La Trobe Financial Asset Management Ltd v Mdvest Pty Ltd - [2017] WASC 272

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: LA TROBE FINANCIAL ASSET MANAGEMENT LTD -v- MDVEST PTY LTD [2017] WASC 272

CORAM: CHANEY J

HEARD: 18 SEPTEMBER 2017

DELIVERED : 21 SEPTEMBER 2017

FILE NO/S: CIV 3176 of 2016

BETWEEN: LA TROBE FINANCIAL ASSET MANAGEMENT LTD (ACN 007 332 363)
Plaintiff
AND
MDVEST PTY LTD (ACN 607 390 536)
First Defendant
MARLENE MICHELE DOUTCH
Second Defendant

FILE NO/S :CIV 1006 of 2017

BETWEEN :LA TROBE FINANCIAL ASSET MANAGEMENT LTD (ACN 007 332 363)
Plaintiff
AND
JETT HOLDINGS PTY LTD as trustee for THE JETT FAMILY TRUST (ACN 121 208 722)
First Defendant
JETT HOLDINGS PTY LTD (ACN 121 208 722)
Second Defendant
JETT HOLDINGS PTY LTD (ACN 121 208 722)
TRACEY MAREE PEARSON
Third Defendants

FILE NO/S :CIV 1007 of 2017

BETWEEN :LA TROBE FINANCIAL ASSET MANAGEMENT LTD (ACN 007 332 363)
Plaintiff
AND
JETT HOLDINGS PTY LTD as trustee for THE JETT FAMILY TRUST (ACN 121 208 722)
First Defendant
JETT HOLDINGS PTY LTD (ACN 121 208 722)
Second Defendant
JETT HOLDINGS PTY LTD (ACN 121 208 722)
TRACEY MAREE PEARSON
Third Defendants

Catchwords:

Contract - Debt - Whether agreement to forebear enforcement action - Whether plaintiff estopped from pursuing enforcement action - Right of plaintiff to sue - Whether assignment of agreements dutiable - Whether assignment effective - Notice of assignment - Whether court precluded from making orders for possession by reason of failure to give notice to tenant

Residential tenancies - Son of registered proprietor paying weekly sum for 'amenities, maintenance and upkeep of property' - Whether residential tenancy agreement

Legislation:

Duties Act 2008 (WA), s 3, s 10, s 11
Evidence Act 1906 (WA), s 73U
Property Law Act 1969 (WA), s 20
Residential Tenancies Act 1987 (WA), s 5(2), s 81B

Result:

Judgment for plaintiff in all three actions

Category: B

Representation:

CIV 3176 of 2016

Counsel:

Plaintiff:     Mr L A Warnick
First Defendant              :     Mr C K Pearce
Second Defendant         :     Mr C K Pearce

Solicitors:

Plaintiff:     GV Lawyers
First Defendant              :     Blackwall Legal LLP
Second Defendant         :     Blackwall Legal LLP

CIV 1006 of 2017

Counsel:

Plaintiff:     Mr L A Warnick
First Defendant              :     Mr C K Pearce
Second Defendant         :     Mr C K Pearce
Third Defendants           :     Mr C K Pearce

Solicitors:

Plaintiff:     GV Lawyers
First Defendant              :     Blackwall Legal LLP
Second Defendant         :     Blackwall Legal LLP
Third Defendants           :     Blackwall Legal LLP

CIV 1007 of 2017

Counsel:

Plaintiff:     Mr L A Warnick
First Defendant              :     Mr C K Pearce
Second Defendant         :     Mr C K Pearce
Third Defendants           :     Mr C K Pearce

Solicitors:

Plaintiff:     GV Lawyers
First Defendant              :     Blackwall Legal LLP
Second Defendant         :     Blackwall Legal LLP
Third Defendants           :     Blackwall Legal LLP

