Express Business Finance Pty Limited v Monaco

[2010] NSWSC 206

CITATION:	Express Business Finance Pty Limited v Monaco & anor [2010] NSWSC 206
HEARING DATE(S):	5 February 2010
JUDGMENT DATE :	5 February 2010
JURISDICTION:	Equity Division
JUDGMENT OF:	Ward J
EX TEMPORE JUDGMENT DATE:	5 February 2010
DECISION:	1. Order that Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd, Level 19, 207 Kent Street, Sydney, be appointed trustees of land pursuant to s 66G of the Conveyancing Act 1919. 2. An order that the land be vested in such trustees subject to any encumbrances affecting the entirety of the land but free from any encumbrances affecting any undivided share or shares of the land to be held by the trustees upon a statutory trust under Division 6D of Part 4 of the Conveyancing Act 1919. 3. Order that the costs and expenses of the sale of the land be met out of the proceeds of sale of the land. Order that the costs of the plaintiff of the proceedings be paid out of the proceeds of the sale of the land with a direction that in the first instance the plaintiff's costs are paid out of the share of Mr Monaco and order that the second defendant's costs of the proceedings also be paid out of the proceeds of the sale of the land but without directing out of what portion of the proceeds of the land those costs should be borne.
CATCHWORDS:	MORTGAGES – 66G order for sale of land – co-owner’s signature on mortgage documents a forgery –HELD – equitable mortgage granted over a half interest in property – order made for appointment of trustees for sale of land and vesting of in land in trustees for sale – mortgagee’s costs be paid out of proceeds of sale with a direction that in the first instance those costs be borne out of the first defendant’s share of the proceeds of sale – order that second defendant’s costs of the proceedings be paid out of the proceeds of sale – order for costs against first defendant.
LEGISLATION CITED:	Conveyancing Act 1919
CATEGORY:	Principal judgment
CASES CITED:	Katsaitas v Commonwealth Bank of Australia (1987) 5 BPR 12,049 National Commercial Banking Corporation of Australia Limited v Hedley (1984) 3 BPR 9477 Westfield Holdings v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194 Westpac Banking Corporation v Sansom (1994) 6 BPR 13,790
TEXTS CITED:	Fisher & Lightwood, Law of Mortgages
PARTIES:	Express Business Finance Pty Limited (Plaintiff) Dominic Frank Monaco (First Defendant) Pamela Barcelon (Second Defendant)
FILE NUMBER(S):	SC 281250 of 2008
COUNSEL:	A J McInerney (Plaintiff) No Appearance (First Defendant) M Rollinson (Second Defendant)
SOLICITORS:	Foulsham & Geddes (Plaintiff) No Appearance (First Defendant) Clive Mills & Associates (Second Defendant)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WARD J

FRIDAY 5 FEBRUARY 2010

2008/281250 EXPRESS BUSINESS FINANCE PTY LTD v PAMELA BARCELON AND DOMINIC FRANK MONACO

1 HER HONOUR: In these proceedings the plaintiff has commenced, by way of statement of claim, proceedings against two defendants, Mr Dominic Monaco and Ms Pamela Barcelon. The plaintiff is a financier. The plaintiff lent moneys to Mr Monaco secured by an unregistered mortgage over certain property. That property was owned by Mr Monaco and Ms Barcelon as joint tenants.

2 There has been no appearance before me on this application by Mr Monaco. Ms Barcelon is represented by Counsel. She does not object to relief being granted of the kind which is now sought by the plaintiff, namely an order pursuant to s 66G of the Conveyancing Act 1919 for the appointment of trustees for the sale of land (following on from the declaration sought that the plaintiff is a co-owner of the land within the meaning of s 66F of the Conveyancing Act) and an order vesting the land in the trustees for sale.

3 The plaintiff has relied upon the principal affidavit of a director of the plaintiff, Mr Anthony DuVernet, sworn 22 October 2008, dealing with the circumstances in which the loan was granted, together with affidavits of Ms Susan Sydes, a legal secretary, and Mr Paul Dillon, the solicitor with conduct of this matter on behalf of the plaintiff. The plaintiff has also tendered an affidavit verifying the consent of the proposed trustees (sworn by Mr John Biddle), and affidavits of fitness as to the proposed trustees sworn by Mr Timothy Castle and Mr Peter Harkin, respectively.

