Westpac Banking Corporation v Konneh

Supreme Court of NSW|2013-07-26|Before: Schmidt J, Johnson J

Judgment 1The proceedings were commenced by statement of claim filed in February 2013. The plaintiff, Westpac, now seeks limited relief for alleged mortgage default by way of orders for possession of land at Bangor owned by the defendant, Mr Konneh. 2The statement of claim pleaded that Mr Konneh was bankrupt. Mr Konneh filed a defence in March 2013, denying that Westpac was entitled to possession of the property, but admitting the bankruptcy. In the circumstances it would seem that Mr Konneh then had no standing in the proceedings, his interest in the property having vested in his trustee (see National Australia Bank Limited v Strik [2009] NSWSC 184 at [9] and Baulkham Hills Shire Council v Stankovic [2009] NSWCA 281 at [9] - [11]). Westpac was, however, entitled to pursue its application, s 58 of the Bankruptcy Act 1966 (Cth) providing as it does that its rights to realise or otherwise deal with its security, were not affected by the bankruptcy. 3In his defence Mr Konneh claimed that Westpac had made a payment of some $14,629 to the strata manager of the property, which it had taken from his overdraft account and which it had no right to make. He also claimed that it had later transferred some $4,130 from his personal account to the overdraft account, which it also had no right to do. On his approach, he did not owe Westpac what it claimed. 4A Mr Jamal Charara filed a notice of motion on 4 April, by which he sought to be joined as second defendant in the proceedings under r 6.27 of the Uniform Civil Procedure Rules 2005. The motion was supported by an affidavit in which Mr Charara attested that he had loaned Mr Konneh money in July 2007, which was secured by a deed over his equity in the property. 5The matter came before Johnson J on 4 June 2013 for directions, when Westpac indicated that it proposed to seek an order for summary judgment, relying on an affidavit sworn by Ms Schar, its recoveries officer, on 24 May. Mr Konneh then sought to have Mr Charara appear for him. 6Mr Charara informed his Honour that he is legally qualified in a foreign country, but not a legal practitioner in this State. His Honour refused Mr Charara leave to appear for Mr Konneh, for reasons which included that he and Mr Konneh appeared to have different interests. 7Mr Konneh then represented himself. He said that his defence had been drafted by Mr Charara; that he did not reside in the property; and that it was leased to his former wife. 8His Honour gave directions. In the result, by motion filed on 12 June Westpac sought an order for possession of the land and by motion filed on 21 June 2013, Mr Konneh sought orders dismissing the proceedings under r 14.28, r 13.4 or r 12.7 of the Uniform Civil Procedure Rules. He also sought an order that Westpac "reverse all transactions it carried out" on an identified bank account, in respect of the loan in issue in the proceedings and that it repay him $4,130.63, debited on 2 August 2012, from another account. 9That motion was supported by an affidavit sworn by Mr Konneh on 12 June, in which he deposed that he had declared himself bankrupt on 3 November 2009. He was due to be discharged on 3 November 2012. His trustee objected to the discharge, because he had not received a sum of $6,269.30, that being the balance of his compulsory contribution liability. That sum had been paid in total by 6 June 2013. 10By his affidavit Mr Konneh also indicated his consent to Mr Charara being joined as a party to the proceedings, acknowledging the interest in the property which he claimed. He denied that he owed Westpac what it claimed under the mortgage. 11At the hearing on 26 July it was common ground that Mr Konneh was no longer a bankrupt. That day Mr Charara again sought and I refused an application that he permitted to appear for Mr Konneh, I too considered that they had different interests. Notwithstanding Mr Charara's claim that Mr Konneh would be unable to represent himself, that he had conducted cases before this Court on behalf of both defendants and plaintiffs and that he had never before faced this type of resistance to his appearance, I was satisfied that the leave which he sought could not be granted in the circumstances of this case, where Mr Charara sought himself to become a party to the proceedings. 12That conclusion still permitted Mr Charara to provide Mr Konneh with certain assistance, but Mr Konneh then appeared for himself.