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

Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

CHANEY J: Each of these actions involve a claim by La Trobe Financial Asset Management Ltd for orders for payment to it of moneys said to be due pursuant to loan agreements, mortgages, and guarantees and for possession of properties that comprised security for the respective loans. The defendants are the same in CIV 1006 of 2017 and CIV 1007 of 2017. The defendants in CIV 3176 of 2016 are different, but there is an apparent relationship between those defendants and the defendants in the other two actions.
In each case, there is no issue that the amounts pleaded by the plaintiff were in fact advanced to the borrower in each case, nor as to the defaults under the various agreements and nor as to the liability of the defendants to repay the amounts outstanding under the various agreements. The defendants contend, however, that the plaintiff is not entitled to judgment in each action. Although the defences pleaded are not common in all three actions, there is one pleaded ground for resisting judgment which is common to all three actions, and there is an overlap in some of the other defences pleaded. It is convenient to commence with the consideration of CIV 1007 of 2017 since that case involves the greatest number of issues to be resolved.

CIV 1007 of 2017

The plaintiff carries on business as a credit provider. It appears to carry on business under the business name La Trobe Financial. On 1 August 2013, the plaintiff sent a letter of offer to the second‑named third defendant, Ms Pearson. The offer was on a letterhead of La Trobe Financial. Beneath that name appears the name of the plaintiff and another company La Trobe Financial Services Pty Ltd. The letter commenced:
We are pleased to advise that your Application for Mortgage Finance has been approved and is now offered to you by La Trobe Financial (Credit Provider's representative) on the terms set out below.
The terms of a loan of $900,000 were then set out. The letter identified the credit provider as 'Permanent Mortgages Pty Ltd ACN 097 176 362' (as 'the mortgagee'). The security provided was a mortgage over a property at 58 Dempster Road, Myrup. A document setting out the general terms and conditions of the loan offer formed part of the offer. Clause 41 of the general terms and conditions of the offer was headed 'Assigning the Mortgage'. It provided:
The Credit Provider may assign or otherwise deal with your rights under the mortgage or any agreement covered by the mortgage in any way they consider appropriate. You agree that the Credit Provider may disclose any information or documents they consider desirable to help them exercise this right. You also agree that the Credit Provider may disclose information or documents at any time to a person to whom they assign their rights under the mortgage. By signing and accepting this offer, you acknowledge that there is no requirement to notify you of these dealings. La Trobe Financial must hold any duplicate Certificate of Title as security at all times until the loan is fully discharged.
The second defendant is, and was at the time of entry into the loan agreement, the registered proprietor of the property at Dempster Road, Myrup which was provided as security for the loan by way of mortgage. The mortgage contained a covenant that the mortgagor 'will pay to the mortgagee the said principal sum' (being $900,000). The mortgage was duly registered against the title of the Dempster Road property. Permanent Mortgages Pty Ltd was registered as mortgagee.
The initial loan was for a term of 12 months.
The third defendants entered into a deed of guarantee and indemnity with Permanent Mortgages Pty Ltd dated 20 August 2013 pursuant to which they guaranteed repayment of the loan and indemnified Permanent Mortgages Pty Ltd in the event of default under the loan agreement or the mortgage.
On 7 July 2014, the loan agreement was renewed for a further two years to expire on 31 August 2016. The general terms and conditions of the renewal were the same as the general terms and conditions of the original loan. Ms Pearson executed the extension documents on behalf of herself and the other defendants.
Ms Melissa Benson is a mortgage manager for La Trobe Financial. She deposed that on 9 October 2015, Permanent Mortgages Pty Ltd assigned its interest in the loan agreement, the mortgage and the guarantee to the plaintiff. The transfer of mortgage to reflect that transaction was registered against the title on 11 December 2015. No written assignment of the loan agreement and guarantee was executed in October 2015. The transaction was, however, recorded in a deed entitled 'Deed of Rectification' between Permanent Mortgages Pty Ltd and the plaintiff dated 9 September 2016. The Deed of Rectification recited the various agreements between Permanent Mortgages Pty Ltd and the defendants. Recital D then provided:
The Assignor assigned all its right, title and interest in the Loan Agreement, the Mortgage and the Guarantee to the Assignee on 9 October 2015 and a Transfer of Mortgage [sic] between the Assignor as transferor and the Assignee as transferor [sic] was registered at the Western Australian Land Information Authority on 11 December 2015 as document N200332. The consideration paid for the assignment of the Loan Agreement, the Mortgage and the Guarantee was the balance of the loan account then outstanding.
