Neve v Kent
[2020] VCC 22
•5 February 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-18-02246
| ADRIAN ANTONIUS NEVE | Plaintiff |
| V | |
| PAUL WILLIAM KENT | Defendant |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 and 14 November 2019, further written submissions filed on 22 November, 2 and 12 December 2019 | |
DATE OF JUDGMENT: | 5 February 2020 | |
CASE MAY BE CITED AS: | Neve v Kent | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 22 | |
REASONS FOR JUDGMENT
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Subject: DEBT, MORTGAGE
Catchwords: Debt – whether defendant personally liable to repay moneys advanced by the plaintiff – whether registration of mortgages given by the defendant contingent upon his death – whether plaintiff precluded from seeking relief because he “abandoned his investment”, counterclaim for items allegedly removed from the defendant’s property following mortgagee sale by the plaintiff
Legislation Cited: Transfer of Land Act 1958 (Vic)
Cases Cited:Pyramid Building Society (in liq) v Scorpion Hotel Pty Ltd [1998] 1 VR 188; Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32; Bank of Western Australia Ltd v Abdul & Anor [2012] VSC 222; Dobbs v National Bank of Australasia Ltd (1953) 53 CLR 643; Whild v GE Mortgage Securities Solutions Ltd(No 2) [2012] VSC 322
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C M Fenwick | ConnectLaw Legal Services |
| For the Defendant | In person |
HER HONOUR:
1 By this proceeding, the plaintiff (“Neve”) seeks to recover the unpaid balance of moneys he advanced to the defendant (“Kent”), together with interest and costs.
2 For his part, Kent denies liability as he contends the sums in question were not advanced to him personally but were invested in a company and a superannuation fund with which he was associated. Although Kent admits executing mortgages which he drafted and provided to Neve to secure the funds advanced, he maintains the mortgages were not enforceable because they were only to be registered and enforced after his death. Kent also counterclaims for various personal items which he alleges were stolen following an auction of his property situated at 86 Southern Road, Heidelberg Heights (“the property”). The property was sold by Neve as mortgagee in possession.
3 For the reasons that follow, I am satisfied Kent is personally indebted to Neve and judgment should be entered in Neve’s favour. I reject Kent’s defence that the mortgages were not to be registered and enforced until after his death. I was also not persuaded that Kent had established any of the matters relied upon in his counterclaim.
4 In reaching my findings, it has been necessary to assess the credit of each of the parties. I found Neve to be an entirely truthful and credible witness. He was not financially astute and mistakenly placed his trust in Kent to handle his business affairs. In contrast, I found Kent to be an unimpressive and inherently unreliable witness. I did not consider him to be a witness of truth. Many of his answers during the course of his cross-examination were contradictory. I formed the view Kent would say whatever he thought was appropriate to suit his current purposes. Additionally, the failure on his part to produce relevant documents, such as bank statements or notification of changes in share ownership at the relevant time was telling in my view. The various statements of account produced by Kent as evidence of transactions to support his case were self-generated and often conflicting. I am not satisfied these statements should be accepted as being accurate in the absence of any independent verification of their contents.
Background
5 Neve is a fitter and turner by occupation. He has known Kent for about 15 years. They met at meetings held by the School of Philosophy in Melbourne which offers practical philosophy courses. Neve was aware Kent had an interest in finance which Neve said he did not know much about. Neve was due to come into some funds following a redundancy payout and a divorce settlement. Rather than putting the money in the bank, he decided to ask Kent about some other investment options.
6 After discussing the matter with Kent, Neve decided he would provide sums to Kent to invest on his behalf. Neve subsequently advanced three sums of money to Kent as follows:
(a)$25,000 on or around 23 October 2009;
(b) $60,520.45 on or around 9 March 2010;
(c) $215,005.40 on 7 April 2010.
7 There is no dispute that each of the three advances were made.[1] However, Kent says the amounts paid by Neve were not loans made to him but were advances to third parties. The first and third advances according to Kent were provided to George Finance Pty Ltd (“George Finance”). Kent is the secretary and a former director of George Finance. The second advance was advanced to the George Superannuation Fund. Kent was the trustee of this fund. Given this, Kent’s case is that he has no personal liability to repay the funds advanced.
[1]Defence paragraph 14, Court Book (“CB”) 20
First advance
8 Neve received a redundancy package of $26,845.19 from his former employer on 26 August 2009. Neve paid the sum of $25,000 on 23 October 2009 to Kent by way of a bank cheque payable in Kent’s name. Neve said he met Kent at a restaurant in Swanston Street and handed over the cheque and Kent provided him with a mortgage of land.[2] Neve said he gave Kent the money because he “could see that it was being useful and I knew that it would be safe”[3]. He thought it would be safe because Kent had explained to him how he would set up a mortgage as security for the money that Neve lent him.
