Adelaide Bank Ltd v Property Builders Pty Ltd - [2010] NSWSC 830

CITATION: Adelaide Bank Ltd v Property Builders Pty Ltd [2010] NSWSC 830

HEARING DATE(S): 17 March 2010; 18 March 2010

JUDGMENT DATE :
29 July 2010

JURISDICTION: Common Law

JUDGMENT OF: Simpson J

DECISION: Adelaide Bank is entitled to an order for possession against Property Builders.
Adelaide Bank is entitled to judgment in whatever amount is presently owing against Property Builders, and against Mr Phontos under his Guarantee.
The parties to provide Short Minutes of Order to reflect the conclusions in this judgment.

CATCHWORDS: REAL PROPERTY – loan agreement –mortgage and guarantee – variation of loan agreement – whether subsequent agreement was a variation of existing agreement or supplanted and replaced earlier agreement – transfer of mortgage – whether secured debt also assigned – notice of assignment of agreement – s 12 Conveyancing Act - GUARANTEE AND INDEMNITY – action against surety – whether guarantee assigned with principal debt – whether notice of assignment given to mortgagor, notices given under s 12 Conveyancing Act are sufficient evidence of assignment - MORTGAGES – mortgage contract – rights and liabilities of mortgagor and mortgagee – remedies of mortgagee

LEGISLATION CITED: Conveyancing Act 1919
Real Property Act 1900

CATEGORY: Principal judgment

CASES CITED: Adelaide Bank Ltd v Property Builders Pty Ltd [2009] NSWSC 849
Consolidated Trust Co Ltd v Naylor [1936] HCA 33; 55 CLR 423
Nemeth v Reachford Pty Ltd [1998] NSWSC 271
Queensland Premier Mines Pty Ltd v French [2007] HCA 53; 235 CLR 81

PARTIES: Adelaide Bank Ltd (First Plaintiff)
Advance Investment Finance No 2 Pty Ltd (Second Plaintiff)
Eurofinance Capital Ltd (Third Plaintiff)
Property Builders Pty Ltd (First Defendant)
Michael Phontos (Second Defendant)

FILE NUMBER(S): SC 2008/286721

COUNSEL: M J Cohen (Plaintiffs)
R Freeman (Defendants)

SOLICITORS: Gadens Lawyers (Plaintiffs)
Phontos Legal (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Simpson J

29 July 2010

2008/286721 Adelaide Bank Ltd v Property Builders Pty Ltd
JUDGMENT

1 HER HONOUR: These are proceedings for possession of property and money judgment. They arise out of a transaction, in 2006, in which the third plaintiff advanced money, secured by mortgage, to the first defendant (Property Builders Pty Ltd), repayment of which was guaranteed by the second defendant (Michael Phontos). The plaintiffs allege that the first defendant defaulted in its obligations to repay, and to pay interest, as a consequence of which they are entitled, against the first defendant, to possession of the property subject of the mortgage, and against both defendants to judgment in a money sum.

2 The defendants do not dispute the advance, the mortgage, or the guarantee. Nor do they contend that the first defendant has discharged the debt to the third plaintiff. They maintain, however, that, by reason of a further transaction between the third plaintiff and the first defendant, and further transactions between the plaintiffs, neither defendant is liable. That is, they assert that the first defendant is not liable under the mortgage, and the second defendant is not liable under the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 830
Decision Date: 29 July 2010

CaseChat Overview and Summary

Adelaide Bank Ltd took Property Builders Pty Ltd to court over a dispute involving a loan agreement, mortgage, and guarantee. The bank claimed the mortgage and guarantee had been assigned to another party, and Property Builders argued the assignment was invalid. The Federal Court of Australia was tasked with determining whether the subsequent agreement was a variation of the existing agreement or if it supplanted and replaced the earlier agreement. The court also needed to decide whether the secured debt was assigned alongside the mortgage and whether the notice of assignment provided to the mortgagor was sufficient under the Conveyancing Act.

The court examined the terms of the original loan agreement, mortgage, and guarantee. It assessed whether the subsequent agreement constituted a variation of the original agreement or if it replaced it entirely. The court also considered the applicability of section 12 of the Conveyancing Act in determining whether the notice of assignment was sufficient to transfer the rights and obligations under the mortgage and guarantee. The court found that the subsequent agreement did not merely vary the original agreement but replaced it, and the notice of assignment provided to the mortgagor met the statutory requirements under section 12 of the Conveyancing Act.

The court concluded that the secured debt was indeed assigned along with the mortgage, and the notice of assignment was sufficient to evidence this assignment. Consequently, the mortgage and guarantee were validly assigned to the party named in the subsequent agreement. The court ruled in favour of Adelaide Bank Ltd, affirming that the assignment was valid and enforceable. The final orders included a declaration that the mortgage and guarantee were assigned, and Property Builders was liable to the assignee of the mortgage and guarantee.

Orders