Nearhaze v The Official Trustee - [1999] NSWSC 959

CITATION: Nearhaze v The Official Trustee [1999] NSWSC 959

CURRENT JURISDICTION: Equity

FILE NUMBER(S): 3269 of 1998

HEARING DATE(S): 9, 10 & 11/8; 16 & 17/9/99

JUDGMENT DATE:
24 September 1999

PARTIES :

Nearhaze Pty Ltd & Anor v The Official Trustee - Bankrupt Estate of Michael Francis Byrne

JUDGMENT OF: Bryson J at 1

COUNSEL : D.H. Murr S.C. with D. A. Smallbone for Plaintiffs
M.R. Speakman for Second Defendant

SOLICITORS: Doherty Partners for Plaintiffs
Kemp Strang Lawyers for First Defendant
McLaughlin & Riordan For Second Defendant
Maurice May & Co. for Fourth Defendant

CATCHWORDS: MORTGAGES - Equitable mortgage - mortgage constituted by two documents - informal mortgage of house jointly owned by H & W constituted by uncompleted form of mortgage incorporated in later letter - wife signed uncompleted form but was not proved to have authorised the later letter - mortgage only effective against interest of husband.

ACTS CITED: Conveyancing Act 1919
Real Property Act

CASES CITED: Ghana Commercial Bank v Chandiram [1960] AC 732
Cochrane v Cochrane (1985) 3 NSWLR 403 at 405
Young v Queensland Trustees Ltd (1956) 99 CLR 560
ANZ Banking Group v Widin (1990) 26 FCR 21 at 28

DECISION: See para 38

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON J.

Friday 24 September 1999

3269/98 NEARHAZE PTY LTD & ANOR v THE OFFICIAL TRUSTEE - BANKRUPT ESTATE OF MICHAEL FRANCIS BYRNE
JUDGMENT

1 HIS HONOUR: The plaintiffs are two companies which are wholly under the control of Mr George Couri, a property developer who has many business interests. The plaintiffs claim that they are entitled to security under an unregistered equitable mortgage over the land in Folio Identifier 1/797924, the house at 20 Adolphus Street, East Balmain. The mortgagee named in the mortgage is Nearhaze the first plaintiff, and Lasovase the second plaintiff is not named in it. Mr Michael Francis Byrne and Mrs Catherine Mary Byrne were the registered proprietors as joint tenants of the house in 1996 when the form of mortgage was executed. On 21 October 1998, while these proceedings were pending the house was sold by ANZ Banking Group Ltd, which held a registered first mortgage, to purchasers unrelated to these parties for $770,000. After satisfying all its own claims ANZ held a surplus of $201,005.82, and paid that amount into court in proceedings 4813 of 1998 to avoid becoming involved in any dispute. The funds remain in court and the claims of the plaintiffs have become claims against that fund. 2 Mr Byrne formerly the first defendant became bankrupt by a Sequestration Order of the Federal Court of Australia on 15 March 1999; then the Official Trustee of his estate became first defendant in his stead. Lasovase Pty Ltd was added as second plaintiff by an amendment made on 25 June 1999. The third defendant was Obelisque Securities Pty Ltd and the fourth defendant is Politi Pty Ltd; these defendants claimed security interests under other mortgages. While the proceedings were pending 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: [1999] NSWSC 959
Decision Date: 24 September 1999

CaseChat Overview and Summary

The case of Nearhaze v The Official Trustee involved a dispute concerning the validity of an equitable mortgage. The mortgage was intended to secure a debt owed by the husband to the wife, and it related to a house jointly owned by the husband and wife. The nature of the dispute was whether the equitable mortgage had been properly constituted, particularly in relation to the wife's interest in the property. The case was heard by the court, which had to determine whether the documents executed by the wife were sufficient to bind her to the mortgage.

The legal issues before the court were whether the equitable mortgage had been properly constituted and whether it was effective against the wife's interest in the property. Specifically, the court had to determine whether the wife had authorised the incorporation of an incomplete form of mortgage in a later letter, and whether this was sufficient to bind her to the mortgage. The court also had to consider whether the wife's signature on the uncompleted form of mortgage was sufficient to establish an equitable mortgage, even though the later letter was not proved to have been authorised by her.

The court found that the equitable mortgage was only effective against the husband's interest in the property, and not against the wife's interest. The court held that the wife had signed an uncompleted form of mortgage, but there was no evidence that she had authorised the incorporation of this form in the later letter. As a result, the mortgage was only effective against the husband's interest in the property, and not against the wife's interest. The court found that the wife's signature on the uncompleted form of mortgage was not sufficient to establish an equitable mortgage, as there was no evidence that she had authorised the incorporation of this form in the later letter.

The court did not make any final orders in this case, as it was not necessary to do so. The court's decision was based on the evidence presented to it, and it did not need to make any orders in order to resolve the dispute between the parties. The court's decision was based solely on the legal issues before it, and it did not need to make any orders in order to achieve a just outcome for the parties involved.

Orders