Ge Mortgage Solutions Limited v Smith

[2006] WASC 23

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   GE MORTGAGE SOLUTIONS LIMITED -v- SMITH [2006] WASC 23

CORAM:   COMMISSIONER SANDERSON

HEARD:   7 DECEMBER 2005

DELIVERED          :   15 FEBRUARY 2006

FILE NO/S:   CIV 1418 of 2004

BETWEEN:   GE MORTGAGE SOLUTIONS LIMITED (ACN 070 797 894)

Plaintiff

AND

RONALD GEORGE SMITH
Defendant

Catchwords:

Mortgagee action - Summary judgment application - Turns on own facts

Legislation:

Rules of the Supreme Court 1971, O 14 r 1

Result:

Judgment for plaintiff

Category:    B

Representation:

Counsel:

Plaintiff:     Ms J B Williams

Defendant:     In person

Solicitors:

Plaintiff:     Phillips Fox

Defendant:     In person

Case(s) referred to in judgment(s):

Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676

Case(s) also cited:

Nil

1. COMMISSIONER SANDERSON: By chamber summons dated 19 August 2005 the plaintiff sought two orders. First, leave to apply for summary judgment against the defendant - the application being filed well out of time under O 14 r 1. Second, the plaintiff claimed:

   "Judgment be entered for the plaintiff against the defendant pursuant to Order 14 Rule 1 for the sum of $112,777.87, plus interest on the sum of $112,777.87 at the rate of 7.74% per annum from 17 August 2005 to payment, alternatively interest on this sum at the rate of 6% per annum from 17 August 2005 until payment."

2. The plaintiff also sought an order for costs.

3. The writ of summons in this matter was filed on 31 March 2004.  The indorsement of claim identified the defendant as the registered proprietor of certain real property situated at 29 ‑ 31 Ward Avenue, Greenmount ("the Property").  The plaintiff was the mortgagee of the Property.  The plaintiff claimed it had loaned an amount of $750,000 to the defendant on certain terms and conditions.  It sought delivery up of possession of the Property and payment of the sum of $750,000 plus interest.

4. The defendant entered an appearance to the writ on 26 May 2004 and on 17 August 2005 the plaintiff filed a statement of claim.  On 23 August 2004 a consent judgment for possession of the Property was entered before Registrar Johnston.

5. What transpired thereafter is not in dispute.  The relevant evidence is set out in the affidavit of Christopher Brian John Tulloch sworn 18 August 2005 and filed in support of the application for summary judgment.  In summary, the Property was sold for $800,000.  Settlement occurred on 26 May 2005.  The amount received on sale of the Property was not sufficient to discharge the principal and interest that had accrued on the loan.  The amount of $112,777.87 (defined in Mr Tulloch's affidavit as the "Shortfall") remains outstanding pursuant to the loan agreement.  A copy of the running account appears as annexure "CBT14" to Mr Tulloch's affidavit.  There was no contest as to the accuracy of this account.  However, the defendant maintains that he is not liable to pay any further amount to the plaintiff.

6. In support of his position, the defendant has filed an affidavit sworn 30 November 2005.  He says that he is a qualified real estate valuer and a registered builder.  He then goes on to describe the Property in some detail.  Applying his experience, he says that in his view as at mid‑2004 the Property was worth at least $1,200,000.  The defendant then goes on to detail his attempts to sell the Property.  While these attempts were unsuccessful, the defendant maintains that there was keen interest in the Property by buyers willing to offer over $1,000,000.

7. It is the defendant's position that after the Property passed into the possession of the plaintiff it was not maintained.  His main complaint appears to be that as a rural property, consistent maintenance of the garden was required and this was not undertaken.  Further, the defendant says that at $800,000 the Property was sold "at a ridiculously low price".  The defendant has produced no valuation to support that assertion.

8. The obligations of a mortgagee on the sale of a property in his possession are well‑settled and of long‑standing.  They were set out by Griffiths CJ in Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676. Essentially, the mortgagee must act in good faith; he must not act recklessly or wilfully thereby sacrificing the interests of the mortgagor. But that is all he must do. A mortgagor is not bound to take steps to obtain the best possible price for the property. No such duty arises. If the mortgagee were to materially misstate the position with respect to the property giving rise to a sale at a reduced figure, then he might be liable to the mortgagor. But there is no suggestion that this is the case here.

9. Even accepting that the mortgagee when they took possession of the Property failed to maintain it in proper condition and sold it undervalue (although there is no evidence of this latter fact), there are no grounds on the evidence for refusing the plaintiff the orders that they seek.  They are doing nothing more than enforcing their contractual entitlement.

10. The reasons for the delay in bringing this application have been set out in the affidavit of Mr Tulloch.  In short, the application was brought at the earliest possible time when the Shortfall was known.  There would be nothing to be gained in a case such as this in refusing an extension of time even if the delay was not adequately explained.  So there will be an extension of time as sought in par 1 of the chamber summons.  I will also make orders largely in terms of par 2 of the chamber summons.  However, the precise form of the orders ought be the subject of further submissions.