The Trust Company (PTAL) Limited v Berry

The circumstances in which the property came to be sold, even though the plaintiffs were aware of the caveat 10There are issues lying between the parties as to what they actually each did in respect of the notice, the caveat and the sale, which must be resolved. Evidence was given by those involved in various discussions and negotiations. None was given by Mrs Anstee. On the evidence, Mr Stoyles had in the main dealt with Mr Barry Anstee, Mrs Anstee's husband and in respect of some matters with Mr Matthew Anstee, her son. 11The Mittagong property was sold at auction on 22 December 2011. Ms Anstee's first caveat was dated 5 December 2011. It provided: "THE MORTGAGEE HAS FAILED TO SERVE ON THE MORTGAGOR A VALID 57(2)(b) NOTICE AS REQUIRED BY SECTION 58 OF THE REAL PROPERTY ACT 1900. THE MORTGAGEE IS PURPORTING TO SELL WHEN IT DOES NOT HAVE A POWER TO SELL FOLIO IDENTIFIER XXX/XXXXXX. THE MORTGAGOR DENIES THE VALIDITY OF MORTGAGE AE 560041 FOR THE REASON SET OUT IN THE DEFENCE FILED BY THE MORTGAGOR IN SUPREME COURT PROCEEDINGS 2011/280129 BETWEEN MORTGAGOR AND MORTGAGEE." 12The loan fell into arrears in 2009. There is a dispute between Mr Barry Anstee and Mr Stoyles, a director and the general manager of the second plaintiff, as to whether Mr Anstee advised Mr Stoyles in August 2009, that the notice which had been served in June 2009 was invalid. It is common ground that there had been an earlier notice served in May 2009, which was also invalid. Mr Anstee drew this to Mr Stoyles' attention, with the result that the second notice was served. 13It is necessary to resolve this conflict. It seems to me that Mr Stoyles' evidence must be preferred. It was in the plaintiffs' interest to ensure that a valid notice had been served. He took steps to have a second notice served, when the problem with the first notice was drawn to his attention. He sought legal advice in relation to the caveat in December 2011, when that came to his attention. There was no reason for him not to have pursued the difficulty with the second notice, if it had then been drawn to his attention and every reason for him to have done so. 14Mr Matthew Anstee gave evidence that he had had a conversation with his father about the second notice in June 2009. It was Mr Barry Anstee's evidence that he told Mr Stoyles on 14 August 2009 that the second notice suffered from the same deficiency as the first, in a conversation where an agreement was reached as to payment of outstanding interest. He sent an email which on his evidence confirmed that agreement, but it made no mention of the defective notice. 15Mr Barry Anstee also claimed that there was a further discussion in September 2011, in which Mr Stoyles insisted that being the mortgagee in possession entitled the plaintiffs to sell and in which Mr Anstee insisted that a new s 57(2)(b) notice had to be served, with Mr Stoyles saying that he would obtain legal advice. 16In cross-examination, Mr Barry Anstee's evidence was that he had mentioned to Mr Stoyles on several occasions that the second notice was invalid, but he agreed that he had never communicated this in writing. Mr Stoyles denies Mr Anstee having given him such advice. No-one thereafter acted in a way which might be expected, had that conversation taken place. There was no reference later made to such a conversation in subsequent correspondence. In the circumstances, it must be concluded that Mr Barry Anstee is mistaken in his recollection of his conversations with Mr Stoyles about the second notice. 17The evidence shows that over a considerable period of time there were ongoing negotiations over steps being pursued to bring the loan repayments up to date; to refinance the loan; as well as active steps being pursued by the plaintiffs in relation to a DA in respect of the property, which it was expected would have considerably increased its value. In evidence is a myriad of communications between the parties as to these matters, as they developed. 18In September 2009, Mr Matthew Anstee paid some $58,611 to bring the arrears up to date, following service of the statement of claim in the earlier proceedings. Those proceedings were not defended. It is disputed that an agreement was then reached in a discussion between Mr Stoyles and Mr Barry Anstee, that this would rectify the default and bring the proceedings to an end. That was also Mr Matthew Anstee's understanding. In cross-examination, he said that his understanding of the amount of the arrears on the loan came from Mr Stoyles. He had discussed the amount with his father and there was a family discussion, but he had also gone through it with Mr Stoyles on the telephone. Mr Matthew Anstee's evidence, that he would have taken further steps, had he understood that his payment left the plaintiffs free to pursue the notice which had earlier been given, must be accepted. 19Mr Stoyles' evidence was that despite the payment, the loan remained in arrears. It was in February 2010 that the plaintiffs obtained a writ of possession in relation to the two properties, on Mrs Anstee's case, contrary to the earlier agreement reached. On Mr Barry Anstee's evidence they did not become aware of this until around August 2010. On his evidence the writ of possession referred to a different sum outstanding, to that appearing in the second s 57(2)(b) notice. 