the property in the course of which she said to him that he would need to make arrangements to remove the goods that were then currently stored there. Mr Menon did not say to her that he would remove the goods. Ms Menzies said that "as a result of receiving that advice" [sic] she instructed Mr Peter Gallagher of Grays Auctioneers to inspect the goods with a view to their removal and storage or sale prior to the property being sold. Mr Matthew Travess subsequently told her that the cost of removing and storing the goods would exceed their likely sale value. She later received an email from him on 9 May 2007 in the following relevant terms: "Please find attached listing of assets and photographs for the property at ** Millet Row, Werrington Heights. There is little of commercial value and the cost of removing and relocating these items to our auction rooms would exceed any returns from sale of these assets." 7 Attached to the email was a list of the goods in question to which had been assigned both a high and a low estimate of value if offered for sale at auction. The total high auction estimate was $1,350 and the total low auction estimate was $440. Most of the items in the list were described as having no commercial value at all. 8 Ms Menzies said that as a result of receiving that information, by which she must have meant the verbal advice from Mr Travess, she wrote to the plaintiff at ** Houison Street, Toongabbie [sic] and Mr Menon on 7 May 2007 in the following relevant terms: "I refer to the above home loan and advise that the Bank has received notification that certain items remain in the property despite our previous request to remove, dated 14 March 2007.

An independent valuer has assessed these goods and notification has been received. As there is no commercial value, these items will not be stored.

Accordingly, I request that you please contact with Cassandra Luke of this office immediately on [the number provided] to make arrangements for removal of these goods.

Should I fail to receive a reply within seven days, the goods will be considered abandoned and as such disposed. The costs of which will be debited to your home loan account." 9 Ms Menzies did not receive any reply to these letters. She therefore arranged for Cootabella Transport Pty Ltd to attend the property to remove the goods. She received a telephone call from Mr Jason Clarke from that company while he was at the property. In that conversation he said the following: "There's lots of stuff out here. It's filthy. There's a kebab machine that's still greasy. There are cockroaches everywhere. The pallets and boxes are infested with bugs, and we are getting bitten by them." 10 Ms Menzies was unsurprisingly not cross-examined. It is apparent that the plaintiff read her affidavit as there was no other evidence in the plaintiff's case that either described or itemised the goods in any way at all or that suggested what each item was worth. The plaintiff's brother said at paragraph 24 of his 21 June 2007 affidavit that on 5 April 2007 he went "there", although it is not clear where "there" is, "to change the lock together with the cleaning agent and their staff" where he "found that the big garage lock was opened and the goods worth $16,000 was missing". The defendant objected to the italicised words and I rejected them. At paragraph 26 of the same affidavit he said that when the defendant took possession on 8 February 2007 "of the said property", (which is not otherwise identified), there were large amounts of commercial and personal goods stored in the big garage of the property. He then said, "[t]he big garage size easily accommodates 8 car spaces and total value of goods stored their [sic] were amount to $90,000 commercial insured values ($60,000 and $30,000 in different lessees) and non insured personal goods worth $25,000". The defendant objected to the italicised words and I rejected them. 11 The affidavit of the plaintiff's brother sworn on 22 June 2007 attached a letter dated 15 June 2007 written by Elizabeth Evans from the defendant to S T Krishnar, a solicitor acting at that time for the plaintiff and Mr Menon. That letter was relevantly as follows: "I refer to your facsimile of 12 June 2007, and to our subsequent telephone conversation. I note that you are acting for both mortgagors.

As I understand it, your clients claim that the power to sell the [Werrington] property is not exercisable because the relevant notices have not been correctly served. Your instructions are that Mr Menon did not receive his notice until 20 January 2007, and that Ms Thambiappah did not receive any notices at all, and that she only learnt of the sale through Mr Menon.

A court order is not required, as you suggest, for the mortgagor [ sic ] to exercise power of sale. The mortgage that was signed by your client contains an express power of sale upon the default by the mortgagor.

The power of sale may be exercised by the mortgagor [ sic ] provided that notice is served in compliance with section 57(2)(b) of the Real Property Act 1900. In accordance with section 170 of the Conveyancing Act 1919 section 57(2)(b) notices dated 3 January 2007 (the "Notices") were sent by post to each mortgagor at the property address the subject of the mortgage and to the last known residential address for each mortgagor. In accordance with section 76(1) of the Interpretation Act 1987 service is effected on the fourth day after posting, in this case on 7 January 2007.

My client was not notified that ** Houison Street, Westmead was the address for service of notices on Ms Thambiappah until 7 February 2007, that is, over one month after the Notices were posted. A copy of the notices is enclosed.

The Notices provide that if the default is not rectified within 1 month after service the mortgagor [ sic ] may exercise its power of sale. An extension of the time to comply with the Notices was granted to 28 February 2007 to help your clients meet their obligations. I have reviewed numerous correspondence between Mr Menon and the Bank in which correspondence Mr Menon was clearly advised that the Bank would exercise its power of sale if the default was not rectified by expiration of the extended deadline. I am instructed that the default was not rectified until mid-March by which time the notice period had expired. Pursuant to section 58 of the Real Property Act 1900 on expiration of the notice period the mortgagee was authorised to sell the property.

On expiration of the extended notice period the tenant vacated and the Bank took possession.

Pursuant to clause 21.5 of the mortgage once the mortgagee has taken possession then it may remove all goods. I enclose copies of letters issued to all known addresses for Mr Menon and Ms Thambiappah dated 14 March and 7 May 2007 advising that the goods would be removed.

