Dalton v Latrobe Capital and Mortgage Corporation Limited

[2004] VSC 318

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 7550 of 2004

ALLEN RAE DALTON	Plaintiff
v
LATROBE CAPITAL AND MORTGAGE CORPORATION LIMITED (ACN 007 332 363)	Defendant

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JUDGE:	HABERSBERGER, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	13 AUGUST 2004
DATE OF JUDGMENT:	13 AUGUST 2004
CASE MAY BE CITED AS:	DALTON v LATROBE CAPITAL AND MORTGAGE CORPORATION LIMITED
MEDIUM NEUTRAL CITATION:	[2004] VSC 318

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Mortgage – Sale by mortgagee – Application for interlocutory injunction to stop auction that day – Whether notice of default had been served on mortgagor – Section 76 of the Transfer of Land Act 1958 – Whether there will be sale at auction at an undervalue – Balance of convenience – Alternative remedy in damages – Application refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P.G. Lovell	Henderson & Ball
For the Defendant	Mr R.L. Moore	Phillip Bing & Associates

HIS HONOUR:

1. Yesterday afternoon an application was made to me ex parte for an injunction to restrain the holding of an auction at noon today of the property situated at 114 Lydiard Street, North Ballarat.  I declined to grant any relief ex parte and directed the plaintiff to serve the documents on the solicitors apparently acting for the defendant, and brought the matter back before me at ten o'clock this morning. 

1. The defendant has put forward an affidavit giving the lengthy history of the loan negotiations between Mr Dalton, the plaintiff, and Latrobe Capital and Mortgage Corporation Ltd, the defendant. 

1. In essence, there are two issues put forward by the plaintiff as to why I should grant interlocutory relief at the eleventh hour.  The first is that Mr Dalton in his affidavit swore that: 

"On 11^th August 2004 Andrew Burgess of Henderson & Ball, Solicitors [his current solicitor] advised me that, before a mortgagee can seek to take possession of a property and exercise a Power of Sale, it must first serve a Notice of Default in accordance with Section 76 Transfer of Land Act 1958. This was the first time I had been advised of the requirement for such a notice. At no time have I received any notice from the Defendant in this regard."

1. The affidavit sworn on behalf of the defendant by Mr Coates, the commercial manager of Mortgage Help, which would appear to be a division of the defendant, referred to the fact that the s.76 notice was said to have been served on 21 August 2003 by post. Copies of two notices were subsequently produced. There was one addressed to Mr Dalton at 1 Airedale Avenue, East Hawthorn, which, when the mortgage was subsequently produced, was shown to be Mr Dalton's address for service in the two mortgages, and a second addressed to Mr Dalton at 114 Lydiard Road, North Ballarat - as I have said, the property in question. Also produced were a registered post customer receipt and a delivery confirmation advice receipt, showing that the registered post item addressed to Mr Dalton at 114 Lydiard Road, North Ballarat, was handed to some person at the property on 27 August 2003 and was signed as having been received.

1. One would have to say that proof as it currently stands of the service is not perfectly established, but, for reasons which I will now give briefly because of the time, I am not prepared to act on the basis that no notice has been properly given.

1. The reasons why it seems to me I should act on the basis that Mr Dalton did receive a s.76 notice is that notices were sent by post, it is said, to both the East Hawthorn address and the North Ballarat address. I have proof that someone received the notice at the North Ballarat address. That was in August 2003. Subsequently the defendant took its own proceeding for possession of the land; Mr Dalton acting for himself put in an appearance, but judgment was entered in default of defence. However, in subsequent negotiations about execution, Mr Dalton has had two other firms of solicitors acting for him.

1. I find it quite extraordinary that solicitors acting in those circumstances would not, as Mr Burgess apparently did, raise with Mr Dalton the question of all of the technicalities required to be gone through in order to establish a lender's right to take possession and sell the property;  and until the absolute last minute there has been no suggestion from Mr Dalton or the previous solicitors acting for him that there had been in any way anything wrong with the judgment and the earlier attempts to execute on that judgment.  Indeed, Mr Dalton, in May, I think it was, of this year, issued proceedings before the court seeking to set aside the judgment, not for the grounds now raised, and those proceedings were subsequently dismissed. 

1. If, of course, the plaintiff would be without a remedy were it subsequently to be proved that the mortgagee has not complied with the statutory requirements, then I would have to look at this matter in a different light.  However, the plaintiff will not be deprived of remedy:  it will have a cause of action sounding in damages if it is subsequently shown that the sale was not properly obtained - although, of course, until the judgment is set aside, the mortgagee has a right to sell the property.

1. The difficulties of trying to establish what has gone on all rest with Mr Dalton, he having left to the absolute last minute this application.

1. The second ground relied on by Mr Dalton is that he fears that the mortgagee is going to sell at an under-value, because, as he said in his affidavit: 

"In early June 2004 the defendant commenced an auction campaign with Jens Gaunt Real Estate for an auction sale of the property on today." 

He then goes on: 

"The estate agent quoted a sale price in the range of $1.3 to $1.4 million.  I complained about this to David Wright of the estate agent and he told me that this quoted price range had been instructed by the defendant.  I then complained to Justin Coates of the defendant and told [him] of the recent valuation of $2.03 million.  Mr Coates informed me that the defendant was entitled to establish the selling price and he would not discuss the matter with me any further."

Mr Coates in his affidavit refers to paragraph 14 of Mr Dalton's affidavit and he says in response:

"I deny that Mr Dalton has told me of the valuation of the property in any figure.  I did say to Mr Dalton that Latrobe would fix a fair reserve price.  I note that a copy of the valuation has not been exhibited to the Dalton affidavit."

He then goes on to say:

"Latrobe is mindful of its obligations at law with regard to the sale of the security property.  I believe that the marketing campaign has been well conducted and that considerable interest in the property has been generated."

1. Mr Lovell, who appears on behalf of the plaintiff, has made the point that there is no denial that the estate agent is quoting a sale price in the range of $1.3 or $1.4 million or that that has been on the instructions of the defendant.  However, Mr Coates in fact gave short evidence to clarify some matters.  He gave evidence that the defendant had obtained a valuation some months ago, which had been updated as of yesterday, and that it was only $1.375 million.  However, in response to a question from me, he then said that the reserve set by the defendant was $1.62 million, which would seem to rather suggest that the allegation that the defendant had instructed the agent to quote a sale price in the range of $1.3 to $1.4  is perhaps not likely to be the case. 

1. Whatever the case, I am faced with the situation that if I make an order, considerable costs will be thrown away because the auction cannot go ahead.  The position is that Mr Dalton owes considerable sums of money to the defendant, interest is continuing to accrue, no interest has been paid on the mortgage, I think for over twelve months, and the undertaking as to damages which would cover the costs thrown away would only just go to increase a debt where there may be very little chance of recovery.  Once again, if I refuse to grant an injunction, Mr Dalton is not without remedy if he is able to make out a case that the mortgagee did not properly look after the interests of the mortgagor in handling the sale and that the price therefore obtained on a sale, if one occurs today, was lower than should have been obtained and he has thereby suffered damage.

1. In terms of balance of convenience, when someone comes to the court at such a late hour, it seems to me that an applicant needs a much stronger case to stop an auction than is made out by the plaintiff and I refuse to grant an injunction.

1. The application will be dismissed.

1. The normal course is if you are unsuccessful in your application you pay the costs.  If the injunction is granted they are reserved.  I do not think, for all the reasons I have given, that I should reserve the costs.  I will order the plaintiff to pay the defendant's costs of and incidental to the application.

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