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[2021] QCA 100
General information, not legal advice.
Court of Appeal (Qld)
2021-05-11
McMurdo and Mullins JJA and Bradley J
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Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: Turba Trium Pty Ltd v First Mortgage Capital Pty Ltd [2021] QCA 100
PARTIES: TURBA TRIUM PTY LTD / ACN 629 837 994 / (appellant) / v / FIRST MORTGAGE CAPITAL PTY LTD / ACN 150 210 736 / (respondent)
FILE NO/S: Appeal No 11841 of 2020 SC No 6650 of 2020
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal
ORIGINATING COURT: Supreme Court at Brisbane – Unreported, 8 October 2020 (Bond J)
DELIVERED ON: 11 May 2021
DELIVERED AT: Brisbane
HEARING DATE: 19 April 2021
JUDGES: McMurdo and Mullins JJA and Bradley J
ORDER: Appeal dismissed with costs to be assessed on the indemnity basis.
CATCHWORDS: MORTGAGES – MORTGAGEE’S REMEDIES – POSSESSION – UNDER CLAUSE ENTITLING MORTGAGEE TO POSSESSION UPON DEFAULT OF MORTGAGOR – where the appellant stopped paying the monthly interest payments of a registered mortgage and failed to repay the principal when due – where the respondent exercised its rights pursuant to the terms of the mortgage and Property Law Act 1974 (Qld) and sought recovery of possession of the land – where the learned primary judge awarded the respondent summary judgment to recover possession of the land – whether the respondent had a valid claim to recover possession – whether the mortgage document was defective / PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – PARTICULAR CASES – where the respondent was successful in its application for summary judgment – where the learned primary judge ordered the appellant pay the respondent’s costs of the proceeding on the indemnity basis pursuant to the terms agreed by the parties – whether the court ought to exercise its discretion to reflect such a contractual right / Property Law Act 1974 (Qld), s 84 / Uniform Civil Procedure Rules 1999 (Qld), r 292 / Platinum United II Pty Ltd & Anor v Mortgage Management Ltd (in liq) [2011] QCA 229, cited
COUNSEL: Director (S P Beard) appeared by leave for the appellant R A Kipps for the respondent
SOLICITORS: The appellant was not legally represented Summer Lawyers for the respondent
McMURDO JA: I agree with Bradley J.
MULLINS JA: I agree with Bradley J.
BRADLEY J: On 8 October 2020, the respondent First Mortgage Capital Pty Ltd (FMC) obtained judgment to recover possession of land at Bray Road, Lawnton (the land) from the appellant Turba Trium Pty Ltd (TTPL) and for TTPL to pay FMC’s costs of the proceeding on the indemnity basis. The judgment followed a successful application by FMC for summary judgment. The learned primary judge, who heard the application, found that TTPL had no real prospect of successfully defending against FMC’s claim.
TTPL has appealed against the whole of that decision.
Summary of the facts
At the relevant time, TTPL had three directors: John William Cini, Shane Peter Beard, and Marcel Ligthart. Mr Ligthart was also the company secretary. Each director held ten shares. In Latin, turba trium means three is a crowd. To some, this name might have indicated that trouble lay ahead.
TTPL sought a loan from FMC to complete the purchase of the land. On 28 March 2019, FMC offered to make a 12-month interest-bearing loan of $712,366 to TTPL. The loan was to be used only for the purpose of purchasing the land. It was to be secured by a first registered mortgage over the land, a personal guarantee by each of the three directors, and other charges. FMC made the offer in writing.
On 31 March 2019, TTPL accepted FMC’s offer. TTPL did so in writing, signed by its director and secretary, Mr Ligthart. Each of the directors also signed the acceptance document as guarantors of the loan.
On 5 April 2019, TTPL executed a mortgage over the land in favour of FMC in registerable form (the mortgage). TTPL executed the mortgage by Mr Cini, a director, and Mr Ligthart, a director and secretary.1
On 12 April 2019, FMC’s solicitor signed the mortgage on its behalf.