20In May 2011, consideration was given by the plaintiffs to mounting a challenge to the Council's refusal of consent to a second DA. The plaintiffs did not further pursue their rights under the mortgage for a considerable period, while steps designed to obtain approval of the DA were taken. Those endeavours failed. 21These proceedings were commenced in August 2011 and in October 2011 the second property securing the loan was sold. The real estate agent, Mr Green, gave evidence that an auction of that property scheduled for 25 June did not proceed, because there were no registered bidders. The marketing campaign then continued and an offer for that property was accepted in September, at a price of $320,000. 22Mr Matthew Anstee then offered to purchase the property here in question for $350,000 with funds which he had available. The offer was not accepted. The plaintiffs had obtained a valuation of the property for some $550,000 in August 2007. Mr Stoyles' evidence was that at the time of his offer Mr Matthew Anstee was also in default on a loan made to him by the plaintiff and he considered that there was a strong prospect of default on completion of such a purchase had Mr Anstee's offer been accepted and so it was rejected. There were then further unsuccessful attempts undertaken for Mrs Anstee at refinancing the loan. 23A defence was filed by Mrs Anstee in October 2011, making relevant admissions in relation to the loan and making no reference to the invalid s 57(2)(b) notice. It was in November 2011 that the plaintiffs listed the second property for sale. Mr Matthew Anstee saw the property being advertised with a price guide of $100,000. The auction was listed for 6 December. On Mr Stoyles' evidence later in November he was advised by the real estate agent that the auction had excited an unusual level of interest. The evidence of Mr Carpenter, the real estate agent acting on the sale, was that he had received 83 enquiries and issued 30 contracts. Mr Stoyles decided to postpone the auction. Mr Carpenter then contacted the people to whom he had issued contracts, advising of the postponement. 24There was a further defence filed by Mrs Anstee without leave in April 2012 which also made certain admissions, but which effectively withdrew others. It referred to the s 57(2)(b) notice. The amended defence also advances claims of undue influence, misleading and deceptive conduct, and mistaken belief induced by her husband Mr Barry Anstee. It was signed by Mrs Anstee's solicitor. Mrs Anstee swore an affidavit verifying that defence. No cross-claim has been filed. There is an issue between the parties as to whether Mrs Anstee requires leave to rely on that defence, which is yet to be determined. 25Mr Stoyles sought advice from junior counsel as to the impact of a decision given by the Court of Appeal in May 2011 and took advice as to the likely cost of bringing proceedings in the Land and Environment Court in relation to the property. Advice was received on 28 November and on 5 December, Mr Stoyles instructed the real estate agents to postpone the auction. Mr Carpenter's evidence was that Mr Stoyles instructed him on the morning the auction was due to proceed, 6 December, that it was in order to proceed with the auction. Mr Carpenter advised it would be impossible to ensure that potential purchasers were renotified and he was then instructed to reschedule the auction for 13 December. He again contacted the interested parties to advise of the revised date. 26It was on 5 December that the caveat was lodged. Mr Stoyles received a copy of the caveat on 8 December and sought legal advice. In cross-examination, he agreed that he was aware that the caveat claimed that the plaintiffs had no power to sell, because of non-compliance with s 57(2)(b). He took advice and then instructed that the auction should proceed, despite being aware that Mrs Anstee was claiming that the plaintiffs had no power to sell. Mr Stoyles did not agree that Mr Anstee had earlier told him that the notice was invalid, but he agreed that he was familiar with a vendor including a special condition in a contract for sale of land, whereby the vendor is not obliged to proceed with the sale, if there is an impediment which cannot be cured. There was no such condition placed in the contract for the sale of the property. 27Mr Stoyles also agreed that the $500,000 initially advanced to Mrs Anstee in 2007, was paid to her father, to help him out. He said that he had then dealt with Mr Anstee and Mrs Anstee's solicitor. He also agreed that the plaintiffs' loans to Mrs Anstee and her father were later amalgamated, so that her property secured the entire indebtedness of some $1.583million. Again, he then dealt with Mr Anstee. He could not recollect then dealing with Mrs Anstee's solicitor. Mr Barry Anstee agreed in cross-examination that it was he who had arranged these loans and mortgages and was pursuing attempts to refinance in 2009 and 2010. Mr Berry, Mrs Anstee's father, died in 2011. 28In re-examination, Mr Stoyles said that when he received the caveat on 8 December, he thought that there had been a problem with service of the notice and that he had sought legal advice about that, not about the contents of the notice given. 29Mr Matthew Anstee said in cross-examination that he advised his mother to lodge a caveat in December 2011. There had been discussions about protecting her, but he had not prepared the caveat and he was not sure if she had received legal advice about its terms. The second caveat was lodged on 22 December. 