Mr Charara gives an undertaking to the Court under s 304(2)(a) of the Duties Act 1997 13Westpac objected to the deed which Mr Charara and Mr Konneh entered on 1 July 2007 being tendered, it having earlier put him on notice of submissions it proposed to advance under the Duties Act 1997. 14The deed recorded that Mr Charara, (referred to as the creditor), had loaned Mr Konneh, (referred to as the debtor), $30,000 in order that he could make certain payments to Westpac, 'who gave loan money to the debtor to buy' the property. The deed provided: 1.1 The debtor willingly agreed and accepted that his equity in the property up to $30,000.00 plus any unpaid interest unconditionally belongs to the creditor until the debt is paid in full. 1.2 The debtor willingly agreed and accepted that he must pay the creditor interest inn the debt in the amount of $500.00 at the end of each calendar month commencing 1 July 2007 and ending 31 July 2014 and the debtor must pay the creditor the debt on 31 July 2014. 1.3 The debtor willingly agreed and accepted that in the event of mortgagee's position and the sale of the property, the debtor's equity in any balance up to $30,000.00 plus any unpaid interest must be paid to the creditor first by the mortgagee before the mortgagee pay any balance to the debtor. 1.4 The debtor willingly agreed and accepted that the debt and the creditor's right against the debtor is not affected and is totally immunized from the bankruptcy, insolvency, impairment and the death of the debtor. 1.5 The production of this 2-page written document is conclusive evidence that the debtor and the creditor have agreed and accepted of what they have signed here to. 1.6 This deed document is valid legal document. 1.7 This deed takes effect immediately when it is signed. 1.8 The debtor willingly agreed and accepted that he must unconditionally indemnified the creditor any loss and cost [sic]. 1.9 Any provision of, or the application of any provision of, this deed which is void, illegal or unenforceable in any jurisdiction does not affect the validity, legality or enforceability of that provision in any other jurisdiction or of the remaining provision in that jurisdiction [sic]." 15In a caveat lodged over the property after the deed had been entered, Mr Charara claimed an interest in the land pursuant to the deed. The deed was not stamped. 16The 1997 Act creates various liabilities for payment of duty to the State, including by s 8, duty on transfers of dutiable property and s 204, mortgage duty, which is calculated by the amount of the loan advanced (see s 206). Mortgages are defined in s 205 to include instruments by way of mortgage or charge over property in the State, or a security by way of a transfer or conveyance of any such property, or which evidences the terms of such a mortgage. 17Section 207 imposes the obligation to pay the duty on the mortgagor. The obligation arises on execution of the mortgage (s 208) and it is payable within three months of execution of the mortgage (s 209). 18Section 211 provides that a mortgage is 'unenforceable to the extent of any amount secured by the mortgage on which duty has not been paid.' Section 304 provides: "304 Receipt of instruments in evidence (1) An instrument that effects a dutiable transaction or is chargeable with duty under this Act is not available for use in law or equity for any purpose and may not be presented in evidence in a court or tribunal exercising civil jurisdiction unless: (a) it is duly stamped, or (b) it is stamped by the Chief Commissioner or in a manner approved by the Chief Commissioner. (2) A court or tribunal may admit in evidence an instrument that effects a dutiable transaction, or is chargeable with duty in accordance with the provisions of this Act, and that does not comply with subsection (1): (a) if the instrument is after its admission transmitted to the Chief Commissioner in accordance with arrangements approved by the court or tribunal, or (b) if (where the person who produces the instrument is not the person liable to pay the duty) the name and address of the person so liable is forwarded, together with the instrument, to the Chief Commissioner in accordance with arrangements approved by the court or tribunal. (3) A court or tribunal may admit in evidence an unexecuted copy of an instrument that effects a dutiable transaction, or is chargeable with duty in accordance with the provisions of this Act, if the court or tribunal is satisfied that: (a) the instrument of which it is a copy is duly stamped, or is stamped in a manner approved by the Chief Commissioner, or (b) the copy is duly stamped under section 299." 19Mr Charara submitted that the deed was 'not a commercial deed', but 'merely another person asking another person for money'; that the 1997 Act did not apply to the deed; and that the only duty payable was on the caveat he had lodged over the property in reliance on the deed. 20Mr Charara argued that the provision made in clause 1.1 of the Deed was ambiguous and did not have the effect of transferring any interest in the property to him, despite the provisions there made. He also submitted that s 211 had no application, because he was not seeking to enforce the deed. Mr Charara claimed that he had gone to the Office of State Revenue and had been advised that only the caveat had to be stamped. He submitted that if it was considered that the deed was dutiable, the proceedings should be adjourned, so that he could make an application to be exempted from payment of such duty. 21Given the terms of the deed and the provisions of s 205, I concluded that Westpac's submission that it was dutiable as a mortgage had to be accepted. 22Westpac then accepted that the deed could be received, if Mr Charara gave an undertaking to the Court that after its admission, the deed would be transmitted to the Chief Commissioner for stamping. Upon that undertaking being given, I admitted the deed.

