Commonwealth Bank v Selby-Fullgrabe; First Mortgage Co Home Loans P/L v Perre; National Australia Bank v Dinh & Ho (No 2)
[2011] SASC 102
•30 June 2011
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
COMMONWEALTH BANK v SELBY-FULLGRABE; FIRST MORTGAGE CO HOME LOANS P/L v PERRE; NATIONAL AUSTRALIA BANK v DINH & HO (No 2)
[2011] SASC 102
Reasons of Judge Withers a Master of the Supreme Court
30 June 2011
PROCEDURE
Summons for possession - applications for dispensation of requirement of notices under Law of Property Act and National Credit Code.
Law of Property Act 1936 (SA) s 55A; National Credit Code s 88(5) and s 93(2)(c), referred to.
Bank of Queensland Limited v Dutta [2010] NSWSC 574, applied.
Hindmarsh Building Society v Manhire (1979) 20 SASR 206; Lamshed v Plakakis (1988) 47 SASR 316; Storr v Stoilov (2007) 252 LSJS 165; Commonwealth Bank of Australia v Saunders (1995) 181 LSJS 363; St George Bank Limited v McCormack (No 2) [2008] SASC 39, considered.
COMMONWEALTH BANK v SELBY-FULLGRABE; FIRST MORTGAGE CO HOME LOANS P/L v PERRE; NATIONAL AUSTRALIA BANK v DINH & HO (No 2)
[2011] SASC 102
JUDGE WITHERS. These reasons should be read in conjunction with my reasons for decision delivered on 7 April 2011 in the matter of Commonwealth Bank of Australia v Selby-Fullgrabe & Anor, and First Mortgage Company Home Loans Pty Limited v Perre & Anor [2011] SASC 48. In those reasons I found that notices of default issued by the plaintiff prior to the institution of proceedings seeking possession of properties subject to mortgage were defective. I adjourned the making of final orders following those reasons to allow the plaintiff in each action to consider same and to make such applications they thought appropriate.
Three further applications have now been argued before the Court on 31 May 2011 involving the first two matters referred to above, together with a further matter of National Australia Bank Limited v Dinh & Anor. In this last matter like proceedings had been issued by the plaintiff and there was a similar defect with the notices of default on which the proceedings relied. In relation to the first defendant that notice had been collected on a registered post delivery on 23 October 2010 and by the second defendant on 17 November 2010. In the notices of default the rectification date was nominated as 21 November 2010. In terms of my earlier ruling that impermissible gap between service of the notice and the rectification date resulted in a defective notice of default.
In each of the above matters an interlocutory application was issued on the part of the plaintiff seeking the following orders:
1.That the Court dispense with the requirement of notice under section 55A of the Law of Property Act 1936 (SA) in these proceedings, in accordance with section 55A(2a) of the Law of Property Act 1936 (SA).
2.That the Court authorise the commencement of these proceedings by the Plaintiff, despite the requirement to give a default notice and wait until the period specified in the default notice has elapsed before beginning enforcement proceedings in section 88 of the National Credit Code, in accordance with section 88(5)(c) of the National Credit Code.
3.Costs in the cause.
In the Commonwealth Bank of Australia v Selby-Fullgrabe & Anor (“CBA v Selby-Fullgrabe”), that application was supported by an affidavit of the solicitor for the plaintiff filed 16 May 2011. Further reliance was placed on affidavits of Mr Nicholson filed 26 May 2011, and another affidavit of Mr Nicholson sworn on 31 May 2011 in respect of which an undertaking to file was given.
In First Mortgage Company Home Loans Pty Limited v Perre & Anor (“First Mortgage v Perre”), an interlocutory application seeking similar orders was filed on 2 May 2011. This application was supported by an affidavit of the solicitor for the plaintiff filed on the same date. Further affidavits were filed in support of the application by another solicitor for the plaintiff on 11 May 2011, and again by the solicitor for the plaintiff on 16 May 2011. A final affidavit of the solicitor for the plaintiff was filed on 16 May 2011. There was no appearance by the defendants at the argument on 31 May 2011.
