Vasiliou v Westpac Banking Corporation & Ors [2007] VSCA 113

Vasiliou v Westpac Banking Corporation & Ors [2007] VSCA 113 - VSCA 2007 case summary — Zoe

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5 We wish to state immediately that there is not the slightest justification for the very serious charge of corruption which Mr Vasiliou makes against the trial Judge. A review of the transcript demonstrates that Ms Vasiliou's case was fairly heard and carefully considered by his Honour. There was no hint of bias in anything which his Honour said or did. The allegation of corruption should never have been made. Mr Vasiliou must accept that the fact that the case against the Bank failed does not mean that there was any impropriety involved in the Court's processes.

6 For the detailed reasons which follow, we have concluded that the appeal must fail. In certain significant respects, to which reference will be made, the Bank's conduct fell far below what could reasonably have been expected of a mortgagee in such circumstances. That is greatly to be regretted, since the Bank's conduct made Mr Vasiliou believe - erroneously - that the Bank was acting improperly and unlawfully. But, having considered all of Mr Vasiliou's arguments, we are quite unable to accept his view of what happened. We respectfully agree with the trial Judge that there was no conspiracy to harm him and his daughter; that the Bank did not collude with the independent valuers or with the second respondent, Mr Lachlan Ian Fenwick; and that the valuers were not corrupt. There is simply no foundation in fact for any of these very serious allegations.

Default under the mortgage

7 By July 2000, the monthly mortgage payment was $1,557.95. At that time, the property was let to the second respondent, Mr Fenwick, at a monthly rent of $1,400, which Mr Fenwick agreed to pay directly into Ms Vasiliou's mortgage account with the Bank. Since there was a shortfall of more than $150 between the rental paid and the amount payable on the mortgage, Ms Vasiliou's mortgage account soon fell into arrears.

8 On 19 December 2000, the Bank caused a notice to be served upon Ms Vasiliou requiring her to remedy her default within 31 days. On 29 December 2000, Ms Vasiliou wrote to the Bank[1] stating that "another investment property" was to be sold, the proceeds from which would pay for the arrears. On 4 January 2001, the Bank wrote to her requiring payment of all arrears by 14 January 2001. Mr Vasiliou contends that this letter was not received by him or his daughter. He maintained before this Court that nothing further was heard from the Bank after his daughter sent her letter of 29 December 2000.

9 Mr Fenwick continued to pay his monthly rent into Ms Vasiliou's mortgage account until 5 January 2001. Thereafter he ceased to pay rent into that account, following his receipt of notice from the City of Boroondara requiring him, as the occupier of the property, to pay his rent directly to the Council in reduction of rate arrears owing to the Council by Ms Vasiliou.[2] Mr Fenwick did not in fact comply with the notice.[3]

10 On 24 January 2001, the Bank served notice upon Ms Vasiliou demanding payment of the sum owed under the mortgage. Mr Vasiliou contends that this notice was not received by him or his daughter.

11 An officer of the Bank, David Pettet, gave evidence that he had telephoned Mr Vasiliou on 7 February 2001, and told him that if the arrears to the Bank were not paid, the property would be sold by the Bank pursuant to its rights under the mortgage. Mr Vasiliou gave evidence that no such conversation had taken place. The trial Judge accepted the evidence of Mr Pettet on this point.

12 On 6 March 2001, the Bank wrote to Ms Vasiliou stating that it had taken possession of the property and was exercising its power of sale. Both Ms Vasiliou and her father gave evidence that this letter had not been received at either of the two addresses to which it was sent. The trial Judge accepted the evidence given on behalf of the Bank that two copies of the letter had been sent, one to Ms Vasiliou's post office box in St Kilda (which was conducted by herself and her father) and the other to her personal address, where she was living with her father.

13 The tenant, Mr Fenwick, received a notice from the Bank's agent, Mortgage and Estate Realisation Company (MERC), to vacate the premises dated 20 March 2001. He had telephoned MERC and said that he was interested in purchasing the property. He was told that the Bank had a policy that a tenant was permitted to make a single offer to purchase the property. If that offer was acceptable, the property would be sold to the tenant, but otherwise the property would be auctioned. The Judge found as a fact that this was the Bank's policy. Mr Vasiliou challenges this finding, arguing that there is nothing in the Bank's written policy documents to that effect.

14 Mr Fenwick obtained a sworn valuation of the property in the sum of $400,000. He made an offer to purchase the property at that price. In the meantime, the Bank and its agent obtained other valuations and appraisals (referred to in detail below), which valued the property in the range $320,000 - $390,000. On 17 April 2001, Mr Fenwick's offer of $400,000 was accepted by MERC on behalf of the Bank. Settlement of the sale occurred on 8 June 2001. The purchase of the property by Mr Fenwick was financed by a mortgage loan from the Bank of Melbourne, a subsidiary of the Bank.

