Australian Secure Capital Fund Ltd v Haider (No 2)
[2024] ACTSC 103
•11 April 2024
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Australian Secure Capital Fund Ltd v Haider (No 2) |
Citation: | [2024] ACTSC 103 |
Hearing Dates: | 8 April 2024 |
Decision Date: | 11 April 2024 |
Before: | Balla AJ |
Decision: | (1) Pursuant to s 96 of the Land Titles Act 1925 (ACT) and registered mortgage 3261726, the plaintiffs are granted exclusive possession of the whole of the land bearing Land Title Reference 528/25 under certificate of title Volume 528 Folio 25 being the Crown lease for the land described as Chapman Section 39 Block 7 on Deposited Plan 3497, commonly known as 23 Beaumont Close, Chapman in the Australian Capital Territory (2) On Monday, 29 April 2024 at 3:00pm, or such time as is otherwise agreed between the parties, the defendants are to provide access to the property referred to in Order 1 to the plaintiffs or their agent, for the purpose of assessment and appraisal for the sale of the property. (3) The defendants are to provide vacant possession of the property referred to in Order 1 by Monday, 13 May 2024 at 5:00pm. (4) The defendants are to pay the plaintiffs’ costs of the proceedings on an indemnity basis. |
Catchwords: | PROPERTY – MORTGAGE – Action for recovery of land – where defendants defaulted in payment of loan – whether memorandum of mortgage contained accurate statement of interest intended to be mortgaged – where defendants acknowledged receipt of memorandum – lack of evidence to support grounds of defence – application for possession granted |
Legislation Cited: | Australian Securities and Investments Commission Act 2001 (Cth) s 12CB |
Cases Cited: | Australia and New Zealand Banking Group Ltd v Manny (No 4) [2013] ACTSC 236 |
Parties: | Australian Secure Capital Fund Ltd as Trustee for the ASCF Select Income Fund (ACN 613 497 635) ( First Plaintiff) ASCF Managed Investments Pty Ltd (ACN 628 059 567) ( Second Plaintiff) Iqtidar Haider ( First Defendant) Maria Haider (Second Defendant) |
Representation: | Counsel D Robens (First and Second Plaintiff) No appearance (First Defendant) No appearance (Second Defendant) |
| Solicitors Summer Lawyers ( First and Second Plaintiff) No appearance (First Defendant) No appearance (Second Defendant) | |
File Numbers: | SC 8 of 2023 |
BALLA AJ:
Introduction
1․The plaintiffs seek possession of the whole of the land under certificate of title Volume 528 Folio 25 being the Crown lease for the land described as Chapman Section 39 Block 7 on Deposited Plan 3497 (“the Land”) as it was given as security by the defendants for a loan made to a company they controlled, I Haider Pty Limited (“the Company”).
2․The plaintiffs relied on affidavit evidence from a director of the first plaintiff, a director of the second plaintiff, and the solicitor for the plaintiffs.
3․The defendants had previously been represented by a solicitor, but that solicitor filed a Notice of Ceasing to Act on 2 February 2024.
4․When the matter was called for hearing, there was no appearance in Court by the defendants. Despite not having been given leave to attend remotely, they had been provided with the information necessary to enable them to participate by an audio-visual link, which they did not use.
5․I was satisfied that the defendants had been informed by email in February 2024 that the matter had been listed for hearing on 8 April 2024.
6․I decided that the matter could proceed in the absence of the defendants as permitted by r 1505 of the Court Procedures Rules2006 (ACT).
History
7․The defendants admitted the following in their defence dated 16 October 2023 (“the Defence”):
(a)They were the registered proprietors of the Land.
(b)On 7 August 2022, the plaintiffs, as joint lenders, the Company, and the defendants, entered into an agreement in which the plaintiffs agreed to provide a loan to the Company of $1,300,000.00 (“the Agreement”). The defendants agreed to guarantee the obligations of the Company and provided, as security, a mortgage over the Land.
(c)The Agreement was comprised of three documents:
(i)a mortgage over the Land in registrable form (“the Mortgage”);
(ii)the Kingston & Partners Memorandum of Common Provision Version 1 (LFMCPV1) (“the Memorandum”); and
(iii)a Finance Offer dated 7 August 2022.