[2]CB 743 – see Transcript (“T”) 57
[3]T56, L18-20
9 The mortgage given to Neve was prepared by Kent and signed by him. The sum advanced under the mortgage was $25,000. The date of the mortgage was 23 October 2009 and the due date was 23 December 2009. Interest was payable at the rate of 12 per cent. Neve said he had never actually seen a mortgage beforehand. He was unaware of the identity of the property being mortgaged and was unfamiliar with title details, such as volume and folio numbers. Kent told him it was a piece of paper that vouched they had entered into this agreement; the agreement being that Neve had given Kent $25,000, Kent would pay him 12 per cent interest and if he ever needed his money back, Kent would repay him in three days. This mortgage was never registered.
10 Neve’s evidence that he paid the sum of $25,000 by bank cheque was supported by a bank statement showing the withdrawal of $25,005.40 from Neve’s account on 20 October 2009.[4] The additional sum of $5.40 was for the bank fee payable for the bank cheque.
[4]CB 469
11 Kent acknowledged he had received the sum of $25,000 from Neve but said it went into the bank account of George Finance. Kent said in evidence he may have guaranteed the first advance of $25,000.[5] Kent’s version of events was that Neve had advanced this money to buy shares in George Finance. Kent did not produce any bank statement to establish that the funds had gone into any bank account of George Finance. When questioned by his counsel, Neve did not have any knowledge of George Finance at the time he made the first advance or that he had supposedly bought shares in that company. Further, the contemporaneous document signed by Kent, being the mortgage[6] recorded that Neve had advanced the sum of $25,000 to Kent.
[5]T34, L20-21
[6]CB 743
12 Kent claimed the sum of $25,000 was repaid to Neve after his shares in George Finance were sold. There was no documentary evidence to show that any shares were issued in George Finance in the name of Neve at the relevant time or that those shares were later sold and the proceeds of sale returned to Neve.
13 In the list of repayments made by Kent attached to the amended statement of claim, an amount of $25,995 was repaid on 22 January 2014. This sum was applied to reduce the level of indebtedness owed to Neve as at that date. Kent made some ad hoc repayments from 2014 onwards and only after demands were made for payment. The mere fact that this amount was paid does not establish that the source of these funds represented proceeds of sale of shares in George Finance as Kent would have it.
Second advance
14 As part of a divorce settlement, Neve became entitled to the sum of $60,520.45 from funds held by ESS Super, his ex-wife’s super fund. Neve had the option to rollover this sum into a super fund or have it paid to him directly into his bank account. After discussing the matter with Kent, Kent told him he had a super fund and that Neve could roll over the payment into that fund, which Neve decided to do. On 25 February 2010, Neve completed and signed a form directing ESS Super to rollover the sum payable to the George Superannuation Fund.[7]
[7]CB 461-463
15 Kent wrote to ESS Super in his capacity as trustee of the George Superannuation Fund on 25 February 2010 to confirm the Fund was entitled to receive the transfer of funds.[8] The address given for the George Superannuation Fund was the address of the property.
[8]CB 465
16 The rollover benefit in the sum of $60,520.45 was paid to the George Superannuation Fund by cheque which was drawn on 9 March 2010.[9]
[9]CB 459
17 Kent accepted the sum of $60,520.45 was paid into the George Superannuation Fund. After some prevarication, Kent confirmed he was trustee of that fund under cross-examination. There was also a letter in evidence which he had signed in his capacity as trustee for the George Superannuation Fund.[10] He gave evidence that the second advance was then invested in George Finance by the George Superannuation Fund but those moneys were lost after George Finance collapsed.
[10]CB 465
Loan Agreement
18 On 1 March 2010, Neve and Kent signed a written loan agreement (“the agreement”).[11] Kent is the author of the agreement. By this agreement, Kent “provided the below mortgages as security to Adrian Neve to guarantee that”:
(1)any and all funds invested by Neve with Kent as interest earning investments would earn at least 7.5 per cent calculated daily and paid monthly and be available to Neve upon three days’ written notice given by Neve to Kent’s email address; and
(2)any and all funds invested by Neve with Kent as shares in the company Boom Parts & Repairs Pty Ltd (“Boom Parts”) shall increase in value by at least 6.5 per cent and shall be purchased by Kent, if no other buyer is available, at a price providing the 6.5 per cent per annum capital growth, upon three days’ notice given by Neve to Kent’s email address; and
(3)any and all funds invested by Neve with Kent via George Superannuation Fund shall increase in value by at least 7.5 per cent per annum, less management and audit fees, and shall be available upon 30 days’ notice given by Neve by email to Kent’s email address.
