NAB v New Road Holdings

[2010] VSC 150

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. SCI 2009 04038

NATIONAL AUSTRALIA BANK LIMITED	Plaintiff
V
NEW ROAD HOLDINGS PTY LTD	Defendant

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JUDGE:	BELL J
WHERE HELD:	Melbourne
DATE OF HEARING:	20 April 2010
DATE OF JUDGMENT:	20 April 2010
CASE MAY BE CITED AS:	NAB v New Road Holdings
MEDIUM NEUTRAL CITATION:	[2010] VSC 150

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MORTGAGE – application for possession under s 78(1)(b) of the Transfer of Land Act 1958.

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APPEARANCES:	Counsel	Solicitors
For the plaintiff	Mr T R Messer	Thompson Playford Cutlers
For the defendant	R M Ambrose

HIS HONOUR:

1. This is the trial of an application by National Australia Bank Limited, as mortgagee, to recover possession of mortgaged property under s 78(1)(b) of the Transfer of Land Act 1958.  The mortgagor, New Road Holdings Pty Ltd, has not appeared to defend the application.  I have granted leave to its former solicitors to withdraw their appearance. 

1. The necessary elements of the bank’s cause of action, and its entitlement to relief, were alleged in the amended statement of claim dated 16 July 2009, and have either been admitted or, not being put in issue by New Road Holdings, are taken to have been admitted (see r 13.12 of the Supreme Court (General Civil Procedure) Rules 2005).  These matters were also independently established by the evidence in the proceeding before me.   

1. The mortgage (No AE492670W) was registered on 3 July 2006.  Its provisions include the provisions of the Home Mortgage Memorandum of Common Provisions retained by the Registrar of Titles (No AA722).  The mortgaged land is described in Certificates of Title Volume 9909 Folio 772 and Volume 9909 Folio 776, being units 2 and 6/139 Melrose Drive, Tullamarine. 

1. By cl 1.1 of the common provisions, the mortgage secured the ‘amount owing’, which was defined by cl 31 to include ‘all money’ owed to the bank under various instruments there specified. 

1. By a letter dated 26 February 2008, financial accommodation was offered to Demar Developments Pty Ltd, which is connected with New Road Holdings.  The offer was accepted.  Four facilities were established:  a standard overdraft of $120,000 (expiring on 31 March 2008), a bank guarantee of $338,838, a business card of $5,000 and a lease of $149,652.  The total amount was $613,490. 

1. Clause 18.2 of the letter of offer allowed the bank to certify conclusively the amounts payable under the agreement. 

1. The borrowings of Demar under the accommodation were supported (among other ways) by a guarantee and indemnity given by New Road Holdings on 26 February 2008 and by the bank’s existing mortgage over the Melrose Drive properties (see Part 2 of the letter of offer). 

1. The guarantee and indemnity between the bank and New Road Holdings required the company to pay the bank all the amounts which Demar owed at any one time (cl 6.2), up to a stated limit of $463,838.  It allowed the bank to issue a conclusive certificate setting out what the amounts owing were (cl 22.1).  In default of payment of the amounts owing, it allowed the bank to resort to the securities (cl 12), which included the mortgage (see the definition of ‘security’ in cl 29). 

1. Demar drew the overdraft facility down fully, but did not repay the balance by 31 March 2008 or at all. Demands were made of Demar and New Road Holdings, including a demand dated 2 December 2008 to New Road Holdings under s 76 of the Transfer of Land Act.  The amounts owing have not been paid. 

1. Demar is indebted to the bank under the other three facilities also.  These are secured by the guarantee and indemnity which, in turn, is secured by the mortgage. 

1. Under cl 18.2 of the letter of offer and cl 22.1 of the guarantee and indemnity, the bank has issued a certificate of moneys owing, which was signed on 16 April 2010.  It certifies that the amounts owing by Demar under the accommodation and New Road Holdings under the guarantee and indemnity are as follows:

Overdraft facility (account number 63-708-9591)	$168,523.20
Bank guarantee facility	330,968.56
Business card facility (account number 4557049901043352)	$3,087.83
Total amount owing under the facilities	$502,579.59

1. These amounts are due and payable by Demar under the accommodation and also New Road Holdings under the guarantee and indemnity (up to the stated limit).  Both companies have failed to respond to formal demands to pay the amounts so due and payable. 

1. The amounts being due and payable under the guarantee and indemnity, and the bank having served the default notice required by cl 20.1 of the common provisions of the mortgage, the bank is entitled to possession of the Melrose Drive properties. 

1. I am therefore satisfied the bank is the mortgagee of the Melrose Drive properties, New Road Holdings is in default under that mortgage and the bank is entitled to possession of the properties. Therefore the bank is entitled to recover possession of the properties under s 78(1)(b) of the Transfer of Land Act and there will be orders accordingly.

1. The defendant did not appear to prosecute its counterclaim, which will be dismissed.

1. Clause 7.1 of the guarantee and indemnity specifically deals with the issue of the liability of New Road Holdings for the bank’s costs and expenses in connection with enforcing its rights and remedies.  The company’s obligation is to pay these costs and expenses ‘on a full indemnity basis’, including ‘legal fees’.  There is no reason to exercise my discretion not to give effect to this provision, which I should respect unless there is good reason not to.[1]  There will be an order for costs in the bank’s favour against New Road Holdings on an indemnity basis.

   [1]Taree Pty Ltd v Bob Jane Corporation [2008] VSC 228.

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