As to National Australia Bank Limited v Dinh & Anor (“NAB v Dinh”), an interlocutory application seeking the same orders as in CBA v Selby-Fullgrabe was filed on 11 May 2011, supported by an affidavit of an authorised officer of the plaintiff filed 13 May 2011. Ms Ho, the second defendant in that matter, attended at the argument on 31 May 2011 and advised the Court that the defendants were engaged in selling the property, that agents had been appointed and that a contract was expected to be signed in the next several days. This contract was subject to agreement as to a settlement period. She was seeking one month. She said that if the Court eventually gave the plaintiff a dispensation and made an order for possession then she would accept a six week order for possession as giving the defendants adequate time to complete their efforts to sell the property.
There was no appearance by or on behalf of the Selby-Fullgrabes, nor any appearance by or on behalf of the Perres.
I am satisfied that notice of the applications, affidavits and hearing date had been provided to all defendants. Each matter has been before the Court on a number of occasions prior to 31 May 2011.
The plaintiff filed an outline of submissions which applied to all three interlocutory applications. It is convenient to deal with all three applications together. In essence the applications and submissions seek dispensations in relation to the requirement of notice both under the Law of Property Act 1936 (SA) (“LPA”) and under the National Credit Code (“Code”).
Section 55A(2a) of the LPA is in the following terms:
(2a) Upon the application of a mortgagee, a court may dispense, upon such terms and conditions as it thinks fit, with the requirement of notice under this section.
Section 88(5) of the Code provides:
(5)A credit provider is not required to give a default notice or to wait until the period specified in the default notice has elapsed, before beginning enforcement proceedings, if:
(a) the credit provider believes on reasonable grounds that it was induced by fraud on the part of the debtor or mortgagor to enter into the credit contract or mortgage; or
(b) the credit provider has made reasonable attempts to locate the debtor or mortgagor but without success; or
(c) the court authorises the credit provider to begin the enforcement proceedings; or
(d) the credit provider believes on reasonable grounds that the debtor or mortgagor has removed or disposed of mortgaged goods under a mortgage related to the credit contract or under the mortgage concerned, or intends to remove or dispose of mortgaged goods, without the credit provider’s permission or that urgent action is necessary to protect the mortgaged property.
Law of Property Act – Section 55A(2a)
In Hindmarsh Building Society v Manhire (1979) 20 SASR 206, Legoe J considered the validity of a notice from a mortgagee to a mortgagor of the mortgagee’s intention to exercise the power of sale. The notice failed to state any time within which the mortgagor was required to remedy the breach contrary to the requirements of s 55A of the LPA. His Honour found that the notice was defective but that in the circumstances of that particular case an order should be made dispensing with the requirement of notice under s 55A subject to a condition that the mortgagor have six weeks from service of the order within which to remedy the breach.
His Honour’s decision is authority for the proposition that where a notice of default is issued that is defective in not complying with the requirements of s 55A then there is a power in the Court under s 55A(2a) to exercise a discretion to make remedial orders if the justice of the case so requires. Various factors have been found to be influential in a Court deciding whether or not to exercise the discretion under s 55A(2a).
In Hindmarsh Building Society v Manhire, Legoe J found:
(1)that the lengthy period of the default by the mortgagee was insufficient in itself to warrant the exercise of the discretion;
(2)that a combination of the borrower knowing from the notice that the bank would exercise its power of sale if the default was not remedied and the borrower having ample time to remedy the default at the time that the order for possession was sought were factors that in his Honour’s mind justified the exercise of the discretion, albeit on conditions.
Perry J in Lamshed v Plakakis (1988) 47 SASR 316, declined to exercise his discretion to dispense on an application under s 55A(2a), following Legoe J in Manhire in terms of the length of the default not being a sufficient factor to warrant exercise of the discretion but finding that because there were allegations that the mortgage was void or voidable and that the mortgagor had not actually received the loan, those were sufficient factors to persuade his Honour that the discretion should not be exercised.