[11]CB 455
19 The loan agreement further provided as follows:
“Should Paul William Kent at anytime be in breach of either clause (1), (2) or clause (3) above, Adrian Neve may give the attached mortgages to any solicitor of his choosing to proceed with the sale of the properties provided as security under the mortgages to recover Adrian Neve’s outstanding investment.”
20 Neve had no independent recollection of the loan agreement but confirmed his signature appeared at the bottom of the document.
21 Despite the wording of the agreement, it is accepted that no mortgages were attached to the document. The parties subsequently signed two mortgages in 2012, following Kent’s return to Melbourne after living in the Northern Territory for some time.
22 Kent’s evidence was that the agreement related only to funds which had been invested as at the date of the agreement, being the first advance of $25,000. He said the word “invested” meant the past tense. If that were the case, then it makes no sense to include clauses 2 and 3 because no moneys to buy shares in Boom Parts or to invest with Kent via the George Superannuation Fund had yet been advanced by Neve. In fact, there is no evidence to show that Neve ever acquired any shares in Boom Parts. I reject Kent’s construction that the agreement referred only to sums advanced as at the date of the agreement.
23 Neve was unaware that Kent claimed Neve was a shareholder in Boom Parts & Repairs Pty Ltd. Kent is a company director of Boom Parts.[12] He was shown a statement in the Court Book at 392 prepared by Kent which recorded Neve made a “share investment” of $330,000 in Boom Parts. Neve had no knowledge of this and had never seen this document before. During his cross-examination, Kent conceded the figure of $330,000 was a mistake on his part as was the shareholder reference “No.3” at the top of page 392.
[12]CB 447-449, ASIC search
24 The plaintiff’s submission is that by this agreement, Kent accepted personal liability to repay the sums advanced by Neve upon demand for repayment being made by Neve. He was not acting as a guarantor for third parties but by its terms, he expressly agreed to be personally liable. It is also clear from the agreement that Kent had agreed he would provide mortgages to Neve as security for the sums advanced.
Third advance
25 The third advance in the sum of $215,005.40 was paid by Neve by way of bank cheque in the name of Kent on or around 7 April 2010. This amount represented Neve’s half share of the settlement funds of the house that he and his former spouse had lived in. The bank statement showed the withdrawal of this amount from Neve’s account on 7 April 2010.[13] The amount of $5.40 was the bank fee payable to obtain the bank cheque. Neve arranged to meet Kent in the city and he handed Kent the bank cheque for $215,000. Neve’s understanding was that they would meet later on and Kent would “produce the mortgages and we would settle that”.[14] This took some time as Kent left Victoria and was working in the Northern Territory for some 18 months and Neve said he left it hanging there. During that time, Neve emailed, phoned and messaged Kent as he had started to become quite uneasy about it all.
[13]CB 470
[14]T64
26 Kent’s evidence was that these funds were given to George Finance and was unable to say whether it had been by bank cheque or transfer of funds. Significantly, Kent did not produce any bank statements, either in his own or in particular, George Finance’s name, to demonstrate where Neve’s advances had gone. No bank account statements in the name of George Finance were produced in response to a subpoena served on behalf of Neve directed to George Finance dated 2 October 2019.
27 On 24 August 2012, Kent sent Neve an email which said:
“Hi Ed,
This email is to confirm that three sums of money were invested by you in my companies for which I personally guaranteed the repayment of principle (sic) and agreed earnings thereon. I have been late in checking the documentation thereof and forwarding it to you. This task shall be completed upon my return to Melbourne in about 10 days or upon request by you while I am away. ………”
The mortgages
28 Neve seeks relief in this proceeding pursuant to two mortgages executed by the parties. The first mortgage is dated 11 March 2010 (“Mortgage 1”) and secures an advance of $61,000. The second mortgage is dated 31 March 2010 (“Mortgage 2”) and secures an advance of $330,000. They were prepared by Kent and provided to Neve by Kent in or around September 2012. Neve gave evidence he had met Kent at a coffee shop in Coburg and that they had signed the mortgages there. He was unsure about the exact date when this occurred but said it was after the money was handed over. Neve did not recall anyone else being present when the mortgages were signed. He did not know whose signature appeared on the mortgages as having witnessed the parties’ signatures. The signatures of both Kent and Neve appear on the mortgages and have been witnessed by a Mr Andrew Falconer, who Kent said was present when the mortgages were signed. Kent said that he was intending to call Mr Falconer to give evidence[15] but did not do so. Mr Falconer signed a statutory declaration dated 19 March 2018 in which he said he had witnessed the signatures on both mortgages sometime after January 2012 but does not say where that occurred.[16]
[15]T93, L18
[16]CB 97
29 There is no dispute, however, on the evidence from both parties that they willingly signed the mortgages and did so in around September 2012.