The terms and conditions of the mortgage were those set out in registered standard terms document No 718188316 and the additional terms set out in the mortgage itself under the heading Schedule A.
According to the standard terms, if TTPL failed to pay the principal amount advanced or any interest on it, then FMC could take possession of the land and exercise any right or power conferred by the mortgage. The standard terms also provided that TTPL was liable to pay on a full indemnity basis all solicitor’s costs, barrister’s fees and disbursements incurred by FMC in the exercise of any right or power under the mortgage.
In Schedule A of the mortgage, an additional term provided that TTPL was to pay interest on the same day each month as the Commencement Date and repay the principal amount to FMC on the day which was 12 months after the Commencement Date. It is common ground that, in the events that have occurred, the Commencement Date was 12 April 2019 and TTPL was to repay the principal amount on 12 April 2020.
On 12 April 2019, FMC advanced the loan according to the written direction of TTPL. A representative of FMC attended the settlement of the contract of sale of the land from its former owners to TTPL, and paid $661,219 of the loan funds to the ANZ Bank, in exchange for a release of a mortgage to ANZ that had been registered over the title to the land and $3,781 to the State for government fees. In accordance with TTPL’s written directions, the balance of the loan was paid to FMC for various fees ($18,569) and the first month’s interest on the loan ($9,680), to FMC’s solicitors as a loan documentation fee ($3,445), and to Cashbase as an introducer’s or brokerage fee ($15,672).
The grounds of appeal
In its notice of appeal, filed on 4 November 2020, TTPL set out 15 grounds of appeal.
On 16 April 2021, TTPL provided an amended outline of argument to the Court. It indicated TTPL would be arguing only grounds 1, 2, 11, 12, 14 and 15 from the notice of appeal.
On 19 April 2021, at the hearing of the appeal, Mr Beard appeared by leave for TTPL. He confirmed to the Court that TTPL was advancing no argument in support of any of the other nine grounds of appeal. TTPL’s submissions on the remaining six grounds were made in two groups. It is convenient to deal with each group in turn.
Whether FMC has a valid claim to recover possession
TTPL’s submissions on grounds 1, 2, 11 and 12 challenged FMC’s entitlement to recover possession of the land on the basis that FMC was no longer the lender to TTPL or the mortgagee of the land.
TTPL recited various statements about the process of mortgage origination and securitisation. These were referenced to passages in the text Commercial Law Aspects of Residential Mortgage Securitisation in Australia by Dr Pelma Rajapakse, published by Palgrave Macmillan in 2019.
There is no reason to doubt the scholarship of the learned author. However, nothing in TTPL’s explanation and commentary about the practice of mortgage origination and securitisation identified any error in the learned primary judge’s reasons or raised any doubt about his Honour’s finding that TTPL had no prospect of succeeding in its defence to FMC’s claim.
The effect of the evidence adduced before his Honour was as summarised in paragraphs [5] to [23] above. TTPL did not dispute any of those matters in this appeal. There was no conflicting evidence before the learned primary judge, so his Honour did not have to make any other finding. Critically for these grounds of appeal, there was no evidence that FMC had assigned its interest in the land as mortgagee to any other person.
TTPL submitted that FMC had failed to prove it had not assigned its interest. The submission must be rejected. FMC relied on a title search of the land. It showed FMC remained the registered mortgagee. If TTPL wished to defend against FMC’s claim on the basis that FMC had assigned the mortgage, then TTPL needed to show it had a real prospect of proving an assignment had occurred. TTPL failed to do so.
On appeal, the evidence remained as it was before the learned primary judge. It follows that TTPL fails in its challenge to the learned primary judge’s decision on grounds 1, 2, 11 and 12.
Whether the evidence established the mortgage was defective
On grounds 14 and 15, TTPL submitted that the registered mortgage was “defective and therefore void” because a document headed “Schedule A” had been signed by TTPL and the guarantors, but it had not been signed by FMC.
