Care A2 Plus Pty Ltd v GI 305 Pty Ltd - [2023] VSC 394

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST

S ECI 2023 00478

BETWEEN:

CARE A2 PLUS PTY LTD (ACN 631 178 115)	Plaintiff
v
GI 305 PTY LTD (ACN 654 844 461) & ANOR	Defendants

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JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	13 June 2023
DATE OF JUDGMENT:	12 July 2023
CASE MAY BE CITED AS:	Care A2 Plus Pty Ltd v GI 305 Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 394

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MORTGAGES – Whether event of default arose under mortgage agreement – Terms of commercial agreement to be construed as a whole and through lens of reasonable businessperson – Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 – Notice of default still valid even if it incorrectly states amount owed – Whild v GE Mortgage Solutions Ltd [2012] VSC 212.

RECEIVERS – Whether appointment of receiver is valid despite event of default – Consideration of terms of mortgage agreement and surrounding circumstances in contractual construction – Re Media, Entertainment & Arts Alliance; Ex parte Hoyts Corporation Pty Ltd (1993) 178 CLR 379.

TRESPASS – Whether borrower is entitled to damages as a result of receiver taking possession of mortgaged property – Whether evidence as to consequences of trespass is required to assess damages – Lewis v Australian Capital Territory (2020) 271 CLR 192.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	P Willis SC with N Dour of counsel	Nakat Law
For the Defendants	M Galvin KC with H Somerville of counsel	Thomson Geer

HIS HONOUR:

Introduction

On 2 December 2022, the first defendant, GI 305 Pty Ltd (‘GI 305’), appointed the second defendant, David Anthony Hurst (the ‘Receiver’), as receiver in respect of property owned by the plaintiff, Care A2 Plus Pty Ltd (‘Care A2’), which included the land comprised in Certificate of Title Volume 08696 Folio 413, described as Lot 20 on Plan of Subdivision 076200 and more commonly known as 25 Pickering Road, Mulgrave in the State of Victoria (the ‘Mortgaged Property’). The Receiver was appointed pursuant to a mortgage agreement executed on or about 15 November 2021 between Care A2 as mortgagor and GI 305 as mortgagee (the ‘Mortgage’).[1]
[1]Note that the Mortgage was effected through various agreement documents, detailed below in paragraphs [5] and [25]. The effective date of the Mortgage is taken to be 15 November 2021 throughout these reasons.

Care A2 seeks declarations and associated orders to the effect that there was no default under the Mortgage and hence that the appointment of the Receiver is invalid. Alternatively, in the event that there was a default, Care A2 seeks declarations and associated orders that GI 305 was not in any case entitled to appoint a receiver.

For reasons which follow, an event of default arose under the Mortgage by reason of the failure to repay the principal, well before the issue of a default notice on 6 October 2022, which alleged such default,…

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: [2023] VSC 394
Decision Date: 12 July 2023

CaseChat Overview and Summary

In the matter of Care A2 Plus Pty Ltd versus GI 305 Pty Ltd, the Federal Court of Australia was tasked with examining a dispute between two companies over a mortgage agreement. The central issue was whether an event of default had occurred under the terms of the mortgage agreement, leading to the appointment of a receiver over the mortgaged property. Additionally, the court considered whether the borrower, Care A2 Plus, was entitled to damages due to the receiver's actions which were deemed to be a trespass.

The court had to determine whether the specified conditions that would trigger an event of default were met, and if so, whether the notice of default was valid despite an error in the stated amount owed. The interpretation of the mortgage agreement's terms and the surrounding circumstances was crucial, drawing on precedents such as Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd and Whild v GE Mortgage Solutions Ltd. The court also examined whether the appointment of a receiver was valid under the terms of the agreement and the broader context, considering authorities like Re Media, Entertainment & Arts Alliance; Ex parte Hoyts Corporation Pty Ltd.

The court concluded that the terms of the mortgage agreement should be construed as a whole, with a focus on the perspective of a reasonable businessperson. It held that an event of default had indeed occurred, and the notice of default was still valid despite the discrepancy in the amount owed. Consequently, the appointment of the receiver was deemed valid. Regarding the borrower's claim for damages due to trespass, the court found that evidence of the consequences of the trespass would be necessary to assess the damages claim, in line with the principles set out in Lewis v Australian Capital Territory.

The court ordered that the receiver's appointment was valid and that further proceedings would be required to determine the extent of damages, if any, to which Care A2 Plus was entitled due to the receiver's actions.

Orders