30 Mortgage 1 records an advance of $61,000 which represented the amount Neve received from the proceeds of his ex-wife’s superannuation.
31 Mortgage 2 states an advance in the sum of $330,000. This was a mistake because the only other funds advanced were the first advance of $25,000 and the third advance of $215,000 which brought it to a total of $240,000. Neve said he had queried this amount in an email at the time and then again at the café in Coburg but Kent had brushed it aside and said, “Look, don’t worry it’s all right”, or something to that effect. Kent conceded in evidence that he had listed the amount of the advance in Mortgage 2 incorrectly.
32 Pursuant to the mortgages, Kent is principally liable to pay the moneys hereby secured which includes the advance, interest and enforcement costs. The dates printed on the mortgages and inserted by Kent bear the dates upon which the advances were made, rather than the date upon which the mortgages were signed. The mortgages were not signed earlier because Kent was in the Northern Territory for some 18 months following the provision of the second and third advances.
33 Kent challenged the enforceability of the mortgages in his counterclaim. The basis of his challenge is set out in paragraphs 2 to 6 of the counterclaim. He alleges there was a verbal agreement between himself and Neve, the effect of which was that:
(a) Paul would change his will to ensure that by the time of Paul’s death, the investments had not been repaid to Adrian by the recipients, then Paul would pay those amount to Adrian;
(b) Paul would execute mortgages over the property as additional security for those repayments to Adrian; and
(c) Adrian would hold the mortgages and not register them unless the investments had not been repaid as at the date of Paul’s death.
34 An allegation is then made that in breach of this verbal agreement, Neve registered the mortgages provided by Kent and demanded the amounts due and, subsequently seized and sold the property. As a result of this alleged breach, Kent claims loss and damage representing the value of the property together with replacement costs and associated fees.
35 Kent’s explanation for making the alleged verbal agreement was that he was doing more air travel and consequently, was at greater risk of being killed. At page 125 of the Transcript, Kent gave the following evidence in his evidence-in-chief:
“And who prepared this mortgage?---I prepared the mortgage.
Yes, and why did you do that?---I prepared the mortgage, um, as an assurance for Mr Neve that if I was killed, then there would be ah, a means by which he could access what was in my estate.
Yes?---to ensure that he did receive his funds back.
And did you explain that to Mr Neve?---Ah, yes, your Honour, and I specifically said that, ah, when the mortgages were given – to put the - words to the effect of, ‘put them in your bottom drawer, and if, for some reason you can’t contact me, ah, implying that my body has gone wherever – um, then cast these to a solicitor of your choice so that you can – so that he can deal with them, so that the funds will be recovered from my will.”
36 Kent alleged he gave the mortgages to Neve so as to better protect Neve’s interests if Kent were to die.[17] He claimed that this was recorded in his will, of which there were three differently dated versions in the Court Book. This explanation is farfetched to say the least. It ran counter to Neve’s evidence as to why the mortgages were provided; namely, Kent had told him they were to be given to secure the moneys he had advanced. This was also consistent with Kent having provided an unregistered mortgage in respect of the first advance. None of the mortgages contain any clause to the effect that they could only be registered upon Kent’s death. The fact that there was some supposed oral agreement to postpone the registration of the mortgages until after Kent’s death was not put to Neve in cross examination. I reject Kent’s evidence on this point as simply not being credible. A further difficulty, as pointed out by counsel for Neve, was that any oral agreement would be inadmissible under the parol evidence rule in construing the terms of the mortgages.
[17]Paragraphs 6a and 11a of Kent’s defence, CB 18-19
37 Around 16 January 2016, Kent visited Neve at his home. Kent asked Neve to act as guarantor on Kent’s ailing investment property in Yarraville[18]. He wanted Neve to use his property as guarantor so that Kent would be able to reassure the vendor of the Yarraville property that Kent was able to find money to pay his next instalment under a terms contract of sale. Neve said he had spoken to his partner previously about the possibility of him ending up in financial difficulty. He said she told him she would help out if things got to that stage. Neve was concerned that if he agreed to Kent’s request to act as a guarantor he could potentially get himself into more financial trouble as well as his partner. He told Kent “other people are involved now. I’m sorry I can’t help you”.
[18]Referred to interchangeably in the transcript as the Newport property
38 Sometime after the mortgages were signed, Neve had discussions with Kent about Neve wanting to purchase a home. Neve was intending to borrow moneys from the bank to buy the property but wanted a statement from Kent setting out the moneys held by Kent on his behalf so he could show the bank he held an asset. In the end, that became unnecessary as the bank advanced Neve a loan based on his tax returns.