His Honour Judge Lunn in Storr v Stoilov (2007) 252 LSJS 165; [2007] SASC 426, reviewed the authorities on the exercise of the discretion under s 55A(2a). In [14] of his decision, his Honour set out a number of factors to be taken into account in considering whether or not the discretion to dispense with the full requirements of the notice should be exercised. Those factors included:
(1)That s 55A was protective consumer legislation which should be beneficially construed in favour of mortgagors. His Honour said:
… Its function is to give a last chance to mortgagors to avoid what will usually be the draconian and expensive consequence of default in being evicted from their homes. The requirements of s 55A are not particularly onerous for a mortgagee in requiring the service of a relatively simple notice as a pre-requisite to taking the legal steps to deprive mortgagors of their homes if their defaults continue.
… As a general rule the more substantial the non-compliance the more reluctant the Court should be to dispense with the requirement for it. …
(2)In the matter before him the non-compliance was a substantial amount.
(3)Is there an adequate and acceptable explanation for the default? The plaintiff would ordinarily bear the consequences of any mistake by the plaintiff’s attorney and agent.
(4)The fact that monies may have fallen due during the course of the action and that there were significant arrears is a factor to be taken into account but does not of itself justify a dispensation.
(5)The creation of delay and additional expense if a dispensation is not granted will be significant in some cases but not in others. It is again a factor to be taken into account.
(6)The Court is more ready to grant dispensations to mortgagees who readily acknowledge their defaults early in the proceedings and do not occupy judicial resources in pursuing what they ultimately acknowledge are untenable positions.
(7)The onus is on the plaintiff to show the justice of the matter is in favour of the dispensation.
His Honour granted primacy to s 55A being a piece of consumer protection legislation and to the gross default of the plaintiff in not complying with its provisions. He found that the plaintiff had not shown that justice would be served by a dispensation and refused same.
His Honour Judge Anderson in Commonwealth Bank of Australia v Saunders (1995) 181 LSJS 363, refused to exercise the dispensing discretion under s 55A of the LPA. However, that refusal was in circumstances where the defendant was not in default such that there was any justification for the issue of a notice in any event. That matter went on appeal to the Full Court, Commonwealth Bank of Australia v Saunders (1995) 64 SASR 428, but the Court did not consider his Honour Judge Anderson’s refusal of the application for dispensation.
Again, his Honour Judge Lunn declined to grant a dispensing order in St George Bank Limited v McCormack (No 2) [2008] SASC 39 because he found that the notice overstated the amount of enforcement expenses due by an amount of at least $93.00 and that the overstatement could be much more. His Honour relied on the decision of Perry J in Lamshed v Plakakis (supra). His Honour found that there was a public policy consideration in the McCormack matter in that the notice included a claim for legal costs to which the plaintiff was not entitled and no explanation had been provided as to why that excessive sum was included in the notice. That was a failure that undermined the basis for any dispensation. His Honour found that as a matter of public policy and in the interests of justice it was not appropriate to grant any dispensation in respect of that particular notice having regard to the nature of the defect. He held in [13]:
... Here, the onus was on the plaintiff to satisfy the Court that there was a proper innocent explanation for the overcharging and on the evidence presented it has not discharged the onus upon it to do so. …
His Honour declined to grant a dispensation.
National Credit Code – Section 88
As to s 88 of the Code, I note that counsel was unable to refer the Court to any decisions on that provision. It is a provision that has only recently come into existence. Its predecessor was s 80 of the Uniform Consumer Credit Code. This provision was considered by Davies J in the Supreme Court of New South Wales in the matter of Bank of Queensland Limited v Dutta [2010] NSWSC 574. That matter involved proceedings seeking the recovery of three loans. Section 80 of the Code was applicable to only one of those three loans.