(d)The material terms of the Agreement were that:
(i)the Company was to repay the loan, all interest payable under the Agreement, and any other money owed to the plaintiffs (“the Secured Money”) on 15 October 2022;
(ii)the defendants guaranteed payment of the Secured Money, so that if the Company did not pay the Secured Money on time and in accordance with the Agreement, then the defendants were required to pay the Secured Money to the plaintiffs;
(iii)the plaintiffs could register the Mortgage and did so on 25 August 2023;
(iv)an Event of Default occurred if the Secured Money was not paid within three business days after it fell due; and
(v)after an Event of Default, the plaintiffs could demand immediate payment of the Secured Money and take legal action, including the commencement of proceedings, to recover possession of the Land.
(e)The Company and the defendants failed to pay the Secured Money by 15 October 2022, or within three business days of that date.
8․The plaintiffs’ records show that the loan was advanced to the Company on 15 August 2022.
9․On 12 January 2023, the plaintiffs commenced these proceedings seeking judgment for the possession of the Land.
10․The defendants did not file a defence and the plaintiffs obtained default judgment on 29 June 2023.
11․The defendants filed an application on 11 July 2023 seeking to have the default judgment set aside.
12․The defendants’ application was listed for hearing before Mossop J, who set aside the default judgment on 1 August 2023: see Australian Secure Capital Fund Ltd v Haider [2023] ACTSC 205 (ASCF v Haider (No 1)) at [99]. Mossop J had noticed that the mortgage which had been registered by the plaintiffs was not the Mortgage which related to the Agreement between the parties. The defendants said they would seek to rely on the defect in the registered mortgage in resisting the claim for possession. The second plaintiff said steps would be taken immediately to prepare a mortgage which corresponded to the documents which had been signed by the defendants, which would be registered as soon as possible. Mossop J held that it was open to the defendants to rely upon this mistake as indicating that they had a good defence available, noting that the parties had not had an opportunity to make submissions and he was not expressing a concluded view: see ASCF v Haider (No 1) at [93], [97].
13․On 25 August 2023, the correct Mortgage was registered by the plaintiffs.
14․On 8 September 2023, an Amended Statement of Claim was filed.
The claim
Land Titles Act 1925 (ACT)
15․Sections 93 and 94 of the Land Titles Act 1925 (ACT) (“the Land Titles Act”) set out a procedure for the sale of land secured by a registered mortgage, consequent on default of at least one month after the giving of notice to the owners of the land.
16․As I have said, these sections were considered by Mossop J in ASCF v Haider (No 1), who observed that, as the plaintiffs had not yet registered the Mortgage and given notice, these proceedings may be incompetent as the cause of action was not complete when the Originating Claim was filed. This proposition is relied on in the Defence.
17․However, the plaintiffs no longer rely on those sections. They rely on s 96 of the Land Titles Act, which says:
96 Default, entry and possession—action for recovery
The mortgagee or encumbrancee upon default in payment of the principal sum or any part thereof, or of any interest, annuity or rent charge secured by any mortgage or encumbrance may—
…
(a)bring an action to recover the land, either before or after commencing to take the rents and profits, and either before or after any sale of the land effected under the power of sale given or implied in his or her memorandum of mortgage or of encumbrance;
in the same manner in which he or she might have made the entry or brought the action if the principal sum or annuity were secured to him or her by a conveyance of the legal estate in the land so mortgaged or encumbered.
18․Counsel for the plaintiffs submitted that proceeding under s 96 of the Land Titles Act meant that the plaintiffs did not have to establish that the Mortgage had been registered or that notice had been given under s 93 of the Land Titles Act.
19․In making this submission, he relied on the following passages from Citibank Savings v Stergiou (1996) 66 FCR 587 at 589-590:
With respect to his Honour we are unable to agree that the requisite period of default for a notice under s 93 of the Act, or the service of such a notice, was relevant to the exercise of the right to bring an action of ejectment under s 96(c) of the Act.
