Norton v Henry

[1999] TASSC 153

[1999] TASSC 153

CITATION:              Norton v Henry & Anor [1999] TASSC 153

PARTIES:  NORTON, G W
  v
  HENRY, N R & Another

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  APPELLATE
FILE NO/S:  FCA 122/1999
DELIVERED ON:  23 December 1999
DELIVERED AT:  Hobart
HEARING DATE:  20 December 1999
JUDGMENT OF:  Cox CJ

CATCHWORDS:

Procedure - Supreme Court procedure - Tasmania - Jurisdiction and generally - Whether appropriate to grant stay of proceedings to prevent exercise of mortgagee's remedies pending appeal to Full Court - Assertion by mortgagor that breach of mortgagee's undertakings led directly to applicant's inability to meet commitments under the mortgage.

Inglis v Commonwealth Trading Bank of Australia (1971 - 1972) 126 CLR 161, referred to.
Aust Dig Procedure [265]

REPRESENTATION:

Counsel:
           Applicant:  In Person
           Respondent:  G T Stevens
Solicitors:
           Applicant:  In Person
           Respondent:  Henry Wherrett & Benjamin

Judgment  Number:  [1999] TASSC 153
Number of paragraphs:  6

Serial No 153/1999
File No FCA 122/1999

G W NORTON v N R HENRY & ANOTHER

REASONS FOR JUDGMENT  COX CJ

23 December1999

1. This is an application for a stay of proceedings pending the hearing of an appeal to the Full Court against an order made by Underwood J dismissing an appeal from an order made by the Master that the applicant give up possession of certain land at Campania, the subject of three mortgages in favour of the respondents, unless all moneys due under the mortgages were paid on or before 29 October 1999.

1. The applicant entered into three mortgages securing certain advances made as follows:

First Mortgage	1 September 1993	$26,000
12 November 1993	15,000
22 April 1994	10,000	$51,000
Second Mortgage	22 July 1994	12,000	$63,000
Third Mortgage	28 August 1994	5,000
30 August 1994	300
25 October 1994	1,000
3 April 1995	1,700	$71,000

By March 1995, the applicant was behind $3,700 in interest on first mortgage and the $1,700 advanced under the third mortgage in April 1995 was appropriated in part payment of that debt, leaving a balance still owing of $2,000 on first mortgage.  In July 1995, second mortgage interest was owing ($900) and by August 1995, third mortgage interest of $600 was owing.  Although some payments of interest have subsequently been made, the applicant has been consistently in arrears in respect of interest and currently owes approximately $52,400 in interest, as well as the principal sums totalling $71,000.

1. There is no suggestion that the securities are a nullity or that there is not money owing thereunder.  The applicant's contention is that prior to borrowing the moneys for the purposes of developing a subdivision on part of his land, he was assured by an employee of the respondent mortgagees that advances would be made initially up to 66 per cent of the valuation of the subject land, but later up to 66 per cent of the valuation of the land in its developed state.  As the applicant is unrepresented, it has been difficult to procure from him a clear statement of his contention, but doing the best I can, I understand him to be saying that whereas the initial valuation was $78,000 and hence the advances under the first mortgage were $51,000, or two-thirds of that amount, the valuation made at the time of the later advances was some $140,000 and hence warranted advances up to $94,000, but the mortgagees, in breach of the agreement, would not advance more than $71,000.  Furthermore, when in August 1994 the third mortgage was executed to secure $8,000, only $5,000 was advanced, part being retained for interest then owing on the first mortgage and the applicant being advised that "the balance of the loan will not be advanced until such time as further interest payments are required".  As no other interest was then owing, the applicant says that the mortgagees unlawfully retained $3,000 of which he was then in sore need, and this lack of funding contributed to the frustration of his plans to develop his property and to realise the potential profit.

1. If the applicant can establish that a breach of an agreement to advance him the further sum of $23,000 and/or a wrongful retention of the $3,000 secured by the third mortgage has caused him damage, such a counterclaim would still not justify a Court refraining from ordering possession or otherwise enforcing the mortgagees' security unless the applicant were to pay into Court the amount sworn to be owing.  This is clear from the decision from Inglis v Commonwealth Trading Bank of Australia (1971 - 1972) 126 CLR 161. Underwood J relied upon that decision for the course he took, rejecting the appeal from the Master and, with respect, he was clearly right to do so. The applicant sought to distinguish that case on the basis that the breach of the mortgagees' undertakings led directly to the applicant's inability to meet his commitments under the mortgage, whereas in the Inglis case, the mortgagors resisted the enforcement of the mortgage on the basis of some unspecified counterclaim for damages.  Whatever be the differences between the two cases in terms of fact, the ground of resistance in each case is the same, namely the proposition that any debt that did exist is more than counter-balanced by the damages to which the mortgagors claim to be entitled (Inglis at 163).  Walsh J, at 164 - 165 said:

"If the debt has not been actually paid, the Court will not, at any rate as a general rule, interfere to deprive the mortgagee of the benefit of his security, except upon terms that an equivalent safeguard is provided to him, by means of the plaintiff bringing in an amount sufficient to meet what is claimed by the mortgagee to be due.

The benefit of having a security for a debt would be greatly diminished if the fact that a debtor has raised claims for damages against the mortgagee were allowed to prevent any enforcement of the security until after the litigation of those claims had been completed."

1. However, there is a further difficulty in the applicant's way and that is that he has instituted no action or counterclaim to seek any remedy for the alleged breach of contract.  There is nothing on foot (unlike in the Inglis case) where the Court could assess the damages to be set off against the mortgage debt.  Furthermore, there is a default judgment against the applicant for the sum of $105,401.98 in respect of the mortgage debt and interest up to the date of its entry on 4 March 1998.  The applicant has neither instituted proceedings against the mortgagees nor sought to set aside this judgment.

1. In the circumstances to grant a stay of proceedings would be quite unjustified.  The application must be dismissed.