His Honour found that the failure for an appropriate notice to be given was no more than an irregularity at the commencement of the proceedings. He noted that s 80 did not confer jurisdiction for bringing the proceedings – see [155]. However, his Honour was prepared to utilize the dispensing power in s 80, which was in similar terms to that contained in s 88 of the Code. At [157] to [159], his Honour said:
[157] However, if I am wrong in my approach to the proper construction of s 80 I would authorise the Plaintiff in the present case nunc pro tunc to bring the present proceedings for these reasons. First, the failure to serve the s 80 notice resulted from the view of the Bank that the Code did not apply to the Line of Credit. Although I have held, on the basis of the authorities, that the Code does apply, there are authorities to the opposite effect. Secondly, the issue arose in the present case precisely because Mr Dutta did not use the funds he obtained for the purposes he had advised to the Bank at the time he applied for the Line of Credit and for its increase. The purposes he advised to the Bank, if he had used the money for those purposes, would have resulted in the Code not applying to the loans. In that regard the Bank’s failure to serve a notice was neither contumelious nor a highhanded disregard for its obligations.
[158] Thirdly, the Defendants are not disadvantaged because they were served with a s 57 notice which complied with the provisions of s 80 except to the extent that I have discussed … The notice specified the default and specified what was required to be done to remedy the default. Although it did not contain the notification concerning subsequent defaults, that was not relevant in the present circumstances.
[159] Furthermore, it would not be consistent with the just, quick and cheap resolution of the real issues in the proceedings if, having found that the Defendants had not made out any defences under the Code, it would still be necessary to dismiss the present proceedings simply to enable the service of a s 80 notice so that new proceedings could be properly commenced. [Italics mine.]
In my view the same approach should be taken to s 88 of the Code. It provides the Court with a discretion to grant a dispensation after proceedings have been issued which prove to be based on a defective notice. That dispensation can be granted nunc pro tunc. Again, the overriding criteria will be whether the justice of the case supports the granting of a dispensation. The criteria relevant to that issue for an application under s 55A(2a) of the LPA apply equally to considering an application for a grant of dispensation under s 88 of the Code.
I turn now to each of the individual cases.
Commonwealth Bank of Australia v Selby-Fullgrabe & Selby-Fullgrabe – Action No 148 of 2011
The notice in this matter is set out in my earlier reasons for decision. Essentially the time between the effective service of the notice and the rectification date was less than one month. The rectification date was 8 January 2011. The first defendant collected the notice on 13 December 2010. It appears that the second defendant had collected the documents on 8 December 2010.
I note that the inappropriately short period given for remedying the default is only inappropriate by approximately five days. I note that neither defendant has made complaint about the lack of notice. I also note that the proceedings themselves were not issued until 2 February 2011, some seven to eight weeks after the notice of default was finally served. There is no suggestion that the defendants were stultified in any way from putting forward any proposals to resolve the outstanding arrears. The affidavit of the plaintiff’s solicitor – FDN 8 – sets out that the second defendant supports and consents to an order for possession being made. The second defendant has appeared on occasion at hearings of this matter and has intimated her support for that position. No complaint was made by her as to the late service of the notice.
The plaintiff’s solicitor attests that the first defendant sent an email to her on 29 March 2011 advising that he was endeavouring to sell the property, that a number of offers had been made and that in the end analysis he had no objection to a judgment being entered for the plaintiff.
On 13 May 2011 the plaintiff received an affidavit from a solicitor for the first defendant from which it was apparent that the first defendant had attested in family law proceedings that he was applying to the Australian Prudential Regulation Authority (“APRA”) for money to discharge the arrears and that he would thereafter make payments off the mortgage.
I am satisfied that notice of the hearing on 31 May 2011 was given to each defendant. A further affidavit handed up at the hearing from an employee of the solicitors for the plaintiff exhibited an exchange of correspondence between the plaintiff’s solicitors and the first defendant and his solicitors from 25 May 2011 to 30 May 2011. This correspondence disclosed an agreement reached whereby the first defendant would consent to an order for possession upon certain terms recorded in a letter from the solicitors for the plaintiff to the solicitors for the defendant of 26 May 2011. In essence the plaintiff undertook not to enforce a possession order provided that certain conditions as to payment were made and that in the event that there was any breach of those conditions the plaintiff undertook to provide notice to the first defendant pursuant to r 204A of the Supreme Court Rules 2006 before requesting the issue of any warrant of execution based on the order for possession.