15 On or about 11 June 2001, some three days after settlement of the sale, Mr Vasiliou contacted Mr Fenwick by telephone. In the course of this conversation, Mr Vasiliou requested that Mr Fenwick pay the rent which he had ceased to pay after 5 January 2001. In the course of this conversation Mr Fenwick told Mr Vasiliou that the Bank had been "in possession of the property since March". This was, as the Judge said, a misleading statement. Mr Fenwick did not tell Mr Vasiliou that he had continued to reside in the property, nor did he tell Mr Vasiliou that he had purchased the property.

16 We would endorse the Judge's criticism of Mr Fenwick's conduct, which he expressed in these terms:

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25 It is common ground between the parties that the Bank did not arrange for the property to be advertised; that the Bank sold the property to Mr Fenwick, the tenant in possession, for the sum of $400,000; and that the property was not put to public auction. At the trial, Ms Vasiliou relied on those three matters, together with an assertion that the true value of the house was "approximately $720,000 to $760,000", to establish a breach of s 77(1). The same submission was made on the appeal.

26 We deal first with the dispute as to the value of the property. As will appear, this is the foundation of many of the other complaints. In his written submission for the appeal, Mr Vasiliou said that the value of the property was "the driving force" which had brought the parties to court.

The value of the property

27 The evidence before the Judge consisted of a number of valuations, from a number of different sources. As will appear, there was a high degree of consistency between them.

28 Upon receiving instructions from the Bank to sell the property, Ms Rosemary Decker, an account manager employed by MERC, retained a firm of local estate agents, Noel James and Associates, for that purpose. A sub-agent employed by that firm served the notice to vacate upon the tenant, Mr Fenwick, on 20 March 2001. On 29 March 2001, that sub-agent, Mr Michael McCarthy, provided a market appraisal of the property to Ms Decker, identifying the "anticipated price range" as between $320,000 and $340,000. Mr McCarthy was not a licensed valuer but he had had many years' experience as a senior consultant and principal auctioneer with Noel James and Associates, and with another well-known real estate agency in the Glen Iris and Camberwell area.

29 We referred earlier to the offer by Mr Fenwick to purchase the property for $400,000. That offer was based on a valuation report which he obtained from a certified practising valuer, Mr Glen Dickinson, valuing the property at $400,000. At about the same time, MERC on behalf of the Bank sought its own valuation of the property. A certified practising valuer, Mr Peter Wigg, valued the property at $390,000, or $360,000 in the event of a forced sale.

30 After receiving the offer of $400,000 from Mr Fenwick, Ms Decker arranged for a second valuation to be obtained, this time from a different certified practising valuer, Mr John Welch. He valued the property at $320,000. Having obtained the Welch valuation, the Bank decided to accept Mr Fenwick's offer. On 17 April 2001, the Bank entered into a contract with Mr Fenwick to sell him the property for $400,000.

31 At the date of the sale, therefore, the Bank was in possession of two valuations from certified valuers, valuing the property at $390,000 and $320,000 respectively. In addition, the Bank had Mr McCarthy's appraisal, putting the value at between $320,000 and $340,000. His Honour said that, in the circumstances, it was reasonable for the Bank to conclude, as at early April 2001, that it might not sell the property on the open market for more than the sum of $400,000. In our view, that conclusion was clearly correct.

32 There was other valuation material before his Honour. The municipal valuation as at 24 July 2000 was $335,000. (The evidence does not reveal whether or not the Bank was aware of this fact at the time of the sale.) Two other valuations came into existence at about the time of the sale. The Bank was aware of neither. The first was the Dickinson valuation obtained by Mr Fenwick, valuing the property at $400,000. The second was obtained by the Bank of Melbourne, when Mr Fenwick sought mortgage finance for the purchase. Yet another certified practising valuer, Mr Andrew Goding, assessed the market value at $400,000. Mr Pettet of the Bank said that he was not aware of this valuation when he approved the sale of the property to Fenwick. The learned Judge said that, notwithstanding the association between the Bank of Melbourne and the respondent Bank, he accepted the evidence of Mr Pettet that he was unaware of the valuation, "if indeed the Goding valuation had been given" at the time when Pettet approved the sale.

33 Evidence was given at the trial by Mr McCarthy (who had provided an appraisal of $320,000 to $340,000), by Mr Wigg (who had valued the property at $390,000) and by Mr Welch (who had valued the property at $320,000). Much of the cross-examination of these witnesses by Mr Vasiliou focused on the fact that, shortly after the sale to Mr Fenwick, the adjoining property at 52 Great Valley Road was sold at auction for $890,000. That auction took place on 12 May 2001. As his Honour observed:[7]

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43 The letter of appraisal contains no description at all of the existing condition of the property. There are obvious similarities between the description which Mr White read from his notes and the description in the letter of what might be undertaken in a "complete renovation and extension" (eg four bedrooms, master with en suite, double garage). There are also significant differences between the two. The notes referred to a "combined living and dining room and to a kitchen leading to laundry, family room, deck off the rear, second family bathroom, and ducted vacuum system," none of which were mentioned in the letter of appraisal.