The operative part of the Deed of Rectification then contained an acknowledgment and agreement that on 9 October 2015 Permanent Mortgages Pty Ltd assigned its right, title, and interest in the loan agreement, mortgage, and guarantee to the plaintiff. There then followed an affirmation and ratification by Permanent Mortgages Pty Ltd of the assignment of the three agreements. The failure to make the assignment the subject of a written document at the time it occurred was said in cl 1(b) of the Deed of Rectification to be an oversight.
There are three bases upon which the defendants deny the plaintiff is entitled to the relief which it claims. The first is a challenge to the plaintiff's entitlement to sue on the agreements. Reliance is placed on references in the documents to La Trobe Financial, the plaintiff, and La Trobe Financial Services Pty Ltd, all of whose names appear on the letterhead of La Trobe Financial upon which the loan offer was made, and various other references to those parties in various documents. Those references are said to show 'a lack of clarity' as to who was involved in the loan. There is nothing in those submissions. The offer documents make specific reference to the credit provider being Permanent Mortgages Pty Ltd, and the fact that the offer was being made by 'La Trobe Financial' as the credit provider's representative. There is no doubt that the lender under the loan agreement was Permanent Mortgages Pty Ltd and the mortgage and guarantee were to be, and were in fact, in favour of that company.
The second basis upon which the defendants contend the plaintiff is not entitled to sue is a contention that the assignment of the loan agreement, the mortgage, and the guarantee was not effective. There are two reasons for that contention. The first is that the deed of rectification is not admissible because it was not stamped for duty, and thus is not admissible pursuant to s 73U of the Evidence Act 1906 (WA). The second is a contention that, on the balance of probabilities, the assignment did not occur as pleaded.
Section 73U of the Evidence Act renders the reproduction of a document chargeable with duties under a duties Act inadmissible unless it is stamped in accordance with that Act.
Duty is imposed on dutiable transactions (Duties Act 2008 (WA) s 10). Section 11(2) of the Duties Act provides that certain transactions are not dutiable transactions. Section 11(2)(c) identifies 'a transfer of, or an agreement for the transfer of, a security interest, if the consideration for the transfer, or agreement, is equal to or greater than the market value of the security interest' as not being a dutiable transaction. A security interest means the estate or interest of a mortgagee, chargee or other secured creditor (Duties Act s 3). It follows that, provided the consideration for the transfer of the mortgage is equal to or greater than the market value of the security interest, the assignment is not a dutiable transaction, no duty is therefore payable in relation to it, and the Deed of Rectification is admissible. The Deed of Rectification recites, in recital D set out above, the consideration for the assignment, being the balance of the loan account then outstanding. Subject to the defendants' second argument as to the effectiveness of the assignment, that provision makes clear that the consideration is equal to or greater than the market value of the security interest. No duty is therefore payable.
The defendants' second argument is that, on the balance of probabilities, the assignment did not occur. The defendants' counsel cross‑examined Ms Benson in relation to that issue. In cross‑examination, Ms Benson reaffirmed that the records of the plaintiff recorded that the assignment did occur in October 2015 as she had deposed in her affidavit. That evidence is supported by the recitals to the Deed of Rectification, and the Deed of Rectification committed the parties to the assignment of all three agreements. There is no reason to reject Ms Benson's evidence nor to treat the Deed of Rectification as some type of sham.
I am satisfied that the assignment of the loan agreement, the mortgage, and the guarantee all occurred in October 2015.
A further contention by the defendants was that no notice of the assignment 'seems to have been given'. I have set out above cl 41 of the general terms and conditions which permits assignment without any requirement for notice. It is not necessary, however, to consider the effectiveness of that provision having regard to s 20 of the Property Law Act 1969 (WA). That section makes effective an absolute assignment of a debt or other legal chose in action of which express notice in writing has been given to the debtor. In earlier proceedings in relation to this debt, a copy of the Deed of Rectification was provided to the defendants as an annexure to an affidavit of Ms Benson sworn 9 September 2016. They had also been served on 6 May 2016 with the statement of claim which recited the assignment documents. I am satisfied, therefore, that well before the commencement of these proceedings, the defendants had express notice of the assignment of the various agreements, and that the assignment was therefore effective as against them.
It follows that the plaintiff is entitled to bring these proceedings, and in the absence of any of the other defences being made out, to judgment in the action.

