New South Wales Rural Assistance Authority v Te Velde

[2003] NSWSC 571

CITATION:	New South Wales Rural Assistance Authority v Te Velde [2003] NSWSC 571
HEARING DATE(S):	31/03/03, 01/04/03, 04/04/03, 23/06/03
JUDGMENT DATE:	26 June 2003
JUDGMENT OF:	Newman AJ at 1
DECISION:	Plaintiff is entitled to the relief it seeks in the action. Short minutes of order to be handed up within three days of delivery of these reasons.
CATCHWORDS:	Possession of land - Limitation Act 1969, Rural Assistance Act 1989 - power of plaintiff to commence proceedings - waiver
LEGISLATION CITED:	Rural Assistance Act 1989 (NSW) State Bank Act 1981 (NSW) Miscellaneous Acts (State Bank Repeal and Amendment Act) 1981 (NSW) Limitations Act 1969 (NSW) Real Property Act 1900 (NSW)
PARTIES :	New South Wales Rural Assistance Authority Janice Leslie Te Velde
FILE NUMBER(S):	SC 10891/01
COUNSEL:	Pl: S Hughes Def: A Jungwirth/ N Obrart
SOLICITORS:	Pl: Messrs Golsby Whitely Def: Jackson Smith

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

NEWMAN AJ

Thursday 26 June 2003

10891/01

NEW SOUTH WALES RURAL ASSISTANCE AUTHORITY v JANICE LESLIE TE VELDE

JUDGMENT

1 HIS HONOUR: This is a claim for possession of land brought by the plaintiff as the successor to former state instrumentalities. The defendant is the registered proprietor of the land subject to the claim.

2 The two state instrumentalities for which the plaintiff stands as successor were the Rural Assistance Board and the State Bank of New South Wales. The plaintiff, a statutory corporation, by virtue of the Rural Assistance Act 1989, the State Bank Act 1981 and the Miscellaneous Acts (State Bank Repeal and Amendment Act) 1981 is the successor in title to loans made by the two previous entities.

3 Initially the question of the plaintiff’s right to sue was put in issue by the defendant. In the course of the hearing the defendant through its counsel properly conceded the plaintiff’s right to sue. I should add that in my view the concession made by counsel for the defendant was based on entirely correct grounds and coincides with my own view as to the right of the present plaintiff to sue. In view of the concession made it is not necessary for me to give detailed reasons for reaching my own conclusion.

4 The defendant is the registered proprietor of the land described in certificate of title folio identifier 3/737290, folio identifier 4/737290 and folio identifier 5/737290 known as “Hillview”, Bolivia via Tenterfield.

5 There was no issue at the hearing that the two previous entities in whose shoes the plaintiff now stands lent the defendant moneys secured by way of mortgage.

6 First on the 10th September 1979 the Rural Assistance Board lent the defendant the sum of $12,000. The terms of that loan were that the principal amount lent plus interest thereon at the rate of 8% per annum would be repayable over a term of 7 years by equal annual payments of $2,310 commencing on the 10th September 1980 and ending on the 10th September 1986.

7 Second the State Bank of New South Wales on the 6th November 1980 (when it was then known as the Rural Bank of New South Wales) lent the defendant the sum of $5,000. The terms of that loan were that the principal sum together with interest thereon at the rate of 4% per annum would be repaid by the defendant over a term of 7 years by annual repayments of $1,206 commencing on 30th November 1983 and ending on the 30th November 1989.

8 As I have said both loans were secured by way of mortgage over the property I have described above. The loan to the defendant by the Rural Assistance Board was secured by mortgage number R488019 and the loan made by the then Rural Bank was secured by mortgage number S 202968 over the subject property. There was no issue that the defendant was in default in respect of both loans. Indeed it seems that other than a payment of $75 recorded as having been made on the 22nd November 1990 the defendant has made no payments in respect of either loan from the time of the inception of both loans.

9 In respect of that payment the defendant in evidence conceded that it had in fact been paid. In cross examination the following exchange occurred:

“Q. The Authority’s ledger accounts show that there was a credit to one of the loan accounts of $75 in about 1990. Are you able to tell us whether or not you in fact made that payment?
A. Yes.
Q. You say you made that payment do you?

A. Yes.

Q. And up until today, the only payment that had ever been made with respect to either of the loans. Do you agree with that?

A. (no verbal reply)

Q. Do you agree with that?

A. Not intentionally but yes, that’s true.”

The defendant was not asked to clarify or vary her responses to those questions in re-examination.

10 Despite her counsel’s submission to the contrary I am satisfied that the defendant did in fact make a payment of $75 on the 22nd November 1990 in relation to the loan granted by the Rural Assistance Board on the 10th September 1979.

