Bank of Western Australia Limited v Shearer; Bank of Western Australia Limited v Sparrow - [2005] SASC 366

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BANK OF WESTERN AUSTRALIA LIMITED v SHEARER; BANK OF WESTERN AUSTRALIA LIMITED v SPARROW
Judgment of Judge Withers a Master of the Supreme Court
23 September 2005
REAL PROPERTY
Possession applications - service of notices under the Law of Property Act.
Law of Property Act 1936 s 112, referred to.
Kirkman v Frost (1978) 20 SASR 192, considered.

BANK OF WESTERN AUSTRALIA LIMITED v SHEARER; BANK OF WESTERN AUSTRALIA LIMITED v SPARROW
[2005] SASC 366

JUDGE WITHERS. These reasons are common to two files, namely Bank of Western Australia Limited v David John Shearer (Action No 687 of 2005) and Bank of Western Australia Limited v Steven Robert Stow Sparrow (Action No 839 of 2005).
Both matters are applications for possession of property pursuant to the provisions of Part 17 of the Real Property Act 1886. In both matters the plaintiff advanced monies to the defendant, the payment of which monies was secured by a registered mortgage over property owned by the defendant. In both matters the plaintiff alleged that each defendant defaulted on payment of the loan as a result of which the plaintiff caused to be served a Notice of Default. That Notice of Default was in each case described as:
NOTICE OF DEFAULT AND INTENTION TO SELL
(Pursuant to section 132 of The Real Property Act,
section 55a of The Law of Property Act).
No issue is taken with the form of the notice. In each case service of the notice was effected by ordinary prepaid post. There is no evidence that the notice was received by the intended recipient. At the hearing of each matter I raised with the solicitors for the plaintiff my concern that such service did not comply with the requirements of the Law of Property Act 1936. A time was set for the solicitors for the plaintiff to make submissions and these reasons now follow.
Section 55A of the Law of Property Act in paragraph (1) provides as follows:
55A(1)     A right of sale or foreclosure in respect of mortgaged land, a right to enter into possession of mortgaged land or a right to appoint a receiver in respect of mortgaged land shall not be enforceable by the mortgagee under a mortgage to which this section applies against the mortgagor by action or otherwise unless –
(a)     the mortgagee has served upon the mortgagor a notice in writing –
(i)alleging a breach of a covenant or condition of the mortgage by the mortgagor; and
(ii)if the breach is capable of remedy, requiring a mortgagor within one month after service of the notice, or such longer period as may be stipulated in the notice, to remedy the breach; and
(iii)if the mortgagee seeks compensation for the breach, requiring the mortgagor within one month after service of the notice or such longer period as may be stipulated in the notice, to pay to the mortgagee the amount of the cost and expenses, stipulated in the notice, that the mortgagee has reasonably incurred in consequence of the breach; and
(b)     where requirements are made of the mortgagor in the notice, he has failed to comply with those requirements.
In Section 112 of the Law of Property Act provision for service is made under the heading “Regulations respecting notices”. Section 112 reads as follows:
Regulations respecting notices
112(1)     Any notice required or authorised to be served or given by this Act shall be in writing.
(2)     Any notice required or authorised by this Act to be served on a mortgagor shall be sufficient, although only addressed to the mortgagor by that designation, without his name, or generally to the persons interested, without any name, and notwithstanding that any person to be affected by the notice is absent, under disability, unborn, or unascertained.
(3)     Any notice required or authorised by this Act to be served shall be sufficiently served if it is left at the last-known place of abode or business in South Australia of the mortgagee, the mortgagor, or other person to be served, or, in case of a notice required or authorised to be served on a mortgagor, is affixed or left for him on the land or any house or building comprised in the mortgage.
(4)     Any notice required or authorised by this Act to be served shall also be sufficiently served if it is sent by post in a registered letter addressed to the mortgagee, mortgagor, or other person to be served, by name, at the aforesaid place of abode or business, and if that letter is not returned through the post undelivered; and that service shall be deemed to be made at the time at which the registered letter would in the ordinary course be delivered.
The Notice of Default which was required to be served in each of these matters is a notice required pursuant to Section 55A of the Law of Property Act. The issue before the Court is whether or not service of such a notice by ordinary prepaid post is sufficient to meet the requirements of the Act. In my view it is not.
The provisions of Section 112 do not provide an exclusive scheme for serving required notices on mortgagors. Such a notice can be served personally. Evidence may be put before the Court that otherwise proves the receipt of the notice by the defendant at a certain date. Section 112 defines the methods by which non-personal service of such a notice can be effected where the Court is entitled without more to regard such service as effective or to use the words of the section “sufficient”. Section 112 does address the issue of service by post in s 112(4) where it confines “sufficient” service by post to circumstances where it was by registered post. This is one example where the maxim expressio unius est exclusio alterus ought properly apply.
Counsel for the plaintiff was unable to refer me to any authority on Section 112. I note the commentary in Lunn, Civil Procedure South Australia at Rule 65.00.10 where the learned author says:
(1)The plaintiff needs to prove the proper service of the notice under that section [referring to Section 55A]. Section 112 of that Act sets out various possible methods of service.
In the matter of Kirkman v Frost (1978) 20 SASR 192, Legoe J in considering a matter where a notice of default had been served under s 55A of the Law of Property Act addressed the question of service under s 112 of that Act. In that case the Notice of Intention to Exercise the Power of Sale had been served by being left at the mortgagor’s place of abode but did not come to the mortgagee’s notice. His Honour found that service was effective in accordance with Section 112(3) of the Law of Property Act 1936-1975. In his reasons for judgment at p 194 his Honour said:
This service was in accordance with s 112(3) of the Law of Property Act, 1936-1975. The address is clearly the address shown on the certificate of title and in the defendant’s affidavit in opposition to the summons in this matter and is therefore quite clearly the defendant’s place of abode in accordance with the provisions of that section. It is therefore immaterial that such service was not in accordance with clause (18) of the mortgage instrument where the words “abode or” appear to have been omitted at the end of line 6 thereof. The address at Blackwood was not the defendant’s place of business which is the only provision in the mortgage instrument for service in clause (18).
In that matter his Honour confirmed that service in accordance with the provisions of the mortgage where that service does not comply with the provisions of Section 112 will not be effective service. To be effective or sufficient service of a notice under the Law of Property Act that service must be personal, or the document otherwise proved to have been received, or must comply with the provisions of Section 112.
The Act provides in Section 55A(2a) a power to the Court to “dispense, upon such terms and conditions as it thinks fit, with the requirement of notice under this section”. A flexibility is therefore provided for non-compliant service to be subsequently approved by the Court.
In these matters I find that service of the Notices of Default does not comply with the requirements of the Law of Property Act and is therefore ineffective.
There will be no order as to costs. I adjourn further consideration of the matters to 9.30 am on Thursday, 6 October 2005.