There are no particular negative factors that apply in this matter. The reduction in time to respond to the notice was relatively slight and appears not to have affected any activity on the part of either defendant. The defendants now consent to an order for possession to be made. No prejudice to the defendants has been demonstrated or asserted. The justice of the case in my view supports the granting of a dispensation but on terms. Those terms are that the defendants should not be liable for the plaintiff’s costs of seeking to obtain possession of the property for any work performed between the first return date in the action and the date of this order. That work has largely been occasioned by the defective notice issued by the plaintiff. To the extent that it is not that is a penalty the plaintiff will have to bear. The plaintiff is not to recover such costs from the defendants by order of the Court. Further, it is also not to seek to recover those costs from the defendants pursuant to any term of the mortgage or loan documents.
On those conditions it is appropriate to grant the dispensation. Having regard to the consent of the defendants, it is also appropriate to grant an order for possession at this time with the Court noting that the order for possession is made upon an agreement between the parties recorded in the letter from the solicitors for the plaintiff to the solicitors for the first defendant of 26 May 2011. An order in those terms will be made.
First Mortgage Company Home Loans Pty Limited v Perre & Perre – Action No 105 of 2011
This matter involved two particular loans, one secured by a property at Victor Harbor and the other by a property at Gulfview Heights. The notices of default were served personally on the first defendant on 28 October 2010 and delivered to the letter-box of the second defendant on 3 November 2010. The notices set 25 November 2010 as the appropriate rectification date, which meant there was a shortfall in time of just under a week from the required period of at least one month.
On 15 November 2010 the second defendant advised a representative of the plaintiff that the defendants were arranging to sell both properties and they sought an extension of hardship arrangements that had earlier been entered into. Further communications occurred where the plaintiff advised the first defendant to forward any contracts for sale to the plaintiff’s office. The representative of the plaintiff confirmed that she believed the notices to have been valid when she issued them.
Further affidavit evidence discloses that the Gulfview Heights property has been sold with part of the debt to the plaintiff being discharged. Settlement has already occurred. The Victor Harbor property is likely to be subject to a contract of sale within a very short time for sale at an amount which will not meet the debt due to the plaintiff. An affidavit of the plaintiff’s solicitor filed on 16 May 2011 exhibits a letter from a person assisting the defendants in the sale of their properties in which it is indicated that the defendants are prepared to accept the anticipated offer for sale of the property but in the event that is unacceptable to the plaintiff will voluntarily surrender the property to the plaintiff to save further expense. I take that as a consent by the defendants to a possession order being made if the Court otherwise finds it to be appropriate.
In my view there is little point in not granting a dispensation in this matter. No prejudice is asserted by either of the defendants for the short time for responding to the notice. As Davies J said in Bank of Queensland v Dutta (supra):
… it would not be consistent with the just, quick and cheap resolution of the real issues in the proceedings if, … to dismiss the present proceedings simply to enable the service of a s 80 notice so that new proceedings could be properly commenced.
The parties have already moved to a resolution of the dispute between them. In my view it is appropriate to grant the dispensation under both s 55A of the LPA and s 88 of the Code, and further in light of the position of the defendants as demonstrated in the affidavit of the plaintiff’s solicitor filed on 16 May 2011 an order for possession should be made.
Again, the dispensation is conditional upon the plaintiff not seeking costs from the defendants for the period from the first return date to the date of this order either pursuant to order of the Court or pursuant to any provisions within the mortgage or loan documents. Such costs as have been incurred have largely been incurred as a result of the plaintiff’s default and it would be inappropriate for the defendants to be liable to pay same. An order will be made in those terms.
National Australia Bank Limited v Dinh & Ho – Action No 271 of 2011
This is not a matter that was considered in my earlier decision to which reference has been made. However, it is a matter where the notices of default were effectively served on 23 October 2010 on the first defendant and on 17 November 2010 on the second defendant with the rectification date being 21 November 2010. The notice was therefore defective in not providing the required period of one month within which the default could be remedied.
