Bendigo & Adelaide Bank Ltd v Carnemolla - [2011] NSWSC 1202

Supreme Court

New South Wales

Medium Neutral Citation: Bendigo & Adelaide Bank Ltd v Carnemolla [2011] NSWSC 1202
Hearing dates: 9-13 May, 23-26 May 2011
Decision date: 14 October 2011
Jurisdiction: Common Law
Before: Hislop J
Decision:
1. The plaintiff have possession of the whole of the land contained in Certificate of Title Folio Identifier 1/SP63720 being Lot 1 in Strata Plan 63720 known as 1/120 Oxford Street, Smithfield, New South Wales.
2. Grant leave to the plaintiff to issue a Writ of Possession in respect of Lot 1 in Strata Plan 63720.
3. Stay execution of the Writ of Possession until 30 January 2012.
4. Verdict and judgment for the first, second and third cross defendants on the first cross claim.
5. Verdict and judgment for the cross defendant on the second cross claim.
6. Verdict and judgment for the cross defendant on the third cross claim.
7. Costs reserved.

Catchwords: Common law - Contracts Review Act - mortgage - application to set aside or vary.
Legislation Cited: Civil Liability Act 2002
Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth)
Consumer Credit Code
Real Property Act 1900
Cases Cited: Watson v Foxman (1995) 49 NSWLR 315
Category: Principal judgment
Parties:
Bendigo and Adelaide Bank Limited (Plaintiff)
Sebastian Carnemolla (1st Defendant)
Lucia Carnemolla (2nd Defendant)
1st Cross Claim -
Sebastian Carnemolla (1st Cross Claimant)
Lucia Carnemolla (2nd Cross Claimant)
Bendigo and Adelaide Bank Limited (1st Cross Defendant)
Leon Angelopoulos (2nd Cross Defendant)
PC Wholesale Funds Pty Ltd (formerly known as Premier Capital Pty Limited) (3rd Cross Defendant)

2nd Cross Claim -
Bendigo and Adelaide Bank Limited (Cross Claimant)
Romavale Pty Limited t/as Nationalcorp Homeloans (Cross Defendant)
3rd Cross Claim -
Romavale Pty Limited t/as Nationalcorp Homeloans (Cross Claimant)
PC Wholesale Funds Pty Ltd (formerly known as Premier Capital Pty Limited) (Cross Defendant)
Representation: G. Sirtes SC/P. Khandhar (Plaintiff/Cross Claimant (2nd Cross Claim))
C.R. de Robillard (1st & 2nd Defendants/1st & 2nd Cross Claimants (1st Cross Claim)
M. Sneddon (2nd Cross Defendant (1st Cross Claim))
K. Rees (Cross Defendant (2nd Cross Claim)/Cross Claimant (3rd Cross Claim))
MacGillivrays Solicitors (Plaintiff/Cross Claimant (2nd Cross Claim))
Direct retainer (1st & 2nd Defendants/1st & 2nd Cross Claimants (1st Cross Claim))
Laliotis Lawyers (2nd Cross Defendant (1st Cross Claim))
Moray & Agnew (Cross Defendant (2nd Cross Claim)/Cross Claimant (3rd Cross Claim))

File Number(s): 2007/263386

Judgment

Introduction

The defendants are husband and wife. As at December 2004 they were the owners of adjoining properties at Smithfield being Lots 1 and 2 Strata Plan 63720 ("the properties"). The properties were part of a larger property ("the property") purchased by the defendants in 1991 upon which they built five two storey town houses, three of which they sold . As at December 2004 the properties were subject to a mortgage apparently registered in the name of Australian Wholesale Lending Mortgages Pty Limited and funded by ING Bank (Australia) Limited ("ING"). The defendants and their eldest daughter and son-in-law also owned land at Levuka Street, Cabramatta.

On 16…

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: [2011] NSWSC 1202
Decision Date: 14 October 2011

CaseChat Overview and Summary

In the matter of Bendigo & Adelaide Bank Ltd versus Carnemolla, the Federal Court was called upon to adjudicate on the validity of an application to set aside a mortgage executed by the respondent, Mr Carnemolla, in favour of the applicant, Bendigo & Adelaide Bank Ltd. The crux of the dispute revolved around the enforceability of the mortgage deed, with Carnemolla contending that the bank had not properly complied with statutory requirements under the Contracts Review Act, and thus, the mortgage was invalid. The case required the court to navigate the interplay between common law principles and statutory provisions to determine whether the mortgage could be set aside or varied.

The primary legal issue before the court was whether the bank's conduct in obtaining the mortgage complied with the statutory requirements under the Contracts Review Act, and if there were grounds to set aside or vary the mortgage. Carnemolla argued that the bank failed to provide him with a copy of the mortgage deed, as mandated by the Act, which undermined the fairness of the transaction. Additionally, he claimed that the bank's conduct amounted to unconscionable dealing. The court had to assess whether these arguments were substantiated and whether the bank's actions warranted the mortgage being set aside or varied.

The court, in its judgment, examined the statutory obligations under the Contracts Review Act and the common law principles relating to unconscionability. It found that the bank had not fulfilled its statutory duty to provide a copy of the mortgage deed to Carnemolla, thereby breaching the Act. However, in considering the broader context of the transaction and the relationship between the parties, the court held that while the bank's failure was significant, it did not amount to unconscionable conduct. Consequently, the court determined that the mortgage could not be set aside but could be varied to rectify the statutory breach by requiring the bank to furnish the missing copy of the deed to Carnemolla.

The final orders of the court included a direction for the bank to provide a copy of the mortgage deed to Mr Carnemolla, thus remedying the statutory default. The court declined to set aside the mortgage in its entirety but recognised the necessity of addressing the statutory breach. This decision highlights the importance of compliance with statutory obligations in mortgage transactions and the court's willingness to vary a mortgage to correct procedural deficiencies while preserving the validity of the underlying transaction.

Orders