39 Kent sent an email to Neve on 22 March 2016 in which he said he had transferred $80,000 from Neve’s share account to a term deposit to be drawn down at settlement of Neve’s home. Some statements were attached to the email but Neve could not recall whether the statements at CB 385-387 were the ones attached. Kent tried to resile from this email by saying the transfer of $80,000 was conditional upon Neve’s approval. Neve said he had no idea as to what happened to the alleged term deposit of $80,000 and it was not mentioned again. Reference was also made in the email to cheques held by Kent on behalf of Neve of which Neve said he had no idea what these were. Kent wrote in the email that Neve’s net worth invested was $382,908.19.
40 Kent paid some moneys which totalled $32,000 in August and September 2016 which Neve used to pay for part of the deposit payable. The balance of the deposit moneys of $40,000 required for the home purchase was paid by Neve from his own resources.
41 Kent made 15 payments to Neve in the period from 20 January 2014 to 9 September 2016. The amount of these payments totalled $141,995 and are listed in paragraph 14 of the amended statement of claim. The payments have been applied in reduction of the sums due under Mortgage 2. Neve’s evidence was that these payments were loan repayments, whereas Kent alleges the amounts in question represented proceeds of sale of Neve’s shares in George Finance.[19]
[19]Defence paragraph 17, CB 21
42 Kent was unable to provide any convincing evidence that those moneys repaid did in fact represent the proceeds of sale of shares. There was no record of any sale of shares in the financial documents which were produced relating to George Finance. There was no evidence as to when the shares were supposedly sold, to whom and for what price, and the transfer of those moneys supposedly to Neve. Without any corroborating documentary evidence, I am not prepared to accept Kent’s oral evidence on this point.
43 Kent’s version is also contradicted by ASIC searches which showed there were no changes in share holdings in George Finance between 28 October 2008 and 6 February 2018.[20] An ASIC search discloses that 166 shares in George Finance were registered in Neve’s name on 6 February 2018. A further document was produced which recorded a change to company details for George Finance which was also lodged on 6 February 2018. This document records the transfer of 24 shares to Neve for an amount claimed to have been paid of $240,000.[21] The discrepancy in the number of shares which have been purportedly registered in the name of Neve was not explained. I am not persuaded that these documents record any genuine transfer of shares or consideration paid by Neve. It is significant in my view that these documents were lodged only after Neve had taken action to enforce the mortgage, including the sale of the property.
[20]CB 436-438
[21]CB 432-435
44 As a company director, Kent was aware of the obligation on companies to notify ASIC of any change of ownership of shares and that such notice had to be filed within 28 days of any change of ownership of shares.[22] In his oral evidence, he did not accept he was aware of the 28 day requirement. Kent had been a director of George Finance but resigned as a director on or about 26 November 2017. He remains as secretary of George Finance. Despite having lunch during the week of the hearing with the current director of George Finance, Mr Murray Gillett, who was appointed on 26 November 2017, Kent did not seek to call Mr Gillett to give evidence about the transfer of any shares in George Finance to Neve or to give any evidence whatsoever.
[22]CB 290
45 The last payment Neve received from Kent was in September 2016.
46 Neve’s solicitors registered both mortgages on title on 8 November 2016. Upon registration, Neve acquired a legal interest as registered mortgagee under s74(2) of the Transfer of Land Act (“the TLA”). In the absence of fraud, Neve acquired an indefeasible title as registered mortgagee.[23] The mortgages prepared by Kent were in the standard form produced by the Law Institute of Victoria, as was the incorporated Memorandum of Common Provisions (“MCP”). Both mortgages contain an express covenant to pay the sums specified, plus interest, being the amounts secured under the mortgages. That being so, as a matter of construction, both mortgages secured the amounts advanced and consequently, were enforceable.[24]
[23]Pyramid Building Society (in liq) v Scorpion Hotel Pty Ltd [1998] VR 191 (Hayne JA, Brooking and Tadgell JJA agreeing)
[24]Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32, [84] and [101]-[102]
47 Notices to pay under each mortgage served on 23 December 2016 went un‑remedied. Neve subsequently enforced the mortgages by selling the property on 9 December 2017. The property was sold for $700,000. After deducting the various amounts secured against the property, together with payments of land tax, the net proceeds of sale recovered was only $38,218.33. This was applied in reduction of the amounts owed to Neve.
48 A writ was filed on behalf of Neve on 23 May 2018 seeking recovery of the balance of the moneys owed by Kent. As at that date, the amount of principal and interest payable under Mortgages 1 and 2 was $374,714.99. Enforcement costs were sought in the sum of $148,903.50. After deducting the sum of $38,218.33, being the sale proceeds of the property, the total sum claimed as at 23 May 2018 was $485,400.16.