Mr Charara's motion must be dismissed 23The only order which Mr Charara sought was that he be joined as a party to the proceedings. He explained that he sought that joinder, because he did not want Westpac to sell the property and so that he could protect his interest in the property, if it was sold. 24Westpac opposed Mr Charara's motion, but Mr Konneh supported it. I am satisfied that Mr Charara's joinder application must fail. 25Ms Schar deposed that until service of Mr Charara's affidavit, Westpac had no knowledge of the loan from him to Mr Konneh and that it was not aware that he claimed to have any interest in the property. 26Mr Charara is not in possession of the property. He is not a party to the contractual arrangements between Mr Konneh and Westpac. 27Mr Charara claims a part interest in the equity in the property, acquired under the deed which he entered with Mr Konneh in 2007, prior to his bankruptcy. Contrary to Mr Charara's submission, that deed acknowledges the existence of the Bank's mortgage over the property. In any event, he does not dispute that the mortgage was first in time and has been registered. The deed does not purport to confer any priority over Mr Charara against the Bank, nor could it, in the circumstances. 28Nor does the deed provide any basis upon which it could be concluded that Mr Charara is entitled to resist the Bank's exercise of its rights under the mortgage. He explained that he is concerned that if Westpac exercises its right of sale, there will be no surplus. No foundation for that concern was established. Westpac will have to exercise its powers of sale in accordance with its obligations as mortgagee (see Commonwealth Bank of Australia v Hadfield [2004] NSWCA 350 at [10] - [14]). 29Mr Charara has taken steps to protect his interest, by the caveat he has lodged. While Mr Charara's interest could not prevail over the rights which Mr Konneh granted Westpac under its registered mortgage, it accepted that now being on notice of Mr Charara's interest, it will be obliged to take that interest into account, when dealing with the proceeds of any sale (see s 58(3) of the Real Property Act 1900). 30In the result it must be concluded that Mr Charara has established no basis upon which he could resist the order for possession which Westpac seeks and that the Court's discretion to order the joinder sought cannot be exercised. Mr Charara has not established that he ought to have been joined as a party to these proceedings, or that he is a person whose joinder as a party is necessary to the determination of all matters in dispute in the proceedings (see r 6.24(1)). In the circumstances his joinder would serve no purpose and could only unnecessarily increase the costs of the proceedings. 31To grant the joinder would also be contrary to the requirements of s 56 of the Civil Procedure Act 2005, which obliges the Court to exercise its discretions to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 32In the result Mr Charara's motion must be dismissed. The usual order as to costs is that they follow the event, which in this case would be an order that he must pay the Bank's costs of the motion, as agreed or assessed. 33Unless the parties approach within 14 days to seek some other order as to costs, that will be the Court's order.