30On 12 December 2011, Mr Stoyles received junior counsel's advice about the DA, as well as correspondence from Mrs Anstee's solicitor, about the Council's refusal of the DA. There it was also advised that the plaintiffs' recent valuation of the property at $100,000 was a mistake. The letter also referred to the caveat, which it was said had been lodged to prevent any sale and advised that Mrs Anstee would hold the plaintiffs responsible for loss and damage, if the sale proceeded for a value that was not a proper market price. 31On 12 December, Mr Carpenter also received a letter from Mrs Anstee's solicitor, threatening to join him in the proceedings, if the auction proceeded. The letter referred both to the disputed valuation and to the caveat which had been lodged. He decided that he required advice and that it was necessary to postpone the auction. Again, he contacted interested parties to advise them of the further postponement, in this instance advising that the postponement was the result of a dispute between the mortgagor and mortgagee and that it would take some time to resolve. On Mr Stoyles' evidence, this occurred without his knowledge or approval. 32On 15 December, the plaintiffs' solicitors wrote to the real estate agents, directing that the property be relisted for auction. Having received advice and having made certain enquiries, Mr Carpenter rescheduled the auction for 22 December and again advised interested parties. 33There was further correspondence from Mrs Anstee's solicitor to Mr Stoyles on 21 December, noting that the auctionWorks website had earlier indicated that the auction on 20 December had been cancelled and rescheduled for 7 February 2012, but that on 21 December the website indicated the auction was to proceed on 22 December. Mrs Anstee complained that a proper sales process had not been pursued and sought an undertaking that the sale not proceed, until these proceedings had been concluded. 34The auction proceeded on 22 December, the property being sold for $200,000. About 20 people were present and the successful bidders, Mr and Mrs Rofe, bid by telephone.

The notice given was not ambiguous 35In opening submissions, it was put for the plaintiffs that given the terms of the caveat 'with the benefit of hindsight and knowing what's actually been said, one can see that it was probably intended as a challenge to the validity of the notice, not to want of service'. The concession as to the invalidity of the notice was not, however, made until the hearing commenced on 12 April 2012. The hearing was then adjourned, to permit the parties to explore the possibility of a settlement. That did not eventuate and so the questions raised by the motion must be determined. 36In final submissions it was urged for the plaintiffs that it would be concluded that the caveat was inherently ambiguous. That submission may not be accepted, notwithstanding Mr Stoyles' evidence that he thought it was claiming that no notice had been served. The caveat squarely raises the failure to serve a valid notice; the plaintiff having no power of sale; and the dispute as to the validity of the mortgage. It is not ambiguous.

Mrs Anstee did not encourage a reasonable belief on the plaintiffs' part that the notice would not be challenged. 37It was accepted for the plaintiffs at the hearing that the notice was invalid. Despite this acceptance, the plaintiffs claim that the caveat was only served at a 'minute to midnight', in circumstances where there had been relevant laches by Mrs Anstee. In the result they should be relieved of the consequences of their failure to serve a valid s 57(2)(b) notice, on which their power of sale rested. 38It was in November 2011 that the property was listed for auction on 6 December, the steps pursued in relation to the DA hearing having failed. Within a short time, Mr Stoyles deferred the auction because of his concern about the inordinate level of interest which the auction was generating. The caveat was lodged on 5 December and Mr Stoyles received it on 8 December. By then the auction had been rescheduled. It was due to take place on 13 December. It was again deferred because of the view which Mr Carpenter took, even though that was not the result of Mr Stoyles' instructions. 39Had the caveat been received by the plaintiffs after the auction had taken place, the position may well have been different. It was, however, received on 8 December before the auction, which only proceeded on 22 December, after the plaintiffs had not only considered the matters raised in the caveat, but had taken legal advice. The reason for Mr Stoyles' approach was obvious. The problems raised by the caveat clearly had to be considered by the plaintiffs. If the notice was invalid, they had no power of sale. 40Given the nature of the problem with the notice given, which has now resulted in its invalidity being conceded by the plaintiffs, it is difficult to see that the problem would not have been recognised in December 2011, if the terms of the notice which had been given had then been given any consideration. Mr Stoyles took legal advice. A failure on his part to seek appropriate advice about the terms of the notice on which the power of sale rested, or even if incorrect advice was then given, because the invalidity of the notice was not recognised, are not difficulties of Mrs Anstee's making. Nor is the result of the decision to proceed with the sale of the property on 22 December, in circumstances where there was no power of sale and where steps were not taken to protect the plaintiffs from the consequences of any problem with its right to sell the property. As Mr Stoyles acknowledged, these steps were easily available to be taken by way of provision inserted in the sale contract. 