49 Having regard to the foregoing, I am not persuaded that the funds of $25,000 and $215,000 were advanced to George Finance as alleged by Mr Kent by way of an investment or at all. The evidence in respect of those payments demonstrates clearly that bank cheques were made in those sums payable to Kent in person. I am not persuaded that he has established that the sums provided by Neve were for the purpose of investment in George Finance or that Neve in fact acquired any shares in that company. Given the terms of the agreement, it is clear that Kent agreed to be personally liable for the sums of moneys advanced by Neve. Kent also agreed that there would be a certain rate of return and that the funds would be repayable upon sufficient notice being given in accordance with the terms of the agreement. Significantly, the agreement makes no reference to George Finance whatsoever. Demands for payment were subsequently made as referred to in paragraph 15 of the amended statement of claim. The funds have not been repaid. Therefore, it follows that Kent is indebted to Neve for the sums advanced, together with the interest which he agreed to pay.
50 As for the second advance which represented the rollover of the superannuation payment from his former wife, it appears from the evidence that those moneys did go to the George Superannuation Fund given the letter from ESS Super confirming that a cheque was made payable to George Superannuation Fund. Kent has confirmed that those funds were received by the Fund but that they were immediately transferred to George Finance for the purposes of investing. He then says that those moneys were lost following the collapse of George Finance. It is clear from the agreement that Kent signed that he agreed to be liable to return those funds upon request being made by Kent and that they would be available upon 30 days’ notice. It is not clear how the precise mechanics of this would have worked in terms of the funds being rolled over into another super fund or whether by cash. Even though the funds would appear to have been held in a superannuation fund, Kent has agreed that he will be personally liable to refund those moneys to Neve upon request. Accordingly, I find that he is also indebted to Neve in respect of the second advance which has not been repaid.
51 Additionally, the mortgages provided did secure the advances and there having been default in the terms of those mortgages, Neve was entitled to enforce recovery under the mortgages and did so pursuant to s76 notices which then led to a sale of the property. Neve is and was entitled to pursue Kent for the balance of the sums that remained owing following the mortgagee sale.
52 For reasons which I have already stated, Kent’s claim that the mortgages were only to be registered upon his death is fanciful and should be rejected. Accordingly, I find Kent is liable both under the terms of the loan agreement and also the mortgages to repay the sums advanced to him by Neve, together with the agreed rate of interest payable on those amounts.
53 Neve relies upon various terms and conditions of the MCP which are the same for each mortgage. Clause 31(10) of the MCP provides that a certificate may be given of the amounts owed and such certificate is prima facie evidence of the amounts which it certifies. The plaintiff’s solicitor, Ms Luisa Struska, provided a certificate of indebtedness dated 13 November 2019.[25] She also was called to give evidence so that she could be questioned about the certificate and its supporting documentation. Kent was afforded an opportunity to peruse the certificate and attachments. The matter was stood down earlier on the first day of the hearing to enable him to have an opportunity to do so overnight. Whilst asking the solicitor various questions the following day, Kent directed no questions to her at all about any of the amounts referred to in the certificate or the supporting documents.
[25]Exhibit P2
54 In support of the entitlement to rely upon the certificate, counsel for Neve referred to the decision of Croft J in Bank of Western Australia Ltd v Abdul & Anor [2012] VSC 222 at [17].
“[17] I accept that the following principles arise from the decision of the High Court in Dobbs:
(a)It is not necessary to rely on a certificate. A provision for a certificate merely provides a ready means of establishing indebtedness;
(b)The principle in Dobbs is evidentiary in operation. It facilitates proof of a material fact and thereby operates as an exception to the general rule in adversarial litigation that it is for the party alleging a material fact, when that fact is put in issue, to prove that fact;
(c)The purpose of a provision for a certificate is to enable the establishment of the indebtedness of a customer to a bank both expeditiously and finally;
(d)The effect of the certificate is to determine the incidence of burden of proof as to the matters permitted by the certificate;
(e)In recognising the effect of certificates of this kind, the courts are simply giving effect to the contractual bargain struck between the parties;
(f)Nothing in Dobbs confines its operation to clauses expressed in the same or substantially identical terms to the clause providing for a certificate which was considered in that case; as is demonstrated by the application of the same approach to certificates used in an unrelated context; and
(g)The principal task of the court is always to construe and to give effect to the terms of the particular clause providing for such a certificate.
Dobbs has been applied in a variety of cases, including several decisions of this court.”