Orders dismissing the proceedings cannot be made 34For orders of summary disposal to be made in favour of Mr Konneh, he would need to meet the well settled principles discussed in General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69; 112 CLR 125 at 129. That Mr Konneh had such a case was not established. 35Mr Konneh complained that Westpac had not prosecuted its case in accordance with its obligations under s 56 of the Civil Procedure Act and that its evidentiary case departed from the claims it advanced in its statement of claim, in a number of respects. His motion was supported by a number of affidavits and documents, including a receipt, which indicated that he had made a payment of $4,500 to Westpac in July 2013. 36Mr Konneh deposed that he had declared himself bankrupt in November 2009, when his trustee in bankruptcy was appointed and that he had been discharged from his bankruptcy on 12 June 2013. 37Mr Konneh also claimed, however, that he had some $296,000 equity in the property, which had been valued at between $640,000 and $665,000. This evidence was difficult to understand. Mr Konneh's bankruptcy in 2009 was not in dispute. Thereupon his interest in the property was vested in his trustee. If the value of the property exceeded the loan which it secured, as he now claims, the trustee should have realised the property and used the excess, after paying out the Bank, to satisfy his other debts. In that event what he owed the Bank, Mr Charara and the owners corporation, as well as other creditors who had made claims against him, should have been dealt with in the bankruptcy. 38That would have accorded with the advice which Mr Konneh was given by the trustee in November 2009, that the trustee could realise his real property for the benefit of his bankrupt estate. How he comes to have been discharged from his bankruptcy, still having the equity which he now claims to have in this property, is not apparent. 39What is unarguable, however, is that Mr Konneh's bankruptcy involved a breach of the mortgage, which entitled Westpac to call in its loan. Mr Konneh has not taken steps to refinance his borrowings. While he was a bankrupt, no doubt he would have had difficulty doing so. Mr Konneh is, however, now discharged from his bankruptcy and still has not taken steps to refinance, notwithstanding Westpac's demand for repayment of the loan, and the considerable equity which he claims to have in the property. 40His evidence in submissions in these proceedings also revealed other breaches of the mortgage, for example the lease of the property, without Westpac's prior consent being sought or obtained. While that breach is not pleaded, it is one on which Westpac would plainly be entitled to rely. In the circumstances, an application to amend its statement of claim to rely on that breach would be granted, if sought. 41Mr Konneh did not dispute that in May 2003 he had first borrowed some $404,000 from Westpac, when he purchased the property. He also agreed that in July 2007, he entered into a second loan arrangement, a Rocket Investment Home Loan, under which the first loan was refinanced and that in October 2007 he also entered into an overdraft. All were secured by the mortgage. He denied, however, that his loans were in arrears. 42This denial rested on his claim that he did not owe the strata levies which Ms Shcar explained that Westpac had paid in November 2011. Mr Konneh's case was that they were levies which related to a period before his bankruptcy and that they 'went under the trustees hand'. In the result, he submitted that the strata manager had fraudulently obtained payment of the levies from Bank, as well as costs of the proceedings incurred in the Local Court, which Mr Konneh had not been ordered to pay. 43That submission rested on a notice of levies due in October 2011, issued to Mr Konneh on 25 August. That notice advised that what was due on 1 October 2011, was: Total of this levy notice 838.75 Levies in arrears 8,654.43 Interest on levies in arrears* 1,135.61 Outstanding owner invoices 3,978.96 Subtotal of amount due 14,607.75 Prepaid 0.00 Total amount due $14,607.75

44Mr Konneh's case was that proceedings had unsuccessfully been pursued against him in the Local Court, for recovery of outstanding levies. He claimed that the payment made by Westpac in November 2011 to the strata manager, charged against his overdraft facility without his knowledge or consent, was made in circumstances where he had no legal obligation to make that payment, which included costs incurred in the Local Court proceedings. In the result the loan was not in default, as Westpac claimed. 45To make good this submission Mr Konneh relied on an order made by the Local Court in May 2010, by which proceedings brought by the owners corporation for arrears in strata levies were discontinued, because, he said, it then accepted that its claim had to be advanced in the bankruptcy. He explained that this order was finally made after an ongoing dispute between himself and the owners corporation, over the payment of those levies, including by way of garnishee of his wages. Further proceedings brought by the owners corporation in August 2011 were discontinued in March 2012. 46His case was that the October 2011 notice included other miscellaneous invoices earlier issued to him, in 2009, 2010 and 2011, for levy arrears under the Local Court judgment, garnishee orders and for steps taken in the Local Court proceedings. Westpac had wrongly paid levies which he did not owe and court costs, which he had not been ordered to pay. 47The evidence establishes that the levies on the property which Westpac paid in November 2011 were in arrears. The Local Court documents on which Mr Konneh relied establish that the owners corporation accepted that proceedings brought in the Local Court to recover the outstanding levies could not be pursued against Mr Konneh, given his bankruptcy. The evidence establishes that Mr Konneh was in breach of his obligations under the mortgage to pay 'all amounts due under the mortgage', which included 'fees and other amounts payable to a body corporate' (clause B2 of the mortgage). Mr Konneh's bankruptcy did not relieve him of that obligation. 