National Australia Bank Ltd v Young - [2009] WASC 216

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: NATIONAL AUSTRALIA BANK LTD -v- YOUNG [2009] WASC 216

CORAM: MASTER SANDERSON

HEARD: 23 & 28 JULY 2009

DELIVERED : 28 JULY 2009

PUBLISHED : 4 AUGUST 2009

FILE NO/S: CIV 1321 of 2009

BETWEEN: NATIONAL AUSTRALIA BANK LTD (ACN 004 044 937)
Plaintiff
AND
WILLIAM LLOYD YOUNG
First Defendant
GLENDA JOY YOUNG
Second Defendant

Catchwords:

Practice and procedure - Application for summary judgment - Terms of orders - Turns on own facts

Legislation:

Nil

Result:

Judgment for plaintiff

Category: B

Representation:

Counsel:

Plaintiff:     Ms E C Hensler
First Defendant              :     In person
Second Defendant         :     Ms L E Tudori (on 23 July 2009) & Mr E W Nielsen (on 28 July 2009)

Solicitors:

Plaintiff:     Mallesons Stephen Jaques
First Defendant              :     In person
Second Defendant         :     Linda E Tudori & Associates

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

Nil

MASTER SANDERSON: This was the plaintiff's application for summary judgment against the defendants. With respect to the second defendant, the plaintiff required an extension of time to bring the application. I granted that extension of time. On 23 July 2009 I heard argument in this matter and reserved my decision. On 28 July I indicated to the parties there would be judgment in favour of the plaintiff against the defendants. There followed some argument as to the form of the judgment. I advised the parties I would publish reasons for entering judgment in favour of the plaintiff and deal with the dispute as to the form of orders. That is the effect of these reasons.
The statement of claim in this matter was filed on 13 February 2009 and was served on the first defendant on 22 March 2009. It was served on the second defendant on 18 February 2009. The first defendant filed a memorandum of appearance on 7 April 2009. The second defendant filed a memorandum of appearance on 10 March 2009. The application for summary judgment was filed on 28 April 2009 together with an amended writ and statement of claim. It was this sequence of events which led to the plaintiff seeking an extension of time to bring the action for summary judgment against the second defendant.
In fact, the evidence makes it plain that it only became necessary for the plaintiff to bring the action for summary judgment against the second defendant once the first defendant entered an appearance. The delay in bringing the application was therefore adequately explained. Furthermore, no opposition was raised by the second defendant to the time for bringing of the application being extended. Accordingly, I granted this aspect of the plaintiff's application.
As it happened, there was no real dispute between the parties as to the facts. The dispute, such as it was, related to the proper interpretation of a document entitled 'Young Settlement Deed' dated 11 July 2007 (the Deed). Before dealing with that document, it is necessary to say something about how and why it came into existence.
The defendants are the registered proprietors as tenants in common in equal shares of six farming properties situated at Nyabing. The defendants granted the plaintiff two mortgages in relation to these properties. Relevantly, the first mortgage dated 22 February 1995 and registered on 1 November 1995, was over one property Certificate of Title volume 1890 folio 125. The second mortgage, which was also dated 22 February 1995 and which was registered on 18 April 1995, covered the other five properties. The mortgages were granted on terms contained in the mortgages which are found as annexures KAD3 and KAD4 to the affidavit of Karen Ann Duncan sworn 28 April 2009. In addition, the parties signed a document which is described in Ms Duncan's affidavit as 'the Memorandum'. This document appears as annexure KAD5 to her affidavit. It specifies that the defendants will observe, perform and be bound by the covenants, obligations, provisions and stipulations contained in the memorandum.
It is unnecessary for present purposes to say anything more about these mortgages or the memorandum. It is sufficient if I say they are in a form which is typical of such documents drawn by banks. Essentially they commit the defendants to pay interest to the bank at an agreed rate on agreed dates. In the event of default the bank is entitled to act against the properties so mortgaged.
It is common ground there was default under these mortgages. Discussions then took place between the plaintiff and the defendants. On or about 11 July 2007 the Deed was entered into. A copy of the Deed is found as annexure KAD6 to Ms Duncan's affidavit. I will return to some of the relevant provisions of the Deed in due course. At present it is sufficient if I say that pursuant to the Deed the defendants agreed to pay the plaintiff an amount of $760,000 (referred to in the Deed as the 'Settlement Amount') by 31 March 2008. This payment was not made. Notices of default were issued on 28 September 2008 and were duly served on the defendants. On 16 January 2009 notices to quit were given to the first and second defendant. Those notices required the defendants to leave the six properties and to hand possession to the plaintiff. The defendants did not comply with either the default notices or the notices to quit. Accordingly, these proceedings were issued and the plaintiff made its application for summary judgment.
What separates this matter from the usual possession actions brought by a bank is the existence of the Deed. In his opposition to the application, the first defendant relied in particular on cl 1.3 of the Deed. That clause, which is headed 'Failure to pay Settlement Amount' is in the following terms:
W Young and G Young agree that, if they do not pay the full amount of the Settlement Amount to nab by 31 March 2008 in accordance with clause 1.2 above:
(a)by executing this deed they will be deemed to have acknowledged their debt to nab in the amount of the Settlement Amount, including interest charged on the outstanding amount of the Settlement Amount at 9% per annum from 10 May 2007 until payment of the outstanding balance of the Settlement Amount;
(b)if requested by nab, W Young and G Young will give nab possession of such of the titles comprising the properties the subject of the Young Mortgages as is agreed so that they may be sold, as necessary, to enable nab to recover the Settlement Amount (including any interest payable on the Settlement Amount in accordance with the terms of this deed and any enforcement costs payable to nab in accordance with the terms of the Young Mortgages) from the proceeds of sale;
