Caruso v Ravenswood P/L - [2017] SASC 15

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master)
CARUSO v RAVENSWOOD P/L
[2017] SASC 15
Judgment of The Honourable Justice Bampton
17 February 2017
MORTGAGES - MORTGAGEE'S REMEDIES - POSSESSION - GENERALLY
Appeal against order for possession made pursuant to Part 17 of the Real Property Act 1886 (SA).
Held:
1. Appeal dismissed.
Real Property Act 1886 (SA) Pt 17, s 132; Law of Property Act 1936 (SA) s 55A; Supreme Court Civil Rules 2006 (SA) r 204, referred to.

CARUSO v RAVENSWOOD P/L
[2017] SASC 15
Appeal from a Master

BAMPTON J: Mr Caruso is the registered proprietor of land situated at 29 Edgeworth Street, Prospect (“the property”).
Mr Caruso appeals against an order made on 7 September 2016 by a Master of this Court for possession of the property within 70 days pursuant to Part 17 of the Real Property Act 1886 (SA) (“the RPA”).
Background
On 20 June 2016, Ravenswood Pty Ltd (“the respondent”) issued proceedings pursuant to Part 17 of the RPA and r 204 of the Supreme Court Civil Rules 2006 (SA) seeking an order for possession of the property (“the summons”).
The following affidavits of John Havard, a director of the respondent, are relied on in support of the order for possession:
·Affidavit sworn 14 June 2016 (“Mr Havard’s first affidavit”);
·Affidavit sworn 18 October 2016 (“Mr Havard’s second affidavit”);
·Affidavit sworn 26 October 2016 (“Mr Havard’s third affidavit”); and
·Affidavit sworn 3 February 2016 (“Mr Havard’s fourth affidavit”).
Mr Havard deposes in his first affidavit that, on 18 May 2015, Mr Caruso mortgaged the whole of his estate and interest in the property to the respondent pursuant to the terms of a memorandum of mortgage to secure a loan of $768,417. A copy of the memorandum of mortgage[1] and a copy of the Standard Terms and Conditions[2] are exhibited to Mr Havard’s affidavit.
[1] Exhibit JH2.
[2] Exhibit JH3.
Pursuant to the terms of the mortgage Mr Caruso agreed to repay the principal sum and interest on 1 May 2016.
It was also agreed that 12 months interest in advance was payable on the drawdown of the principle sum. In his fourth affidavit, Mr Havard deposes that 12 months calendar interest was withdrawn from the principal sum and that the principal sum was due to be paid on 1 May 2016 with any further interest payments to be made on 1 May 2016 and the first day of each calendar month thereafter. Mr Havard states that he did not agree to an extension of the term of the loan and that no payments have been received since the repayment date of 1 May 2016.
Mr Havard deposes in his first affidavit that he arranged for a default notice pursuant to s 132 of the RPA to be served on Mr Caruso.[3] A copy of the default notice dated 2 May 2016 is exhibited to the first affidavit of Brenton Kitson, a licensed investigation agent, who deposes to having served the notice on Mr Caruso on 3 May 2016.
[3] FDN 2.
The default notice gives notice to Mr Caruso that the term of the mortgage had expired, that the total amount that was overdue is $768,417, and that the default could be remedied within 31 days after service of the notice by payment of the full amount due under the terms and conditions of the mortgage. The default notice conforms with the requirements of s 55A of the Law of Property Act 1936 (SA).
Mr Caruso did not respond to or comply with the default notice and the respondent commenced these enforcement proceedings.
The respondent had difficulty in serving Mr Caruso with the summons. Mr Kitson deposes in his second affidavit sworn on 20 July 2016 that, after several attendances at the property, he served the summons on 30 June 2016 by inserting a copy of the summons with a notice to occupiers into the letterbox at the property.[4]
[4] FDN 4.
On 21 July 2016, a Master made an order for presumptive service of the summons and affidavits filed in support of the order for possession.[5] Mr Caruso was served by way of presumptive service on 4 August 2016. The order for presumptive service gave Mr Caruso notice that the summons was listed for hearing on 7 September 2016.
[5] FDN 7.
At the hearing of the summons on 7 September 2016, Mr Caruso appeared in person accompanied by Mr Abdo Nassar. Mr Nassar informed the Master that Mr Caruso had a contract to sell the property for $1.2 million with settlement in three months and that, in the meantime, he would refinance within four to six weeks. The Master made an extended order for possession ordering that Mr Caruso give possession to the respondent within 70 days (in lieu of the usual 14 days) allowing him time to pursue refinancing.
On 29 September 2016, Mr Caruso filed a notice of appeal against the order for possession seeking:
1.An order quashing the order of the learned Judge and referring the matter to a single judge for determination upon a full enquiry having been made as to the validity of the Notice of Demand made by the Respondent.
2.In the alternative, an order staying the enforcement and execution of the order of the Honourable Judge Dart made on 9 September 2016.
3.Further and in the alternative an order extending the time within which the Respondent, if so ordered, is required to give possession of the said property as aforesaid, for such period as follows:
a. At the date of the settlement of the sale of the said property pursuant to a contract for the sale between the Appellant and Living Australia Pty Ltd of P.O 36 Glenelg; or
b. Within such period as this Honourable Court deems fit in all the circumstances of the case extending the time within which the Appellant is required to comply with the order of the Honourable Judge Dart made on the 9th September,
whichever is the later to occur.
Mr Caruso also filed an interlocutory application[6] seeking a stay of the order for possession or in the alternative an extension of time to comply with the order. In his affidavit sworn on 19 September 2016, Mr Caruso deposes to his land agent having secured a contract to sell the property for $1.2 million subject to planning approval being obtained on or before 20 February 2017 for the construction of 24 apartments. Mr Caruso sought a stay until 20 February 2017 pending planning approval. A copy of the Residential Contract Schedule apparently executed on 16 September 2016 by Mr Caruso and the purchaser, Living Australia Pty Ltd, is exhibit LC1 to his affidavit. Clause 19 of the Schedule headed Special Conditions refers to Annexure A. Annexure A provides that the:
Purchaser to lodge a development approval application for this site to the local government authorities (and or DAC) by the 18^th November 2016.
This contract is subject to the development approval of 24 apartments for this site to be approved by the relevant local government authorities (and or DAC) by the 20^th February 2017.
[6] FDN 12.
Further, the Schedule refers to the property being subject to two caveats; one registered in the name of Abdo Nassar and the other in the names of David Glynn Morgan and David Owen Ward.
A copy of a historical search of the Certificate of Title pertaining to the property is exhibited to Mr Havard’s third affidavit.[7] This search records that the caveat registered in Mr Nassar’s name has been withdrawn, however Mr Nassar told me at the hearing of the appeal a caveat was registered in his name on the title. I note that a further caveat was registered on 30 June 2016 in the name of Peter Balnaves.
[7] Exhibit JH4.
Mr Havard deposes in his third affidavit to the property being passed in at auction on 22 July 2016 for $800,000.
A stay was granted by a judge of this Court on 31 October 2016. The stay was not conditional upon Mr Caruso paying the amount due or any amount into Court.
In his second affidavit, Mr Havard deposes to having being informed by a town planner with the City of Prospect that an application for planning approval for the proposed development of 24 apartments would not be granted as it was “a non-compliant development”.[8]
[8] FDN 14.
The respondent’s solicitor, Karen Marie Olsson, deposes in her affidavit sworn on 28 November 2016 that she had been informed by the City of Prospect Planning Department that no development application had been lodged with the council with respect to the property. Further, Ms Olsson states that on 28 November 2016 she was informed by the Development Assessment Commission (“DAC”) that no development application had been lodged with DAC.[9]
[9] FDN 19.
Mr Caruso deposes in his affidavit sworn on 9 December 2016 that the purchaser, Living Australia Pty Ltd, had not yet been able to file the application for planning approval and an addendum to the contract of sale was signed on 16 November 2016 extending the time to lodge the development application to 10 January 2017.[10]
[10] FDN 24.
This appeal was listed for hearing on 21 December 2016. On the morning of the appeal, a certificate of sickness purporting to relate to Mr Caruso was handed to my associate by an unknown person. As there was no appearance for Mr Caruso and in light of the sick certificate, the hearing was adjourned to 1 February 2017.
At the hearing of the appeal on 1 February 2017, Mr Caruso appeared with Mr Nassar. I was informed that the development approval application had been lodged with DAC and that the contract would settle prior to 20 February 2017.
I adjourned the hearing ordering that the respondent file an affidavit deposing to the fact that the 12 months interest payable in advance was paid when the principal sum was drawn down and to the results of inquiries regarding the development application I had been informed had been lodged. I also gave Mr Caruso the opportunity to file any further evidence he sought to rely on.
Mr Havard’s fourth affidavit refers to the 12 months interest payment being made at the date of the draw down of the principal sum. Mr Havard also refers to being informed by a City of Prospect town planner that planning approval was unlikely due to lack of car parking. By reference exhibit JH6 to Mr Havard’s fourth affidavit, no application has been lodged with the City of Prospect.
Mr Havard also deposes that Toop & Toop Real Estate have valued the property at $732,000, and as at 1 February 2017 the amount owed by Mr Caruso under the mortgage was $901,063.90.
Ms Olsson deposes in her affidavit sworn on 3 February 2017 to having been informed on 31 January 2017 that no development application has been received by the City of Prospect. She further deposes to having made enquires of the DAC on 2 February 2017 and being informed that no development application has been received by DAC.
In his affidavit sworn on 13 February 2017, Mr Caruso deposes that in the circumstance that planning approval had not been obtained, he was seeking to either refinance his debt or begin negotiations with another interested purchaser. He further deposes that the property may be worth up to $1.5 million and therefore the added delay would not cause any prejudice to the respondent.[11]
[11] FDN 29.
Conclusion
Under the terms of the mortgage Mr Caruso agreed to repay the loan on 1 May 2016. As no payment had been made, the respondent commenced these proceedings. The order for possession made on 7 September 2016 gave Mr Caruso time to arrange refinancing. Mr Caruso has not made any payment other than the 12 months interest paid on the drawdown of the principal sum. Despite having the benefit of an unconditional stay, Mr Caruso has been unable to sell the property or to refinance. As no development application has been lodged with either the City of Prospect or DAC, the only conclusion to be drawn regarding the contract is that compliance with the Special Conditions set out in Annexure A of the Schedule by 20 February 2017 is impossible.
Mr Caruso has been provided with ample opportunity to complete the sale of the property or to refinance. He has not been able to effect either and there is no indication that he will be able to do so. Mr Havard has deposed that the current value of the property is $732,000 and the amount due under the mortgage is $901,063.90 as at 1 February 2017. That means the loan to value ratio is 123 per cent. As Mr Caruso has not been able to comply with his obligations to repay the mortgage, the respondent is entitled to exercise its right to possession pursuant to the mortgage and the RPA. Accordingly, I dismiss the appeal and lift the stay imposed on 31 October 2016.