44 In the course of re-examination, Mr Vasiliou put to Mr White that he (Vasiliou) had never mentioned a "vacuum cleaner". The issue then arose as to whether the notes made by Mr White should be tendered as an exhibit. Mr Vasiliou objected to their tender and the notes were not tendered.

45 Without the notes having been in evidence, it is impossible to determine whether what Mr White read from his notes was a description given by Mr Vasiliou of the existing condition of the house or was instead a listing of changes which might be effected upon "a complete renovation and extension", as postulated in the letter of appraisal. With respect, the evidence was so confused and equivocal on this point that his Honour's adverse finding against Mr Vasiliou - that he misdescribed the house to Mr White - is open to doubt. No firm conclusion can be reached.

46 That does not, however, affect our conclusion that this aspect of the ground of appeal fails. His Honour was right to conclude on the evidence before him that, as at April 2001, the property had a market value of $400,000 or less. No other conclusion was reasonably open, given that the evidence, including that called on behalf of Ms Vasiliou, was overwhelmingly to that effect. One after another, certified practising valuers fixed the value of the house at $400,000 or below. We set out below the summary table which his Honour provided in the judgment:[10]

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47 Given the valuation evidence, there is in our view no basis for the appellant's contention that his Honour should have preferred the evidence of Mr White over that of the certified practising valuers. The appraisal by Mr White (at $520,000 - $560,000) was the odd one out. Assuming that the appraisal was based on an accurate description of the property by Mr Vasiliou, the fact that Mr White did not see inside the property inevitably reduced the weight to be attached to his opinion, as did the fact that he was not a professionally qualified valuer.

48 We therefore reject all those grounds of appeal (grounds (b), (c), (d), (f) and (s)) which contend, in one way or another, that his Honour erred in finding that the property had a value of $400,000 or less.

Failure to communicate and failure to account properly

49 A number of other grounds are advanced to show that his Honour was in error in accepting that the Bank conducted the mortgagee sale "in good faith and having regard to the interests" of Ms Vasiliou as mortgagor. These grounds attack the conduct of the Bank and of the tenant, Mr Fenwick. They assert that the sale of the property was not a proper arm's length transaction but was the product of collusion between the Bank and Mr Fenwick.

50 Particular (i) of ground (a) in the notice of appeal asserts that the Bank "failed at every stage in their duty to account to the plaintiff fully, or adequately, in accordance with the law". Other grounds of appeal assert that the Bank failed to communicate adequately with the appellant and her father. Ground (j) states "his Honour failed to afford sufficient weight to the fact that [the Bank] failed to inform the appellant of its readiness to sell the property by private sale without advertisement to [Fenwick]". Ground (k) provides that "his Honour failed to afford sufficient weight to the fact that [the Bank] had failed to inform the appellant that the property had been sold".

51 As noted earlier, there were contested factual issues at the trial about what communication took place between the Bank and the Vasilious in the period following Ms Vasiliou's letter of 29 December 2000. Mr Vasiliou and his daughter maintained that nothing further was heard from the Bank until June 2001, when Mr Vasiliou was told that the property had been sold. The Judge found, however, that critical communications did take place, on 7 February 2001 (telephone call from Pettet) and 6 March 2001 (Bank letter sent to two addresses).

52 Mr Vasiliou contests these findings. A significant part of his challenge against the Bank relies on the contention that the property was sold by the Bank without warning and, in particular, without his daughter having had any opportunity to rectify the mortgage default. In our view, no basis has been established for this Court to interfere with the Judge's findings. His Honour had the very considerable advantage, which this Court does not have, of seeing the key witnesses (Ms Vasiliou, Mr Vasiliou and Mr Pettet) give their evidence and respond to cross-examination. The findings about whether the communications took place depended heavily on the Judge's assessment of the credibility of each witness. That being so, this Court would not interfere with the findings unless they were either "glaringly improbable or contrary to compelling inferences".[11]

53 We said earlier that there were significant failings on the part of the Bank. His Honour gave detailed consideration to the failure of the Bank to communicate to Ms Vasiliou in the period following the letter of 6 March 2001, in which the Bank stated that it had taken possession of the property and would be exercising its power of sale.[12] His Honour said:[13]

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66 Once again, these assertions reflect the strongly held belief of Mr Vasiliou that the sale price of the property was far below its market value. As his Honour said, the fact that the next door property was sold one month later for $890,000 caused "Mr Vasiliou to be suspicious, if not distrustful, of the bona fides of the sale to Mr Fenwick". As his Honour observed, those suspicions were heightened by the failure of the Bank to keep the appellant and her father informed of what was happening; by the Bank's failure to account to the appellant in respect of the balance of the proceeds of sale; and by Mr Fenwick's misleading statement to Mr Vasiliou after the sale.

67 Crucially, however, his Honour found that the suspicions of Mr Vasiliou were unfounded. That conclusion was clearly correct. The property was sold at market value. There was no evidence of collusion or conspiracy between the Bank and Fenwick, nor that the sale to Fenwick was other than a proper arm's length sale.