(c)in the absence of any agreement between the parties as contemplated in clause 1.3(b), W Young and G Young will give nab possession of any titles comprising the properties the subject of the Young Mortgages requested by nab and nab may sell so many of the properties the subject of the Young Mortgages as it needs to realise the outstanding balance of the Settlement Amount (including any interest payable on the Settlement Amount in accordance with the terms of this deed and any enforcement costs payable to nab in accordance with the terms of the Young Mortgages);
(d)in carrying out the sales contemplated by clause 1.3(c), nab will take into account any reasonable request from W Young and G Young in relation to the order in which the properties the subject of the Young Mortgages are to be sold, but nab retains absolute discretion as to the order of sale of the properties in order to recover the outstanding balance of the Settlement Amount (including any interest payable on the Settlement Amount in accordance with the terms of this deed and any enforcement costs payable to nab in accordance with the terms of the Young Mortgages); and
(e)if requested by nab in order to give effect to clause 1.3(b) to (d), W Young and G Young will consent to judgment for the Settlement Amount (including any interest payable on the outstanding amount of the Settlement Amount in accordance with the terms of this deed and any enforcement costs payable to nab in accordance with the terms of the Young Mortgages).
It was the first defendant's argument that cl 1.3(b) made it a condition precedent to the plaintiff taking possession and selling any of the properties the subject of the mortgage that the plaintiff and the defendants would confer about which of the titles to the properties would pass to the plaintiff and be sold to satisfy the Settlement Amount. It was further said that if no agreement was reached then, and only then, was the plaintiff entitled to request possession of sufficient of the properties to satisfy the Settlement Amount. As no requests had been made by the plaintiff, the condition precedent had not been satisfied and the plaintiff was therefore not entitled to possession of the properties. On that basis it was said by the first defendant (supported, at least tacitly, by the second defendant) that the application for summary judgment ought be dismissed.
On behalf of the plaintiff it was said that cl 1.3(b) was permissive. It allowed the plaintiff to enter into discussions with the defendants but did not require them to do so. If no request was made, and therefore no agreement was reached, it was open to the plaintiff to move to recover the properties either pursuant to cl 1.3(c) of the Deed or otherwise.
I am satisfied that the plaintiff's interpretation of the Deed is to be preferred. The wording of cl 1.3(b) is permissive. It creates no obligation on the plaintiff to make any request or to enter into any discussions with the defendants. If the plaintiff had initiated some discussions then certain rights and liabilities may have arisen consequent upon cl 1.3(b) being activated. But it was common ground that no discussions were initiated and therefore, in my view, the clause is of no effect. Consequently the plaintiff was entitled to the relief that it sought.
That then left the question of the form of the orders. At the hearing of the application, the plaintiff proposed a form of orders to which both defendants took exception. One of the issues was the way in which interest was calculated. Counsel for the plaintiff made a concession in relation to the interest calculation and that issue fell away. At the time I indicated to the parties that judgment would be entered for the plaintiff, counsel instructed on behalf of the second defendant appeared. He proposed a minute of orders which was significantly different from that proposed by the plaintiff. I heard argument from the parties and reserved this question.
Both minutes provided there should be judgment in favour of the plaintiff against both defendants for an amount of $760,000. Both minutes accepted that within 28 days of the order possession of the six lots ought be given by the defendants to the plaintiff. The second defendant's minute also conceded that the defendants should pay the plaintiff's costs of the action to be taxed. The real point of difference between the parties related to enforcement costs.
The plaintiff's minute proposed these costs be dealt with in the following way:
The defendants pay to the plaintiff all the costs, charges, expenses and liabilities incurred by it in enforcing its rights against the defendants (or either of them) under:
(a)a memorandum filed and registered with the Office of Titles (now Landgate) Western Australia as Number [MP 59];
(b)mortgage G18435 dated 22 February 1995 and registered with the Office of Titles (now Landgate) on 1 November 1995;
(c)mortgage F856370 dated 22 February 1995 and registered with the Office of Titles (now Landgate) on 18 April 1995; and
(d)an agreement made on or around 11 July 2007 between the plaintiff and the defendants known as the Young Settlement Deed,
including the plaintiff's legal costs (together Costs) on an indemnity basis.
So importantly then, the plaintiff was looking to have its costs paid on an indemnity basis. In seeking the costs on that basis it was relying in part on the mortgages registered over the land. It was the second defendant's position that under the terms of the Deed, indemnity costs otherwise payable pursuant to the mortgages could not be claimed. In particular, reliance was placed upon cl 12.9 of the Deed. It was said that as the Deed pursuant to that clause constituted an entire agreement, reliance could not be placed on the indemnity cost provisions in the mortgages.
On balance I am satisfied the defendants' submission on this point is to be preferred. In my view, there is no basis upon which the indemnity cost provisions in the mortgages can be imported into the settlement deeds and apply to these proceedings. That being the case, I am satisfied the order should be made in terms of the second defendant's minute.
I will make orders in terms of that minute. I note there is a liberty to apply provision and if any matters remain outstanding subsequent to the publication of these reasons, the parties can refer the matter back to the court.