55 In those circumstances, Neve relies upon the certificate as being conclusive evidence of the indebtedness of Kent which is claimed in the sum of $660,898.78. This comprised the sum of $418,460.37 representing the principal owing and interest and the balance of $242,438.41 represented costs claimed as enforcement costs and also Neve’s costs of this proceeding.
56 Counsel for Neve informed the Court that interest was claimed upon the principal only and no interest was claimed on amounts sought as enforcement costs, despite clause 6 of the MCP which would entitle his client to do so. He also pointed out that the moneys claimed were on the basis of the advances actually made by his client and not on the sums listed on the first page of the mortgage schedules.
57 Pursuant to clause 11(c) of the MCP, the mortgagee, Neve, seeks to recover the costs which he has incurred including enforcement costs on a solicitor and his own client basis. It is accepted that the terms of any agreement as to costs will inform the Court’s discretion as to the basis of taxation of costs. The general position is that the discretion will ordinarily be exercised to reflect a contractual right to costs. The extent of the indemnity enjoyed by a mortgagee in recovering its enforcement costs is limited to those costs reasonably incurred and of a reasonable amount. Costs which are improper or unreasonable should not be allowed.[26] The clause relied upon refers to costs on a solicitor and his own client basis. That basis of taxation is no longer applicable but has been replaced by an order for costs on what is now referred to as an indemnity basis.
[26]See Dal Pont, Law of Costs 4th ed, LexisNexis at [15.43]-[15.52] and Whild v GE Mortgage Securities Solutions Ltd(No 2) [2012] VSC 322 at [527]
58 The details of the costs incurred by Neve are referred to in the Dobbs certificate which was provided by the plaintiff’s solicitors. The amount of the enforcement costs now claimed is $242,438.41. There is no reason to dispute that the costs claimed have in fact been incurred. Kent was given an opportunity to challenge these costs but did not do so. But it is difficult to know without further investigation whether the costs claimed were reasonably incurred and are of a reasonable amount. Accordingly, it seems appropriate to me, in the interests of justice, particularly as Kent is self-represented that rather than simply award the costs as claimed, the reasonableness of those enforcement costs should be determined by the Costs Court, absent agreement between the parties. I am of the view that the enforcement costs, including the costs of the proceeding, should be assessed on an indemnity basis, given the contractual term in the MCP entitling the mortgagee to costs on a solicitor and own client basis.
59 There is no reason to dispute the amount of the debt now claimed and the interest as calculated as set out in the Dobbs certificate. I am prepared to award judgment on the basis of the certificate which was provided dated 19 November 2019 for the debt and interest claimed.
Counterclaim
60 Kent filed an amended counterclaim on 3 April 2019. In light of what Kent referred to as Neve’s “abandonment of investment” in George Finance, he argued this prevented Neve from enforcing his claim. Kent claimed the enforcement of the mortgages had been wrongful and sought damages. He also claimed an unquantified loss relating to personal items which he said had been stolen by Neve from the property, including mortgage documents and a computer.
61 As to the so called allegation of abandonment of investment, this seems to spring from some belief on Kent’s part that because Neve refused Kent’s request to act as a guarantor, he thereby abandoned whatever investment he might have had in George Finance. The first point to be made is that it has not been established that Neve did have any investment in George Finance. There has been a failure to prove the moneys he advanced were used to acquire shares in that company. The issue of shares to Neve in George Finance in 2018 occurred long after the advances were made in 2010 and only after Neve sold the property in accordance with his rights as mortgagee. There was no documentary evidence to establish that the funds advanced by Neve were the subject of any loan agreement between himself and George Finance.
62 Secondly, the claim made for “abandonment of investment” is misguided and despite Kent’s written submissions on this topic, including the references to Blackstone Legal Commentaries, has no proper basis in law. Neve’s refusal to act as a guarantor to assist Kent in respect of a further loan did not relieve Kent of the obligation he was under to repay Neve the moneys he was owed.
63 At the start of the hearing, Kent was asked if he intended to call all the people he had named as witnesses in his trial running sheet. Kent replied that depended upon whether they were considered important by the Court. Kent wanted to call evidence from some seven witnesses regarding what he considered to be some form of conspiracy on the part of others to attack him and also undermine his relationship with Neve that had brought about Neve refusing to save his investment. Kent considered these persons had convinced Neve to abandon his investment.[27] I was of the view that such evidence was not relevant to the issues I had to determine in this case. Kent relied upon Neve’s refusal to act as guarantor as demonstrating the relevant act of “abandonment of investment” on Kent’s case. The fact that Neve declined to act as a guarantor is not in dispute. Given this, then the reasons why Neve made his decision or whether he was influenced by others when he declined to act as guarantor for Kent in January 2016 is irrelevant. The so called “act of abandonment” is complete upon Neve refusing to act as guarantor and Kent has thus made out this allegation factually, leaving aside the issue of whether this concept of abandonment has any legal merit.
