CATCHWORDS: MORTGAGES – REMEDIES OF MORTGAGEE – SALE UNDER POWER – mode of exercise of power – duty to mortgagor – whether duty of good faith independent of duty in s 85 of Property Law Act 1974 – remedies

Valuation of undivided half share as tenant-in-common – relevance of other tenant-in-common’s interest in acquiring outstanding interest
Breach of statutory duty – failure to exercise reasonable care in setting reserve
Boland v Yates Property Corporation Pty Ltd [1999] HCA 64, applied

Emerson v Custom Credit Corporation Ltd [1994] 1 Qd R 516 at 520-21, applied
Spencer v Commonwealth (1907) 5 CLR 418 at 432, applied
McDonald v Deputy Federal Commissioner of Land Tax (1915) 20 CLR 231 at 239, applied
Goold v Commonwealth (1992-933) 79 LGERA 407 at 415-6, considered
Raja Vyricherla Narayana Gajapatiraju v The Revenue Divisional Officer, Vizagapatam [1939] AC 302 at 312, applied
Public Trustee for NSW v Commissioner of Inland Revenue [1966] NZLR 257 at 261, considered
Chuah Say Hai & Ors v Collector Of Land Revenue, Kuala Lumpur [1967] 2 MLJ 99, considered
Ringer V.P., ‘Value of an Undivided Interest’ (1966) July The Appraisal Journal 413 at 418
Nelson R.D., ‘Discounting Fractional Interests’ (1969) October The Appraisal Journal 522 at 528
Snyder E.A., ‘Appraising Fractional Interests – A Short Reprise’ (1975) October The Valuer 618
Oayda v Mercantile Mutual Insurance Co Ltd [1994] Fed Ct No NG 779 of 1994; 18 November 1994, considered

Barns v Queensland National Bank Ltd (1906) 3 CLR 925 at 942-3, considered
Pendlebury v The Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 at 679-680, 694-5, 699-701, considered
Forsyth v Blundell (1973) 129 CLR 477 at 493, 506, 481, considered
The Australia and New Zealand Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 195, distinguished
Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949, considered
Citicorp Australia Ltd v McLoughney (1984) 35 SASR 375 at 381, considered
Westpac Banking Corporation Ltd v Kingland (1991) 26 NSWLR 700 at 707-709, considered
Brutan Investments Pty Ltd v Underwriting and Insurance Ltd (1981-82) 58 FLR 289 at 298, considered
CAGA Ltd v Nixon (1982) 152 CLR 491 at 502-3, 517-18, 525, followed
Mortgage Express Ltd v Bowerman and Partners [1995] QB 375 at 428-31, considered
Beach Protection Act 1968
Property Law Act 1974 ss 85, 87

Counsel: Mr MD Hinson, SC for the plaintiff
Mr PA Keane, QC and Mr RIM Lilley for the defendant

Solicitors: Dunhill Madden Butler for the plaintiff
Deacons Graham & Jones for the defendant

Hearing dates: 19, 20, 21 July 1999

This proceeding concerns alleged breaches of duty by a mortgagee in exercising its power of sale over an undivided half share as tenant in common…

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.

Continue reading Cameron v Brisbane Fleet Sales Pty Ltd

Details

AGLC: Cameron v Brisbane Fleet Sales Pty Ltd [2000] QSC 15
Case: [2000] QSC 15
Decision Date: 11 February 2000

