Coleman v First Mortgage Capital Pty Ltd
[2019] VSC 643
•13 September 2019 (revised 20 September 2019)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
| MICHELLE LEE-ANNE COLEMAN & ORS (ACCORDING TO THE ATTACHED SCHEDULE) | Plaintiffs |
| v | |
| FIRST MORTGAGE CAPITAL PTY LTD (ACN 150 210 736) | Defendant |
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JUDGE: | KENNEDY J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 13 September 2019 |
DATE OF RULING: | 13 September 2019 (revised 20 September 2019) |
CASE MAY BE CITED AS: | Coleman & Ors v First Mortgage Capital Pty Ltd |
MEDIUM NEUTRAL CITATION | [2019] VSC 643 |
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PRACTICE COURT - Application for urgent injunction to restrain mortgagee auction of property – Where mortgagor in default – Mortgagor sought to hold off auction on the basis of conditional offer – Application refused where no serious questions raised - Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161 also applied – Application refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | - | Ms M Coleman (appeared in person on behalf of the plaintiffs) |
| For the Defendant | Ms Y Hajizi (Solicitor appeared by telephone) | Summer Lawyers |
HER HONOUR:
This is an application seeking an order that an auction scheduled for 14 September 2019 at 2:30 pm of a property at 40 Tennyson Street Malvern East, Victoria (the Property) be cancelled or postponed.
The application is supported by an unsworn affidavit of Ms Michelle Lee-Anne Coleman, the first plaintiff, of 13 September 2019. It was filed in extremely urgent circumstances.
The defendant, First Mortgage Capital Pty Ltd ACN 150 210 736 (First Mortgage Capital), was given notice of this application and appeared by telephone by Ms Yasmin Hijazi, at a hearing listed on 13 September 2019 at 7.00 pm.
Background
The plaintiffs, (Ms Coleman, Ms Marie Poole and Mr Kenneth Poole) are three individuals who are registered proprietors of the Property. Ms Coleman has been provided with authority from both Ms Poole and Mr Poole to bring this application. First Mortgage Capital is the second registered mortgagee, with the Bendigo and Adelaide Bank Limited being the first registered mortgagee.
On 5 December 2018, Wealth Division Property Pty Ltd, Fortunam Blackburn Pty Ltd in its corporate capacity and as Trustee for the Blackburn Road Trust and Fortunam Malvern Pty Ltd in its corporate capacity and as Trustee for the Malvern Unit Trust (collectively, the Companies) obtained a loan from First Mortgage Capital. The plaintiffs are all listed as guarantors to the loan. The loan was for an amount of $625,607.00 with a loan repayment date of 4 June 2019. The Property was one of the three properties that were given as security in respect of this loan.
Ms Coleman has acknowledged that the loan is in default and has been since 4 June 2019. By email on 8 July 2019, Ms Coleman received certain default notices dated 14 June 2019 which were addressed to the Companies (they may have been served earlier as well but it was unclear).
The first notice was a notice of default and demand, which included the loan over the Property. It provided that:
‘You have 14 days after service of the Notice to pay the Amount Owing to the Lender.’
As at 14 June 2019, the total amount owing was $665,333.46.
The covering letter to the notice included the following statement:
‘Read the notice carefully as the Lender may immediately seizing [sic] possession of the Land without notice or need for court intervention.’
There were a further three notices dated 14 June 2019 for each of the properties. However, relevantly for current purposes, a notice of default and demand for the Property were sent pursuant to s 76 of the Transfer of Land Act 1958 (Vic) (Section 76 Notice). These notices again set out that there was a default and gave 31 days after service of the notice to pay the amount owing of $665,333.46.
The section 76 Notice included the statement:
‘If the Amount Owing is not paid within thirty-one (31) days after service of this Notice the Mortgagee proposes to exercise its power of sale as registered mortgagee in relation to the Land.’
On 19 July 2019, Ms Coleman sent an email to Summer Lawyers, the solicitors for First Mortgage Capital, requesting an extension of time of two weeks to pay the loans. In response, by correspondence of even date, Summer Lawyers stated that it had instructions to proceed with enforcement as First Mortgage Capital had not received any payment from the debtors.
On 22 July 2019, Ms Coleman again wrote an email requesting a further extension and indicated that she had a conditional approval for refinance and requested one extension so that First Mortgage could get paid out in full.
On 23 July 2019, Summer Lawyers advised that First Mortgage Capital had advised that they would grant a two week extension for the debts across the two loans to be discharged, provided that a payment of $50,000 was paid by close of business on Friday 26 July 2019.
In the result, no payment of $50,000 was received by 26 July 2019. Rather, on 26 July 2019 Ms Coleman requested a loan statement and asked that the outstanding debt be reduced.
On 2 August 2019, Summer Lawyers wrote back in response saying:
‘As the current arrears on your combined loans of Wealth Division Property Pty Ltd and Triple A Investments Pty Ltd (the Loans) is in excess of $113,530.00, our client requested a payment of $50,000.00 to reduce the arrears, whilst you finalised your refinance.’
In the result, no payment was made.
On 11 September 2019, Ms Coleman says that she found out that the Property was listed for auction, when her builder drove past the Property and messaged her.