68 As noted earlier, the Judge accepted that the Bank's practice at that time was that, if a "sitting tenant" wished to purchase a property being sold by the Bank as mortgagee, the tenant was given the opportunity to make "one highest and best offer". MERC would obtain two sworn valuations and, if the tenant's offer was regarded as "exceptional" in the light of those valuations, the offer would be accepted. There is no reason to doubt his Honour's finding in this regard.

69 In accordance with this practice, Fenwick was told that he could make one offer to purchase the property. We have previously[24] set out the sequence of valuations, which confirmed that the price obtained was the market price.

70 In the course of the hearing before us, Mr Vasiliou asserted from the Bar table that all the valuers who gave evidence before his Honour were a party to such collusion. There is simply no basis for that allegation. As the President pointed out during the hearing, certified valuers are relied on in courts everywhere as a source of independent expert opinion on matters of valuation. An allegation that a valuer had dishonestly stated a value which did not reflect his actual opinion is a very serious allegation, and would only warrant investigation if there were some evidence to support it. In the present case, there is absolutely nothing to suggest that any of the valuers was doing anything other than discharging his professional duty.

Did the failure of Fenwick to pay rent cause the appellant's default under the mortgage?

71 Ground (h) asserts that the failure of Fenwick to pay the rental moneys to the Bank in reduction of the mortgage over the property was the reason for the appellant's default under the mortgage. There is no factual basis for this allegation. It is true that the lease of the property from the appellant to Fenwick required the rent of $1,400 a month to be paid by direct debit to the account of the appellant with the Bank of Melbourne. Fenwick made all payments under the lease up until 7 January 2001.[25]

72 The concerns of the Bank in relation to Ms Vasiliou's default arose well before Fenwick made his last payment on 5 January 2001. Notices of demand or default had been served by the Bank on 26 October 2000 and 19 December 2000. As noted earlier, Ms Vasiliou wrote to the Bank on 29 December 2000, stating that another investment property was being sold, the proceeds of which would pay the arrears. His Honour found this to be a false statement. In response, the Bank stated that it required the arrears to be brought up to date by 14 January 2001. At that time those arrears were said to total $3,091.10 with a further $1,706 falling due on 14 January. In short, the fact that Fenwick did not pay rent after the next due date in February 2001 had nothing to do with the appellant's default under the mortgage.

The failure of Fenwick to pay rent

73 Ground (p) contends that his Honour erred in concluding that Fenwick made payment of outstanding rates to the City of Boroondara. As already noted, soon after 25 January 2001 Fenwick received a letter from the collection agent of the City of Boroondara, advising him that municipal rates and charges were outstanding on the property and requesting, pursuant to s 177 of the Local Government Act 1989, that he pay his monthly rent to the council. His Honour found:[26]

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74 In evidence, Mr Fenwick said that when he ceased to pay rent to the account of the appellant, he did not make payment of the rent to the City of Boroondara. He simply made no payments of rent after 7 January 2001. Clearly enough, Fenwick was obliged to pay the rent to the City of Boroondara. But no claim was made for this rent in the proceedings. We are far from satisfied that his Honour's statement - that Fenwick "decided to comply" - amounted to a finding that Fenwick actually paid the rent to the City of Boroondara. But even if his Honour did come to this mistaken conclusion, it was of no relevance to the issues which were before his Honour and which arise on this appeal.

Unconscionable conduct

75 Grounds (q) and (r) contend that his Honour should have found that both the Bank and Fenwick had engaged in unconscionable conduct, in contravention of s 7 of the Fair Trading Act 1999. His Honour held that there was no evidence of unconscionable behaviour by either the Bank or Fenwick. Given the unimpeachable finding that the property had a market value of $400,000 or less as at early April 2001, his Honour's conclusion in this regard was clearly correct.

Did the trial Judge fail to give proper weight to the letter from the appellant offering future payment in arrears?

76 Ground (t) contends that his Honour failed to give proper weight to the appellant's letter to the Bank dated 29 December 2000, and should have found that the Bank was under a duty to respond to that proposal and give further notice to the appellant prior to proceeding with the sale of the property. As already noted, notices of demand or default were served on 26 October and 19 December 2000. Ms Vasiliou's letter of 29 December 2000 was a response to the second of these notices. The letter advised that she was "currently in the process of selling another investment property, to be in the position to pay our home loan arrears".

77 In evidence Ms Vasiliou was unclear as to which property this might have referred, but said that she "thought" this referred to a property in Clairmont Street, South Yarra. The evidence before his Honour was, however, that this property was not for sale at that time. The 29 December letter also asked the Bank to capitalise the arrears currently owed. By letter dated 4 January 2001, the Bank wrote to the appellant, acknowledging her letter of 29 December and stating that all arrears (together with the instalment of $1,706 due and payable by 14 January 2001) were required to be paid by 14 January 2001. Furthermore, the Bank advised that it was not prepared to capitalise the loan arrears and that, unless the arrears and instalment were paid, the Bank would "proceed". Following this, a further formal notice of demand dated 24 January 2001 was forwarded by the Bank to the appellant.