CaseChat Overview and Summary

Ian Milne Dixon Cameron (the plaintiff) brought this proceeding against Brisbane Fleet Sales Pty Ltd (the defendant) seeking a declaration that the sale of the plaintiff’s undivided half share as tenant-in-common in a parcel of land was improper, an order setting aside the sale and the transfer, or alternatively damages. The defendant company (then called Vicvale Pty Ltd) took a transfer of a mortgage over the plaintiff’s interest from Halls Knob Pty Ltd, a company controlled by Mr Girle. The mortgage secured three advances originally made by Mr Girle to Mr Cameron. The advances were as follows:-$50,000 on 13 June 1995 at 10% per annum repayable on 13 June 1998, $50,000 on 21 September 1995 at 12.5% per annum payable on 13 June 1998 and $100,000 on 17 May 1996 at 2.5% principal and interest repayable on 31 December 1996. At the time the defendant took the transfer of the mortgage Mr Cameron was in default. He had not paid any principal or interest on either of the first two advances. With respect to the third advance he had repaid $12,000 on 17 March 1998 and $92,000 on 27 March 1998. The balance of principal and interest was outstanding. Mr Upton was not concerned about the defaults at the time he and his wife acquired their interest in the land and the company took the transfer of the mortgage. In December 1998 his car yard was hit by a bad hailstorm. The vehicles in it were uninsured. Hence he had an immediate call for funds which resulted in a decision to enforce Mr Cameron’s obligations under the mortgage. On 26 February 1999 a notice of exercise of power of sale was served. It specified that as at 23 February 1999, $182,169 was due and owing. In a letter which accompanied the notice, Mr Cameron was told that he would need to pay that amount as well as outstanding rates, legal expenses and costs of sale in order to discharge his obligations. An auction was arranged for 11 May 1999. On 30 April 1999 Mr Cameron paid the sum of $182,169. However the mortgagee refused to release the mortgage alleging that $62,022.47 was still owing. On 11 May 1999 the plaintiff’s undivided half share in the land was sold at auction to the Uptons for $300,000. Two days later the defendant company paid out the second mortgage over the plaintiff's interest (in the sum of $169,727.82). On 17 May 1999 the plaintiff lodged a caveat alleging an improper exercise of the power of sale. The plaintiff contended that the amount paid by the Uptons to Mr Girle ($550,000) exceeded the market value at the time, and that they made an “imprudent purchase” as they were not “knowledgeable purchasers.” In my view the amount they paid for Girle’s undivided half share in the land ($550,000) was the market value of that interest as at July 1998. Despite Mr Upton’s evidence that he and his wife purchased their undivided half share in the land from Mr Girle without knowledge of the restrictions on the use and subdivision of the land, I am not prepared to find that they were not “knowledgeable purchasers” in the relevant sense. Mr Upton was a successful and experienced motor dealer. He always understood that the land in its entirety was worth at least $1 million. The contract with Mr Girle was the culmination of at least four months’ interest in the property. In March 1998 he had attended an auction arranged on behalf of Mr Girle as mortgagee exercising power of sale over Mr Cameron’s undivided half share. He intended buying the whole, believing that Mr Girle would offer his half interest immediately after the sale of Mr Cameron’s half interest. The advertising for the auction had informed potential purchasers that the land was situated in a coastal management area and a tree preservation area, that it was zoned “Rural Preservation,” and that it was not a contaminated site. On arrival at the auction he found that it had been restrained by court order. Subsequently, Mr Upton made offers to the plaintiff and to Mr Girle. A day or two after the auction he offered $500,000 for the plaintiff’s interest but received no reply. In April 1998 he offered the plaintiff and Mr Girle $550,000 each for their respective interests. The plaintiff told him he had been offered $600,000, to which Mr Upton replied that the most he could pay was $620,000. In May 1998, Mr Girle indicated he was prepared to sell his undivided half share for $550,000 if the Uptons also bought the mortgage. He was selling in order to finalize a matrimonial property settlement. The sale from Mr Girle to the Uptons was pursuant to a contract dated 27 July 1998. The purchase price was $550,000. Walters & Co., solicitors, were named as acting for the Uptons. By cl 2 of the contract the seller disclosed that there was a beach protection precinct along the full length of the eastern boundary, that the land was included in an area subject to a native title claim, and that it was in the Rural Preservation Zone. Mr Upton gave evidence that at the time of the purchase he thought one of two things would happen – either he would buy Mr Cameron’s interest at a later date, or he would split the property into two. He clearly intended it as a passive investment. The former was a realistic expectation in the circumstances: the company controlled by the Uptons was acquiring the mortgage under which Mr Cameron was in default, and he was not concerned. The latter was not realistic, and it emerged in cross-examination that Mr Upton had no more than a hope that he might be able to subdivide the land. He said in his affidavit that he was unaware of the restrictions arising from the North Shore Development Control Plan or the repercussions of the Rural Preservation Zone. However the Development Control Plan did not impose additional restrictions impacting on the value of the land, and as I have said, he had no more than a hope that the land would have subdivisional potential. The Uptons were clearly desirous of purchasing Mr Girle’s interest in the land. They dealt with him at arm’s length. There was no compulsion involved. In my view they knew enough about the land to be described as knowledgeable purchasers. At the auction in May 1999 the Uptons purchased Mr Cameron’s

Orders