An affidavit of an employee of the Sydney solicitors for the plaintiff was filed in support of the application for dispensation. In that matter she attests to the service of the default notices by registered post and as to their date of collection. The latest date of collection was 17 November 2010.
On 10 January 2011 the plaintiff sent by prepaid post letters of demand to the defendants demanding payment of the full amount due. On 14 January 2011 the deponent to the affidavit had a telephone conversation with the first defendant when she was advised that they were selling the property, that the defendants had separated and that there was not enough money to make ongoing payments. She requested a copy of any contract of sale. A further letter was sent on 17 January 2011 to the first defendant seeking a copy of the sale contract. No response to that letter was received. The proceedings were instituted on 24 February 2011.
There is no suggestion that the defendants sought an opportunity to remedy the default. There is no suggestion or evidence that the defendants were prejudiced by being given inadequate notice of the time within which they could comply with the notice to remedy the default. It appears from the only evidence before the Court that the defendants had separated and that it was intended that the property be sold.
I refer to the earlier part of my reasons when I described the attendance of Ms Ho, the second defendant, at the hearing on 31 May 2011. She appeared in person and did not wish to put any submissions as to whether or not a dispensation should be granted on the notice of default but confirmed that she and the first defendant were engaged in selling the property, that they anticipated a contract for sale being received shortly, and that if the Court were minded to grant a dispensation and make a possession order then an order giving them six weeks before possession was required would give them enough time to complete their efforts to sell the property.
An explanation for the inappropriately early rectification date has been made. It is understandable in the sense of creditors and practitioners endeavouring to comply with the requirements of new legislation. In this particular matter there was only a very short time allowed for rectification, particularly in relation to service of the second defendant. However, no action was taken by the plaintiff nor was there any contact from the defendants until after the service of a notice of demand on 10 January 2011, which was well after 30 days after the notice of default. There was no suggestion in that contact that any arrears could be paid but rather the property was to be sold. That seems to have remained the case since.
For the reasons earlier given, in my view it is appropriate in this matter that a dispensation should be granted to the plaintiff pursuant to s 55A(2a) of the LPA and s 88(5)(c) of the Code upon the terms and conditions that apply to the other two matters. Accordingly, an order will be made in those terms.
The plaintiff’s application was heard on 31 May 2011. On 1 June 2011 the Court received supplementary submissions from the plaintiff delivered without permission and seeking that the Court dispense with what was a potentially defective notice of the implementation of an acceleration clause which formed part of the defective notices underlying the three actions.
The requirements to be met before a credit provider can enforce an acceleration clause are addressed in s 93 of the Code. Section 93 is in the following terms:
93Requirements to be met before credit provider can enforce an acceleration clause
(1)An acceleration clause is to operate only if the debtor or mortgagor is in default under the credit contract or mortgage and:
(a) the credit provider has given to the debtor and any guarantor, or to the mortgagor, a default notice under section 88; and
(b) the default notice contains an additional statement of the manner in which the liabilities of the debtor or mortgagor under the contract or mortgage would be affected by the operation of the acceleration clause and also of the amount required to pay out the contract (as accelerated); and
(c) the default has not been remedied within the period specified in the default notice (unless the credit provider believes on reasonable grounds that the default is not capable of being remedied).
(2)However, a credit provider is not required to give a default notice under section 88 or to wait until the period specified in the default notice has elapsed before bringing an acceleration clause into operation, if:
(a) the credit provider believes on reasonable grounds that it was induced by fraud on the part of the debtor or mortgagor to enter into the contract or mortgage; or
(b) the credit provider has made reasonable attempts to locate the debtor or mortgagor but without success; or
(c) the court authorises the credit provider not to do so; or
(d) the credit provider believes on reasonable grounds that the debtor or mortgagor has removed or disposed of mortgaged goods under a mortgage related to the credit contract or the mortgage concerned, or intends to remove or dispose of mortgaged goods, without the credit provider’s permission or that urgent action is necessary to protect the goods.
