McGarry v 14 Hiscock Street Pty Ltd - [2012] VSC 573

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2010 6705

JANET EVELYN McGARRY	Plaintiff
v
14 HISCOCK STREET PTY LIMITED (ACN 127 490 859) and ors (according to the attached schedule)	First Defendant

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JUDGE:	LANSDOWNE AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	28 November 2011
DATE OF REASONS FOR JUDGMENT:	26 November 2012
CASE MAY BE CITED AS:	McGarry v 14 Hiscock Street Pty Ltd
MEDIUM NEUTRAL CITATION:	[2012] VSC 573

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FUNDS IN COURT – Application for payment out by claimed equitable chargee or mortgagee – Dispute as to nature of equitable interest of applicant – Dispute between caveators as to priority of equitable interest of applicant – Construction of loan agreement – Applicant found to hold interest as be equitable mortgagee from date of agreement – No basis established for postponement of that interest to that of later caveator.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Magowan	Koornang Legal Services
For the Second Defendant	Mr T Messer	At trial: Kliger Partners
At judgment: Altus Lawyers

HER HONOUR:

Proceedings

This is an application for payment out from funds in court, being the balance of the proceeds of sale of land at 14 Hiscock Street, Chadstone by the second mortgagee. The second mortgagee deposited the sum of $70,345.73 in two instalments in April 2010 after payment of itself and the first registered mortgagee. As at 13 November 2012 the amount is $71,484.45 with an amount to be added for interest, and an amount deducted for tax.

The proceedings were commenced by originating motion filed on 13 December 2010. In accordance with the usual practice, the plaintiff did not join any defendants to the application but she did serve all persons who had been notified by the Funds in Court Office of the receipt of the funds, being, broadly speaking, the former registered proprietor of 14 Hiscock Street Pty Limited and other caveators.

A number of the other caveators attended the return date of the originating motion. On that date, 16 February 2011, I ordered the plaintiff to file and serve a statement of claim joining as defendant all persons other than herself and the second mortgagee issued with a certificate of moneys received by the Senior Master’s office. I further directed that further pleadings be in accordance with the Supreme Court (General Civil Procedure) Rules 2005 (“the Rules”). The plaintiff filed a statement of claim on 4 April 2011. The second defendant filed a Notice of Appearance on 9 April 2011 and an Amended Defence on 6 May 2011. I am satisfied by reason of the affidavit of service filed in court by the plaintiff at the hearing of the proceedings that all other required defendants had been served. No other Notice of Appearance was filed and no other party attended the trial.

The statement of claim specifically pleads that the first defendant is joined “as a necessary party only” and “without prejudice to any other rights the Plaintiff may otherwise…

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: [2012] VSC 573
Decision Date: 26 November 2012

CaseChat Overview and Summary

The matter before the court involved a dispute between McGarry, who claimed an equitable interest in certain funds held by the court, and 14 Hiscock Street Pty Ltd, the respondent. The funds in question were held by the court as a result of a prior legal proceeding. The nature of McGarry's equitable interest and its priority relative to other claimants was contested. The primary issue before the court was to determine the nature and priority of McGarry's equitable interest in the funds held by the court. This involved interpreting a loan agreement and determining whether McGarry held an equitable charge or mortgage over the funds, as well as resolving the dispute over the priority of this interest against other caveators.

The court first examined the terms of the loan agreement to ascertain the nature of McGarry's interest. It was established that McGarry held an equitable mortgage over the funds from the date of the agreement. The court then turned to the question of priority, considering whether there were grounds to postpone McGarry's interest in favour of a later caveator. After careful consideration, the court found no basis for postponing McGarry's interest. The court held that McGarry's equitable mortgage was valid and had priority over any subsequent interests claimed by other parties.

In conclusion, the court determined that McGarry held an equitable mortgage over the funds from the date of the loan agreement and that this interest had priority over any claims by subsequent caveators. The court's reasoning was grounded in the construction of the loan agreement and the lack of any valid reason to postpone McGarry's interest. The final orders of the court would reflect this determination, ensuring that the appropriate party receives payment of the funds held by the court.

Orders