Permanent Custodians Ltd v El Ali - [2008] NSWSC 1264

CITATION: Permanent Custodians Ltd v El Ali [2008] NSWSC 1264

HEARING DATE(S): 23 July 2008

JUDGMENT DATE :
28 November 2008

JURISDICTION: Common Law

JUDGMENT OF: Rothman J

DECISION:
(i) Order 2 of the judgment made and entered in these proceedings on 26 October 2006 be set aside as against the second defendant;
(ii) The second defendant be granted leave to file a defence in the form annexed to the affidavit in support of the notice of motion filed 17 October 2007;
(iii) The parties have liberty to apply for any further or consequential order, including an order for costs, within 7 days of the date hereof by serving a written submission in support thereof and providing same to my Associate. Any other party has liberty within a further 7 days to respond thereto.

CATCHWORDS: MORTGAGE – indefeasibility of title – forgery – mortgagee sale not satisfying debt – liability of defrauded mortgagor - PRACTICE AND PROCEDURE – res judicata – issue estoppel – capacity to challenge mortgage other than as interest in land without setting aside judgment for possession

LEGISLATION CITED: Civil Procedure Act 2005
Real Property Act 1900

CATEGORY: Procedural and other rulings

CASES CITED: Adams v Kennick Trading (International) Limited & Ors (1986) 4 NSWLR 503
Breskvar v Wall [1971] HCA 70; (1971) 126 CLR 376
English Scottish & Australian Bank Ltd v Phillips [1937] HCA 6; (1937) 57 CLR 302
Frazer v Walker [1967] 1 AC 569
Garofano v Reliance Finance (1992) 5 BPR 11,941; [1992] NSW Conv R 59,659 (55-640)
Garrard (t/as Arthur Anderson & Co) & Ors v Email Furniture Pty Ltd (1993) 32 NSWLR 662
Provident Capital Limited v Printy [2008] NSWCA 131

PARTIES: Permanent Custodians Ltd (Plaintiff/Respondent)
Mohamed El Ali (First Defendant)
Baheja Awad (Second Defendant/Applicant)

FILE NUMBER(S): SC 12469/2006

COUNSEL: A C Casselden (Plaintiff/Respondent)
No Appearance (First Defendant)
P M Barham (Second Defendant/Applicant)

SOLICITORS: Gadens Lawyers (Plaintiff/Respondent)
No Appearance (First Defendant)
MCW Lawyers (Second Defendant/Applicant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ROTHMAN J

28 NOVEMBER 2008

12469/2006 Permanent Custodians Ltd v Mohamed El Ali & Anor
JUDGMENT

1 HIS HONOUR: Ms Baheja Awad, the second defendant in the substantive proceedings, applies to set aside part only of the default judgment issued on 26 October 2006, which judgment gave possession of land that was subject to a mortgage to the mortgagee, the plaintiff in the substantive proceedings, and also ordered the first and second defendants to pay a money amount.

2 The notice of motion initially came before the Registrar, who, on 25 February 2008, dismissed the notice of motion and ordered the second defendant to pay costs.

3 Ms Awad, the second defendant, has applied by motion on notice for a review of the Registrar’s decision and, as a consequence, for the orders sought in the initial motion.

4 Ms Awad is the first defendant’s brother’s mother-in-law. She alleges that the first defendant (Mr El Ali), with the assistance of others, arranged…

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.

Continue reading Permanent Custodians Ltd v El Ali

Details

AGLC: Permanent Custodians Ltd v El Ali [2008] NSWSC 1264
Case: [2008] NSWSC 1264
Decision Date: 28 November 2008

CaseChat Overview and Summary

The case before the court involved Permanent Custodians Limited, acting as the mortgagee, and Mr El Ali, the mortgagor. The dispute centred on the legal ramifications of a mortgage transaction where the title to a property was subject to a forged signature. The mortgagee had conducted a sale of the property but failed to cover the debt, leading to a claim by the mortgagor for the deficiency amount. The court was tasked with determining the extent of the mortgagor's liability given the fraudulent nature of the mortgage transaction and whether the mortgagor could challenge the mortgage's validity in a different capacity than merely as an interest holder in the land. Additionally, the court had to address procedural issues, including whether the principle of res judicata or issue estoppel prevented the mortgagor from challenging the mortgage's validity in the current proceedings.

The primary legal issue was whether Mr El Ali, the mortgagor, remained liable for the shortfall after the mortgagee's sale of the property did not cover the debt. The court had to consider the implications of the forgery on the mortgage transaction and whether this affected the indefeasibility of title. Another significant issue was the capacity in which Mr El Ali could challenge the validity of the mortgage. The court was asked to determine if he could do so outside the context of his interest in the land, without the need to set aside a previous judgment for possession. The procedural aspects of the case, including the application of res judicata and issue estoppel, were also critical in determining the outcome of the case.

The court found that despite the forged signature, the mortgagee's title was still protected by indefeasibility. However, this did not absolve the mortgagor of his liability for the debt. The court held that Mr El Ali could challenge the mortgage's validity in a capacity other than merely as an interest holder in the land. This allowed him to pursue a claim for the deficiency amount without needing to set aside the previous judgment for possession. The court also determined that res judicata and issue estoppel did not bar Mr El Ali from challenging the mortgage's validity in the current proceedings, given the unique circumstances of the case.

The final orders of the court were that the mortgagee, Permanent Custodians Limited, was not required to satisfy the full debt from the sale proceeds due to the indefeasibility of their title. However, Mr El Ali was entitled to claim the shortfall amount. The court also clarified that Mr El Ali could challenge the mortgage's validity outside the context of his land interest, and the principles of res judicata and issue estoppel did not prevent him from doing so in this instance.

Orders