Ge Capital Finance Pty Limited v Sunset Investments Pty Limited

[2005] NSWSC 1205

CITATION:	GE Capital Finance Pty Limited v Sunset Investments Pty Limited [2005] NSWSC 1205
HEARING DATE(S):	7/11/2005
JUDGMENT DATE :	7 November 2005
JURISDICTION:	EQUITY DIVISION
JUDGMENT OF:	Lloyd AJ
DECISION:	1. A Declaration that the Plaintiff, GE Capital Finance Pty Limited, has a caveatable interest in respect of the land comprised in folio identifiers 4, 5, 6, 7 and 8 of Strata Plan 62836. 2. A Declaration that Caveat number AB67512 lodged by the Plaintiff in respect of the land comprised in folio identifiers 4, 5, 6, 7 and 8 of Strata Plan 62836 is valid and properly lodged. 3. A declaration that the Notice of Lapsing of a Caveat lodged on behalf of the Defendant, Sunset Investments Pty Limited, is invalid and of no effect. 4. An Order that the Defendant to pay the Plaintiff’s costs. 5. The exhibits may be returned.

CATCHWORDS:	MORTGAGES: -Mortgagor and Mortgagee - Right and Liabilities of Mortgagor and Mortgagee - Construction of Deed of Release
LEGISLATION CITED:	Australian Securities and Investment Commission Act 2001 (Cth) s 33
PARTIES:	GE Capital Finance Pty Limited ACN 075 554 175 - Plaintiff Sunset Investments Pty Limited ACN 074 471 533 - Defendant
FILE NUMBER(S):	SC 4701 of 2005
COUNSEL:	M R Gracie (barrister) - Plaintiff M L Sneddon (barrister) - Defendant
SOLICITORS:	Middletons Lawyers - Plaintiff Raj Lawyers - Defendant

LOWER COURT JURISDICTION:

- 4 -

IN THE Supreme Court
OF NEW SOUTH WALES
Equity Division

Lloyd AJ

Monday, 7 November 2005

4701/05 GE CAPITAL FINANCE PTY LIMITED v SUNSET INVESTMENTS PTY LIMITED

EX TEMPORE JUDGMENT

1 HIS HONOUR: By an unregistered mortgage dated 25 October 2005 the defendant, Sunset Investments Pty Limited (“Sunset Investments”), as mortgagor granted a mortgage over lots 4 to 8 inclusive of Strata Plan 62836 to the plaintiff, GE Capital Finance Pty Limited (“GE Capital”) as mortgagee.

2 It seems that the plaintiff had advanced moneys by way of a loan to Fenning Timbers (Australia) Pty Limited (“Fenning”). Sunset Investments was a guarantor of Fenning’s obligation to GE Capital.

3 On 30 November 2004, the parties executed a document entitled Deed of Release. It is the construction of this Deed which gives rise to the present dispute, namely, whether the Caveat, bearing registration number AB67512S that has been lodged by GE Capital over the land described in the mortgage should be continued. It is necessary for this purpose to refer in particular to cll 2.2 and 2.3 of the Deed of Release which are as follows:

2.2 Subject to clause 2.3, GE Capital covenants not to sue the other parties to this deed in respect of all debts, costs, expenses, damages, causes of action, actions, suits, arbitrations, claims, demands and legal proceedings with GE Capital now has or has the right to bring against those parties or which GE Capital would have had or had the right to bring against those parties at any future time but for the execution of this Deed, arising out of, or in any way connected with, or relating to the facts, matters or circumstances surrounding:

(a) the Loan Facility;
(b) each document or agreement referred to or defined as a “Transaction Document” in the Loan Facility;
(c) the Fenning Charge;
(d) the Charges;
(e) the FTC Sale [FT Consolidated Pty Limited (In Liquidation)];
(f) the Wood Floor Sale [Wood Floor Solutions Pty Limited];
(g) the Boral Sale;
(h) the FCT/FTA Deed of Settlement;
(i) the Liquidator’s Claim;
(j) the winding uo of FTC; and
(k) the costs of the liquidation of FTC.
2.3 GE Capital reserves all of its rights against the parties to this Deed under the Transaction Documents [being any document or agreement relevant to the loan facility and charges owed to GE Capital: see clause 1.1] and at law generally in respect of:

(a) all claims made or action taken or potential claims by any third party against GE Capital for reimbursement of funds received by GE Capital;

(b) all claims made or action taken or potential claims by any third party against GE Capital claiming title to or any interest in any assets the subject of the Boral Sale or other assets which GE Capital has received the proceeds or collection of realisations; and

(c) all claims made or action taken or potential claims by any third party against GE Capital arising from or relating to any misrepresentation, fraud, or misfeasance by the other parties to this deed.

4 On 21 January 2005, the Australian Securities and Investment Commission (ASIC) issued a notice under s 33 of the Australian Securities and Investment Commission Act 2001 (Cth) against GE Capital to produce documents relating to other parties to the Deed of Release, including Fenning and Sunset Investments. There is evidence that the plaintiff has incurred the sum of $28,169.20 to date in complying with the ASIC notice and there are additional sums continuing to be incurred by it.

5 According to the affidavit of Ms D Glass, the solicitor for GE Capital, at the time of negotiating the Deed of Release a claim had been made by the liquidator of FT Consolidated Pty Limited (“FTC”) against GE Capital. GE Capital was concerned that other persons could make claims against GE Capital or GE Capital could become involved in litigation or other actions arising from or relating to the conduct of Fenning and its associated companies and persons involved in those companies. For this reason, Ms Glass says, that cl 2.3 of the Deed of Release expressly retained GE Capital’s rights against Sunset Investments and others to recover money owing to GE Capital under the mortgage and at law generally as a consequence of actions taken by third parties.

6 Sunset Investments says that the claims by ASIC are not within cl 2.3 of the Deed of Release; in particular, any claim made or action taken does not relate to any misrepresentation, fraud or misfeasance by any other party to the Deed within the meaning of cl 2.3(c).

7 The question is whether the action taken by ASIC against GE Capital is an action taken by third party within the meaning of cl 2.3, being an action triggered by another party to the Deed?

8 The key words, I think, are the words inserted into cl 2.3(c), namely “any claims made or action taken or potential claim by any third party…”.

9 Reference should also be made to the mortgage itself, in which the definition of the “amount owing” includes “all amounts that …(a) are payable, are owing but not currently payable, are contingently owing, or remain unpaid, …”.

10 It seems to me that the claims by ASIC could well amount to a potential claim within the meaning of cl 2.3 of the Deed of Release and within the meaning of definition of “amount owing” under the mortgage. It follows, therefore, that GE Capital’s claim for relief is made out and the caveat should remain in place.

11 I make the following orders and declarations:

1. A Declaration that the Plaintiff, GE Capital Finance Pty Limited, has a caveatable interest in respect of the land comprised in folio identifiers 4, 5, 6, 7 and 8 of SP62836.

2. A Declaration that Caveat number AB67512 lodged by the Plaintiff in respect of the land comprised in folio identifiers 4, 5, 6, 7 and 8 of SP62836 is valid and properly lodged.

3. A declaration that the Notice of Lapsing of a Caveat lodged on behalf of the Defendant, Sunset Investments Pty Limited, is invalid and of no effect.

4. An Order that the Defendant to pay the Plaintiff’s costs.

5. The exhibits may be returned.

I hereby certify that the preceding 11 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

Associate