The plaintiffs have now obtained a conditional offer of finance from Capital Securities Australia Pty Ltd dated 10 September 2019. It is not signed but it was provided to First Mortgage Capital’s representatives on 13 September 2019.
The offer also includes a condition at Part 6, which requires second registered mortgages over six properties including one at 7 Meakin Street, East Geelong VIC. This is a property over which the defendant is holding security for another loan that remains unpaid by Triple A Investments Pty Ltd ACN 121 515 964 in its corporate capacity and as Trustee for Triple A Investment Trust. Ms Coleman is listed as guarantor to that loan.
Injunction
Legal Principles
The principles governing the grant of an interlocutory injunction are well established.
The Court has jurisdiction and power to grant an injunction pursuant to order 38 of the Supreme Court (General Civil Procedure Rules) 2015.
The applicant must establish three criteria:[1]
[1]Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, 68 [19] (Gleeson CJ and Crennan J); See also 82 [65] (Gummow and Hayne JJ).
(a) there is a serious issue to be tried as to its entitlement to relief at trial. In order to satisfy that requirement, the applicant must make out a prima facie case as to its entitlement to that relief, in the sense that it must show a sufficient likelihood of success at trial to justify, in the circumstances, the preservation of the status quo pending trial;
(b) that the applicant is likely to suffer injury for which damages is not an adequate remedy; and
(c) that the balance of convenience favours the granting of an injunction.
In terms of balance of convenience, the Court of Appeal in Bradto Pty Ltd v State of Victoria stated:[2]
In our view, the flexibility and adaptability of the remedy of injunction as an instrument of justice will be best served by the adoption of the Hoffman approach. That is, whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been ‘wrong’, in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial.
Serious issue to be tried
[2](2006) 15 VR 65, 73 [35].
No serious issue is raised on the material before me. In particular, the notices appear to be validly prepared. The plaintiffs also do not dispute the debt.
In such circumstances the application must be refused. However the other factors will be examined below for the sake of completeness.
Adequacy of damages
The property is a vacant block. Although Ms Coleman suggested that she would ultimately like to make the property her own, there was also no evidence that it possessed any unique characteristics.
In such circumstances the plaintiffs have not demonstrated that damages will be inadequate.
Balance of convenience
I have taken into account that the plaintiffs would like more time.
In submissions before me, Ms Coleman also submitted that there was not a sufficient time period to market the property to obtain the best fair market price; that the property was marketed with DA-approved plans which were not the latest approved plans; that renders were being used that were not paid for; there were not the correct orders to take possession; and that I should have regard to the offer of conditional finance. Finally, that there was no prejudice to the defendant if the date was moved.
In response to these various submissions, the defendant advised the court that the marketing period commenced on 16 August and, as best as could be determined, has been appropriate. A market valuation was also being held for the property.
The defendant denied that the plans were out of date. In circumstances where there is no evidence about the matter this does not assist the plaintiffs.
The “renders issue” was also not the subject of evidence and would not appear to challenge the rights of the mortgagee.
In terms of the “correct orders”, I have examined the notices (as I have set out above) and can find no defect.
In terms of the offer of conditional finance, the defendant has considered the offer and found it not suitable. This appears to be justifiable in circumstances where the offer has not even been signed, and given the terms of condition 6.
In terms of moving the date, the defendant highlighted that there did not appear to be any utility in putting off the auction in circumstances where the plaintiffs have previously been given time to refinance this facility.
Moreover:
·there is a first-registered mortgagee who is also standing by supporting this sale, and who also alleges a default;
·there is interest accruing;
·there are significant costs that have been already incurred including on a marketing campaign that has been already advanced and is nearly complete;
·finally, there is significant delay in bringing this matter to the court.
Having regard to all of these factors, the balance of convenience is against the grant of the relief sought.
Summary
The plaintiffs have failed to demonstrate a serious issue to be tried. Further, that damages are inadequate. The balance of convenience also weighs against the grant of the relief sought.
Additional matter
There is an additional long established principle set out in Inglis v Commonwealth Trading Bank of Australia,[3] which is that, as a general rule, an injunction will not be granted restraining a mortgagee from exercising powers conferred by a mortgage, and in particular, a power of sale, unless the amount of the mortgage debt, if this is not in dispute, is paid.
[3](1972) 126 CLR 161, 164.
In circumstances where the plaintiffs are not in a position to pay the amount claimed by the mortgagee into court, there is an additional reason for refusing relief.
Conclusion
The following orders will be made:
(a) The plaintiffs’ application for an order that the auction scheduled for 14 September 2019 at 2.30 pm of the property situated at 40 Tennyson Street Malvern East VIC 3145 be cancelled or postponed is dismissed.
(b) The defendant’s costs are reserved.
(c) On or before 4.00 pm on 16 September 2019, the plaintiffs are to file the Writ, Statement of Claim dated 13 September 2019, Summons dated 13 September 2019 and a sworn affidavit of Michelle Lee-Anne Coleman.
| SCHEDULE OF PARTIES | |
| BETWEEN | |
| MICHELLE LEE-ANNE COLEMAN | First Plaintiff |
| MARIE-THERESE POOLE | Second Plaintiff |
| KENNETH GORDON POOLE | Third Plaintiff |
| AND | |
| FIRST MORTGAGE CAPITAL PTY LTD (ACN 150 210 736) | Defendant |
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