78 As already noted, we uphold the Judge's finding that, on 7 February 2001, Mr Pettet spoke by telephone to Mr Vasiliou and told him that, if the arrears were not paid, the Bank would proceed to sell the property. We likewise uphold the finding that on 6 March 2001 the Bank wrote to Ms Vasiliou stating that it had taken possession and would be exercising its power of sale. The letter from Ms Vasiliou of 29 December 2000 was overtaken by these subsequent communications.

Procedural fairness

79 Finally, the appellant asserts that she was not accorded procedural fairness in the course of the proceedings before his Honour. She contends (ground (e)) that his Honour erred in failing to allow her an adjournment to enable her to adduce additional evidence of the true value of the property; and (ground (w)), that his Honour denied her natural justice, by failing to consider further evidence she sought to present, in the form of further valuations of the property, by failing to allow her to call subpoenaed witnesses, and by failing to accept into evidence key documents brought into the Court at the hearing.

Failure to allow an adjournment and alleged failure to allow appellant to call subpoenaed witnesses

80 As to the refusal of an adjournment to adduce additional valuation evidence, it must be noted that the writ in this matter was issued on 30 July 2001. On 23 July 2003, the proceeding was fixed for trial to commence on 4 March 2004. On 18 February 2004, the appellant filed a summons seeking orders that the trial date fixed for 4 March 2004 be vacated. This was supported by an affidavit sworn by the appellant deposing to the requirement for extra time to "study serious expert evidence served upon us" by the Bank early in February.

81 The proceeding had been listed for trial in 2003 but that trial date had been vacated by reason of the failure of Ms Vasiliou to engage in mediation prior to that time as ordered by the Court. The new material upon which the Bank relied was an expert report prepared by Mr Bourke, a certified practising valuer, which had been served on 3 February 2004 pursuant to O 44 of the Supreme Court Rules.

82 The application for adjournment came on before his Honour on 25 February 2004. Mr Vasiliou appeared and told his Honour that he still needed "the valuers to do the valuation comparison to No 52 Great Valley Road". He did not, however, name any valuer whom he had approached to give evidence on his behalf. He said that he had telephoned valuers from the Yellow Pages but they had not wanted to get involved. In addition, Mr Vasiliou said,

[53]

The failure to adjourn did not prejudice the appellant's ability to conduct the proceeding. The trial had been long delayed. The appellant and her father were well aware of the basis of the defence. Mr Fenwick had undertaken not to sell the property before trial. No injustice was suffered by the appellant.

90 As to the contention that the trial Judge failed to allow Ms Vasiliou to "call subpoenaed witnesses and evidence", the grounds failed to identify any such witness. The appellant did issue a number of subpoenas which were called on before the trial Judge on 4 March 2004. The first subpoena was addressed to Mr Colin Neave, the Banking Industry Ombudsman, requiring him to give evidence and produce "all information and evidence you hold in relation to the legal code of conduct in and during its execution rights in mortgage sale as such". The appellant had made a complaint to the Banking Ombudsman about the conduct of the Bank. Mr Vasiliou told his Honour, "I would like to ask Mr Neave whatever that is the, the way the Bank did it, is the proper and legal way, if his office thinks so." His Honour ruled that the evidence proposed to be led from the Banking Ombudsman was irrelevant to the issues before him and excused him from attendance and from producing a file which related to the dispute between Mr Vasiliou and the Bank in relation to another property. With respect, that conclusion was plainly correct.

91 In addition, the appellant subpoenaed Dr David Morgan, Chief Executive Officer of Westpac Banking Corporation, to give evidence and produce the documents including "a complete profile of your company" and "full details of your personal profile". Mr Vasiliou told his Honour that the evidence he wished to adduce from Dr Morgan was "to explain to the Court, whether he is aware of what is going on with his employees". His Honour ruled that Dr Morgan had no relevant evidence to give and set the subpoena aside. Again, with respect, that decision was plainly correct.

92 A number of other subpoenas - to give evidence and/or to produce documents - were duly answered. Only the two subpoenas referred to (to the Banking Ombudsman and the Chief Executive Officer of Westpac) were set aside, correctly in our view.

Further matters raised by the appellant since the trial

93 By summons dated 14 August 2006, Ms Vasiliou sought an order that new evidence be admitted on the hearing of the appeal. The application came on before Eames and Neave JJA on 22 September 2006. After hearing argument, their Honours ordered that a number of the applications be referred to the Court hearing the appeal.

