The Trust Company (PTAL) Limited v Berry

Judgment 1The plaintiffs seek orders under s 74MA of the Real Property Act 1900 for the removal of a caveat which the second defendant, Lynette Anstee, placed on the title of a property located at Mittagong. She is the registered proprietor of the land, over which the second plaintiff holds a registered mortgage, securing a loan of some $1,583,000. It is the mortgagee in possession as the result of orders made in earlier undefended proceedings. The loan was also secured by a mortgage over another property formerly owned by Mrs Anstee's father, Harold Berry. There is no issue that the loan is in default. 2There were two caveats lodged, one on 5 December and another on 22 December 2011. They each rest on a claim that no valid s 57(2)(b) notice was served on Mrs Anstee. At the hearing it was common ground that the notice served in June 2009 was invalid and that in the absence of the service of a valid notice, there was no power of sale. The order sought is pressed, nevertheless, on the basis of the operation of the principle of laches discussed in Websdale v S & JD Investments Pty Limited (1991) 24 NSWLR 573, where it was observed at 581-2: "It is accepted that the general principle of laches is as expressed in two cases during the last century and summarised by Deane J in Orr v Ford (1989) 167 CLR 316 at 341 in these terms: '... whether the plaintiff has, by his inaction and standing by, placed the defendant or a third party in a situation in which it would be inequitable and unreasonable 'to place him if the remedy were afterwards to be asserted'." 3In issue between the parties is whether, in the circumstances which have arisen, the conclusions reached in Websdale are of assistance to the plaintiffs. There it was concluded at 582-3: "In the circumstances of this case whether the first appellant deliberately refrained from challenging the notices until after the power of sale had been exercised or failed to do so because he had overlooked the extension seems to me to be of little moment. What is important is that having participated in actions which would reasonably lead the first respondent to believe that the appellants were aware at all relevant times that the term had not expired the appellants acted in a manner which encouraged a reasonable belief in the respondents that the notice would not be challenged. The case is not unlike estoppel - the appellants' inaction constituting a representation upon which the respondents acted to their detriment. In my opinion it would be inequitable to uphold the appellants' claim in these circumstances. I would conclude, therefore, that the claim in the notice of contention should be upheld." 4In this case there is no question that the notice given was not valid. That has been conceded. There is also no question that when the plaintiffs sold the property they were aware of the 5 December caveat. What is in issue is whether, given the terms of the caveat and the time that the question of the validity of the notice was drawn to the plaintiffs' attention, the conclusions reached in Websdale are available to them. 5Their case is that Mrs Anstee is not entitled to maintain her caveats, because of her laches, acquiescence and delay. Mrs Anstee's case is that she put the plaintiffs on notice of the invalidity of the s 57(2)(b) notice and that despite being on actual notice of the difficulty, they proceeded with a sale of the property by auction, knowing they had no power of sale. This relevantly distinguished the circumstances in this case, from those which arose to be considered in Websdale, where the invalidity of the notice was raised only after the mortgagee had exercised its power of sale, in circumstances where the mortgagee had been led to believe that the invalidity would not be relied on. In this case while the plaintiffs had acted to their detriment, that was not the result of any laches on Mrs Anstee's part. 6The plaintiffs also relied on the fact that there had been no payment into court of any amount which was outstanding and not in dispute. It was submitted that the result of the caveat was that Mrs Anstee had effectively achieved injunctive relief. It was acknowledged that she had given an undertaking as to damages, but it was submitted that this did not address the failure to repay any part of the outstanding loan, in respect of which nothing had been paid since September 2009. That was submitted to be a relevant consideration, in circumstances where the complaints which she sought to advance in these proceedings, were ones in respect of which damages were an adequate remedy. 7The plaintiffs also relied on the various advices earlier given to Mrs Anstee as to payout figures and pointed to Khalid v Perpetual Limited [2012] NSWCA 153 where it was observed at [34] - [35]: "[34] In Bunbury Foods, a statutory demand to pay monies due had failed to specify the amount owing. In considering the validity of the notice in that case, the High Court (Mason, Murphy, Wilson, Brennan and Dawson JJ) stated at 503-504: It is of some materiality to note that it is not essential to the validity of a notice calling up a debt that it correctly states the amount of the debt. Even a notice given to the mortgagor by the mortgagee as a condition precedent of a power of sale is not rendered invalid because it demands payment of more than is due ... the interests of the parties will be more adequately protected by the principle that the debtor must be allowed a reasonable opportunity to comply with the demand before the creditor can enforce or realize the security than by the adoption of the suggested proposition that the notice of demand must specify the amount of the debt. In determining whether the debtor has had such an opportunity it will be relevant to take account of the debtor's knowledge, lack of knowledge and means of knowledge of the amount due and of the information which the creditor has provided in that respect, including the response which he has made to any inquiry by the debtor. (emphasis added) [35] Bunbury Foods did not involve a s 57(2)(b) notice, but rather a demand in respect of monies due under a debenture. Nonetheless, the principles stated in the decision have been accepted as applying to the validity of a s 57(2)(b) notice: see Websdale v S & JD Investments Pty Ltd (1991) 24 NSWLR 573 at 578-9; Wongala Holdings Pty Ltd v Mulinglebar Pty Ltd (1994) 6 BPR 13,527 at 13,529 and 13,532-3; and Notaras v Sly & Weigall [2005] NSWCA 275 ; 12 BPR 23,765." 8The plaintiffs also relied on the fact that in earlier proceedings they obtained possession of the property on the basis of the same s 57(2)(b) notice which is now disputed. No point was taken in relation to the inadequacy of the notice in those proceedings, in which Mrs Anstee did not appear or take any steps. 9For Mrs Anstee it was not conceded that she had received the benefit of any part of the loan in question, even though it was conceded that some $500,000 had been advanced to her. There was no concession that she was liable to repay any part of the loan. Her case was that the property was being sold for a gross undervalue in circumstances where the plaintiffs were simply trustees for investors. It was submitted that in the circumstances, damages would not necessarily be adequate. There would be significant prejudice potentially flowing from removal of the caveat. Her case was that what had occurred in the earlier proceedings was not of assistance to the plaintiffs, given the way in which they had obtained possession of that property.