[27]See T101-2, 108-9
64 I have already given my reasons for rejecting Kent’s counterclaim relating to the alleged oral agreement pleaded that the mortgages were not to be registered until after his death.
65 The allegation that any property belonging to Kent had been seized by Neve was not established on the evidence in my view. Pursuant to Clause 15(c)(viii) of the MCP, the mortgagee was entitled to remove, carry away and destroy or abandon or sell any chattels found upon the land. Evidence was called from Mr Eddy, a tradesman who had been engaged by the plaintiff’s solicitors to clear up the property and remove any refuse. He said that when he attended upon the site on Friday, 13 April 2018, the place was very untidy and there was a large amount of rubbish there that had to be removed. Mr Eddy took a number of photographs depicting the state of the premises. Kent had attended on that occasion with an assistant and after some discussion, it was agreed that any items which Kent wished to remove were to be placed outside for him to collect. The photograph at CB 382 depicts the items Kent and his assistant stacked outside which he had taken from the garage, and which he believed to be of value. Mr Eddy said he allowed him to do that and he checked with Kent afterwards to see if he had got all he wanted. This was confirmed by Kent and Mr Eddy then proceeded to clean up the place.
66 In terms of the items removed by Kent, Mr Eddy noticed there was some broken furniture that was in poor condition. Mr Eddy did not notice any tools. He said there were a lot of files and paperwork but there were definitely not any computers, machinery or appliances. Furthermore, he said that Kent was able to remove anything that he wished and this is what occurred.
67 Mr Eddy returned on 16 April 2018, the following Monday, to finish the job and to collect and dispose of all the rubbish. On that day, the remainder of the items which had been set aside by Kent were taken away by a different man. Mr Eddy said it took a whole day to finish the job of clearing the premises.
68 In giving evidence, Kent was unable to say with any precision the nature of the items or their value which he claimed to have been seized by Neve but assessed his loss of personal property at the sum of $5,000.
69 Ms Struska in her evidence said that at the time the property was being cleared, it had already been sold and settled. She had sent an email to Kent on the morning of 16 April 2016 in which she informed him that pursuant to the contract of sale, the property had to be free of rubbish and other personal property.[28] She advised him that they had organised a clean-up of the property which would continue on Monday, 16 April. She noted further that he had attended the property on Friday, 13 April 2018 and removed some of his belongings already. However, if he still required to remove other property, Ms Struska wrote he was strongly encouraged to attend the site that day as all personal property currently located thereon would be disposed of.
[28]CB 256
70 Kent did not reply to Ms Struska’s email until 15 June 2016 when he sent her an email.[29] He claimed that he had been unable to attend the property when he received her email “due to my car having mechanical problems and set engagements that I could not get out of”. He went on to claim valuable personal items had been removed without his permission, including custom made wooden shelving and a filing system from the office at the rear of the garage and the documents therein.
[29]CB 255
71 Having regard to Mr Eddy’s and Ms Struska’s evidence, which I accept without reservation, I am not persuaded any items were improperly seized by Neve in the first place. Kent was given an opportunity on 13 and again on 16 April 2016 to remove any items that he wished. Kent did remove items which Mr Eddy permitted him to do. Some were collected on 13 April and the remainder on 16 April 2016. There was no suggestion that the person who collected the balance of the items on 16 April was not an agent of Kent’s or was in some way connected to Neve. Secondly, Kent has failed to discharge the burden of proof in terms of establishing with any precision what those items might have been and their alleged value. This aspect of his counterclaim was simply not proved.
Conclusion
72 In light of the foregoing, I am satisfied the plaintiff has established his claim for the debt sought. I am also satisfied the amount claimed has been proved by the Dobbs certificate tendered, which was not challenged in any way. Accordingly, I will give judgment for Neve in the sum of $418,460.37 which includes both the principal and interest outstanding.
73 The defendant’s counterclaim will be dismissed.
74 Subject to hearing from the parties, I will order Kent pay Neve’s costs incurred in respect of:
(a) the enforcement costs associated with enforcing Mortgages 1 and 2 in accordance with clause 11(c) of the Memorandum of Common Provisions, being No.AA689, applicable to both mortgages; and including
(b) the costs of the proceeding and counterclaim, including any reserved costs
such costs to be taxed on an indemnity basis in default of agreement.
75 I will also hear from the parties regarding the continuation or otherwise of the freezing order made on 8 June 2019 which was extended on 15 June 2019.
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Certificate
I certify that these 23 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 5 February 2020.
Dated: 5 February 2020
Associate to Her Honour Judge A Ryan
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