94 Those applications appear as paragraphs 2, 5 and 7 of the appellant's summons of 14 August 2006, as follows:

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95 We deal first with paragraph 2 of the summons. Neither the summons nor the submission in support identifies the witnesses concerned. As stated above, we see no basis upon which it can be said that his Honour dealt with such subpoenas in any way erroneously. The summons was supported by an affidavit sworn by Mr Vasiliou. That affidavit fails to identify the further evidence sought to be admitted or the names of the witnesses from whom it is proposed to lead evidence. Accordingly, there is no basis upon which this Court could permit the evidence - whatever it might be - to be introduced on appeal.

96 Paragraph 5 of the summons seeks the production of a number of documents. Ground (w)(iii) of the grounds of appeal asserts that the trial Judge erred by denying natural justice to the appellant by failing to accept into evidence "key documents brought into Court at the hearing". The "key documents" upon which the appellant purports to rely are not identified by the grounds of appeal. Assuming that paragraph 5 of the summons of 14 August 2006 is referring to the same documents, we note that copies of the Bank's policy as regards mortgagee sales at the time of the sale of the property were in fact produced in the course of the trial. As noted earlier, a subpoena had been issued to Dr David Morgan, Chief Executive Officer of Westpac, seeking him to attend personally to give evidence and to produce a number of documents. Dr Morgan was excused from attending to give evidence, but a document sought by paragraph 4 of the subpoena was "a copy of the in-house mortgage sales manual/instructions and policies applied to a mortgagee sale".

97 On 10 March 2004, in the course of cross-examination of Mr Pettet, Mr Vasiliou asked whether the Bank had a manual or a policy relating to the method by which property should be sold. Mr Pettet stated that the recovery section had a general outline of "how it conducts itself, yes". Four documents were produced entitled "Recovery-Disposal Area" (dated March 2004), "Recovery Legal Area" (dated May 2003), "Collections Servicing Area" (dated December 2000), and "Recovery, Loss Recovery Area" (dated May 2001). Each document was made available to Mr Vasiliou and, after lunch on 10 March 2004, he cross-examined Mr Pettet on the documents. He did not tender them, however. In the circumstances, there is no basis upon which these documents should now be produced before this Court.

98 Paragraph 5(b) of the summons seeks a copy of the engagement arrangement between the Bank and MERC. An authority from the Bank to MERC, and an agreement between the Bank and MERC dated 14 February 2001, were tendered in the trial. Some parts of the agreement were masked for reasons of commercial confidentiality. This followed his Honour's inspection of the original. There is nothing to suggest that there was any relevant matter in the masked section of the agreement.

99 Paragraph 5(c) seeks the production of telephone accounts covering the period of the telephone call which Mr Pettet said had been made to Mr Vasiliou on 8 February 2001. As noted earlier, his Honour accepted Mr Pettet's evidence that he had made the call. The telephone records were not the subject of a subpoena at trial. It is far too late for them to be sought now. The trial is over.

100 Finally, the summons of 14 August 2006 seeks leave to amend the statement of claim and "to supply the Court with new evidences or other supportive material including valuations of the property as soon as [the appellant] receives the above information requested and financial support so as to enable her to engage a law firm to represent her at the future hearings". The affidavit sworn by Mr Vasiliou in support does not exhibit the proposed amended statement of claim. It does not depose to any reason for delaying in seeking leave to amend. In these circumstances leave should not be extended.

101 Furthermore, the application for leave to produce "new evidences" does not identify the nature of the proposed evidence, nor any witness who might produce such evidence. At the minimum an application for leave to admit further evidence on the hearing of an appeal should be supported by an affidavit which clearly states the grounds on which the application is to be made and which discloses the evidence sought to be introduced.[28] There is no evidence or other basis upon which the Court can act to make the orders sought by paragraph 7 of the summons of 14 August 2006.

The action against the third respondent, the Registrar of Titles

102 Ms Vasiliou asserts that the Registrar is liable to the plaintiff in damages. It is said that the Registrar breached a statutory duty or a duty of care owed to the plaintiff, by failing to accept one or more of the caveats sought to be lodged by the plaintiff, or her father on her behalf, on 15 June 2001 or by registering the transfer of the land to Mr Fenwick.

103 The submissions made to the learned trial Judge are summarised in his reasons as follows:

[64]

110 His Honour was clearly correct in finding that the caveats were irregular in form. The approved form is set out in Form 25 in Schedule 2 of the Transfer of Land (General) Regulations 2004.[30]

111 The first caveat, which Mr Vasiliou attempted to lodge on behalf of his daughter on 15 June 2001, did not set out the estate or interest claimed in the land, or the extent of the prohibition on dealings. The latter information is required to enable the Registrar to determine what steps to take if a competing interest is lodged for registration. Nor did the first caveat include certain other information, such as an address for service on the caveator.

112 The second and third caveats assert that the mortgagor has an estate in fee simple in the property. Ms Vasiliou was the registered proprietor of the property at the time an attempt was made to lodge the caveat. But her caveat is not based on that interest, but on the interest which is claimed to give her the right to have the sale set aside. We discuss the nature of that interest below. The caveat therefore misdescribed the nature of the interest which was said to justify its lodgement.