41Before the auction proceeded, Mrs Anstee's solicitor twice drew attention to the caveat. Being on clear notice of the challenge to its power of sale, the plaintiff decided to proceed, without ensuring that a condition was placed in the contract, to deal with the possibility that there was a problem with the notice, which affected its power of sale. It was not then claimed by the plaintiffs that there had been any laches on Mrs Anstee's part, or that the plaintiff would suffer any detriment by having to issue another notice. In all of these circumstances. It is difficult to see why the plaintiffs should be protected from the consequences of their failure to ensure that they had a power of sale, notwithstanding that it may have been possible for Mrs Anstee to have raised the difficulties with the s 57(2)(b) notice earlier than she did. 42Mrs Anstee did not give evidence. The plaintiffs submitted that a Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 inference arose against her. The inference is that her evidence would not have assisted her case. The problem with the notice was known to Mr Barry Anstee and Mr Matthew Anstee, before Mrs Anstee lodged the caveat in December 2011. The inference is that so did Mrs Anstee. 43It is in those circumstances that the plaintiffs urged the view that despite being on actual notice of the problem with the s 57(2)(b) notice, and the exercise of power of sale prior to the auction, it would be concluded that Mrs Anstee raised the problem with the s 57(2)(b) notice too late and that as a matter of discretion, the order the plaintiffs seek should be made. It was argued that consideration would be given to the entirety of the course of dealings between the parties and the repeated opportunities given Mrs Anstee by the plaintiffs, to address arrears and to refinance the borrowings, as well as the co-operative, but ultimately unsuccessful pursuit of the DA. In those circumstances, it would be accepted that the plaintiffs had acted to their detriment and a discretion would now be exercised in their favour, given the sale of the property. It was also urged that attention would be given to the fact that there is now no question that the loan has expired and that time for repayment is long past. It was accepted that there was nothing stopping the service of another notice, but it was submitted that it would be taken into account that the plaintiffs had entered a binding contract with the purchasers as would the consequences which would result for the plaintiffs, if it could not complete that sale. 44I cannot see that these submissions assist the plaintiffs in the circumstances which have arisen for consideration. It was accepted that it was only if the plaintiff could establish laches on Mrs Anstee's part, that the difficulty with the s 57(2)(b) notice could be overcome. The Court has no discretion to rectify or ignore the defect. All that arises to be determined is whether by her conduct, the plaintiffs may be relieved of the consequences of its failure to adhere to its statutory obligation to give a valid s 57(2)(b) notice. 45The plaintiffs' approach to the pursuit of their rights against Mrs Anstee, prior to the steps taken to sell the property, was the result of commercial decisions which they made from time to time. Those decisions did not relieve them of the statutory obligation to serve a valid s 57(2)(b) notice, before pursuing a different course, namely, of selling the property. The exercise of the power of sale depended on the validity of the notice given. 46At the time that the invalidity of the notice was raised by Mrs Anstee in December 2011, there was nothing to prevent the plaintiffs deferring the auction. That step was taken twice, once before Mrs Anstee raised the difficulties, when Mr Stoyles dealt with another concern that had arisen, namely, the unusual interest which the auction was generating. The caveat was lodged on 5 December, the day before the originally scheduled auction. It was received by Mr Stoyles on 8 December, before the rescheduled auction due to proceed on 13 December. That sale was also postponed because of Mr Carpenter's concerns. It was Mr Stoyles who instructed that it be rescheduled for 22 December. Nothing prevented it being delayed until a valid notice was given. 47It ought to have been a matter of significant concern to the plaintiffs at that point, to ensure that they had a valid basis upon which to exercise a power of sale. There had, after all, been a problem with the first notice given. That there was a problem with the second notice as well, was a matter which could have easily been checked. It was only in November 2011 that the plaintiffs decided to auction the property. Mrs Anstee may well have been able to pursue the problem earlier, but she finally did not stand by and allow the plaintiffs to act to their detriment, without alerting them to the problem with the notice, before the auction took place. She drew the plaintiffs' attention to the difficulty in sufficient time for the auction to have been deferred, so that a valid notice could be given. It was the plaintiffs who decided to proceed, rather than taking steps necessary to ensure that a valid notice had been served, or including a term in the contract to deal with any problem with the notice on which it had relied. 