Wren Close Nominees Pty Ltd v McCulloch [2002] VSC 138

11. The plaintiff further contends that on 13 December 1995 the loan was increased by $3,300 and that on 4 July 1996 it was increased by $3,000 making the total loan to the defendant $106,300.

14. Since 26 July 2000 the defendant has made no payment of interest to the plaintiff in respect of the loan save for a sum of $6,000 on 28 May 2001.

17. On 22 September 2000 the plaintiff served on the defendant a notice pursuant to s.76 of the Transfer of Land Act 1958 demanding payment of the sum of $148,133.72 which it contended was the amount outstanding as at that date.

20. On 21 November 2000 the plaintiff made a demand of the defendant that he give it possession of the property. The defendant did not comply with the demand and on 29 November 2000 the plaintiff filed this proceeding in the Court seeking possession of the properties pursuant to the provisions of s.78 of the Transfer of Land Act. The sub-sections of that section relevant for present purposes read:

"(1) The mortgagee or annuitant upon default in payment of the principal sum or interest or annuity or any part thereof respectively at the due time - (a) may enter into possession of the mortgaged or charged land by receiving the rents and profits thereof; or (b) may bring an action of ejectment to recover the land, either before or after entering into the receipt of the rents and profits and either before or after any sale of the land as aforesaid."

24. In due course the defendant filed an appearance and defence to the proceeding.

27. By his defence the defendant admits the loan of $95,000 but specifically denies that the loan was increased to $100,000.

30. No reference is made in the statement of claim or the defence to the two additional sums of $3,200 and $3,000 now claimed by the plaintiff.

33. The defendant further maintains in his defence that he is not in arrears so far as the loan is concerned; that from time to time since the original loan was made the plaintiff has extended the time for its repayment, and that the loan is still not due for repayment. He does not specify any date on which the loan is to be repaid.

36. On 15 December 2001 the plaintiff filed a summons in the proceeding seeking an order for possession of the properties.

39. The summons came before me in the Practice Court on 20 February 2002. The defendant did not appear at the hearing and that day I made an order in the plaintiff's favour for possession of the properties. No application was made to me by the plaintiff for judgment in respect of the sum then said to be owing.

42. On 19 March 2002 the defendant filed a summons in the proceeding seeking to set aside the judgment.

45. The defendant's explanation for his failure to attend on 20 February is that he was then and is now incarcerated in Port Phillip Prison awaiting trial on drug related charges and that due to an administrative error no gaol order was signed to have him brought before the Court on 20 February.

48. In my opinion the defendant has afforded a sufficient explanation to the Court for his failure to appear on 20 February and if he can satisfy me that he has an arguable defence to the plaintiff's claim, then the judgment will be set aside.

51. The question for me to determine therefore is whether the defendant has an arguable defence to the plaintiff's claim.

54. In his affidavit filed in support of the present application the defendant now concedes that in August 1993 the loan was increased from $95,000 to $100,000. In the light of the executed Deed of Variation of Mortgage dated 10 August 1993 it would have been difficult for him to maintain his initial denial (see Ex. KDW3 to the affidavit of Kenneth David Wines of 11 December 2001). He also conceded the two further increases to $106,300.

57. The thrust of the defendant's defence to the plaintiff's claim is that by various verbal agreements between him and a director of the plaintiff it was agreed that the rate of interest payable on the loans should be reduced from the initial 12% or 15% to approximately 1.5% or 2% above the bank home rates current from time to time and that the loan would not be called up without three months' notice being given to the defendant.

60. It follows therefore (so it is said) that the Notice to Pay served on the defendant on 22 September 2000 is defective in that interest at the original default rate of 15% has been claimed; further that it is also defective because it demands payment within one month not the three months said to have been agreed upon by the parties.

63. Needless to say that the director of the plaintiff in question has sworn an affidavit denying the defendant's allegations.

66. During the course of the discussion before me counsel for the defendant placed great reliance on the content of a Schedule of Payments prepared by the plaintiff in relation to the loans to the defendant (see Ex. EBW5 to the affidavit of Elsa Bertha Wines sworn 16 April 2002).

"Further penalty on $100,000 from 22.8.97 at 11.5% to 12.7.2000 - $34,499.88."

73. Counsel contended that that entry confirmed the defendant's evidence that the rate of interest to be charged had been reduced by agreement from 12% to 15% to 1.5% to 2% above the current bank rates.

76. However, it is interesting to note that in a personal letter written to the defendant by the director of the plaintiff said to have made the agreement concerning the reduction in interest rates and dated 24 November 1997, there appears the following passage:

"I am ever so sorry and disappointed you don't trust me David, even though I religiously and sincerely write down every bit of cash or cheques you have given us over the years and have honestly not robbed you of even 1 cent. I have a large calculator to check over and over again spending hours and hours including writing all your figures and you are the only person we have to battle with over the years unfortunately. I am prepared to type and send you all the figures if you are prepared to read them. In fact what you owe us should have been much higher and have only charged you the penalty rate of 11.5 in lieu of 15% since last July for the $100,000 when you were supposed to pay M.M.G.R. for the variation."

80. Although it is not for me to determine where the truth of the matter lies, the content of that letter does cause one to doubt the veracity of the defendant's present testimony.

83. However, be that as it may, does the fact that there is an arguable dispute concerning the question of the principal and interest owed by the defendant to the plaintiff, impact in any way upon the entitlement of the defendant to possession of the properties.

89. A mortgagee exercising the power given to it by s.78(1) of the Transfer of Land Act is not required to give any notice to a mortgagor of its intention to take possession of the mortgaged properties, nor is it required to give particulars of the mortgagor's default before it does so. See Commonwealth Bank of Australia v. Jackson & Anor.[1]

92. If the mortgagee establishes upon an application for summary judgment the execution of the mortgage, the advance to the mortgagor, default under the mortgage and that the mortgagor is in possession of the mortgaged property, it is entitled to an order for possession.

95. In the present case all those matters are conceded by the defendant, particularly the fact of the default.

98. In that situation there is no basis upon which the judgment should be set aside.

101. I order that the defendant's summons filed in the Court on 19 March 2002 be dismissed with costs to be taxed including any reserved costs and paid by the defendant.