(3)…
On 1 June 2011 the plaintiff filed in NAB v Dinh an amended interlocutory application seeking in addition to the orders already sought the following order:
3.That pursuant to Section 93(2)(c) of the National Credit Code the Court authorises the plaintiff to bring into operation the acceleration provision in clause 20.1 of the Memorandum of Standard Terms and Conditions deposited at the Lands Titles Office as No 9114601.
Similar interlocutory applications were filed in CBA v Selby-Fullgrabe and First Mortgage v Perre referring to different clauses but with same effect.
As is apparent from these reasons, one of the most persuasive factors in granting the dispensation pursuant to s 88 of the Code has been that identified by Davies J in Bank of Queensland Limited v Dutta (supra) at [159], namely:
[159] ... it would not be consistent with the just, quick and cheap resolution of the real issues in the proceedings if, having found that the Defendants had not made out any defences under the Code, it would still be necessary to dismiss the present proceedings simply to enable the service of a s 80 notice so that new proceedings could be properly commenced.
In my view, that factor does not apply to the application for dispensation with proper notice in relation to the application of an acceleration clause. That issue does not affect the ability of the plaintiffs to obtain orders for possession of the security properties.
In these matters it appears at least arguably that the requirements of s 93(1) have been met in that a dispensation has been given, or is to be given, in relation to the default notices under s 88 thereby resulting in effective notices; secondly, that the default notices contained the required statements advising the debtor/mortgagor of how the position would be affected by the operation of the acceleration clause and the amount required to pay out the accelerated contract, and, thirdly, that the default had not been remedied. In those circumstances an authorisation by the Court under s 93(2)(c) is at least arguably not required to validate the notice generally. In any event a fresh notice of the implementation of the acceleration clause can be given.
The plaintiffs in their written submissions note that the statement effectively in each case in the notice of default was in these terms:
If the Total Amount Due is not paid by the Rectification Date then (without the need for the Lender to give you further notice):
(a)pursuant to the terms of your loan agreement, the whole of the amount required to pay out the loan will become immediately due and payable;
The plaintiffs argue that clause was inaccurate because – see plaintiffs’ written submissions paragraph 11:
11.1Section 93(1) meant that the acceleration clause could not operate until a Section 88 notice was validly served;
11.2The Section 88 notice has been ruled in each case not to have been validly served;
11.3Further, even if the Section 88 notice had otherwise been valid, the time at which the acceleration clause would have taken effect would not have been “the Rectification Date” but the expiration of the period of 30 days after service.
11.4Therefore, the plaintiffs cannot rely upon the acceleration clause.
The plaintiffs submit that there is in any event sufficient default for the plaintiffs to obtain an order for possession, a submission with which I agree.
In my view the defective notice of acceleration does not in these cases operate as a factor against the exercise of a discretion under s 88(5). There may be circumstances where that factor would mitigate against the exercise of the discretion if, for example, a debtor was dissuaded from endeavouring to remedy the true default by reason of the inappropriate and inaccurate notice of operation of the acceleration clause.
There is nothing to stop the plaintiffs from giving a further notice of acceleration if they choose so to do. I am not persuaded by the submissions that it is necessary or appropriate for the Court to make an order for dispensation pursuant to s 93(2)(c) in the circumstances of these particular matters. It seems to me that the orders earlier contemplated for possession and dispensation under s 88(5) adequately address the matter and to the extent that the plaintiffs might decide that any further notice of acceleration is required then that is a matter for them.
Accordingly, the further applications for dispensation under s 93(2)(c) are refused.
As these further applications might require amended Minutes of Order, I direct that the plaintiffs provide Minutes of Order to reflect these reasons. No order for costs is to be made in favour of the plaintiffs against the defendants in respect of the amended interlocutory applications and supplementary submissions, and the defendants are not to be called upon to meet those costs pursuant to any provision in the loan agreement or mortgage.
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