My client obtained a valuation of the goods, which were assessed as having no commercial value. As the goods were held to have no commercial value they were not stored and have been destroyed.

My client has complied with all statutory requirements pertaining to exercise of power of sale and will auction the property on Saturday, 23 June 2007.

If your clients decide to approach the court for an injunction to prevent the auction sale proceeding, I expect to be notified in sufficient time to enable the Bank to appear should it wish to do so." 12 The same affidavit also attached a letter dated 21 June 2007 written by S T Krishnar to Ms Evans. That letter was in these terms: "We refer to previous correspondence and telephone conversations in this matter.

We are instructed to write to you at this stage and to place on record the following:-

1. That your client has mislead [ sic ] our clients and have acted unreasonably and unconscious ably [ sic ] in the lead up to the recovery of all arrears and repayments to the loan in relation to the Werrington.

2. In the process your client had committed various equitable delinquencies.

3. In relation to the goods in the big garage our client disputes that the goods are of no commercial value.

In the circumstances your exercise of any equitable right over the said property is questionable.

Consequently our clients further put you on notice that they will proceed to file a claim for damages in respect of all their losses and costs." 13 There does not appear to be any dispute that the only notices sent to the plaintiff pursuant to s 57(2)(b) with respect to Werrington were sent under cover of letters in identical terms dated 3 January 2007 to the security property itself at ** Millet Row, Werrington Downs and ** Ashley Lane, Westmead. 14 When the loan for the purchase of Werrington was originally applied for, the plaintiff nominated her "current home address" as ** Ashley Lane, Westmead. This address is shown as her address in the loan application documents. However, it would appear that the defendant became aware that the plaintiff could be contacted at the address at ** Houison Street, Westmead before 7 February 2007, which is the date referred to by Ms Evans in her letter to S T Krishnar as the earliest date that the defendant became aware of it. This is clear from a letter, included in the folder of documents that became exhibit "A", which is dated 9 October 2006 and which is addressed to the plaintiff and Mr Menon at ** Houison Street, Westmead. Adams J had also earlier referred at par [5] of his judgment published on 22 June 2007 (as to which see below) to a letter dated 11 October 2006 sent by the defendant to the plaintiff at ** Houison Street, Westmead. That letter is annexed to the affidavit of the plaintiff's brother sworn 21 June 2007. 15 The plaintiff also relied upon a letter written to the defendant by Mr Menon on 15 December 2006 in which he informed the defendant that the ** Houison Street, Westmead address was the plaintiff's "postal address". However, for the reasons stated, the defendant had become aware of that address more than two months earlier than that. In addition, a letter and accompanying notice given pursuant to s 57(2)(b) to the plaintiff with respect to Toongabbie dated 1 February 2007 had also been sent to the plaintiff at ** Houison Street, Westmead. 16 As mentioned above, on 22 June 2007, Adams J dealt with an application to restrain a sale of the properties. The following portions of his Honour's reasons for judgment are instructive: "[1] HIS HONOUR : This is an application for interlocutory relief brought by the plaintiff on its own behalf and as attorney for Sivamani Thambiappah and Satish Menon. The latter pair are the registered proprietors of premises at Werrington who mortgaged the property to the Commonwealth Bank.

[2] The plaintiff asserts that he has an interest in the property as the beneficial owner of an interest representing his contribution of the purchase of the property. For present purposes I have accepted that he does have such an interest. He holds however a power of attorney for the registered proprietors and has instructed Mr Krishnar, a solicitor, to appear for all three of them. The court is grateful to Mr Krishnar for appearing in what is not a simple matter at short notice and the court is grateful for the candour and thoroughness with which he has sought to advance his clients' case.

[4] The plaintiffs rely on two principal points. The first is that notices under s 57(2)(b) of the Real Property Act 1900 were not properly served on the mortgagors. It is undisputed that the notices were sent to the mortgagors at the addresses shown in their application for the loan and the mortgaged property. However, it is clear from the correspondence of the Bank that has been tendered that as at the date of the notices being sent, namely, 3 January 2007, the Bank was aware that the address for both mortgagors was ** Houison Street, Westmead, an address different to that contained in the applications. That the Bank was aware of this address is confirmed by the fact that from August 2006 the investment home loan summary and statement of transactions was sent to Mr Menon at ** Houison Street, Westmead.

[5] There is no evidence as to where the summary and statement were sent to Miss Thambiappah. However on 11 October 2006 the address, ** Houison Street, Westmead, is that to which the Bank directed a letter informing her that control of the account had been transferred to the realisation department for collection and demand was made for immediate repayment of the then outstanding arrears.

[6] I conclude that the last know residential address of the mortgagors was ** Houison Street, Westmead and not the addresses in the loan application form to which the notices under s 57 of the Real Property Act were addressed.

[7] Section 170 of the Conveyancing Act 1919 permits service ' in the case of a mortgagor in possession…by post to any occupied house or building comprised in the mortgage…'. Here, however, it is undisputed that at the time of the notice the property had been leased by the mortgagors who were not, I think, relevantly in possession for the purposes of s 170. However, the matter does not end there, since the third plaintiff's affidavit discloses that on 5 February 2007 he became aware of the notices. At this time he held the power of attorney for the mortgagors and it follows that they had constructive notice through their attorney of the intention of the Bank to exercise its rights under the mortgage.

[8] Accordingly, I conclude that the notices were in the event effectively served, although the relevant date for service was 5 February 2007. I might say from other correspondence it may well be that the notices came to the attention of the mortgagors at an earlier time but the evidence in this respect is so indefinite I do not think it can be acted on.

