Capital Bridging Finance v NVP

[2023] VCC 2392

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

BANKING AND FINANCE LIST

Case No. CI-22-04775

CAPITAL BRIDGING FINANCE PTY LTD (ACN 608 576 361)	Plaintiff
v
NVP AUSTRALIA PTY LTD (ACN 653 755 732)	First Defendant
and
JORDAN KOVCO	Second Defendant
and
JOE KOVCO	Third Defendant

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JUDGE:	HER HONOUR JUDGE MARKS
WHERE HELD:	Melbourne
DATE OF HEARING:	5 December 2023
DATE OF RULING:	7 December 2023 (oral); 19 December 2023 (in writing)
CASE MAY BE CITED AS:	Capital Bridging Finance v NVP
MEDIUM NEUTRAL CITATION:	[2023] VCC 2392

REASONS FOR RULING
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SUMMARY JUDGMENT – default in payment of money due under mortgage – summary judgment sought by plaintiff for possession of property – possession  ordered.

MORTGAGES – ACCOUNTING – circumstances in which an account can be ordered against mortgagee – Rowe v National Australia Bank Limited [2019] WASCA 140 at [113]-[124].

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B Carew	Piper Alderman
For the First Defendant	No appearance
For the Second and Third Defendants	Mr B McNab (Diamonds Solicitors)

HER HONOUR:

1On 8 December 2023 I made the following orders:

1.The plaintiff recover possession of the property at 42 Scenic Drive, Point Cook, in the State of Victoria, being the property more particularly described in Certificate of Title Volume 10607 Folio 350, from Jordan Kovco, the second defendant.

2.The second defendant pay the plaintiff’s costs of the summons filed 3 November 2023 on an indemnity basis, to be taxed in default of agreement.

2I gave the ruling which gave rise to those orders, orally, on 7 December 2023.

3A request for transcript of the oral ruling has been made, and given the time of year and the time that it can take for transcript to be provided,  I now put the ruling into writing.

4Orders are sought that the plaintiff have possession of the second defendant’s property located at 42 Scenic Drive, Point Cook, Victoria, being the land more particularly described in the Certificate of Title, Volume 10607, Folio 350.  That is sought as a result of a summons that was issued by the plaintiff on 30 October 2023.  Affidavits were before the Court of Jordan Kovco dated 19 July 2023, three affidavits of Robert Norton, dated 21, 27 July and 30 October 2023, and a further affidavit of Jordan Kovco of 1 December 2023.  Submissions have been filed on behalf of the plaintiff dated 4 December 2023, citing a number of authorities (some of which have been provided to the Court), and submissions have been filed on behalf of the second defendant dated 5 December 2023. 

5I will make the order for possession.  There is no defence to the possession that is sought, in the circumstances.

6The second defendant mortgaged his property to the plaintiff and he has defaulted in payment of money due.

7Under s 78 of the Transfer of Land Act 1958 (Vic), the mortgagee may enter into possession of the mortgaged or charged land and may do so after there has been default of payment in the principal sum. The mortgage, itself, in this case, also provides the remedy of possession to the mortgagee as soon as there has been an event of default, and without there being any need to give notice to the debtor. I am referring, there, to clauses 338 and 339 of the mortgage, which is an exhibit in the case.

8As against that, it was argued for by Mr McNab, solicitor for the second defendant, that the second defendant wants an accounting of the amount that is due.  This is an argument that had already been abandoned, having first been raised by the second defendant in the Summons he filed, dated 14 July 2023. It was then brought back to life by Mr McNab in his submissions before me.  I am not persuaded that it is appropriate for the Court to order a taking of accounts when there has been no offer to redeem the amount of the mortgage by offering of the amount that the mortgagee says is due under the mortgage.  This is not a matter I consider is amenable to the discretion of the Court.  I was taken to a number of authorities, and I have had a look at a number more, which make it quite clear that the equity of redemption, which is what was being suggested is in some way what the second defendant seeks to rely on, is available where the amount is due under the mortgage has been tendered.

9Further, an accounting is provided once.  It is provided once after the mortgagee enforces its rights, which will be when the relevant loans have been finalised, or if the amount claimed to be due is tendered.  This has not occurred at this point and I refer to Rowe v National Australia Bank Limited,[1] which usefully sets out principles in relation to redemption of mortgage at paragraphs 113 through to 124. At paragraph 116, it states that:

Where the mortgagor offers to redeem the mortgage, it is entitled to a redemption statement or payout figure from the mortgagee and, at least generally speaking, has a right to know how the figure is arrived at. If the mortgagee fails to provide the information, the mortgagor is entitled, in the redemption suit, to ascertain that information either on discovery, or by an order for accounting if necessary, or, if need be, by a special order for an inquiry. 

