Panizza v Service Finance Corporation Ltd
[2002] WASC 176
•27 JUNE 2002
PANIZZA & ANOR -v- SERVICE FINANCE CORPORATION LTD & ORS [2002] WASC 176
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 176 | |
| 27/06/2002 | |||
| Case No: | CIV:1805/2002 | 20 JUNE 2002 | |
| Coram: | WHEELER J | 20/06/02 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | PASQUALINO PANIZZA IRENE CHARMAINE PANIZZA SERVICE FINANCE CORPORATION LTD (ACN 077 860 256) R J WILSON HOLDINGS PTY LTD (ACN 008 509 617) PAUL FREDERICK BRENNAND MARK ANDREW BRENNAND |
Catchwords: | Mortgage action Transfer of titles Refusal to extend interim orders Turns on own facts |
Legislation: | Nil |
Case References: | Inglis v Commonwealth Trading Bank of Australia (1972) 26 CLR 161 Australian and New Zealand Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd [1978] 139 CLR 195 China & South Sea Bank Ltd v Tan [1900] 1 AC 536 Commercial & General Acceptance Corporation Ltd v Nixon (1981) 152 CLR 491 Commonwealth Bank v Lee (1996) 22 ACSR 574 Glandore Pty Ltd v Elders Finance and Investments Co Ltd (1984) 4 FCR 130 Inkhorn Pty Ltd v Herbert [2000] WASCA 333 Lam v Wong [1983] 3 All ER 54 Mott v Mount Edon Goldmines (Aust) Pty Ltd (1993-94) 12 ACSR 658 Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 Southern Goldfields Ltd v General Credits Ltd (1991) 4 WAR 138 Standard Chartered Bank v Walker [1982] 3 All ER |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- IRENE CHARMAINE PANIZZA
Plaintiffs
AND
SERVICE FINANCE CORPORATION LTD (ACN 077 860 256)
First Defendant
R J WILSON HOLDINGS PTY LTD (ACN 008 509 617)
Second Defendant
PAUL FREDERICK BRENNAND
MARK ANDREW BRENNAND
Third Defendants
Catchwords:
Mortgage action - Transfer of titles - Refusal to extend interim orders - Turns on own facts
(Page 2)
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiffs : Mr T O Coyle
First Defendant : Mr A R Beech
Second Defendant : Mr A R Beech
Third Defendants : Mr D T Park
Solicitors:
Plaintiffs : Phillips Fox
First Defendant : Karp Steedman Ross-Adjie
Second Defendant : Karp Steedman Ross-Adjie
Third Defendants : Michael Whyte & Co
Case(s) referred to in judgment(s):
Inglis v Commonwealth Trading Bank of Australia (1972) 26 CLR 161
Case(s) also cited:
Australian and New Zealand Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd [1978] 139 CLR 195
China & South Sea Bank Ltd v Tan [1900] 1 AC 536
Commercial & General Acceptance Corporation Ltd v Nixon (1981) 152 CLR 491
Commonwealth Bank v Lee (1996) 22 ACSR 574
Glandore Pty Ltd v Elders Finance and Investments Co Ltd (1984) 4 FCR 130
(Page 3)
Inkhorn Pty Ltd v Herbert [2000] WASCA 333
Lam v Wong [1983] 3 All ER 54
Mott v Mount Edon Goldmines (Aust) Pty Ltd (1993-94) 12 ACSR 658
Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676
Southern Goldfields Ltd v General Credits Ltd (1991) 4 WAR 138
Standard Chartered Bank v Walker [1982] 3 All ER
(Page 4)
1 WHEELER J: On 20 June I declined to extend orders made on 14 June 2002 by the Hon Auxiliary Justice White which restrained the defendants from transferring title to a property. I then said that I would publish my reasons at a later time.