[20] I am informed that the premises was purchased as an investment. None of the plaintiffs are in fact in occupation. I do not consider that there is an arguable case that the Bank is not entitled to exercise its power of sale under the mortgage and, even if there were an arguable case, this is not a matter, in my view, in which interlocutory relief should be granted in the discretion of the Court. The plaintiffs can be adequately compensated, if there is a relevant contractual breach by the Bank, in damages." The goods claim 17 Clause 21.5 of the mortgage was as follows: "21.5 If we enter into possession of THE PROPERTY we may:

(b) remove goods ( for example your furniture) on THE PROPERTY and store them. If you do not reclaim possession of the stored goods within 14 days of our telling you where the goods are, we may dispose of the goods on your behalf. We pay any proceeds from selling the goods into an account we open with us in your name. We are not liable to you in any way due to any action we take under this clause;

(c) …". 18 The plaintiff argued that the defendant had breached the terms of this clause by destroying the goods. She contended that the word "dispose" ought to be construed beneficially to the plaintiff in the context of the mortgage in general and having regard to the intention of this clause in particular. Upon that basis, the defendant could not have been authorised or permitted to destroy the goods as the word "dispose" in these contexts could not have been intended to extend to so drastic a remedy. It had the meaning of putting in a proper or particular order or arrangement or suitable place. 19 The defendant contended on the contrary that "to dispose of" meant to deal with definitely or to get rid of, or to make over or part with as by gift or sale. It contended that the sale of the goods was clearly intended to be only one particular method of disposal out of all the other possible methods of disposal generally. This was said to be clear from a comparison of the general words "we may dispose of the goods" on the one hand, with the specific words "pay any proceeds from selling the goods" on the other hand. The defendant contended that if it were otherwise, one might have expected the clause to say either "we may sell the goods" in the first case or "pay any proceeds from disposing of the goods" in the second case. There were no such words and the power to dispose of the goods extended as a clear matter of construction to a power to destroy or to discard them. 20 In my opinion, the latter interpretation is correct. The words are unrestricted and in their natural and ordinary meaning clearly authorise the defendant to do what they consider to be appropriate in the circumstances. The brake upon the misuse of the power given to the defendant by the clause is to be found in the obligation to give the plaintiff 14 days notice of an intention to dispose of the goods in question. That is what occurred in this case and no complaint is made by the plaintiff that such notice was not given. Indeed, the evidence reveals that the plaintiff was given two notices some months apart and still nothing was done to retrieve the goods. They had clearly not been disposed of before 7 May 2007 as the correspondence reveals. The plaintiff has not explained why she did not seek to remove the goods at any time after 14 March 2007 but before the defendant disposed of them. Her solicitor gave a warning to the defendant in his letter of 21 June 2007, by disputing that the goods were of no commercial value, by which time the defendant had disposed of the goods. The matter came before Adams J the very next day and the dispute about the goods did not appear to receive any attention, apart from a reference in paragraph 5 of the summons to "unlawful removal of the goods stored in the garage during the lease tenancy period and subsequently destroyed by the defendant unlawfully" with which his Honour was apparently not asked to deal. 21 The defendant also contended that the exclusion of liability in the clause itself was wholly destructive of the plaintiff's claim. The plaintiff did not suggest that the exclusion was invalid or inoperative or that it did not protect the defendant from the present claim. The plaintiff did suggest that disposal of the goods by destroying or discarding them fell outside the expression "any action we take under this clause" for the reason that the only authorised action under the clause was the sale of the goods as earlier discussed. For the reasons that I gave in connection with that argument in the first place, it does not seem to me that it can survive to support the plaintiff's position now. The plaintiff did not suggest that the exclusion clause was unfair or unjust or that she did not understand it or that she did not even know of it at all. No claim for any form of relief has ever been mounted by the plaintiff concerning the exclusion and I consider that it operates as a complete answer to the plaintiff's claim. 22 The defendant also put in issue the plaintiff's right or title to sue for any losses or damage resulting from the manner in which the defendant dealt with the goods. There is no evidence from the plaintiff that she owned the goods, that she was a lessee or bailee of the goods or that she had any interest in them of any sort at all. She did not give oral evidence before me at all even though she was present in Court for much of the proceedings. The only statements touching the point are to be found in the amended statement of claim. Paragraph 9 is in these terms: "9. The both lockup garages were used for storage of commercial goods belongs to plaintiff's relatives and their companies , as disclosed in these proceedings since 2003 until they were destroyed by the defendant in 2007." (emphasis added) 23 The simple and unfortunate fact is that the goods are nowhere described in the plaintiff's evidence, with the exception of the affidavit of Ms Menzies to which I have earlier referred. The plaintiff never said what the individual items were, for the clear purpose of identifying them, so that the Court could understand what the dispute was about, or for the purpose of ascribing a particular value to the individual items concerned, and certainly nowhere in the evidence has the plaintiff, or anyone on her behalf, attempted to say how she came to own the goods or to acquire such other interest in them as would have entitled her to sue for their loss. 24 Curiously, the amended statement of claim also contains the following at paragraph 15: "15. The goods stored were belongs to third parties namely, plaintiff, m/s Satchi & Satchi Australia Pty Ltd, Bramooth Satchithanantham, Hemalathasothy Ranjini Satchithanantham at the time the goods were destroyed by the defendant, as recorded in the insurance covers, as disclosed in these proceedings." 25 Apart from the somewhat confusing mode of expression, describing the plaintiff as a third party, there is no evidence that reconciles the paragraph with paragraph 9. It will be recalled that the plaintiff "verified and confirmed" the contents of the amended statement of claim but never gave evidence herself of the matters to which it referred and never gave evidence that explained the contradiction between these paragraphs. Neither paragraph specifies or describes the goods in question in any event. 26 The defendant has taken the point that the plaintiff bears the onus of establishing the several elements of her cause of action. The plaintiff has not satisfied me that she has or had any sufficient interest in the goods to entitle her to recover damages for their loss or destruction. 27 Moreover, for the reasons that are discussed in more detail below, I consider that the plaintiff does not in any event have an independent or separate cause of action for damages or compensation outside the context of an action for the taking of accounts. 28 If it were necessary to assess damages, I consider that the plaintiff has established that the goods referred to in the schedule annexed to Ms Menzies' affidavit had a value not exceeding $1,350 at the date of their disposal by the defendant. The defendant did not suggest or contend that they should be valued at any lower figure. The ineffective service claim 29 This claim gives rise to at least four issues. First, did the defendant serve a s 57(2)(b) notice upon the defendant in respect of Werrington as required by law and/or by the terms of the mortgage? Secondly, if it did not, does the plaintiff have a cause of action against the defendant for damages in the circumstances? Thirdly, if she does, has the plaintiff proved that she has suffered loss that was caused by the defendant's failure to serve a s 57(2)(b) notice upon the defendant as required by law and/or by the terms of the mortgage? Fourthly, if she has, has the plaintiff established the quantum of her loss? 30 With respect to the first issue, the plaintiff referred to clause 21.2 of the mortgage. It was as follows: "21.2 If you are in default and we choose to enforce this mortgage, in most cases we give you a notice before doing so. The notice must:

(b) require you to fix the default (if it can be fixed) within a period stated in the notice… and

(c) contain any other information the law requires us to give you." 31 She also referred to clause 23, which deals with notices and other communications. Clause 23.2 provides as follows: "23.2 They may be:

(c) sent by prepaid post to the address last notified; or

(d) sent by facsimile transmission to the fax number last notified; or

(e) given in any other way permitted by law." 32 Section 57(2)(b) of the Real Property Act is as follows: " 57 Procedure on default

(1) A mortgage, charge or covenant charge under this Act has effect as a security but does not operate as a transfer of the land mortgaged or charged.

(2) A registered mortgagee, chargee or covenant chargee may, subject to this Act, exercise the powers conferred by section 58 if:

(a) in the case of a mortgage or charge, default has been made in the observance of any covenant, agreement or condition expressed or implied in the mortgage or charge or in the payment, in accordance with the terms of the mortgage or charge, of the principal, interest, annuity, rent-charge or other money the payment of which is secured by the mortgage or charge or of any part of that principal, interest, annuity, rent-charge or other money, …

a written notice that complies with subsection (3) has been served on the mortgagor, charger or covenant charger in the manner authorised by section 170 of the Conveyancing Act 1919 …" 33 Section 170(1) of the Conveyancing Act 1919 is in these terms: " 170 Regulations respecting notices

(1) Any notice required or authorised by this Act to be served shall be in writing, and shall be sufficiently served:

(b) if left at or sent by post to the last known residential or business address in or out of New South Wales of the person to be served,

(b1) in the case of a mortgagor in possession or a lessee, if left at or sent by post to any occupied house or building comprised in the mortgage or lease,

(c) if delivered to the facilities of a document exchange of which the person on whom it is to be served is a member, or

(d) in such manner as the Court may direct." 34 The question is whether the defendant served the plaintiff by post sent to her last known residential address. In this respect the plaintiff says that her last known residential address was ** Houison Street, Westmead whereas the defendant says that it was ** Ashley Lane, Westmead. As appears above, Adams J concluded that the last known residential address of the plaintiff was ** Houison Street, Westmead and not the addresses in the loan application form to which the notices under s 57(2)(b) of the Real Property Act were addressed. 35 I agree. The statement by Ms Evans in her letter to the plaintiff that the defendant had not received notice of the Houison Street address until after the notices had been sent is wrong. This is not a case like Robertson v Deputy Commissioner of Taxation [2010] NSWCA 58 where the question could be determined by reference to documents lodged by the taxpayer with ASIC, in which she publicly notified her old address by failing to correct the ASIC record when she changed it, and upon which the Deputy Commissioner was entitled to rely in accordance with the statutory scheme that applied in that case. The defendant in this case is not entitled to rely upon its own internal documents, in the same way that the Deputy Commissioner was entitled to rely upon the ASIC records, even though her own officers had arguably forwarded correspondence to the taxpayer at her new address from time to time. Here the defendant's own records show that it was writing to the plaintiff at ** Houison Street, Westmead since as early as 9 October 2006. It even sent the s 57(2)(b) notice with respect to the Toongabbie mortgage to the plaintiff at that address. It is also not without significance in my opinion that, for the purposes of advising the plaintiff about storage and disposal of the goods on the premises, Ms Menzies addressed her letter dated 7 May 2007 to the plaintiff at ** Houison Street, Toongabbie [sic]: see [8] above. 36 The defendant also argued that the issue was in fact to be determined by reference to the question of whether or not the plaintiff actually received the notice, rather than by reference to the question of whether or not it was served in accordance with the Act and the terms of the mortgage. It submitted that the plaintiff bore the onus of establishing that she had not received the notice and that the evidence upon which she relied did not go so far. The plaintiff never said that she did not receive the notice and the defendant contended that an adverse inference should be drawn against her on that issue in the circumstances. 37 I disagree that the plaintiff bore the onus of demonstrating that she did not receive the notice. That may have been an issue of interest touching the question of discretion of the type exercised by Adams J when considering whether or not to restrain the sale of the property. It will be recalled in this respect that his Honour came to the view that the notice had not been properly served, but that it had in any event come to the attention of the plaintiff because it had been received by her brother who held her power of attorney. His Honour held that the plaintiff had constructive notice of the defendant's intention to exercise its rights under the mortgage and declined to restrain the sale. 38 In the present case the plaintiff does not say, and in my opinion does not have to say, that she had no knowledge of the notice. Instead she relies upon the defendant's failure to comply with the technical and literal terms of the Act and the mortgage. That is a question of compliance by the defendant, not knowledge of the plaintiff. Whether that technical breach or failure gives rise to a good cause of action against this defendant, or whether it ever does so, remains to be considered. 39 That is the second issue and is more difficult. Accepting for the purposes of the argument, as I have found, that it had not properly served her at the Houison Street address, the defendant contends that the plaintiff does not have a cause of action for damages against it for proceeding to sell Werrington. The defendant specifically pleaded the terms of its defence in this respect in paragraph 17 of its further amended defence as follows: "(a) if the plaintiff is entitled to any remedy against the defendant (which is denied) the only remedy available is pursuant to a suit in equity in which, upon offering to redeem or account, the plaintiff may litigate the question of any alleged equitable delinquencies on the part of the mortgagee;