Bar to proceedings

The defendants plead that the plaintiff has no right to issue the notices of demand (with which they admit they were served), or to enforce rights under the loan agreement, mortgage or guarantee, by reason of an agreement with the defendants, or alternatively the plaintiff is estopped from enforcing those rights. The agreement is said to be contained in an email sent on 29 November 2016 by the defendants' solicitors to the plaintiff's solicitors and the acceptance of the proposal contained in that letter in a letter dated 1 December 2016 from the plaintiff's solicitors. That email exchange followed the dismissal by the master of applications for summary judgment in three previous actions in respect of the debt the subject of each of CIV 1007 of 2017, CIV 1006 of 2017 and CIV 3176 of 2016.
The email from the defendants' solicitors was headed with a reference to the three previous actions, and commenced as follows:
As discussed, we are instructed that the defendants in each of the above matters are prepared to offer to have the proceedings dismissed without any order as to costs. As you are aware, where a defence has been filed and the plaintiff has taken further steps, it is not possible to discontinue without leave (O 23 r 2(3)).
Agreeing that course would allow the defendant owners the opportunity to undertake an orderly sale or refinance of the properties and have your client paid in full. If your client does not agree to this proposal, our clients intend to defend the actions.
If your client is amenable to proceeding in this manner, please let us know and we will prepare consent orders …
The plaintiff's solicitors then replied:
We refer to your email dated 29 November 2016 and confirm that our client accepts your client's offer to discontinue these proceedings with no order as to costs.
We enclose a minute of consent orders which we request you sign and return to us.
The defendants contend that it was an express, or in the alternative an implied, term of that offer that the plaintiff would forbear for a reasonable period in which the first defendant was to procure an orderly sale or refinance of the property the subject of the proceedings. In my view, that construction is not reasonably open. On the plain reading of the text, the offer was contained in the first paragraph. It was that proposal which was the subject of the acceptance (albeit that the acceptance was in terms of discontinuance rather than dismissal and may more accurately be described as a counter‑offer which was then accepted by the defendants when they signed the consent orders giving effect to the agreement). It would have been very simple, if forbearance from further action was to be a term of the agreement, for that to have been made plain. The reference to an opportunity to undertake an orderly sale is couched simply in terms of something which would follow from 'agreeing that course'. The apparent consideration for the agreement on the part of the plaintiff was to cease to pursue the defendants in the various actions. The consideration on the part of the defendants was to not pursue costs in the event of dismissal (or discontinuance). On a plain reading of the email exchange, there was nothing more to the agreement than that. The mere fact that the defendants indicated an intention to undertake an orderly sale of the properties did not give rise to any contractual obligation on the part of the plaintiff to forebear any further enforcement action.
The plaintiff is not barred from claiming relief in this action by reason of any agreement with the defendants to forebear action.
The second basis upon which the defendants contend that the plaintiff is barred from pursuing its remedies is said to be an estoppel of the type explained in Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, 404 (Mason CJ & Wilson J), 428 ‑ 429 (Brennan J).
There is no basis upon which to conclude that the plaintiff represented to the defendants that it would forebear commencing fresh proceedings, or otherwise acted so as to create an assumption to that effect on the part of the defendants. The reference by the defendants to having an opportunity to undertake an orderly sale of the property (without any stipulation as to what might be done or how long it might take) is simply too vague and generalised to carry with it any legal effect. No estoppel against the plaintiff arises.

