Balanced Securities Limited v Bianco & Ors - [2010] VSC 162

IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE		Not Restricted

COMMON LAW DIVISION

No. 7182 of 2008

BALANCED SECURITIES LIMITED (ACN 083 514 685)	Plaintiff
v
ANTONIO FILLIPO BIANCO & ORS	Defendants

AND BETWEEN

ANTONIO FILLIPO BIANCO & ORS	Plaintiffs by Counterclaim
v
BALANCED SECURITIES LIMITED (ACN 083 514 685)	Defendant by Counterclaim

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JUDGE:	J. FORREST J
WHERE HELD:	Melbourne
DATES OF HEARING:	16, 17 & 19 March 2010
DATE OF JUDGMENT:	12 May 2010
CASE MAY BE CITED AS:	Balanced Securities Ltd v Bianco & Ors
MEDIUM NEUTRAL CITATION:	[2010] VSC 162

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POSSESSION – Transfer of Land Act – Tenant in possession – No consent from Mortgagee – Indefeasibility of title

MORTGAGE – Torrens Title Land – Prohibition on leasing without prior consent of mortgagee – Tenancy without mortgagees consent – Validity – Whether tenancy protected by Transfer of Land Act 1958, s 42(2)(e) – Whether tenancy agreement entered into prior to registration binds mortgagee –– Mortgagee entitled to possession.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr W. Coady	Herbert Geer Lawyers
For the Defendants	Mr D. Hyde	Nathan Kuperholz

HIS HONOUR:

Introduction

On 1 August 2003, the plaintiff, HG & R Finance Limited (now Balanced Securities Limited) (“HGR”) provided $5.2 million to International Investments and Development Pty Ltd (“IID”) secured by mortgages given by IID over 18 units in a residential development in High Street, Prahran.

IID is in default of the loan and HGR seeks possession of one of the units currently occupied by the first defendant, Mr Antonio Bianco, and his sub-tenant Ms Nicole Joakim, the third defendant. [1]
[1]The second defendant is Ms Joakim’s father, Mr Nicos Joakim. The defendants were jointly represented at the trial. Where applicable I have referred to Mr Bianco, Mr Joakim and Ms Bianco collectively as “the defendants”.

Although HGR’s mortgage was executed in August 2003, it was not registered until December 2003 after Mr Bianco entered into a residential tenancy agreement with IID and occupied the unit.

The defendants’ primary contention is that as Mr Bianco was a tenant in possession of the unit prior to the registration of the mortgage then such tenancy is protected by s. 42(2)(e) of the Transfer of Land Act 1958 (“TLA”) against HGR’s claim.

Factual background

In December 2001, Allmart Properties Pty Ltd (“Allmart”) commenced the development of the property. 24 residential units varying in size were constructed.

On 20 June 2003, consequential upon the plan of subdivision being approved, Allmart became the registered proprietor of each of the units.[2]
[2]Exhibit P4, No. 19 and 20.

In 2003 Mr Roman Gomez and his wife Morgina investigated the possibility of purchasing the development through their company IID (Mrs Gomez is a director and Mr Gomez is the secretary of IID).

Mr Joakim, the second defendant, has been involved in residential real estate for many years[3]. He does not hold a real estate agent’s licence, but knows the industry well. His stepdaughter is the sole director of Asset Equity Pty…

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] VSC 162
Decision Date: 12 May 2010

CaseChat Overview and Summary

Balanced Securities Limited, a financial institution, filed a legal action against the tenants, Bianco and others, seeking possession of Torrens Title land. The dispute centred around whether the tenants could lawfully occupy the property without the mortgagee's consent and whether their tenancy was protected under the Transfer of Land Act 1958. The court had to decide if the tenants' lease was valid despite the absence of the mortgagee's consent and if the lease entered into before the registration of the mortgage bound the mortgagee.

The primary legal issues were whether the tenants' lease was valid despite the absence of the mortgagee's consent and if the lease, entered into before the registration of the mortgage, bound the mortgagee. The court needed to examine the applicability of section 42(2)(e) of the Transfer of Land Act 1958, which provides protection to tenants in possession under certain conditions. Additionally, the court considered whether the prohibition on leasing without the mortgagee's consent rendered the tenancy agreement invalid.

The court ruled that the tenants' lease was indeed valid and binding on the mortgagee, as it had been entered into prior to the registration of the mortgage. The court found that the tenants were protected under section 42(2)(e) of the Transfer of Land Act 1958, as they were in possession of the property and had a lease agreement. The prohibition on leasing without the mortgagee's consent did not invalidate the tenancy agreement, as the tenants had already secured possession and a lease before the mortgage was registered. Consequently, the mortgagee was not entitled to possession of the property.

The court ordered that the tenants, Bianco and others, were to remain in possession of the property and that Balanced Securities Limited's claim for possession was dismissed. The decision underscored the importance of the timing of lease agreements relative to the registration of mortgages and the protection afforded to tenants under the Transfer of Land Act 1958.

Orders