Perpetual Trustee Ltd v Baranov - [2010] VSC 18

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 4208 of 2009

BETWEEN

PERPETUAL TRUSTEE LIMITED (ACN 000 001 007) and CHALLENGER MANAGED INVESTMENTS LIMITED (ACN 002 835 592)	Plaintiffs
and
MARK BARANOV	Defendant

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JUDGE:	MUKHTAR AsJ
WHERE HELD:	Melbourne
DATES OF HEARING:	24 November, 1, 22 (mention) December 2009
DATE OF JUDGMENT:	8 February 2010
CASE MAY BE CITED AS:	Perpetual Trustee Ltd and another v Baranov
MEDIUM NEUTRAL CITATION:	[2010] VSC 18

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MORTGAGES − Default by mortgagee ― Deed of cross collateralisation ― Multiple securities available to mortgagee to satisfy debt ― Claim for possession of mortgagee’s family home ― Precursor to mortgagee’s sale ― Statutory obligation to exercise power of sale in good faith with regard to mortgagor’s interests ― Protection of “interests” in family home ― Whether mortgagee obliged to have primary recourse to other securities ― Applicability of Nolan v MBF Investments [2009] VSC 244

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr B Carew	Deacons
For the Defendant	Mr R Cook	Efron & Associates

HIS HONOUR:

This is an application for summary judgment by the plaintiffs for moneys secured under a mortgage of land, and possession of the mortgaged property at 85 Lumeah Road (also known as 105 Balaclava Road) in Caulfield North. The defendant is the registered proprietor of that land. It is his family home. He is a property developer operating businesses in Sydney and Melbourne. As part of some dealings with the plaintiffs, he mortgaged his home to the first plaintiff as security for his obligations under a guarantee to the second plaintiff for the liabilities of his company Beluga Developments Pty Ltd (“Beluga”). The plaintiffs allege there has been default under the mortgage and guarantee. They say as at 28 September 2009 the defendant owes $3,371,829 and interest has been accruing at $628.84 per day since then.
The affidavit material and the exhibits are vast. Argument took one and a half days. Of itself, that might suggest there is an arguably good defence or a triable issue, or that “there ought for some other reason be a trial”.[1] But the plaintiffs maintained there truly was no defence, and in my view they are entitled to test stringently the tenability of each of the defences which are said to be arguable. That means the Court is bound to assess the case, issue by issue, even if it may involve having to consider a difficult or substantial question of law.[2] In that regard, I note that on 29 June 2009 the defendant filed a notice to have this proceeding heard by a jury.
[1]See Rule 22.06 (1) (b).
[2]See discussion and authorities in Civil Procedure Victoria, Vol 1 at [22.06.25].
There are four issues. First, has there been default under the mortgage? Secondly, the defendant contends as a matter of construction of s 76 of the Transfer of Land Act (“the TLA”), the default notice is inadequate. Thirdly, he…

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.

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Details

Case: [2010] VSC 18
Decision Date: 8 February 2010

CaseChat Overview and Summary

In the case of Perpetual Trustee Ltd v Baranov, the dispute revolved around the obligations of a mortgagee who was in default under a mortgage. The parties involved were Perpetual Trustee Ltd, the mortgagee, and Baranov, the mortgagor. The case was heard in the Supreme Court of Victoria. The primary issue before the court was whether the mortgagee, who held multiple securities to satisfy the debt, was obliged to have primary recourse to these securities before proceeding to claim possession of the mortgagor's family home and ultimately seeking to sell it. This question was closely tied to the statutory requirement for the mortgagee to exercise its power of sale in good faith, with regard to the mortgagor's interests, particularly in relation to the family home.

The court was required to determine whether the mortgagee had to prioritise the other securities before taking action against the family home, and if the principles established in Nolan v MBF Investments [2009] VSC 244 applied in this context. This case had previously held that a mortgagee must consider the availability of other securities before exercising the power of sale on the family home. The court had to assess if the facts of the current case warranted a similar approach and whether the statutory obligation to act in good faith necessitated a different outcome.

The court found that the mortgagee was indeed required to consider the other securities before proceeding with the sale of the family home. The reasoning was grounded in the need to protect the mortgagor's interests in the family home, particularly when the mortgagee held multiple securities. The court held that the statutory obligation to act in good faith required the mortgagee to have primary recourse to the other securities. The decision was influenced by the principles established in Nolan v MBF Investments, which emphasised the importance of protecting the mortgagor's interests in the family home. Consequently, the mortgagee's claim for possession of the family home and its intention to sell it was to be reconsidered in light of these findings.

The final orders of the court directed that the mortgagee must reassess its position in accordance with the statutory requirement to act in good faith, taking into account the availability of other securities. The court's decision underscored the importance of protecting the mortgagor's interests in their family home, particularly in situations where multiple securities are available to the mortgagee.

Orders