In its terms s 96 gives the mortgagee the same right to bring an action to recover possession of the mortgaged property as is available to a mortgagee under a mortgage of land made under the general law. Section 96 does not deem a mortgage made under the Act, defined in the Act as "any charge on land created merely for securing a debt", to be a general law mortgage, under which the consequence of default in the payment of interest by a mortgagor is the termination of any possessory interest the mortgagor might hold by grant from the mortgagee: see E L G Tyler, Fisher & Lightwood's Law of Mortgage (Aust ed, 1995), pp 374-375. However, s 96(c) of the Act does provide a mortgagee with a right equivalent to that enjoyed by a mortgagee under a general law mortgage to bring an action in ejectment immediately upon the occurrence of such a default.
Under the general law, subject to the terms of the mortgage, upon the mortgagee's entitlement to possession arising in consequence of a default such an action may be taken without delivery of notice or demand for possession to the mortgagor: see W R Cole, The Law and Practice In Ejectment Under the Common Law Procedure Acts of 1852 and 1854 (1857), p 465; R E Megarry and H W R Wade, The Law of Real Property (5th ed, 1984), pp 942-943; R H Coote, A Treatise on the Law of Mortgages (7th ed, 1904), pp 814-817.
Under s 93 of the Act continuing default in the payment of principal or interest, or in the performance of any covenant, permits the mortgagee to give a notice which, if the default continues for the period of the notice, will ground a statutory power of sale granted to the mortgagee under s 94 of the Act.
Section 96 of the Act is not dependent upon the mortgagee establishing a right to exercise a power of sale under s 94 and, to the contrary, consistently with the rights under a general law mortgage, appears to contemplate the exercise by the mortgagee of the powers set out in the section irrespective of the entitlement of the mortgagee to exercise a power of sale …
20․This distinction has been applied in the Australian Capital Territory. In Australia and New Zealand Banking Group Ltd v Manny (No 4) [2013] ACTSC 236, Refshauge J held:
[85] None of Mr Manny’s claims, including those set out at [83] above, amount to a viable defence to the ANZ Bank’s claim for possession. That action was, in essence, relatively simple. Section 96 of the Land Titles Act provides, relevantly, that upon default in payment under a mortgage the mortgagee may bring an action to recover the land.
[86] The ANZ Bank, therefore, had to show was that:
(a) Mr Manny had granted it a mortgage over land of which he was the registered proprietor;
(b) the mortgage secured payment of moneys lent by the ANZ Bank to Mr Manny; and
(c) he defaulted in payment of the moneys due under the mortgage.
[87] See, for example, Bank of New South Wales v Murray [1963] NSWR 515 at 518.
[88] As the learned Master pointed out, although a notice was given to Mr Manny under s 93 of the Land Titles Act, the Full Court of the Federal Court had held in Citibank Savings Ltd v Stergiou (1996) 66 FCR 587 that such a notice is not a pre-condition to the exercise of the power under s 96 of the Land Titles Act for possession of mortgaged land.
21․I am satisfied that the plaintiffs do not have to establish that the Mortgage had been registered or that notice had been given under s 93 to proceed under s 96 of the Land Titles Act.
22․To proceed under s 96, the plaintiffs have to demonstrate that:
(i)there was a mortgage, as defined under the Land Titles Act, naming the plaintiffs as the mortgagees of the Land; and
(ii)there was a default in the payment of the principal sum, or any part thereof, or any interest.
23․“Mortgage” is defined in the Dictionary of the Land Titles Act as "any charge on land created merely for securing a debt”. "Mortgagee" is defined as meaning “the proprietor of a mortgage”. These definitions apply to the Mortgage signed by the defendants.
24․In addition, s 92 of the Land Titles Act provides that a mortgage securing land must contain an accurate statement of the interest intended to be mortgaged and refer to the folio identifier for the land together with a statement of all mortgages and other encumbrances (if any) affecting the land. The terms and conditions of the Mortgage relevantly say that the provisions of the Memorandum are incorporated into the Mortgage, and that the defendants acknowledged that they had received the Memorandum before signing the Mortgage. The Memorandum, signed by the defendants, is also in evidence.
25․I accept the submission made by counsel for the plaintiffs that the Memorandum sets out an accurate statement of the interest to be mortgaged and a description of the Land, satisfying s 92 of the Land Titles Act.