Notice under the Residential Tenancies Acts 1987 (WA)

Section 81B of the Residential Tenancies Act 1987 (WA) provides:
Notice of proposed recovery of premises by person with superior title
(1)This section applies where a person (the plaintiff) brings proceedings in a competent court for the recovery of possession of residential premises.
(2)The court must not make an order for possession unless it is satisfied -
(a)that a person is not in possession of the residential premises as -
(i)a tenant under a residential tenancy agreement; or
(ii)a tenant holding over after termination of a residential tenancy agreement;
or
(b)if there is such a person in possession of the residential premises and the plaintiff is not the lessor under the residential tenancy agreement — that the person has been given written notice, in a form approved by the Minister, of the proceedings not less than 30 days before the commencement of the proceedings.
(3)Failure to comply with this section does not invalidate or otherwise affect the judgment or order.
The defendants contend that the plaintiff has failed to comply with s 81B(2)(b), and thus the court is precluded from making an order for possession. In an affidavit of Tracey Maree Pearson sworn 24 August 2017, Ms Pearson says that she is in the process of arranging the sale of the property the subject of the proceedings and is familiar with its occupation and tenants. She says that for the past four years, one Mr Lucas Doutch has resided at the property and pays a weekly rent of $100 as well as providing some consideration through the provision of labour as a farmhand. In addition, a Mr Samuel Doutch has resided at the property and paid a weekly rent of $100 as well as providing some provision of labour as a farmhand.

It is not in issue that in March 2016 a notice in the approved form under the Residential Tenancies Act was given to the occupiers of the security property. The notice specifies that the premises will be the subject of proceedings before the Supreme Court in 30 days or more.
The defendants contend that it is not open to the plaintiff to rely upon that notice because it was given nine months before the issue of the writ in these proceedings and were in relation to a separate and distinct action brought eight months before these proceedings. I reject that submission. The terms of the notice are not specific to any particular proceedings. It is apparent that these proceedings are simply part of an ongoing attempt by the plaintiff to enforce its securities. There has been no change in the tenants since the notice was given. The requirement of s 81B(2)(b) of the Residential Tenancies Act is met. There is no bar to the making of the orders for possession.
None of the defendants' defences are made out. It follows that the plaintiff is entitled to the relief claimed in CIV 1007 of 2017.

CIV 1006 of 2017

This action relates to a similar suite of agreements with the defendants as existed in relation to CIV 1007 of 2017. In this case, the parties entered into a loan agreement dated 10 March 2015. In this case, however, the plaintiff was named as the lender and as the mortgagee. There is no lack of clarity as to the contracting lender and mortgagee. The principal sum advanced was $337,500.
In this case, the defendants deny that the plaintiff is entitled to judgment first on the basis of what are said to be 'inconsistencies in evidence as to the description of the plaintiff'. There is nothing in those submissions. The documents make quite clear that the plaintiff is the lender and the mortgagee and is entitled to the benefit of the guarantee.
The second contention raised by the defendants is that there are inconsistencies in relation to the references to the date of the guarantee in respect of which relief is sought against the third defendants. Ms Benson swore an affidavit dated 27 February 2017 in which she deposed to the fact that the third defendants entered into a deed of guarantee on or about 10 March 2015. A form of guarantee signed by Ms Pearson is annexed to her affidavit. The notice of demand pursuant to the guarantee was also annexed to Ms Benson's affidavit. It bears the date of 2 December 2016. It refers, however, to a deed of guarantee 'dated the 20 August 2013'. Ms Benson's affidavit also annexes a notice calling up money on default addressed to each of the defendants. That notice clearly relates to the loan the subject of the 10 March 2015 loan agreement. It bears the date of 2 December 2016. The unchallenged evidence of Ms Benson was that it was served on the defendants the same time the demand pursuant to the guarantee was served.
Ms Pearson swore two affidavits in these proceedings both of which were read at trial. In neither did she deny executing the guarantee relied upon by the plaintiff.
The reference in the notice of demand under the guarantee to the date 20 August 2013 is obviously a typographical error. There is no suggestion that Ms Pearson was in any way misled by the date in that notice. There is no deficiency in the guarantee or the notice of demand which would prevent enforcement of the guarantee.
The third contention upon which the defendants resist the judgment is reliance upon the exchange of emails discussed above in the context of CIV 1007 of 2017. That defence fails for the reasons discussed above.
Although pleaded as a defence, reliance upon s 81B of the Residential Tenancies Act was not pursued at hearing because the property is no longer tenanted.
The plaintiff is entitled to judgment in CIV 1006 of 2017.