2 The plaintiffs are the mortgagors of a farming property. It is not in dispute that there is a valid mortgage in favour of the second defendant, for whom the first defendants act as agents, and that the amount payable under the mortgage has not been paid. It is not in dispute that the second defendant is entitled to exercise the power of sale. The power of sale was exercised by the first defendants on behalf of the second defendant in May of this year, following an earlier auction in February at which the property was one of four offered for sale, and at which it failed to sell. The third defendants were the successful bidders at the auction conducted in May 2002. It is alleged by the plaintiffs that the first and second defendants have failed to act in good faith and have acted with reckless disregard of the interests of the mortgagor. There are a number of reasons for that assertion.
3 The plaintiffs assert that the auction having been held in May, in the middle of wheat planting season, it would have been difficult for prospective purchasers to attend. The best time to sell properties of this type is said to be between October and February. The plaintiffs assert that because the auction was held not on the premises, but at a location in Perth, some 330 kilometres from the property, it made it more difficult for prospective purchasers to attend. It appears not to be in dispute that the most likely purchasers of a property of this type would be farmers who own properties in the vicinity. The advertisement for the auction apparently stated the wrong address; it advertised the auction as being conducted at the Celtic Club at 45 Ord Street, West Perth, when the correct address was apparently 48 Ord Street. The first-named first plaintiff deposes that there were no easily visible signs indicating the whereabouts of the auction and that he found it difficult to locate. Finally, the plaintiffs assert that the property sold at a price which was significantly under its true value.
4 So far as the balance of convenience is concerned, the first-named plaintiff deposes that the amount obtained at sale will only just cover the amount of the mortgage debt in relation to the property. Further, he deposes that the plaintiffs own two other, apparently adjoining, farming properties which he is seeking to refinance. He deposes that he has been advised that the value of this property is likely to be used for the calculation of the value of the other properties, so that they would be
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- valued at an under value, which would make it unlikely that he could refinance them. The result, he asserts, will be that it will be necessary for him to sell them, with the result that the plaintiffs will lose their home and their source of income. He deposes that he has been negotiating with a long-standing family friend who is prepared to assist him. At the hearing before me, the plaintiffs offered, with the support of that family friend, to pay into court the sum of $125,000, being a substantial proportion of the mortgage debt, with the balance to be paid within 21 days. It was indicated that it was possible that the balance could be paid within a shorter time, but 21 days was seen as being an adequate period to enable the plaintiffs' friend to make arrangements with his bankers.
5 The first of the reasons for refusing to extend the orders made by White AUJ relates to the arrangements proposed for payment into court. In the well-known passage in Inglis v Commonwealth Trading Bank of Australia (1972) 26 CLR 161 at 169, Barwick CJ, with whom Menzies and Gibbs JJ agreed said:
"Failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no restraint should be placed by order upon the exercise of the respondent mortgagee's rights under the mortgage."
- Not only are the circumstances of this case not sufficiently unusual to take it outside that general rule, but also, as I will shortly explain, it is my view that the circumstances of this case are such that even with payment into court it is unlikely that it would appropriate to grant relief.
6 The second reason for refusing to extend the orders stems from the position of the third defendants and the conduct of the first-named plaintiff in relation to them. The third defendants are neighbours of the plaintiffs. They attended the auction in February but did not bid for this property. They were successful bidders at the auction on 15 May. I should note in passing, that in the view of the second-named third defendant, as an experienced farmer in the area, the value of this property per acre is significantly less than the value of the property which did sell in February, and upon the sale of which the plaintiffs rely as establishing a value for this property.
7 The third defendants were concerned about whether access to the property could be obtained prior to settlement which was scheduled for June 2002. The reason for that concern was that they wished to be able to commence cropping the property before the planting season ended. Some 11 days after the auction the third defendants met with the first-named
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- plaintiff on the property. The first-named plaintiff is alleged to have said that he would not stand in the way of the third defendants' purchasing the property, but would try to retain his other properties. He agreed to let the third defendants into the land and to start working it. These allegations are apparently not disputed by the plaintiffs.
8 As a result of that meeting, on 5 June the third defendants commenced cropping the land and had to the date of the hearing before me prepared approximately 1,000 acres of land for cropping and had cropped 400 acres at a cost of approximately $16,500. The second-named third defendant deposes that if settlement cannot be held shortly they will not be able to finish cropping the property and will of course suffer a resulting financial loss.