26․The defendants have admitted that they failed to pay the Secured Money by 15 October 2022, or within three business days of 15 October 2022.
27․I am satisfied that the plaintiffs have established all of the matters necessary for an order for possession under s 96 of the Land Titles Act.
Defences
Unconscionable conduct
28․In their Defence, the defendants allege that the plaintiffs acted in an unconscionable manner by failing to undertake reasonable due diligence. It is pleaded that if the plaintiffs had undertaken due diligence by reviewing the Company’s business activity statements to identify its capacity to repay any loan monies and requesting and reviewing the records of the assets owned by the Company, they would have been on notice that the Company did not have any realistic capacity to repay any loan monies.
29․On this basis, the defendants sought orders that the Agreement be set aside or that it be set aside to the extent that it would require the payment of interest or costs.
30․No evidence to support this pleading has been adduced by the defendants. I find that this ground of the Defence must fail.
31․The defendants also rely on s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth), which says:
12CBUnconscionable conduct in connection with financial services
(1)A person must not, in trade or commerce, in connection with:
(a)the supply or possible supply of financial services to a person; or
(b)the acquisition or possible acquisition of financial services from a person;
…
32․The defendants say, in their Defence, that the plaintiffs engaged in unconscionable conduct under section 12CB(1)(a) as the plaintiffs operated a system of lending money:
(a)to companies, where the intended beneficiary of that money was in fact an individual or individuals;
(b)purportedly for 'business purposes' where the true purpose of the loan was for domestic purposes;
(c)secured against a guarantor’s property;
(d)where the plaintiffs knew or ought to have known that the Company and the defendants had no income or capacity to service the loan; and
(e)without undertaking reasonable due diligence so as to avoid being on notice of the Company or the defendants' income or capacity to service the loan.
33․No evidence to support this pleading has been adduced by the defendants and I find that this ground of the Defence must fail.
Duress to the person
34․The defendants have pleaded that they entered into the Agreement with the plaintiffs under duress by their son, who was the party responsible for instigating the application for the loan from the plaintiffs. They say that their son perpetrated actual and threatened violence against them before and during August 2022 to cause them to enter into the Agreement.
35․The defendants say that the plaintiffs knew, or ought to have known, that they were not the true beneficiaries of the Agreement and had only entered into the Agreement due to duress.
36․No evidence to support this pleading has been adduced by the defendants and I find that this ground of the Defence must fail.
Costs
37․The plaintiffs claim costs on an indemnity basis.
38․The Memorandum provides that the defendants are liable to pay the plaintiffs’ costs in respect of exercising, enforcing, or preserving the plaintiffs’ rights. Costs are defined as including legal costs on a full indemnity basis.
39․I am satisfied that the plaintiffs are, pursuant to their Agreement with the defendants, entitled to an order for indemnity costs of the proceedings.
Decision
40․I have found that:
(a)the plaintiffs have established all the matters necessary for an order for possession under s 96 of the Land Titles Act;
(b)the defendants have not established any of their defences to the plaintiffs’ claim; and
(c)the plaintiffs are entitled to an order for indemnity costs of the proceedings.
Orders
41․For those reasons, the following orders are made:
(1)Pursuant to s 96 of the Land Titles Act 1925 (ACT) and registered mortgage 3261726, the plaintiffs are granted exclusive possession of the whole of the land bearing Land Title Reference 528/25 under certificate of title Volume 528 Folio 25 being the Crown lease for the land described as Chapman Section 39 Block 7 on Deposited Plan 3497, commonly known as 23 Beaumont Close, Chapman in the Australian Capital Territory.
(2)On Monday, 29 April 2024 at 3:00pm, or such time as is otherwise agreed between the parties, the defendants are to provide access to the property referred to in Order 1 to the plaintiffs or their agent, for the purpose of assessment and appraisal for the sale of the property.
(3)The defendants are to provide vacant possession of the property referred to in Order 1 by Monday, 13 May 2024 at 5:00pm.
(4)The defendants are to pay the plaintiffs’ costs of the proceedings on an indemnity basis.
| I certify that the preceding forty-one [41] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Acting Justice Balla Associate: Date: |
0
2
3