TTPL offered no explanation or authority for this submission. It is plainly wrong.
The registered mortgage executed by TTPL and FMC included a Schedule A under the heading additional terms and conditions. This Schedule A included a definition of “Commencement Date” as well as information about the lender, the borrower and the guarantors, the principal amount, interest rates, interest payments and early repayment.
TTPL and each of the guarantors signed another document headed “Schedule A” containing the same definition and information as that in Schedule A in the mortgage. By signing this document, TTPL and the guarantors indicated their agreement to the additional terms and conditions to be included in the mortgage. In addition to this separate “Schedule A” document, separate Schedules “B” to “G” were signed by variously TTPL, each of the three guarantors, and their respective solicitors. These documents set out directions for the payment of the principal amount, other directions and authorities, declarations by TTPL and each of the guarantors about having taken advice on the loan and the guarantee, and the solicitors’ certificates of advice to TTPL and to each guarantor on the loan and the guarantee. Unlike the mortgage, none of these schedules, including “Schedule A”, was in the form of an instrument to be registered over the title to the land.
FMC exercised its rights as mortgagee under the mortgage registered over the title to the land. The failure of FMC to sign the separate “Schedule A” document had no effect on the effectiveness or the validity of the mortgage. It follows that TTPL fails in its challenge on grounds 14 and 15.
Costs of the proceeding
TTPL also challenged the costs element of the judgment obtained by FMC.
For the reasons set out above, FMC was entitled to summary judgment on its claim. Having failed, TTPL was also liable to pay FMC’s cost of the proceeding. The learned primary judge ordered TTPL to pay those costs on the indemnity basis because that is the bargain agreed between TTPL and FMC in the standard terms in the mortgage. Ordinarily, the court should exercise its discretion to reflect such a contractual right.3 In the circumstances, there was no error in ordering TTPL to pay FMC’s costs of the proceeding on the indemnity basis.
Final Disposition
On 3 April 2019, TTPL, by its directors Mr Ligthart and Mr Beard, executed a mortgage in the same terms. However, Mr Beard wrote “All rights reserved” under his signature. This earlier dated instrument was not accepted by FMC and was not registered over the title to the land. ↩
A second mortgage to Apex Capital Solution Pty Ltd was also registered over the title to the land that day. ↩
Platinum United II Pty Ltd & Anor v Mortgage Management Ltd (in liq) [2011] QCA 229 at [6]. ↩
Turba Trium Pty Ltd
First Mortgage Capital Pty Ltd [2021] QCA 100
On 3 May 2019, the transfer to TTPL and the mortgage were both registered over the title to the land. So, TTPL became the registered proprietor of an estate in fee simple and FMC became the first registered mortgagee.2
From about 13 May 2019 until about 11 February 2020, TTPL made monthly payments of interest to FMC.
On 12 March 2020, TTPL made no interest payment.
On 19 March 2020, the solicitors for FMC sent TTPL a default notice for the failure to pay monthly interest, and a notice pursuant to s 84 of the Property Law Act 1974 (Qld) (the Act). Each notice stated the arrears as $20,928.16.
On 12 April 2020, when the principal amount was due to be repaid, TTPL failed to do so.
On 22 April 2020, FMC’s solicitors sent TTPL a default notice for failure to repay the amount owing, and a notice pursuant to s 84 of the Act. Each notice stated the amount then owing was $754,283.43. The statutory notice informed TTPL that, if it failed to remedy the default by paying the amount owing to FMC within 31 days after service of the notice, FMC proposed to exercise its rights to power of sale in respect of the land.
TTPL acknowledged receipt of the default notices.
TTPL did not pay the amount owing, or any amount, to FMC.
On 19 June 2020, FMC filed a claim and statement of claim seeking recovery of possession of the land, so commencing the proceeding.
On 18 August 2020, TTPL filed its defence.
On 17 September 2020, FMC applied for summary judgment pursuant to r 292 of the Uniform Civil Procedure Rules 1999 (Qld). This was ordered on 8 October 2020.