[1][2019] WASCA 140.

10We are not at the point where an order for accounting is necessary.  First of all, the second defendant is aware, generally speaking, of the amount that is sought by the plaintiff. As deposed to in the affidavit of Jordan Kovco dated 1 December 2023, he was provided with a payout figure on 13 October 2023 and then a breakdown of that figure on 16 October 2023. Mr Carew said that he was instructed the second defendant was provided with relevant PEXA statements at the time of the attempt to effect settlement on 13 October 2023. The PEXA statements were sent to the Court but not the subject of an affidavit.

11There was no attempt to redeem, other than by, it seems, offering to pay an amount significantly short of the amount that the mortgagee says is due under the mortgage.  This is not the time to quibble about the amount that is due and I do not use that phrase lightly.  Clearly, it is important that the mortgagee only takes the amount that is due, but the mortgagor has other remedies available if something else occurs.  It is also entitled to bring a suit in relation to redemption, at any time up until sale or foreclosure of the property.  There has not been a tender of the amount, there has not been a redemption suit brought, and it is not appropriate to hold up the entitlement that the plaintiff has, and has had since there was default in payment, of possession of the property. 

12Mr McNab suggested that, in some way, the plaintiff had clogged the equity of redemption by taking the assignment of an additional mortgage.  I was not provided with any authority in relation to this and I do not accept that this could in any way clog the equity of redemption.  It is a common thing for a mortgagee to take over another mortgage, and it is certainly not something that stops there being a tendering, if the mortgagor wants to, of the amount that is presently due under the mortgage.  (Later, argument can be made about whether too much has been sought by the mortgagee.)   

13No argument was put for the second defendant as to why Rowe and the other authorities that were referred to in the course of the hearing, should not be followed.

14In Project Research Pty Ltd and Permanent Trustee of Aust Ltd,[2] in the Supreme Court of New South Wales, Hodgson J said, ‘[h]owever, where the disagreement between the mortgagor and mortgagee depends upon some details of the accounts’. He goes on to say:

… it seems to me that if a mortgagor is seeking to redeem and asks for a payout figure, the mortgagee should normally give such a figure. Failure to do so could be misconduct, rendering the mortgagee liable to costs if redemption proceedings are brought as a result of that failure. The payout figure would normally be the principal and interest to the date of redemption, plus costs and expenses to the date of redemption, including the actual costs of discharging the mortgage.

What then if the mortgagor disputes such a figure given by the mortgagee, and says he will pay it under protest?

(I interpose here.  There has not been any offer to pay under protest here.  That would be the appropriate course.) 

[2](1990) 5 BPR 11,225 at 11,229.

15His Honour goes on:

I put this proposition to Mr Wales during argument in this case, and, at that time, it seemed to me that it would not be open for the mortgagee to say in those circumstances, “That exposes me to proceedings against which I am entitled to costs except in cases of misconduct, so my payout figure is now increased to cover my costs of these anticipated proceedings.”[3]

And on he goes. 

[3]Ibid.

16This case is one example among many of the cases that I have looked at in continuing to look at this particular issue. It is quite apparent that Mr Carew is right in what he has submitted to the Court, that there needs to be a tender of the amount before the issue of redemption arises, and that has not occurred.

17The second defendant also argues that the plaintiff has relied on the Defendants’ Notice of Default served for the purpose of its claim, and says that Notice is clearly defective on the face of it.  First of all, I do not agree that the Notice is defective, relevantly, but I need not get into that, because the Notice is not relevant to the claim of possession. (No notice is required for the mortgagee to be entitled to possession.) Finally, it is put by the second defendant, in answer to the Notice, that the second defendant has offered payment of $960,000 on 13 October 2023, and that any default has been cured if there was one. However that was not a tender of the amount that was due under the mortgage.

18Accordingly, I make the order for possession of the property.

19Indemnity costs were sought in the plaintiff’s summons.   The mortgage provides for legal costs to be paid on a full indemnity basis or on a solicitor and own client basis, whichever is the greater (clause 217).    Costs on an indemnity basis are ordered, to be taxed in default of agreement.

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Certificate

I certify that these 5 pages are a true copy of the reasons for the ruling of Her Honour Judge Marks, delivered on 7 December 2023 and put in writing on 19 December 2023.

Dated: 19 December 2023

Jack Rudman

Associate to Her Honour Judge Marks