48Under the Strata Schemes Management Act 1996, the owners corporation was obliged to maintain an administrative fund and a sinking fund and under s 78 was entitled to levy contributions on owners such as Mr Konneh. Mortgagees such as Westpac are thereby made jointly and severally liable for such contributions (s 78(4)). The mortgage imposed an obligation upon him to pay such levies. The fact of his bankruptcy did not cure Mr Konneh's breach of that obligation. 49Mr Konneh claimed that he had entered an agreement that Westpac would hold off interest repayments on the third loan until it had investigated the payment it had made, but he did not reveal who it was that he made such an agreement with, or when it was made. This evidence could not establish the existence of any such agreement. 50Mr Konneh also claimed that the amount of $4,130.63 withdrawn from his bank account in August 2012 and applied to reduce the overdraft facility had put the loan into credit. In the result the loan was not in default. 51Westpac had advised him by letter of 10 August 2012, that it had exercised its rights under the mortgage to transfer money kept in an account with it, to reduce the debt owed under the mortgage, which then stood at $17,373.29. Westpac has established that the loan was then in arrears, and that Mr Konneh was then in default of his obligations under the mortgage. Not only was he a bankrupt, Westpac had demanded repayment, which he had not made. It then exercised rights which it had under the mortgage, to use the funds in his account, to reduce what was owing under the mortgage. 52Clause 21 of the terms and conditions provides: "21. SET OFF - NO DEDUCTION If you have money in any account with us, we can, but need not, use it to pay amounts owing under this loan contract and the security. If we do this, the balance of that account will reduce by the amount used for this purpose. To the maximum extent allowed by law, you give up any right to set off any amounts we owe you (for example, credit balances in your accounts) against amounts you owe under this loan contract or the security for it. You will need to pay any money you are required to pay under this loan contract without deducting amounts you claim are owing to you by us or any other person (for example, an amount in our deposit account)." 53In all of those circumstances, Mr Konneh has not established any basis upon which an order dismissing the proceedings could be made. To the contrary, he is in clear default of his obligations under the mortgage, including by defaults which he only revealed during the course of the proceedings, the property having been leased, without Westpac's knowledge or consent. In the circumstances Westpac's right to require repayment of the mortgage cannot be disputed and the orders he sought dismissing the proceedings, cannot justly be made.

Westpac is entitled to possession 54Westpac sought an order for possession of the property in circumstances where it claimed that Mr Konneh had failed to make repayments due under the loan, the last payment having been made on 15 February 2012 and where Mr Konneh's bankruptcy unarguably involved a default under the loan agreement and the mortgage, on which Westpac was entitled to rely. Contrary to Mr Konneh's submissions, Westpac did plead his bankruptcy. Given the admissions made in his defence, its reliance on that bankruptcy can have come as no surprise to him. 55As to what is owing under the mortgage, by affidavit of 9 July Ms Schar deposed that Westpac had advanced funds of some $404,000 in July 2003 to Mr Konneh, under a home loan agreement. On 30 July 2007 Mr Konneh entered a second loan agreement for some $390,000. Both loans were secured by a registered mortgage over the property. The funds advanced under the second loan agreement were used to pay out the first. This second loan was in arrears some $7,833.47 as at 28 June 2013. The payment made in July 2013 did not meet the entirety of what was outstanding. 56A third loan agreement was entered in July 2007, under which Mr Konneh drew down $70,000, to refinance the existing loan account. This loan was also secured by the property. As at 15 January 2013 it was in arrears by the amount of $86,404. 57Ms Schar deposed that when Mr Konneh was made bankrupt in November 2009, there was a default under all three loan agreements. There were further defaults when instalments of interest due under the third agreement were not paid. The last payment made prior to July 2013 was in the sum of $480.48 in February 2012. 58A default notice was sent to Mr Konneh at the property and at his last known address, in April 2012. A notice under s 57(2)(b) was served on Mr Konneh by prepaid post on 20 April, giving him notice that the loan was some $15,510.15 in default and that the account balance was $85,568.63. 59In those circumstances Ms Schar deposed to her belief that Mr Konneh had no defence the Westpac's claim for possession. 60Mr Konneh's defence was that Westpac's claim did not rest on the pleadings and that the default relied on had not occurred. In written submissions in reply, he also raised a matter not pleaded in his defence as to the invalidity of the s 57(2)(b) notice served upon him. The defect was said to be that the notice wrongly claimed an amount which Mr Konneh did not owe the Bank 61That submission can be shortly dealt with. An overstatement of an amount owed cannot, alone, invalidate such a notice (see Notaras v Sly Weigall; Notaras v Newman Psaltis [2005] NSWCA 275 at [73]. As discussed by McDougall J in Iaconis v Pynt [2008] NSWSC 781 at [13] : " ... in AGC (Advances) Limited v Tweed Canal Estates Pty Limited (1988) 4 BPR 9404, Needham J stated, specifically in relation to a notice under s 57(2)(b) that was alleged to be defective in form, that the question was to be analysed by reference to the decision of the High Court in Bunbury Foods. His Honour said at 9406: It seems to me that this question is concluded by what the High Court said in Bunbury Foods Pty Ltd v National Bank of Australasia Ltd at 503-4. There, their Honours say it is of some materiality to note that it is not essential to the validity of a notice calling up the 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." 62In the result Westpac has established that it is entitled to the order for possession which it seeks.

