Colombus Property Developments Ltd and 1Ors v Derwent Ventures Ltd

[2001] NSWSC 132

CITATION:	Colombus Property Developments Ltd & 1Ors v Derwent Ventures Ltd [2001] NSWSC 132 revised - 9/03/2001
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 1588/01
HEARING DATE(S):	28/02/01
JUDGMENT DATE:	28 February 2001
PARTIES :	Colombus Property Developments Ltd (ACN 085 581 193) (First Plaintiff) Eugene Maria Benson (Second Plaintiff) Derwent Ventures Ltd (Defendant)
JUDGMENT OF:	Santow J

COUNSEL :	Eugene Benson (In Person) (Second Plaintiff) F G Lever (Defendant)
SOLICITORS:	Dibbs Barker Gosling (Defendant)
CATCHWORDS:	MORTGAGES — No Requirement for notice to enforce by taking possession — Other factors affecting court intervention.
LEGISLATION CITED:	Real Property Act 1900: s57
DECISION:	Plaintiffs’ Summons dismissed. Costs to follow the event.

REVISED — 9 March, 2001
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J

No. 1588/01
COLOMBUS PROPERTY DEVELOPMENTS LTD (ACN 085 581 193)
First Plaintiff

EUGENE MARIA BENSON
Second Plaintiff

DERWENT VENTURES LTD
Defendant
JUDGMENT — ex tempore

INTRODUCTION

1    The matter before me is a Summons brought by the First Plaintiff Colombus Property Developments Ltd seeking to restrain a secured lender Derwent Ventures Limited, the Defendant, from interfering with the First Plaintiff’s possession and occupation of the property so secured, namely 15-17 Pittwater Road, Manly (“the Property”). The Second Plaintiff is Mr Eugene Benson, the principal and director of the First Plaintiff. The Second Plaintiff represented himself and appeared on behalf of the First Plaintiff without objection.

2    The relevant loan relates to a development of the Property by the construction of strata title units upon it.

3    The Second Plaintiff has chosen to represent himself and the First Plaintiff in circumstances where I offered him the opportunity to seek legal representation. However, despite the difficulties of representing himself and the Second Plaintiff, Mr Benson has shown an understanding of the relevant matters to sufficient degree for me to be satisfied that he has been properly heard.

4    This was in circumstances where the Defendant showed a fair appreciation of the difficulty of a self-represented litigant in these circumstances.

RESOLUTION OF APPLICATION

5    Regrettably, I am unable to avoid the conclusion that the Defendant is entitled to possession of the Property in the circumstances which here exist. Nor in those circumstances could it be said that the Defendant as mortgagee has acted in any way unreasonably. I will give my reasons for that conclusion.

6 The relevant mortgage is in conventional form over the Property and is dated 14 October 1999. The Memorandum of Mortgage appears as Annexure A and both appear as pages 8 and 9 to the affidavit of the Defendant’s affidavit given by Mr Thomas Ormshaw. It is to be read with the Memorandum containing the powers of enforcement (DX1). The power of enforcement appears in clause 4 of the Memorandum in the concluding paragraph. It authorises the mortgagee to enter into possession and to exercise powers of sale and foreclosure upon default, thus obviating reliance on any statutory power of sale or enforcement. Indeed by clause 8 of Annexure A to the Memorandum of Mortgage the requirement for any notice pursuant to s57 of the Real Property Act 1900 is dispensed with. I say this because the Plaintiffs contended that the service of notice under s57(2)(b) of the Real Property Act upon the First Plaintiff occurred when the Second Plaintiff was overseas. He acknowledged that he had returned by 1 February 2001 and there is no evidence to suggest that there was a failure to serve that notice upon the registered office of the company. I should add that the Notice was also apparently served upon Velik Solicitors who were the solicitors for the Plaintiffs; see page 11 of Mr Ormshaw’s affidavit. In any event the notice is not a pre-condition to taking possession, for the reasons I have explained. This is quite apart from the earlier mentioned clause 8 dispensing with that notice. Entry into possession is the only matter presently before me, not the exercise of power of sale.

7 Default has undoubtedly occurred. The mortgage required originally that the payment was to be effected of principal on 14 May 2000. That did not occur. Nor were interest payments made beyond those referred to in the Schedule to the s57(2)(b) Notice, that is to say, only two payments of interest were made. The first was on 23/12/99 of $20,498 and the second was on 3/2/00 of $20,000.

8    An extension of time was given to 8 December 2000 to repay capital, and on the basis of the capitalisation of interest. The correspondence relating to that extension is annexed to Mr Ormshaw’s affidavit. It is clear that no payment was effected pursuant to that extension or at all

9    On 31 January 2001 a second extension was contemplated. This followed exchange of correspondence, as is clear from the annexures to Mr Ormshaw’s affidavit. However, the conditions for that further extension were not met. The further extension was contemplated to be upon the terms set out in the letter of 31 January 2001 from the Defendant’s solicitors to the Plaintiffs’ solicitors; see page 17 of the affidavit of Mr Peters, solicitor for the Defendant. That letter confirmed agreements reached which were expressed to be conditional upon a number of specified matters. The second of these required the plan of strata subdivision for the Property to be registered within one week from 29 January 2001. As is clear from the letter being Annexure A to Mr Benson’s affidavit of 27 February 2001 the furthest that condition came to fulfilment was the lodgement of the plan on 7 February 2001 but not its registration. Thus the letter from Land & Property Information states that the relevant strata plan though lodged, "is currently under requisition”. There is no evidence that the position has changed to the point where registration was effected within the time stipulated or indeed ever.

10    A further condition is that the second and third mortgagees of the Property have to agree to cap their interest under their mortgages, as at 31 January 2001. There is no evidence that such capping ever has been agreed, let alone in legally binding form.

11    The Plaintiffs say through Mr Benson that the effect of the First Plaintiff now having obtained a letter of grant from Colonial State Bank (PX3) is that the Defendant can be assured that it will be in a position to be fully repaid, though concededly not immediately but only in some three weeks. Even if true, that on any view of matters could not satisfy the stipulation of the Defendant in its letter of 31 January 2001. This is to the effect that not only was there to be a $900,000 loan from Colonial taken up but also that $600,000 should be applied to partly repay the first mortgage. Neither has yet occurred. The Colonial loan advance is subject to conditions which may or may not be fulfilled.

12    In any event, the agreement to extend was not confirmed as required by the First Plaintiff signing the copy letter of 31 January 2001 containing the terms of the contemplated extension. On 8 February 2001 the proposed extension was withdrawn with no such confirmation received.

13 In all the circumstances, there can be no basis for restraining the Defendant from taking possession of the Property. This is a case where the breaches have been substantial and continuing. This is no proffering of the amount required to repay all monies now owing immediately, but only contingent prospects of that for the future. The argument about s57(2)(b) notice has no merit, for the reasons earlier stated.

ORDERS

14    The Summons of the Plaintiffs is dismissed.

15    Costs are to follow the event; the Plaintiffs are to pay the Defendant’s costs.

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Last Modified: 03/09/2001