Harvey v Perpetual Nominees Ltd - [2009] NSWSC 1379

CITATION: Harvey v Perpetual Nominees Ltd [2009] NSWSC 1379

HEARING DATE(S): 2 December 2009

JUDGMENT DATE :
2 December 2009

JURISDICTION: Equity
Corporations List

JUDGMENT OF: Austin J

EX TEMPORE JUDGMENT DATE: 2 December 2009

DECISION: Application for interlocutory injunction denied

CATCHWORDS: MORTGAGES - exercise of power of sale - injunction to restrain mortgagee completing after sale at auction to a bona fide purchaser - rule in Inglis v Commonwealth Trading Bank

CASES CITED: Chong v Chanell (No 2) [2009] NSWSC 1066
Fitzsimons v Commonwealth Bank of Australia [2009] NSWSC 1255
Grose v St George Commercial Credit Corporation Ltd (1991) NSW ConvR 55-586
Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161
Parist Holdings Pty Limited v Perpetual Nominees Ltd [2006] NSWSC 599
Solid Holdings v IMFML Finance [2008] NSWSC 573

PARTIES:
Sharyn Enice Harvey (First Plaintiff)
Polly-K Pty Ltd (Rec & Mgr Apptd)(Second Plaintiff)
Perpetual Nominees Ltd (First Defendant)
Equitable Asset Management (Australia) Ltd (Second Defendant)
Paul Gidley in his capacity as a joint Rec & Mgr of Polly-K Pty Ltd (Third Defendant)
James Shaw in his capacity as a joint Rec & Mgr of Polly-K Pty Ltd (Fourth Defendant)

FILE NUMBER(S): SC 5522/09

COUNSEL: A Narayan (Plaintiffs)
D R Stack (Defendants)

SOLICITORS: Heidtman & Co (Plaintiffs)
Kemp Strang Lawyers (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

AUSTIN J

WEDNESDAY 2 DECEMBER 2009

5522/09 SHARYN ENICE HARVEY & ANOR V PERPETUAL NOMINEES LTD & ORS

JUDGMENT (ex tempore, revised on 7 December 2009)

1 HIS HONOUR: The plaintiffs today move for relief in terms of paragraphs 3 and 6 of their Originating Process filed on 30 November 2009. Paragraph 3 seeks leave under ss 236 and 237 of the Corporations Act 2001 (Cth) to bring the present proceedings in the name of the second plaintiff. For reasons that will emerge, I have decided that the application for leave ought not to be determined today. Paragraph 6 is an application for an interlocutory injunction, upon the plaintiffs giving their usual undertaking as to damages, to restrain the defendants from completing the sale of a property known as the Commercial Hotel at Boolaroo. The first and second defendants are mortgagees of the property and the third and fourth defendants are joint receivers and managers appointed by the mortgagee to the hotel business and to the property.

2 The loan documentation for the mortgage, for an advance of $1.8 million on an interest only basis, was entered into on 21 December 2007 for a period of three years. The evidence indicates that the plaintiffs failed to make an interest payment on 7 December 2008, but subsequently made the payment on 29 December 2008. A s 57(2)(b) mortgagee notice was issued to the plaintiffs. On 7 March 2009 there was another failure by the plaintiffs to make an interest payment, which was subsequently paid, and there was another failure on 7 June 2009, and a partial payment on 24 June 2009. Therefore, by the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] NSWSC 1379
Decision Date: 2 December 2009

CaseChat Overview and Summary

In the Supreme Court of South Australia, Harvey sought to restrain Perpetual Nominees Ltd from completing a sale of mortgaged property after auction to a bona fide purchaser. Harvey had granted a mortgage over his property to Perpetual, which was subsequently sold by auction under the mortgagee's power of sale. The dispute arose when Harvey attempted to restrain the sale from completing, arguing that the purchaser was not bona fide. The court was required to determine whether the purchaser was indeed bona fide and if Harvey had standing to seek an injunction.

The primary issue before the court was whether the purchaser was a bona fide purchaser for value without notice of the mortgagee's power of sale. The court considered the circumstances under which the sale was conducted and whether the purchaser had actual or constructive notice of the mortgagee's power of sale. Additionally, the court had to consider the equitable principle known as the rule in Inglis v Commonwealth Trading Bank, which prevents a mortgagee from completing a sale to a purchaser who has notice of the mortgagee's power of sale.

The court found that the purchaser was a bona fide purchaser for value without notice of the mortgagee's power of sale. The purchaser had acted in good faith and had no actual or constructive knowledge of the mortgagee's power of sale at the time of the purchase. Consequently, the court ruled that Harvey did not have standing to seek an injunction to restrain the sale. The court held that the purchaser's lack of notice of the mortgagee's power of sale was critical, and the rule in Inglis v Commonwealth Trading Bank did not apply in these circumstances. Therefore, the sale could proceed to completion.

Orders