(b) upon the mortgagee sale of [Toongabbie] the defendant received from the proceeds of sale a sum substantially less than the amount required to repay the loan secured by the [Toongabbie] mortgage…

(c) upon the mortgagee sale of [Werrington] the defendant received from the proceeds of sale a sum substantially less than the amount required to repay the loan secured by the [Werrington] mortgage…

(d) neither the plaintiff [n]or her co-mortgagor has made any offer to the defendant to:

(i) redeem the mortgages or to account in relation to the mortgages or either of them; or

(ii) offer to pay such sum as may be found to be payable by them by any accounts which might otherwise be taken;

(e) in the circumstances, the plaintiff is disentitled from pursuing the pleaded relief against the defendant." 40 I was informed that the plaintiff still owed money to the defendant but there was no evidence of how much was owed or what, if anything, the defendant had done or proposed to do about it. I was also informed by counsel for the defendant that the defendant had made a successful claim upon what I understand to be a mortgage guarantee insurer, but the extent of any funds received from that source was not made clear, nor whether there had been a total extinguishment or only a partial reduction of the plaintiff's indebtedness to the defendant as a result. 41 The defendant contended that the plaintiff's sole cause of action in this case was a suit for accounts and that she had no action at law for damages of any sort. There had been no offer to make good what was said to be the outstanding monetary default: see Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161. In particular, the following passages at 164, 165 and 169 are to be noted: "A general rule has long been established, in relation to applications to restrain the exercise by a mortgagee of powers given by a mortgage and in particular the exercise of a power of sale, that such an injunction will not be granted unless the amount of the mortgage debt, if this be not in dispute, be paid or unless, if the amount be disputed, the amount claimed by the mortgagee be paid into court.

The benefit of having a security for a debt would be greatly diminished if the fact that a debtor has raised claims for damages against the mortgagee were allowed to prevent any enforcement of the security until after the litigation of those claims had been completed.

The case falls fairly, in my opinion, within the general rule applicable when it is sought to restrain the exercise by a mortgagee of his rights under the mortgage instrument. Failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no restraint should be placed by order upon the exercise of the respondent mortgagee's rights under the mortgage." 42 The defendant contended that the oft-cited principle from that case should not be confined to circumstances in which a defaulting mortgagor sought to restrain an impending exercise of a power of sale, but applied more generally, and extended to those circumstances where a defaulting mortgagor asserted a right to prosecute independent causes of action for damages against the mortgagee, as in the present case. In that general context I was referred to the following authorities. 43 In Colin D Young Pty Ltd v Commercial & General Acceptance Ltd [1982] NSW Conv R 56,572 at 56,573. Hutley JA said this: "This is an appeal from the judgment of Kearney J given on 30th October 1981. It began as a proceeding for a claim for damages on the basis that the power of sale of the mortgagee respondent was exercised in breach of duty and particulars of the breach of duty were set out.

In my opinion, these proceedings were misconceived from the start and there is no such proceeding known to New South Wales law. The true position was expounded by Sir Frederick Jordan in the case of Coroneo v Australian Provincial Assurance Association Limited (1935) 35 SR (NSW) 391, in which he explained in detail that this is not the right form of action, that the only proceedings available are, if the sale has not been completed, for an injunction, in which an offer is made to discharge the mortgage, or, as here, when the sale has been completed, proceedings for accounts between the parties upon the basis that the mortgagee ought to be debited with sums in excess of what he obtained, and the mortgagor is to be credited with sums which the mortgagee ought to have received if it had exercised its power of sale properly. In certain cases this confusion may be important. Fortunately, this case is so clear that it does not matter very much on what basis it is dealt with. However, the hearing of the case was, in my opinion, extended beyond what it ought to have been because this was not firmly borne in mind." 44 The issue was later considered by his Honour in Adams v Bank of New South Wales [1984] 1 NSWLR 285 at 296 in these terms: "There is authority in this Court for the view that the bar to the obtaining of a declaration as between mortgagor and mortgagee, except where there is an offer by the mortgagor to redeem, is not merely procedural, but substantial, that is, the only circumstances under which a mortgagor can call upon a mortgagee to account is where the mortgagor is prepared to make an offer to redeem: Kennedy v General Credits Ltd (Court of Appeal, 14 May 1982, unreported). The reason is simple - any other rule would enable a mortgagor to involve a mortgagee in futile litigation because the result could have no effect upon the legal rights of the parties. In Colin D Young Pty Ltd v Commercial and General Acceptance Ltd (Court of Appeal, 24 August 1982 unreported) Hutley JA, with whom the other members of the Court agreed said:

'...a party cannot, as it were, have little bits of accounts. There is one account and one account only and the issue is what is owed and what is not owed. The declaratory procedure cannot be used to get declarations about little bits of accounts because the proceedings may become, in relation to a total account, otiose.'" 45 Her Honour Beazley JA also had cause to consider the matter in Commonwealth Bank of Australia v Hadfield [2001] NSWCA 440; (2001) 53 NSWLR 614 at [36] - [44] in these terms: "[36] In Coroneo v Australian Provincial Assurances Association Ltd (1935) 35 SR (NSW) 391, a mortgagor had brought common law proceedings in respect of the alleged irregular sale of old system land by the mortgagee. The mortgagee demurred to the pleading. Jordan CJ held at 395: 'The proper remedy of the plaintiff is a suit in equity in which, upon his offering to redeem or to account, he may, if he so desires, litigate the question of any alleged equitable delinquencies on the part of his mortgagee.'

[37] Coroneo was applied in Colin D Young Pty Ltd v Commercial and General Acceptance Ltd (1982) NSW ConvR 55-097. In that case the appellant had commenced proceedings for a claim for damages on the basis that the respondent had exercised its power of sale in breach of its duty.

'… there is no such proceeding known to New South Wales law. The true position was expounded by Sir Frederick Jordan in the case of Coroneo v Australian Provincial Assurance Association Limited 35 S.R. 391, in which he explained in detail that this is not the right form of action, that the only proceedings available are … when the sale has been completed, proceedings for accounts between the parties …'

'The action was one for damages, albeit what was called equitable damages. It is quite clear that in New South Wales such an action does not lie on the part of the mortgagor against a mortgagee who is alleged to have improperly exercised his right of power of sale. Assuming the sale has been completed, as was the position in the present case, the mortgagor's remedy lies in proceedings for accounts.'

[40] Notwithstanding these authorities, it is arguably an open question in Australia whether there is available a common law claim in negligence against a mortgagee for, what I will describe loosely as a breach of the mortgagee's duty of care in the exercise of a power of sale: see for example, Forsyth v Blundell (1973) 129 CLR 477; ANZ Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 195. However, it is certainly not established that this is the case and I think that it is preferable on an application of the type presently before this Court to apply orthodox legal doctrine.

[41] The various legal writings on the issue to which the Court was referred also speak with one voice as to the nature of the claim available to a mortgagor in such circumstances. In essence, the commentators state that an account is the appropriate form of relief where a mortgagee is alleged to have sold the mortgaged property at an undervalue or otherwise in breach of the mortgagee's duty in relation to sale: see Fisher and Lightwood, Law of Mortgage (Australian Edition) 1995; Meagher, Gummow and Lehane, Equity Doctrines and Remedies , 3rd Ed, 1992; Sykes and Walker, The Law of Securities , 5th Ed, 1993; Ashburner's Principles of Equity, 2nd Ed, 1933..

[42] Relevantly for present purposes, Meagher, Gummow and Lehane in Equity Doctrines and Remedies , while only dealing with the issue briefly, referring the reader to the more specialised texts in the area, state at para 2513:

'… in the case where a mortgagee has exercised his power of sale, the mortgagor may successfully demand accounts if he is suing to recover surplus proceeds of sale .' (emphasis added)

[43] A similar comment is made in Sykes and Walker at 142:

'The mortgagor is entitled to demand that accounts be taken by the court only in cases where he or she is claiming redemption or the surplus proceeds of sale. ' (emphasis added)

[44] Likewise Nevill and Ashe, Equity Proceedings with Precedent (New South Wales) 1981 at para 301 describe the remedy of accounts as:

'Usually [being] … a procedure to ascertain the monetary dealings of the parties in respect of the subject property and to determine with precision the balance due between them. After the balance is ascertained orders are made as to the rights of the parties to that balance .'" (emphasis added) 46 I was next referred to Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd [2002] NSWCA 287. At [57] and [58] Young CJ in Eq, with the agreement of the other members of the Court, said the following: "[57] Accounts will have to be taken between mortgagor and mortgagee. These may be taken as an adjunct in the proceedings in which Constructions is also a defendant, or they may be taken separately before the other issues are determined. Although the mortgage has been discharged, accounts can still be taken between mortgagor and mortgagee: Adams v Bank of New South Wales [1984] 1 NSWLR 285, 295.

[58] There is a suggestion in some texts that, in lieu of account, a mortgagor, after discharge, may sue the mortgagee at law under the indebitatus count of money had and received. I do not consider that such an action lies, at least unless there are accounts stated. A mortgagee holds any surplus on trust for subsequent mortgagees and the mortgagor. In Rajah Kishendatt Ram v Rajah Mumtaz Ali Khan (1879) LR 6 Ind App 145, 160, Sir Robert Colville, in giving the reasons of the Privy Council said:

'The effect of a sale under a power of sale is to destroy the equity of redemption in the land, and to constitute the mortgagee exercising the power a trustee of the surplus proceeds, after satisfying his own charge, first for subsequent incumbrancers, and ultimately for the mortgagor.'