113 Even if the caveats had not been irregular in form, Ms Vasiliou did not have a caveatable interest, as the law currently stands in Victoria. There are two reasons why she could not caveat. The first reason is that in Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd[31] this Court held that a mortgagor's equity to have an improper sale of mortgage property set aside is "a mere equity" and not the "estate or interest in land" which a person must have in order to lodge a caveat under s 89 of the Transfer of Land Act 1958.

114 In Swanston Mortgage,[32] a mortgagor lodged or sought to lodge a caveat at the Titles Office, prohibiting registration of any transfer by the mortgagee of the mortgage property, on the basis that the sale was at an undervalue. The issue in the case related to the nature of the interest of a mortgagor, in circumstances where the sale of the mortgaged property is voidable but has not yet been avoided by the Court.

115 Brooking J, who delivered the main judgment,[33] referred to case law which differentiated between the equitable interest of a mortgagor (the equity of redemption) which would be held to exist if a court decided that a mortgagee's sale of Torrens system land should be set aside, and the "mere equity" which existed prior to the granting of a remedy by the court. Because the mortgagor sought to caveat before the sale was set aside, the right was a "mere equity". This was not a caveatable interest because it did not amount to an equitable interest in land.

116 His Honour relied on the decision of the High Court in Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq)[34] in support of the proposition that a mortgagor who had the right to set aside a sale had a mere equity and not an equitable interest. The issue which arose in that case was whether the interest of a defrauded mortgagor, whose Torrens title land had been sold by a mortgagee acting in collusion with the purchaser, took priority over the interest of a later equitable chargee who had not been a party to the fraud and who had acquired the equitable charge from the purchaser.

117 Kitto, Taylor and Menzies JJ held that the later equitable charge took priority over the mortgagor's right to set aside the sale, but they characterised the nature of the mortgagor's interest in different ways. Taylor J held that the mortgagor had an equitable interest in the land, even before a court order had been made setting aside the sale. Menzies J regarded the nature of the mortgagor's right as dependent on the purpose for which the interest was being characterised.[35] For the purpose of determining a priority dispute the mortgagor's right should be characterised as a mere equity.[36] This characterisation was not inconsistent with another line of authority which held that such a right could be characterised as an equitable interest in land for the purposes of transmission by will.[37] Kitto J said that prior to the setting aside of the sale the mortgagor had an equity which would have to be made good by setting aside the sale. After it was set aside a mortgagor of Torrens system land would have an equity of redemption akin to the equity of redemption possessed by a mortgagor of general law land.

118 In Swanston Mortgage,[38] Brooking J said that the judgments of Kitto and Menzies JJ supported the characterisation of the mortgagor's interest as an equity, not an equitable interest in the property. Thus the mortgagor's interest was not caveatable.[39]

119 The Latec case was not concerned with the question of whether a mortgagor who had a right to set aside a mortgagee's sale had a caveatable interest in the land.[40] It is also arguable that Menzies J's judgment did not support the proposition that a mortgagor with the right to set aside a sale of the mortgaged land has a mere equity, rather than an estate or interest in land.

120 The decision in Swanston Mortgage has been followed or implicitly approved in decisions of this Court,[41] but a different approach has been taken in New South Wales.[42] In Patmore v Upton,[43] Underwood J undertook a detailed analysis of the competing authorities and declined to follow the Swanston Mortgage decision. The decision in Swanston Mortgage has been criticised in journal articles[44] and the learned authors of Meagher Gummow and Lehane, Equity Doctrines and Remedies, suggest that it is wrong. [45]

121 It may be that the correctness of the Swanston Mortgage decision requires reconsideration. But, unless and until that decision is overruled after a full hearing before a bench of five appellate judges, we are bound by it.

122 The second obstacle to the assertion that Ms Vasiliou could have caveated to protect her interest is that a registered proprietor may be unable to lodge a caveat to prevent dealings with his or her own land.[46] Again some academic commentators[47] have suggested that this view is incorrect. For the purposes of this case it is unnecessary to consider the correctness of the proposition, since even if Ms Vasiliou had a caveatable interest in the property on 15 June 2001, and even if the caveats which her father attempted to lodge had been in acceptable form, the Registrar would be protected from liability by s 117 of the Transfer of Land Act 1958.

Subsequent submission by the appellant

123 Following the hearing, Mr Vasiliou lodged with the Court on behalf of the appellant a document entitled "Communication Submission". It began:

[70]

[1] The letter was composed by Mr Vasiliou.

[2] See Local Government Act 1989 s 177.

[3] See para [74] below.

[4] [1976] VicRp 26; [1976] VR 309.

[5] Ibid 312.

[6] Ibid 313.

[7] Vasiliou v Westpac Banking Corporation [2004] VSC 208, [26].

[8] Ibid [33] (emphasis added).

[9] Ibid.

[10] We have omitted the municipal valuation.

[11] Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, [99] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ); CSR Ltd v Maddelena [2006] HCA 1; (2006) 224 ALR 1, 8 (Kirby J).