11 Although initially the defendant raised a number of issues in the case by way of defence at the hearing only two of those matters were relied upon. They were:-

1. That the plaintiff’s claim in relation to both loans is statute barred. and
2. That the plaintiff had waived its right to payment of either of the principal sums involved or any interest thereon.

While the defence to the amended statement of claim relies upon delay in respect of the matter of waiver at the trial and in submissions made it was contended on behalf of the defendant that the waiver had in fact been expressly made by the plaintiff’s chief executive officer.

12 I turn then to the first of the defences raised by the defendant namely that the plaintiff’s action is statute barred.

13 The defendant in relation to both the loans relies upon the provisions of section 42(1) of the Limitations Act 1969. Section 42(1) is in the following terms:

(1) An action on a cause of action:

(a) to recover principal money secured by mortgage,
(b) to recover possession of mortgaged property from a mortgagor, or
(c) to foreclose the equity of redemption of mortgaged property,
is not maintainable by a mortgagee under the mortgage if brought after the expiration of a limitation period of twelve years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.

14 The defendant contended that the twelve year limitation period stipulated by section 42 had expired in relation to both loans at the time when the plaintiff commenced these proceedings by way of summons on the 20th November 2000.

15 In relation to the loan emanating from the Rural Assistance Board the defendant contended that the first accrual of a cause of action in relation to that loan was the 17th April 1987. The reason why the defendant selected that date is that the defendant by dint of an application for assistance she made to the plaintiff on the 17th April 1987 confirmed that loan. Accordingly the defendant argued that the cause of action had become statute barred in respect of that loan from the 17th April 1999.

16 In relation to the loan emanating from the Rural Bank on the 6th November 1980 the defendant submitted that it had become statute barred on the 30th November 1999.

17 The defendant contended that the plaintiff in the circumstances of this case was not entitled to rely upon the provisions of section 40 to overcome the twelve year limitation period set by section 42(1). Section 40 is in the following terms:-

“This Act applies to an action on a cause of action founded on a mortgage registered under the Real Property Act 1900 to recover from any person any debt damages or other money payable under the mortgage, but otherwise, except to the extent that this Act is taken into consideration for the purposes of a possessory application under Part 6A of that Act, this Act does not affect the right title or remedies under a mortgage so registered of a registered proprietor under that Act of the mortgage or of the mortgaged land.”

18 In this regard the defendant submitted that the plaintiff being a statutory corporation established by legislation containing express objects to assist farmers thus the plaintiff was not in the usual position of an ordinary commercial lender or secured creditor.

19 In oral argument counsel for the defendant confirmed his written submissions in this regard. In those written submissions counsel submitted as follows:-

“10. Section 2A of the Rural Assistance Act , 1989 (NSW) provides:
‘The object of this Act is to promote the efficient delivery of programs of assistance to farmers and other persons engaged in rural industries…’
Section 5 provides the plaintiff is to ‘provide assistance, and administer programs for the provision of assistance to farmers…’. Section 21 outlines, not exhaustively, the type of assistance the plaintiff may grant.
11. There is no suggestion the defendant was not entitled to apply to the plaintiff for assistance. The purpose of both loans to the defendant appears to fall within the ambit of programs of assistance which the plaintiff was authorised to establish: see Section 18 Rural Assistance Act , 1989 (NSW).
12. It is submitted the plaintiff, through the continuing legislative regime in place at the time the loans were advanced pursuant to the Rural Assistance Act , 1932 (NSW) (repealed) the Government Savings Bank Act , 1906 (NSW) (repealed), has duties to indigent farmers that are reflected in Section 2A and Section 18 of the present statute.
13. The plaintiff continues to have obligations to farmers in the defendant’s position, including the compulsion to mediate debts: for example, Sections 8 and 11 Farm Debt Mediation Act , 1994 (NSW).
14. The plaintiff is not a commercial entity. There is no evidence that recovery action of the plaintiff in these proceedings arises from fiscal or other economic necessity. There appears to be no necessity for the plaintiff to recover the monies advanced.
15. Indeed, should the plaintiff be successful in the proceedings it has sought to maintain, it will receive the benefit of a provident transaction: recovery of substantial interest accrued at rates between 4% (Drought Relief Loan since November 1980) and 10% (Farm Improvement Loan since 31 May 1982 [Exhibit A to Bunworth affidavit sworn 11 February 2003] and at 8% since 1979: Annexure “J” to Bunworth’s Affidavit sworn 6 December 2001), from a property which has constantly been worked by the defendant since 1974 (Defendant’s Affidavit sworn 27 February 2002, paragraph 11).
16. The defendant submits that Section 40 of the Limitation Act , 1969 (NSW) is to be read subject to the provisions of the Rural Assistance Act , 1989 (NSW), the legislation governing the operation and powers of the plaintiff as a statutory body charged with administering the loans advanced to the defendant. This is so particularly having regard to Section 35(2)(d) of the Act.
17. These mortgages secured loans to the defendant made under a statutory scheme, and in accordance with that scheme, these proceedings are to be properly regarded as one for recovery of those two principal sums.
18. The defendant submits this action is not a possessory application under Part 6A of the Real Property Act , 1900 (NSW) as amended. Those provisions must be read, it is submitted, subject to Section 35 of the Rural Assistance Act , 1989 (NSW), which relevantly provides:
‘(1) The Authority may, despite the provisions of any other Act or regulations made under any such Act:
(a) waive the payment by a person of any money to which this section applies:

(b) ..