The dispute as to what was owed under the mortgage 63Westpac did not seek an order for any money judgment in its favour. By his motion Mr Konneh claims that not only did Westpac pay the outstanding levies, but he paid a sum which included costs in the Local Court proceedings, which he had not been ordered to pay. 64Ms Schar deposed that on 15 August 2011, Westpac received an email sent on behalf of the owners corporation, advising that certain levies had not been paid by Mr Konneh and requesting payment. The email provided: "We are requesting that Westpac pay the levies owing for this debtor. He declared himself bankrupt and refuses to pay the levies owing prior to the date of his bankruptcy. They are substantial as you can see from the owners ledger. We now continue to sue him for levies which have come due since the date of his bankruptcy. He is working and has a highly paid job. He is probably paying his mortgage, so his bankruptcy may not have come to your notice. We are asking that you pay the levies and apply the amount to his loan. In this way you will know of your potential liability. I believe that the rates are probably unpaid. Please advise as soon as possible as to whether payment can be made as the Owners Corporation is concerned about the amount outstanding and is in financial difficulty because of the amount which as not been paid by the debtor." 65That request was complied with and on 8 November 2009, $14,629.08 was paid for the outstanding levies. Ms Schar deposed that this step was taken pursuant to Westpac's rights under the mortgage, which included: "C1. GENERALLY The Lender and any representative of the Lender may do any one or more of the following at any time. ... (b) Do what you promise to do but fail to do (for example, this might include taking out insurance or payment insurance premiums, rates and taxes and other amounts or execute any transfer of the property or any other document)." 66Mr Konneh's obligations under the mortgage, included: "B3. YOUR OTHER OBLIGATIONS You promise to do all of the following at all times. Secured Arrangements Comply with each Secured Arrangement. Ensure that everything is true that you tell the Lender in this mortgagor a Secured Arrangement, or in connection with any of them. Maintenance Look after the property - protect and maintain it and its value. Building Make sure all building work on the property is completed properly. Business Make sure any business or other activity carried on by you anywhere, or by anyone on or with the property, is carried out properly and efficiently. Outgoings Pay all outgoings relating to the property. For example: - council rates; - water rates; - rent (if the property is leasehold); - land tax; and - fees and other amounts payable to a body corporate or association. Pay all amounts due under other mortgages or charges over the property. Law Comply with the law and respect to the property. Make sure everything built or done on the property complies with the law. This includes, any licensing requirement, the terms of any licence, consent or approval, the local council's requirements and all environmental laws, but is not limited to them. Make sure there is nothing on or relating to the property which might lead to a claim against it or the Lender. (For example, you will ensure there is no contamination in any land which could give rise to a claim for the damage it causes or requiring its clean-up.) No Dealings Not do any of the following: (a) let any of the property for more than one year (you will not have the power to let the property except for leases of a year or less than a year); (b) sell or otherwise dispose of the property; (c) give any one a right over or to use any of the property; or (d) give or allow another mortgage or charge over the property (unless the property is in Queensland), unless the Lender first gives its consent." 67Mr Konneh relied on clause C2 of the mortgage which included that if he: "... (b) fail to do what you promise the Lender, and the failure continues for at least seven days, the Lender may notify you of the failure and serve a notice on you. If the failure continues for at least 31 days after service of the notice then the Lender can do any one or more of the following, but it need not do so.