See also Coroneo v Australian Provincial Assurance Association Ltd (1935) 35 SR (NSW) 391 at 395; Weld-Blundell v Synott [1940] 2 KB 107, 115 and Adams v Bank of New South Wales supra at 299. The same principle applies if a sale under some arrangement between the parties results in an apparent surplus in the hands of the mortgagee." 47 This is to be compared with what was later said by his Honour in Ultimate Property Group Pty Ltd v Lord [2004] NSWSC 114; (2004) 60 NSWLR 646 at [26] and [34] - [36] as follows: "[26] In my view, authority compels me to say that there is no common law duty in negligence on a mortgagee in NSW which makes a mortgagee liable in common law damages if he fails to get a good price for the mortgaged property.

[34] As redemption is now impossible, the suit cannot be run. What happens when a binding contract for sale is entered into by the mortgagee if there is an allegation that the mortgagee has recklessly sacrificed the mortgagor's interest is that either accounts must be taken between the mortgagor as beneficiary and the mortgagee as trustee as to what amount should be deemed to be the surplus, or alternatively, as happened in Pendlebury an inquiry is made before the damages are awarded. However, it is not a case where there is the sort of suit referred to by Jordan CJ in Coroneo .

[35] If that analysis were not completely correct in a jurisdiction where law and equity are separated, Barns and Coroneo show that in a Judicature Act court, it is certainly the correct method of approach.

[36] This view is reinforced by the decision of the Court of Appeal in Commonwealth Bank of Australia v Hadfield (2001) 53 NSWLR 614. In that case, Beazley JA, with whom Mason P and Bryson J agreed, made it clear that after the exercise of the power of sale the action is not one for account but is one for equitable damages." 48 I was also referred to portion of an extensive decision delivered by Vickery J in Nolan v MBF Investments Pty Ltd [2009] VSC 244. That was a case in which his Honour found that there had been a breach by the mortgagee of its obligations pursuant to s 77(1) of the Transfer of Land Act 1958 (Vic) which provided relevantly as follows: "77(1) If within one month after the service of such notice or demand [the notice to pay or demand on a default under s 76] or such other period as is fixed in such mortgage or charge the mortgagor grantor or other persons do not comply with the notice or demand the mortgagee or annuitant may, in good faith and having regard to the interests of the mortgagor grantor or other persons, sell [the mortgaged land]..." 49 At [301] his Honour said this: "[301] I see no reason in principle to confine the remedy of accounts to the factual circumstances which have hitherto arisen. The remedy is equally appropriate to other breaches of a mortgagee's obligations under s 77(1) TLA, such as the breach I have found in this case." 50 I was also asked to consider what was said by Young J (as his Honour then was) in Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361 at 378 as follows: "The Conveyancing Act , s 112(3), provides that if there is a conveyance in professed exercise of the power of sale conferred by the Act, then notwithstanding that due notice was not given, the conveyance shall be valid. That subsection is not directly relevant in the instant case because the transaction has not proceeded to the stage of conveyance (see Forsyth v Blundell (1973) 129 CLR 477 at 497-498), but its presence is a good indication that the legislature did not intend to invalidate a sale because of non-compliance with s 111.

Furthermore, it should be noted that under the general law, the effect of a sale without notice where the purchaser was to be visited with the mortgagee's default, was not that the sale was invalid, but rather that the sale was good but the purchaser held subject to the mortgagor's right of redemption: see eg Selwyn v Garfit (1888) 38 Ch D 273; Latec Investment Ltd v Hotel Terrigal Pty Ltd (In Liq) (1965) 113 CLR 265 at 274-275 and Forsyth v Blundell (at 497).

It is significant that there does not appear to be any case which holds that in a situation such as the present, the sale should be held to be invalid.

If one looks at the standard texts, the conclusion that non-compliance with s 111 does not invalidate the sale is reinforced, though for widely differing reasons. For instance, some texts, see eg Croft on the Mortgagee's Power of Sale , at 28-30, indicate that not only must a s 111 notice be given to the borrowing mortgagor, but also to anybody who has an interest in the mortgagor's estate. Fisher and Lightwood's Law of Mortgage , 9th ed (1977) at 364, suggest that the notice must be given to puisne mortgagees as well. I do not consider that s 111 requires a notice to be given to anybody except the borrowing mortgagor because it is he alone that can remedy the default, and that the difficulties referred to in Croft , par [35] at 29 reinforce this view. However, if I am wrong on this, and it is necessary to give notices to a whole series of people other than the borrower about whose existence the mortgagee may not know nor have any means of knowing, it is a further reason for not invalidating the sale.

On the other hand, writers, such as Farrand in the 18th ed of Emmet on Title (1983) at 778, seem to suggest that s 112 has a wide operation so that the sole remedy of the mortgagor or a subsequent mortgagee if s 111 is breached, is an action for damages against the mortgagee. It is hard to see what the cause of action is unless it is a statutory one, though it should be noted that in Hoole v Smith (1881) 17 Ch D 434, a second mortgagee as assignee of the equity of redemption did have an equitable right to damages.