(c) ..

(d) ..
(e) write off wholly or partly money to which this section applies, whether or not by suspending or allowing further time for payment:
(f ) take any action to enable recovery of money to which this section applies, to secure its repayment or to preserve or protect a security for its repayment, such as the selling or foreclosing of mortgaged property and taking a new or additional security or postponing a security.’
19. This action is pleaded as one in debt but seeks relief in terms of possession. The action seeks recovery of two principal sums and significant amounts of interest thereon. It alleges the defendant has failed to comply with a demand for repayment of debts. It is submitted these proceedings are a claim for recovery of principal sums and is to be properly characterised as an action based upon the plaintiff’s fiat contained in Section 35(1)(f) of the Rural Assistance Act , 1989 (NSW).
20. This is an action on a cause of action to recover principal money secured by a mortgage pursuant to Section 42(1)(a) of the Limitation Act , 1969 (NSW). The action is thereby time barred by reason of Section 42(1) of that Act.
21. No application for leave was sought or granted to the plaintiff to bring or maintain these proceedings.”

20 In my view the plaintiff is entitled to rely upon Section 40 of the Limitation Act in these proceedings. Section 35(1)(f) of the Rural Assistance Act 1989 is as follows:-

“1. The Authority may, despite the provisions of any other Act or regulations made under any such Act…

(f) take any action to enable the recovery of money to which this section applies to secure a repayment or to preserve or protect a security for its repayment, such as the selling or foreclosing of mortgaged property and taking a new or additional security or postponing a security.”

In my view the action taken by way of the present statement of claim by the plaintiff falls squarely within the ambit of the powers conferred on it by Section 35(1)(f) of the Rural Assistance Act. That in turn places the plaintiff squarely within the provisions of Section 40 of the Limitation Act and it is thus entitled to its benefit. Accordingly the defendant’s argument in my view fails.

21 Additionally the confirmation arising from the defendant paying the sum of $75 on the 22nd November 1990 would in my view have extended the limitation period imposed by Section 42 until the 22nd November 2002 – thus the proceedings would in any event have been brought within time.

22 I now turn to the defendant’s claim that pursuant to Section 35(1)(a) of the Rural Assistance Act 1989 that the plaintiff had waived payment by the defendant of any monies owing under the loans. There is no doubt that Section 35(1)(a) and (b) gives the plaintiff power to so waive monies owed to it. Section 35(1)(a) and (b) are in the following terms:-

“(1) The Authority may, despite the provisions of any other Act or regulations made under any such Act:
(a) waive the payment by a person of any money to which this section applies, or

(b) waive the payment by a person of any interest payable on money to which this section applies..”

23 The defendant’s evidence in relation to the alleged waiver by the plaintiff was as follows.

24 In an affidavit of the 27 February 2002 in paragraph 7 the defendant deposed as follows:-

“In or about 1992, I had a telephone conversation with Graham Maslen at who was at that time the Chief Executive Officer of the Plaintiff, during which he said to me in words to the following effect:
‘ The Rural Assistance Authority has the power under the Act to wipe that debt. Considering your circumstances, I am prepared to do that’ .”

25 Subsequent to that alleged conversation in a letter dated the 19th February 1992 the defendant in the penultimate paragraph of the letter stated:-

“My enquiry to the Rural Assistance Authority therefore concerns my exact financial position with the Authority. Mr Maslen has previously agreed to wipe the debt and mortgage on the Drought Relief Loan, originally $5000 @ 4%, and to accept principal only on the Farm Improvement Loan of $12000, discharging that mortgage also, and to allow me 5 years to repay Household Support, should I succeed in my efforts to resolve matters with ANZ Bank. As you can see, repayment of mortgagees by ANZ Bank is specifically drafted in my Amended Statement of Claim, and I feel Household Support should be included in this arrangement. Mr Maslen is holding a copy of the Farm Consultants’ study of my enterprise, which clearly shows the earning ability of this property had ANZ acted in a proper manner, and is supported by other expert opinion.”