9 A condition of the contract of sale between the second and third defendants permits the third defendants to terminate the contract of sale should an injunction be obtained which prevents the sale from proceeding to settlement. There is, it would appear from the circumstances to which I have already referred, a real possibility that, if the injunction were continued, the third defendants may consider that it is not worthwhile to attempt to proceed with the sale, since they would inevitably lose at least the present cropping season, and may terminate the contract. When one turns to the potential hardship to the second defendant should that possibility eventuate, I note that the second defendant is a company used as a vehicle by Mr and Mrs Wilson who are 76 and 72 years of age respectively, as a vehicle for making investments during their retirement. The amount invested in the mortgage in this property, together with the amount invested in a mortgage secured by another of the plaintiffs' properties, represents approximately one-third of their retirement capital, and Mr Wilson deposes that it is his recollection that they have received no income from the moneys invested by way of loans to the plaintiffs for a period exceeding 12 months.
10 The potential hardship to the third defendants is a significant one, and arises from the conduct of the first-named first plaintiff and the delay in making this application. The potential hardship to the second defendant is clear, particularly in the context where there has been no payment into court of the full amount, and it is proposed that such payment only be received after the passing of the date by which the contract of sale requires settlement.
11 Finally, against that balance of convenience, one must set the issue of the serious question to be tried. It is my view that, on the materials
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- presently before me, the plaintiffs' case is at best a weak one. The matters to which the first-named plaintiff deposes might, taken together, suggest a reckless disregard of the interests of the mortgagor. However, those matters do not stand in isolation. There have been affidavits filed on behalf of the defendants dealing with various allegations made by the plaintiffs.
12 So far as the timing of the sale is concerned, it appears that a reason for holding the sale at that time was to ensure that potential purchasers would be in a position to crop the property prior to the end of the seeding season, so that there was some urgency about the need for sale if it were not to be deferred until significantly later in the year. Further, there had been an advertising campaign in February for this property as part of a parcel of other properties, and it was sought to build on interest which had been attracted by that campaign. So far as the location is concerned, it appears that some advice had been obtained by the first defendant that it might be desirable to hold the sale at a more neutral location, away from the subject property, as it was thought that sometimes neighbours who might be potential purchasers would be concerned about being seen as "predatory" or taking advantage of their neighbours' misfortune. There was said to be some greater risk of picketing of the sale by an organisation called the Rural Action Movement, should the sale take place on the property. Finally, it was noted that the auction in February at Southern Cross, near to the subject property, had failed to result in a sale. The misadvertising of the auction address is conceded, but it is deposed that those responsible for organising the auction did not note this error until subsequent to the auction, and it is further suggested in the affidavits on behalf of the second and third defendants that the Celtic Club is across the road from the advertised address and is easy to identify. No photograph has been provided to me of the location, so I am unable to test the various assertions about this aspect in any way. So far as the price achieved for the property is concerned, there are affidavits explaining in some detail why the sum achieved is thought to have been a reasonable one.
13 The assertions in the affidavits filed on behalf of the defendants, and on behalf of the plaintiffs, are of course untested by cross-examination. It is not possible at this stage to attempt to ascertain where the truth lies, nor is it appropriate for me to do so. However, as a matter of first impression it seems that unless the materials deposed to in the first and second defendants' affidavits can be shown to be deliberate falsehoods, then the most that can be said about the plaintiffs' case is that there may have been a better way to conduct the sale, or that the best way of conducting the sale is a matter upon which opinions may reasonably differ. While there
(Page 8)
- is, it appears to me, a serious question to be tried it also appears to me that taking the whole of the affidavit material together, the plaintiffs' case can at present be described as a relatively weak one. While I appreciate the real risk of hardship to the plaintiffs from the non-extension of the orders, it is my view that the weakness of the plaintiffs' case, the risk of injustice to the second and third defendants, and the absence of immediate payment into court all combined to require the conclusion that the relief sought could not be continued.
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