Equititrust Limited v Bosiljevac

[2006] QSC 183

SUPREME COURT OF QUEENSLAND

CITATION:

Equititrust Limited v Bosiljevac & Anor [2006] QSC 183

PARTIES:

EQUITITRUST LIMITED (ACN 061 383 944)
(plaintiff)
v
STEVO BOSILJEVAC and MARIA BOSILJEVAC
(defendants)

FILE NO:

BS 3793 of 2005

DIVISION:

Trial

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

2 August 2006

DELIVERED AT:

Brisbane

HEARING DATE:

31 July 2006

JUDGE:

Chesterman J

ORDER:

1.       The plaintiff recover from the defendants possession of the land described as Lot 48 on RP 183992, County of Ward, Parish of Nerang (title reference 16367112) being the house property at 1 Marseille Court, Sorrento in Queensland.

2.       The defendants pay the plaintiff’s costs of and incidental to the action to be assessed on the indemnity basis.

CATCHWORDS:

MORTGAGES – RIGHTS AND LIABILITIES OF MORTGAGOR AND MORTGAGEE – POSSESSION – RIGHT OF MORTGAGEE TO POSSESSION – defendants shareholders and directors of company and gave mortgage over land to secure obligations as guarantors of moneys lent to company – company and defendants are in default under deeds of load, guarantee and mortgage – whether mortgagee entitled to recover possession

COUNSEL:

R P S Jackson for the plaintiff
The defendants appeared on their own behalf

SOLICITORS:

Tucker & Cowen for the plaintiff
The defendants appeared on their own behalf

1. The plaintiff claims possession of land described as Lot 48 RP 183992 in the Country of Ward, Parish of Nerang (title reference 16367112) which is a house property at Marseille Court, Sorrento on the Gold Coast.

1. The land is owned by the defendants who, together with their son, Steve Bosiljevac were the shareholders and directors of Boscorp Pty Ltd (‘Boscorp’), to which receivers and managers have been appointed.

1. Boscorp borrowed money from the plaintiff to enable it to buy and develop real property on the Gold Coast.  A number of advances were made over a two year period.  The total amount advanced was almost $4,000,000.

1. On or about 22 March 2002 the plaintiff lent Boscorp $95,000 by way of providing it with working capital.  The defendants who, as I say, were directors and shareholders of Boscorp, gave a mortgage over the property at 1 Marseille Court to secure that advance and other moneys which had been or might be lent by the plaintiff to Boscorp.  The property was the defendants’ home.

1. Boscorp has defaulted on repaying the moneys it borrowed and judgment has been entered against it for an amount in excess of $2,600,000.  The defendants (and their son Mr Steve Bosiljevac) were guarantees for Boscorp of the moneys it borrowed and judgment has been given against them in the same amount. 

1. This claim, as I said, is to recover possession of the land mortgaged to secure the guarantee.

1. The defendants appeared in person.  They were earlier represented by solicitors and counsel but terminated the retainer.  Mrs Bosiljevac spoke for both.  She was understandably distressed and emotional and could offer no coherent resistance to the plaintiff’s claim.  A defence of fact was advanced by the amended defence and counter-claim filed on 23 November 2005.  By para 4D the defendants allege that prior to the plaintiff advancing the loan of $95,000 to Boscorp the plaintiff’s director, Mr McIvor, represented to Mr Steve Bosiljevac that the house was to be mortgaged to secure only the $95,000 advance and the mortgage would not be used as collateral security for any other moneys borrowed by Boscorp from the plaintiff;  and that the mortgage was a ‘stand alone’ security.

1. Consequent upon this allegation of fact the defence raises estoppels, claims for relief pursuant to the Trade Practices Act 1974 and a claim to rectify the mortgage.

1. Had the fact been proved the defendants may have had a substantial ground for resisting the plaintiff’s claim.   The conversation in which the representations were said to have occurred was between Mr McIvor and Mr Steve Bosiljevac. 

   
   

   Mr McIvor denied making any such representation.  Mr Steve Bosiljevac did not give evidence.  He was aware of the trial and no doubt aware that his parents’ defence to the plaintiff’s claim depended upon his evidence.  He did not come or even provide an affidavit deposing to the alleged conversation.

1. I am left therefore with only the documents which Mrs Bosiljevac, who gave evidence, admitted that she and her husband had signed. 

1. By deed dated 8 April 2002 the plaintiff agreed to lend Boscorp the sum of $95,000 on terms which included a promise by Boscorp to provide a mortgage ‘intended to be executed … by [the defendants] … over the land … at 1 Marseille Court, Sorrento … described as … Lot 48 on RP 183992 … to be registered as a second mortgage’.

1. By a deed of guarantee and indemnity, also dated 8 April 2002, the defendants (and their son Steve Bosiljevac) agreed to:

‘… unconditionally guarantee … to [the plaintiff] the punctual performance and observance by [Boscorp] of all the covenants, terms, conditions and other provisions of the Security, including … the payment of the Money Secured by [Boscorp] at the time … and in the manner provided for …’.

1. ‘Security’ was defined to include the mortgage given by the defendants over their house property at 1 Marseille Court, Sorrento, and the deed pursuant to which the advance was made.

1. The mortgage itself defined the ‘debt or liability secured’ as the ‘Money Secured’ as defined in document number 704073929 which was the memorandum of mortgage attached to the short form mortgage.  ‘Money Secured’ was defined to mean ‘all moneys … which now or in the future are owing (whether actually or contingently), by the [defendants] and/or [Boscorp] to the [plaintiff] whether as principal debtor, guarantor or indemnifier.’

1. Boscorp’s solicitors were Steindl Bell Lawyers.  Mr Fradgley of that office certified in writing on 18 March 2002 that he had explained ‘the purport, effect and consequences of and obligations created by the Mortgage’ to the defendants before they executed it.  Mr Fradgley also certified that he had formed the opinion that the defendants fully understood the purport, effect and obligations contained in the mortgage.

1. Mrs Bosiljevac did not contend that Mr Fradgley had not, in fact, properly explained the terms of the mortgage and, in particular, that it was an ‘all moneys’ mortgage and was not limited to securing a debt of $95,000.  Nor did she say that she did not understand that to be the case though I think it likely that she did not involve herself in any of Boscorp’s activities or business decisions.  I suspect that she and her husband left everything to their son in whom they still repose complete trust and confidence.

1. On or about 12 January 2005 the plaintiff served the defendants with a notice of exercise of power of sale pursuant to s 96 of the Property Law Act 1974. The notice provided a period of 90 days within which the defendants were to remedy the default. On 22 June 2005 the plaintiff gave the defendants notice to vacate the property pursuant to s 78 of the Land Title Act 1994.

1. The deed of loan, the guarantee and the mortgage all unequivocally make out the plaintiff’s case that the defendants mortgaged their house property to secure their obligations as guarantor of Boscorp’s borrowings and that those amounts are not limited to an advance of $95,000.  Boscorp and the guarantors are in default of their obligations to repay the amounts advanced and judgment has been given against them.  The defence pleaded has not been made out. 

1. Accordingly I order that the plaintiff recover from the defendants possession of the land described as Lot 48 on RP 183992, Country of Ward, Parish of Nerang (title reference 1637112) being the house property at 1 Marseille Court, Sorrento in Queensland.  I further order that the defendants pay the plaintiff’s costs of and incidental to the action to be assessed on the indemnity basis.