26 This is of course markedly different to the bald statement contained in the plaintiff’s affidavit. Mr Maslen on behalf of the plaintiff responded to the defendant’s letter on the 22nd April 1992. I set out the terms of that letter:-

“I refer to your letter of 19 February 1992 which was considered by the Board of the NSW Rural Assistance Authority at its meeting held in Cooma on 14 April 1992.
As the Board of which I am a member only deals with matters of policy it has asked me to respond to the specified queries raised in your correspondence.
With regard to your present position with the Authority I wish to advise that at no stage was it ever indicated to you that any portion of the principal debts outstanding would be waived.
You might recall that at our last meeting in Sydney it was indicated by you that your brother might be prepared to provide certain inputs to enable debts to Commonwealth Development Bank, the ANZ Bank and the Authority to be finally resolved.
Based on the above it was indicated to you that the Authority would be prepared to waive interest on the Drought Relief and Farm Improvement Loan and accept repayment of the Household Support payments over an agreed term. This proposal only being acceptable on the express condition that the principal amounts outstanding on the Drought Relief and Farm Improvement Loan were to be repaid in the not too distant future.
In view of the time which has now elapsed it has been assumed that your brother is no longer proceeding with the course previously indicated.
In the circumstances your position will again need to be reviewed and it would be appreciated if you would kindly complete the attached form and return. To assist with completion of review I have enclosed schedule setting out present position of balances outstanding to the Authority.
It is stressed that the Authority has provided you with considerable assistance in the past and whilst it acknowledges the hardship currently being experienced it does not wish to hinder your desire to remain in farming but it must seek an early resolution to the outstanding debt position. The Authority would be prepared to honour the proposal indicated earlier in this letter if sufficient funds were forthcoming no later than 30 June 1992.
Your early attention to the above would therefore be greatly appreciated.”

27 Plainly enough the offer to waive interest payments provided certain other conditions were met was not taken up by the defendant.

28 Indeed she wrote to the plaintiff on the 10th December 1992 in which she dealt with the question of litigation between herself and the first mortgagee, the Commonwealth Development Bank. She expressed herself as follows:-

“I apologise for the delay since receipt of forms from the Authority requesting information, however due to recent court action on 4th December 1992 I have been unable to furnish details to the Authority prior to that date.
The litigation between first mortgagee, Commonwealth Development Bank and myself has been adjourned till 10th February 1993. The matter involves attempts by the bank to sell two 100 acre lots of this property at 2/4 of their value, and the closure of my gravel business 18 months ago, due to local Council negligence in not applying to the Roads and Traffic Authority for approval for access to three allotments 5, 6 and 7, which front the New England Highway, in the years 1984 to 1987.

In fighting the bank’s intention to sell at such low value, and in ensuring provision of access to these allotments, I am protecting my interests as well as those of the Authority. Sale without access devalues the blocks to simply a grazing proposition, and destroys the gravel business worth $100,000, as there exists no other access for gravel trucks except from the highway. Sale would also leave Lot 5 without access.
Sale with access means the land and business can be sold at proper value, thereby ensuring payment to the Authority. As a damages claim may be filed, please advise the amount the Authority is prepared to accept in order to release the mortgage. The amount will need to be taken into consideration and included in any damages claimed.”

Thereafter the defendant in her correspondence makes no reference to any question of waiver. As I have said, it is apparent that the defendant did not avail herself of the offer made by the plaintiff in its letter to her of the 22nd April 1992.

29 Somewhat unconvincingly when presented with the terms of the letter of the 22nd April 1992 and the other correspondence the defendant claimed that the then CEO of the plaintiff, Mr Maslen, had made further offers after that by telephone.

30 In these circumstances I am of the view that the defendant has failed to establish (and the onus is upon her) that the plaintiff had waived payment on the two loans the subject of this litigation. While it is true, as counsel for the plaintiff submitted, that Mr Maslen was not called in the matte, however the tenor of the correspondence after the defendant’s letter of the 19th February 1992 is indicative to me that the only offer of waiver was that set out in the plaintiff’s letter of the 22nd April 1992 which offer expired on the 30th June 1992.

31 As far as any waiver occurring by conduct is concerned, the nature of the correspondence from the plaintiff to the defendant in the ensuing years was one of forbearance. In my view the plaintiff far from waiving its power to take action to recover the moneys outstanding and to exercise its powers as a mortgagee, did what it could to enable the defendant to meet her obligations. As I have indicated the language used by the plaintiff in the correspondence with the defendant was not that of waiver but of forbearance.

32 In these circumstances I am of the view that this defence also fails.

33 Accordingly the plaintiff is entitled to the relief it seeks in the action. I direct that short minutes of order be handed up within three days of delivery of these reasons to give effect to the conclusion I have reached.

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Last Modified: 06/30/2003