Require you to pay to the Lender all money secured by this mortgage. Each of you will then pay immediately all principal and all other amounts which you promise to pay under Clause B1, even if they are not yet otherwise payable.
Take possession of the property. The Lender can remove personal possessions and other things on the property and store them at your risk. If you do not reclaim them within a reasonable time, it may dispose of them and pay any proceeds into your account, or the account of their owner.
Sell the property in one or more lots or with other property.
Do anything you could do in relation to all or part of the property. For example: - letting it; - improving it; - sub-dividing it; - demolishing it;

voting at meetings; - carrying on any business or other activity; - collecting rents and other amounts; - surrendering it; - dealing with leases and other rights and agreements (for example, performing them, exercising rights under them, enforcing them, giving consents or ending or changing them); - signing or executing any document or agreement; - making, defending, enforcing, paying and settling insurance or other claims; and - dedicating it to a government or authority. Appoint one or more receivers, who alone or together may do anything the Lender can do as set out above; remove or replace such a receiver; and fix the remuneration of any receiver. That receiver will be your agent where the law permits. When permitted by law the Lender can do any of the above without giving you a notice or waiting for the periods specified above where it believes on reasonable grounds that it was induced by fraud to enter this mortgage or a Secured Arrangement, or that urgent action is necessary to protect the property, or it has made reasonable attempts to locate you without success, or the court so orders. Despite anything in any Secured Arrangement, if what you tell the Lender is wrong or you fail to do what you promise the Lender, the Lender need not make a loan or provide any other form of finance secured by this mortgage." 68Mr Konneh's submission was that no notification was given to him, as clause C2(b) required, prior to the payment of the claimed levies and that the defective s 57(2)(b) notices later served on him, did not cure that deficiency. 69Mr Konneh's undisputed bankruptcy involved a breach of the mortgage on which Westpac was entitled to rely. Clause C2 required that Westpac give him certain notice, before it required him to repay the loan. There was no obligation to give him the claimed notice, before it paid the levies. 70What the evidence has not established is that the entirety of the payment which Westpac made related to payments which Mr Konneh had promised, but failed to make, under the mortgage. Its payment of the outstanding levies, cannot be challenged. If some part of the $14,629.08 related to other amounts which Mr Konneh owed, which he had not promised under the mortgage to pay, then Westpac has wrongly paid a sum which it had no right to pay, notwithstanding the provision made in s 58 of the Bankruptcy Act. 71That it did so, has not been established on the evidence which Mr Konneh led. Nor however, does the evidence clearly establish that all that it paid, related to what he had promised to pay under the mortgage. 72That is because the evidence led by Westpac does not identify what the sum of $14,629.08 related to. The October 2011 invoice sent to Mr Konneh was for an amount of $14,607.75 and apart from levies and interest, included an amount of $3,978.96 for 'outstanding owner invoices'. Whether that was included in the sum which Westpac paid, what it was for and whether it was something which Mr Konneh was obliged by the mortgage to pay, is not clear. If it included costs incurred in the Local Court, which Mr Konneh had not been ordered to pay, for example, it is difficult to see that Westpac was entitled to pay that sum as it did, exercising its rights under the mortgage. 73The evidence does not allow firm conclusions to be reached about this possibility. What it does establish is that Mr Konneh did not establish a basis for the orders which he otherwise sought in his motion.

Orders 74For these reasons, I order that: (1)Mr Charara's motion is dismissed. (2)Mr Konneh's motion is dismissed. (3)Mr Konneh is to give Westpac possession of the land contained in Certificate of Title Folio Identifier X/XXXXXXX and known as X/XX XXXXXX XXXXX, Bangor NSW 2234. (4)Westpac is granted leave to issue a writ of possession forthwith in relation to that land. (5)Unless the parties approach within 14 days, the order as to costs will be that: (a)Mr Charara is to bear Westpac's costs of his motion, as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 August 2013

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