[12] Vasiliou v Westpac Banking Corporation [2004] VSC 208, [27].

[13] Ibid.

[14] Ibid [28].

[15] Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VicRp 26; [1976] VR 309.

[16] [1912] HCA 9; (1912) 13 CLR 676.

[17] [1989] ANZ ConvR 169.

[18] (Unreported, Supreme Court of Victoria, Hansen J, 30 April 1997).

[19] Ibid [37].

[20] [1983] VicRp 86; [1983] 2 VR 257.

[21] Ibid 261-2.

[22] [2001] VSC 37.

[23] Vasiliou v Westpac Banking Corporation [2004] VSC 208, [29].

[24] See paras [28] - [37], [46] above.

[25] The payment was made on 5 January for a rental period expiring on 7 January.

[26] Vasiliou v Westpac Banking Corporation [2004] VSC 208, [10].

[27] [2002] VSCA 69; (2002) 4 VR 344, 347.

[28] Costi v Keats [1972] 2 NSWLR 957.

[29] Vasiliou v Westpac Banking Corporation [2004] VSC 208, [43]-[44].

[30] For a caveat to be lodged under section 61 of the Transfer of Land Act 1958.

[31] [1994] VicRp 47; [1994] 1 VR 672.

[32] Ibid.

[33] Southwell and Teague JJ agreed.

[34] [1965] HCA 17; (1965) 113 CLR 265.

[35] Ibid 290.

[36] See Phillips v Phillips [1861] EngR 1044; (1861) 4 De GF & J, 208, 215-218 cited in Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17; (1965) 113 CLR 265, 289.

[37] Stump v Gaby [1852] EngR 1119; (1852) 2 De GM & G 623, 630 cited in Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17; (1965) 113 CLR 265, 289.

[38] [1994] VicRp 47; [1994] 1 VR 672.

[39] In the view of Brooking J, the decisions in Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870 and Re McKeans Caveat [1988] 1 Qd R 524 were based on an incorrect analysis of the Latec case.

[40] See the comments to similar effect in Patmore v Upton [2004] TASSC 77, [45].

[41] It was applied by Coldrey J in Commonwealth Bank of Australia v Kyriackou & Anor (2003) V Conv R 54-674, [5]; referred to by Chernov J in Renwarl Pty Ltd v Birky & Anor [1998] ANZ Conv R 515 (the case involved the caveatability of a restrictive covenant); discussed by the Court of Appeal in Byrne v St George Bank Ltd [1996] ANZ Conv R 405, 406 (Hayne JA); refer also to Walter v Registrar of Titles & Handberg [2003] VSCA 122, [21]. See also Westpoint Corp Pty Ltd v Registrar of Titles [2004] WASC 189; Western Australian Real Estate Custodian Pty Ltd (Receiver and Manager Appointed) v Chesson [2005] WASC 33; and Shaw Excavations Pty Ltd v Portfolio Investments Pty Ltd [2000] TASSC 185; (2000) 9 Tas R 444.

[42] Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870, which Brooking J declined to follow in Swanston Mortgage. The decision in Swanston Mortgage was recently distinguished by Warren CJ in Schmidt v 28 Myola Street Pty Ltd [2006] VSC 343 (a case involving the caveatability of an interest arising under a unit trust) and by Commissioner Sipis SC in Western Australian Real Estate Custodian Pty Ltd v Chesson [2005] WASC 33 (a case involving the exercise of a mortgagees power of sale).

[43] [2004] TASSC 77; (2004) 13 Tas R 95.

[44] S Rodrick, The Response of Torrens Mortgagors to Improper Mortgagee Sales (1996) 22 _Monash U L Rev, 2_89, 336; Wright, D "Does the Registered Proprietor have a Caveatable Interest?" (1995) 69 Australian Law Journal 935.

[45] Meagher R, Heydon D and Leeming M, "Meagher Gummow & Lehane's Equity Doctrines & Remedies" LexisNexis Butterworths (4th edn, 2002) 151.

[46] In J & H Just (Holdings) Pty Ltd v The Bank of New South Wales [1971] HCA 57; (1971) 125 CLR 546, 533 Barwick CJ suggested it might be appropriate for a mortgagor who had handed a duplicate certificate of title and an executed transfer to a mortgagee to caveat to protect that interest. Note that there are now legislative provisions in New South Wales and Queensland permitting a registered proprietor to caveat: see s 74F(2) of the Property Act 1900 (NSW), and section 122(1)(c) of the Land Title Act 1994 (Qld).

[47] Wright, D "Does the Registered Proprietor have a Caveatable Interest?" (1995) 69 Australian Law Journal 935 which discusses the authorities on this issue; A J Bradbrook, MacCallum, S V and A P Moore, Australian Real Property Law, 3rd Edition, Lawbook Co (2002) 163-165. For other discussion of this issue see S Colbran and S Jackson, Caveats (1996) 220-223.

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Cases Cited (7)