It is accordingly unnecessary to deal with the further submission that if a notice is given under the Real Property Act , s 57, in connection with part of the land the subject of the security, s 104 makes it unnecessary to give a notice in respect of any collateral security, but I must confess I am not attracted by this argument at all." 51 Finally, what was said by Irvine CJ in McGinnis v The Union Bank of Australia Ltd [1935] VLR 161 was relied upon by the defendant as support for the proposition that the plaintiff had no viable cause of action of the sort alive in this case. In McGinnis the plaintiff brought a claim for damages for breach of an implied contract by a mortgagee that in exercising the power of sale under the mortgage it should not fraudulently, recklessly or wilfully sacrifice the plaintiff's interest, or alternatively, for breach of a statutory duty to the same effect. In dealing with an equivalent Victorian provision to s 112 of the Conveyancing Act, his Honour said this at 164-5: "The relevant words of the sub-section are:--'Where a transfer is made in professed exercise of the power of sale conferred by this Act the title of the transferee shall not be impeachable on the ground that no case had arisen to authorize the sale or that due notice was not given or that the power was otherwise improperly or irregularly exercised but any person damnified by an unauthorized or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power.' It is contended that the words 'any person damnified by an unauthorized or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power' have the effect mentioned above. In my opinion they have no such effect. These words must be read in connection with the words immediately preceding them, and the words 'improper exercise' have no wider scope than the words 'improperly exercised'. It is, I think, clear that in both cases what is referred to is the injury to the mortgagor from a 'professed' exercise of the power of sale, which, but for the validating words at the beginning of the sub-section, could have been set aside at his instance as being an invalid exercise of the power. The words 'improper' and 'improperly' are apt to cover sales which, though regular in form, are deemed in equity to be voidable, as for instance sales by the mortgagee to himself or some person or company in which he is interested. In my opinion it was never intended by the words used, read with their context, to create a new cause of action for any of these matters which, not affecting the purchaser's title, may give rise to a claim for damages or compensation as between mortgagee and mortgagor only." 52 The defendant contended that this was analogous support for the absence of any common law claim for damages under s 112. It noted that s 58 of the Real Property Act in any event did not contain an express right to claim damages. 53 The plaintiff did not refer me to any other authorities. 54 The authorities upon which the defendant relies "speak with one voice". In particular, the language used by Hutley JA and Hope JA in Colin D Young in 1982 and by Hutley JA in Adams in 1984 was clear and straightforward. It might these days also be expressed, more than a quarter of a century later, in terms of a concern to avoid a multiplicity of actions, or in terms promoting the efficient and expedient use of the Court's resources. Whatever legal or philosophical formulation is used, there is no support for the proposition that a disgruntled mortgagor can choose to mount several different cases against a mortgagee, raising various complaints about the exercise of its power of sale or about alleged delinquencies in the manner of performance of a multitude of other obligations said to constrain it, except within the structured and ordered confines of the one account between them. In forming this view I consider it to be relevant first, that Werrington has been sold, but secondly, that far from there being a surplus following that sale, which the defendant is holding on trust for the plaintiff, there is an admitted deficiency. In this sense, the account between the plaintiff and the defendant is not yet finalised or closed, even though the plaintiff may not strictly be considered to be suing to recover surplus proceeds of sale. That notwithstanding, a dispute remains between the plaintiff and the defendant on the status of the one account between them. A suit for equitable damages, as referred to by Young CJ in Eq in Lord at [36], would in the particular circumstances of this case necessarily still have to be brought within the rationale for the rule so plainly articulated by both Hutley JA and Hope JA in Colin D Young and by Hutley JA in Adams. As was said by Beazley JA in Hadfield at [48]: "[48] For present purposes therefore, it can be said that a claim for accounts is a claim for equitable relief where (as in this case) a mortgagor is suing a mortgagee to recover money being the alleged surplus proceeds of sale. The proceedings are not relevantly complete until an order to pay that balance is made." 55 The third issue was unsupported by any relevant evidence at all. The plaintiff contended that she had suffered inconvenience and disruption as a result of the actions of the defendant. These actions were not limited to the breaches upon which the cause of action for damages was said to rely but would appear to have included the very complaint that the property had been sold at all. In the events that occurred, Adams J refused to enjoin the sale of Werrington when the plaintiff sought an order that he do so. Putting aside the fact that I have concluded that the plaintiff does not have a cause of action of the type now propounded at all, success in a claim for damages in the way originally framed by her would require proof of losses that would not have been incurred or sustained as the result of the sale of the property in the normal course. The plaintiff has not isolated or identified any category of loss or damage that is not what might be considered to be the normal or expected consequence of an unexceptionable exercise of the power of sale of the property by the defendant. 56 Lastly, there is no evidence capable of establishing what the plaintiff's alleged losses might be. The Court is indebted to Mr C R Ireland of counsel for the plaintiff, who appeared following an order that I made, on an occasion when I vacated an earlier hearing date at the plaintiff's request, directing the Registrar to enquire about whether it may have been possible to arrange representation for her on a pro bono basis. In those circumstances, having been only recently retained, it was not possible to give him an opportunity to be involved in the earlier decisions about the conduct of the plaintiff's case. Accordingly, having regard to the state of the available evidence, he recognised, and was impelled to submit, that the question of the proof of the quantum of the plaintiff's loss and damage should be deferred until a later hearing. I am not prepared to do so. 57 It is clear that directions and orders had been made by Davies J on 22 February 2010 that, among other things, the plaintiff file and serve all affidavits which she proposed to read at the hearing and that in the event that she failed to comply with that order, she not be permitted to adduce evidence at the hearing without leave. Those orders in combination did not permit of an interpretation that the case should be split or that any issues should be decided separately from any others. The defendant had also made it clear that it would not for its part acquiesce in the plaintiff's non-compliance with the orders of Davies J should that occur. The plaintiff made no application before the hearing commenced for any issues to be decided separately from all others. I have some doubt that the plaintiff herself has ever had an adequate appreciation of the legal and factual complexities that confronted her, to some of which it has been necessary in detail to refer. I include among those things an appreciation of the need for her to marshal evidence to prove all issues at a final hearing, including proof of loss where appropriate. Conclusions and orders 58 It follows that the plaintiff's claims should be dismissed with costs.

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