CIV 3176 of 2016

This action relates to a loan agreement dated 14 August 2015 made between the defendants and the plaintiff whereby the plaintiff advanced a principal sum of $1,100,000 to the first defendant. There is again no issue as to the amount advanced, nor as to the default in relation to payments under the loan. The defendants however oppose judgment on the basis of confusion about the identity of the plaintiff and its entitlement to the relief claimed, the proposition that the proceedings are barred by agreement or estoppel, and by reliance on s 81B of the Residential Tenancies Act.
There is nothing in the submissions in this case in relation to any confusion as to the identity of the lender. The application for finance clearly identifies the plaintiff as the credit provider. The mortgage, in this case granted by the second defendant in this action, Mrs Doutch, is to the plaintiff as mortgagee. The schedule to the guarantee identifies the plaintiff as lender. The position is pellucidly clear, and the first basis of the defendants' defence is without merit.
Similarly, the reliance by these defendants on the exchange of emails on 29 November 2016 and 1 December 2016 fails for the reasons previously discussed.
The final basis upon which judgment is resisted in this matter turns on the affidavit of the second defendant, Mrs Doutch. She is the registered proprietor of the property which is the subject of the mortgage in this action. She explained that she and her husband have resided at the property for approximately half of the year. She said that for the past four years, her son, Mr Jacob Doutch 'has been living with us at the property and paying rent'. She says that he pays 'approximately $200 per week in rent' and that 'this payment is made by Mr Jacob Doutch paying for amenities, maintenance and costs associated with the upkeep of the property'.
There is no evidence of any notice pursuant to s 81B of the Residential Tenancies Act having been given to Mr Jacob Doutch. The defendants contend that, for that reason, the court is not in a position to make an order for possession of the property.
The court is precluded under s 81B from making an order unless it is satisfied that a person is not in possession as 'a tenant under a residential tenancy agreement'. A residential tenancy agreement is defined by s 3 of the Residential Tenancies Act as meaning 'any agreement, whether or not in writing and whether expressed or implied, under which any person for valuable consideration grants to any other person a right to occupy, whether exclusively or otherwise, any residential premises, or part of residential premises, for the purpose of residence'. The Act does not apply in relation to any residential tenancy agreement in certain specified circumstances, including where the tenant is a boarder or lodger: Residential Tenancies Act s 5(2)(d).
Mrs Doutch deposes to the payment of 'rent' being made for 'amenities, maintenance and costs associated with the upkeep of the property'. She does not depose to the payment being in relation to any 'right to occupy' the premises. Jacob Doutch is Mrs Doutch's son. The clear implication is that there exists a common domestic arrangement whereby an adult child makes a contribution towards the household expenses, or as described by Mrs Doutch, 'amenities, maintenance and upkeep'. The arrangement undoubtedly involves permission to occupy the premises or part of them. That is not, however, a 'right to occupy' in the sense required to constitute the arrangement as a residential tenancy agreement. Section 81B has no application to the facts of this case.
It follows that the plaintiff is entitled to judgment on its claims in CIV 3176 of 2016.
I will hear the parties as to the appropriate orders to be made.