4 A notice to admit facts was served by the plaintiff on Ms Barcelon (Exhibit D) and Ms Barcelon responded thereto making admissions as to a large number of factual matters (that response being admitted as part of Exhibit D).

5 No evidence has been filed on behalf of Ms Barcelon. The only issue as between the plaintiff and Ms Barcelon has been as to the costs order which should be made in relation to the proceedings. In that regard, Counsel for Ms Barcelon (Mr Rollinson) has submitted that, rather than an order that the costs be paid out of the proceeds of sale without more, there should in addition to such an order be a direction that in the first instance the costs of the plaintiff and of Ms Barcelon be paid out of the share of the proceeds of sale attributable to the share of Mr Monaco in the land, on the basis that these proceedings were generated by the actions of Mr Monaco in purporting to mortgage the whole of the land to the plaintiff, whereas in reality all Mr Monaco was in a position to do was to mortgage his half share of the land to the plaintiff.

6 The plaintiff resists such a direction and says that it would have been necessary in any event (without the consent of Mr Monaco which it does not have), for the plaintiff to commence these proceedings in order to seek an order of the kind presently sought and that until recently there was no indication by Ms Barcelon that she would consent to the appointment of trustees for the sale of the land.

7 Mr Rollinson submits that Ms Barcelon was justified in defending the proceedings in the first instance because the relief then claimed against her under the original Statement of Claim was for possession of the land and because, on the facts as now conceded by the plaintiff, Mr Monaco was the sole author of the litigation which would have been necessary in any event.

8 I have had the benefit of the Statement of Facts and Contentions submitted in advance by the plaintiffs. Reliance is placed on the principle stated in Fisher & Lightwood, Law of Mortgages (9^th edition) at p 244 that, in the situation where there is a mortgage purportedly signed by husband and wife but with the wife’s signature forged by the husband, the mortgagee nevertheless obtains an equitable mortgage of the husband’s aliquot share (accepted in National Commercial Banking Corporation of Australia Limited v Hedley (1984) 3 BPR 9477, per Hodgson J; Katsaitas v Commonwealth Bank of Australia (1987) 5 BPR 12,049, per Young J, as his Honour then was; and Westpac Banking Corporation v Sansom (1994) 6 BPR 13,790).

9 An equitable mortgage may be created by an agreement in which there is shown to be an intention to create a security and where valuable consideration is given, provided the agreement is specifically enforceable (Westfield Holdings v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194, at 200 per Young J).

10 Here, Ms Barcelon asserts that her signature was forged on the relevant loan and security documents. Mr Monaco admitted that in his record of interview with the police on 10 December 2008 (a transcript of which was in evidence before me) and the plaintiff does not dispute this.

11 I am satisfied on the evidence before me that the plaintiff holds an equitable mortgage over Mr Monaco’s share of the land (National Commercial Banking Corporation; Katsaitas) and that I should grant the relief sought by the plaintiff, namely a declaration that, by the loan agreement the mortgage and annexure A to the mortgage, Mr Monaco granted an equitable mortgage to the plaintiff over the land; a declaration that the plaintiff is a “co-owner” of the land within the meaning of s 66F of the Conveyancing Act 1919 (New South Wales); an order that Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd, Level 19, 207 Kent Street, Sydney, be appointed trustees of the land pursuant to s 66G of the Conveyancing Act 1919; and an order that the land be vested in such trustees subject to any encumbrances affecting the entirety of the land but free from any encumbrances affecting any undivided share or shares of the land to be held by the trustees upon a statutory trust under Division 6D of Part 4 of the Conveyancing Act 1919.

12 In relation to costs, I order that the costs and expenses of the sale of the land be met out of the proceeds of sale of the land. I order that the costs of the plaintiff of the proceedings be paid out of the proceeds of the sale of the land with a direction that in the first instance the plaintiff's costs are paid out of the share of Mr Monaco and I order that the second defendant's costs of the proceedings also be paid out of the proceeds of the sale of the land but without directing out of what portion of the proceeds of the land those costs should be borne.

13 I further make an order for costs against the first defendant of the proceedings brought by the plaintiff.

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