48The submission that by the time the advice was received, the marketing and sales process had acquired such momentum, that the auction could not reasonably be deferred, may not be accepted. It had already been deferred once. It was in fact deferred twice, with the result that it was Mrs Anstee who finally complained that the disrupted process did not meet the plaintiffs' obligations in relation to the marketing of the property. 49It was on 15 December that the plaintiffs' solicitors instructed the real estate agents to proceed with the auction. It took place on 22 December, despite a further approach from Mrs Anstee's solicitor. It was not suggested to her then that her advice had been given too late. Deferring the auction so that a valid notice could be given, would have resulted in the auction proceeding in January. I cannot see, in terms of the considerations arising in respect of the principles discussed in Websdale, that such a delay could on any view be considered to have resulted in real detriment for the plaintiffs, given the circumstances. They were clearly not that the plaintiffs had been wrongly led to the view that Mrs Anstee would not challenge the validity of the notice. The position was quite to the contrary. The plaintiffs were put on actual notice of the problem and Mrs Anstee's view that it had no power of sale, but proceeded nevertheless. 50Given the approach which Mr Stoyles took to the advice received about validity of the notice and the plaintiffs' power of sale, and the course which the plaintiffs decided to pursue, notwithstanding service of the caveat and the correspondence received form Mrs Anstee's solicitor, it is difficult to see that there would have been any different result, had the plaintiffs' attention been drawn to the problem earlier than it was. 51It follows that this was not a situation like that in Websdale, where the invalidity of the notice was not raised until after the sale. Clarke J observed in Websdale at 581: "As I have pointed out none of these facts was in issue except in so far as the respondents did not accept that the first appellant had overlooked at the relevant times the extension of the term of the mortgage. If the correct view is that, with full knowledge that the term of the mortgage had not expired when the notices were given, he had delayed raising the notice issue until the last possible minute I do not doubt that it would be proper to refuse the claims for equitable relief. Obviously, if he had taken the point at the earliest possible time the first respondent would have served another notice and thereby overcome the deficiencies in the notices actually served. This could have been done at any time in the months leading up to the exercise of the power of sale. By taking the point for the first time after the power of sale had been exercised the appellants sought to gain an advantage which would not have been available if the issue had been raised at any time prior to, say, March or April 1991 and also greatly to prejudice the respondents who had, clearly enough, contracted upon the basis that the appellants had accepted that the power of sale had arisen." 52That was not this case. To the contrary, the auction scheduled for 13 December was actually deferred, after the notice was given. It was the plaintiffs who decided to proceed, notwithstanding that it was on notice of its problem and could have taken steps to protect itself from the possibility that it did not have a power of sale, by making relevant provision in the contract. 53The plaintiff's case cannot be resolved on the basis of the outcome in the earlier proceedings, given the dispute as to what was agreed would result from Mr Matthew Anstee's payment, on Mrs Anstee's case, that it would bring those proceedings to an end. On the evidence the judgment obtained in the earlier proceedings, after this payment was made, did not come to light for a considerable time, during which there were ongoing negotiations as to refinancing and other matters. That those proceedings rested on the s 57(2)(b) notice, which it is now accepted was invalid, cannot provided a proper basis for the orders now sought. If it be correct that the orders obtained in those earlier proceedings were the result of an irregularity, as was Mr Barry Anstee's evidence, that would clearly not be a proper foundation for the orders here pursued by the plaintiffs in these proceedings. 54Given the statutory requirements in relation to the giving of a s 57(2)(b) notice, the case advanced for the plaintiffs cannot be accepted. It has not been shown that the circumstances establish laches on Mrs Anstee's part, of the kind discussed in Websdale, nor are the observations in Khalid of assistance. Given the conclusions which I have reached, that there was not relevant laches on Mrs Anstee's part, she not having encouraged a belief on the plaintiffs' part, that the notice given would not be challenged, it follows that the orders sought must be refused.

Costs 55The usual order as to costs is that they follow the event. In the circumstances that would be an order as to the costs of the motion in favour of Mrs Anstee, as agreed or assessed. Unless the parties approach to be heard within 14 days, that will be the Court's order as to costs.

Orders 56For these reasons given, I order that the motion be dismissed.

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