Perpetual Trustees Victoria Ltd v Kirkbride - [2009] NSWSC 377

CITATION: Perpetual Trustees Victoria Ltd v Kirkbride & anor [2009] NSWSC 377

HEARING DATE(S): 6 - 8 April 2009

JUDGMENT DATE :
14 May 2009

JURISDICTION: Common Law

JUDGMENT OF: R A Hulme J

DECISION: Judgment for the plaintiff against the first and second defendants and an order for a warrant of possession of the three properties. Cross claim dismissed.

CATCHWORDS: MORTGAGES - mortgages and charges generally - remedies of the mortgagee - claim for possession of land - CONTRACTS - general contractual principles - discharge, breach and defences to action for breach - Contracts Review Act - whether contract unjust - borrower deferred to husband and signed documents without reading - claimed understanding that mortgage affected investment properties but not family home - whether lender adopted prudent lending practice - LoDoc loan - whether lender imprudent in acting on declarations of borrowers - whether pure asset lending - absence of evidence of contract being entered - inferences to be drawn in absence of witnesses

LEGISLATION CITED: Contracts Review Act 1980
Real Property Act 1900

CATEGORY: Principal judgment

CASES CITED: Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413; (2003) Aust Contract Reports
Garcia v National Australia Bank (1998) 194 CLR 395
Kowalczuk v Accom Finance [2008] NSWCA 343
Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41
Riz v Perpetual Trustee Australia Ltd [2007] NSWCS 1153
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd 219 CLR 165; [2004] HCA 52
West v AGC Advances Limited (1986) 5 NSWLR 610
Wilton v Farnworth [1948] HCA 20; (1949) 76 CLR 646
Yerkey v Jones (1939) 63 CLR 649

TEXTS CITED: (2003) Aust Contract Reports
The Essential Guide to Mortgage Law in New South Wales, Bransgrove M, Young M, LexisNexis Butterworths, 2008

PARTIES: Perpetual Trustees Victoria Limited (Plaintiff)
Robert Kirkbride and Silvia Fabiana Rodao-Kirkbride (Defendants)

FILE NUMBER(S): SC 15188/06

COUNSEL: Ms L Young for the Plaintiff
Mr D Loewenstein for the second Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

R A Hulme J

14 May 2009

15188/06 Perpetual Trustees Victoria Limited v Robert Kirkbride and Silvia Fabiana Rodao-Kirkbride

JUDGMENT

1 HIS HONOUR: The plaintiff seeks relief against the two defendants by way of an order for possession of three properties the subject of a mortgage. The first defendant has played no active part in the proceedings and judgment was sought against him upon the close of the plaintiff’s case. The second defendant has filed a defence and has cross claimed against the plaintiff seeking an order pursuant to s 7 of the Contracts Review Act 1980 declaring the mortgage void.

The plaintiff’s case

2 The plaintiff’s case was not in dispute. I am satisfied of the following facts.

3 The defendants are the registered proprietors of the whole of the land contained in certificate of title folio identifiers 72/248474, 31/SP74800 and 32/SP74800, being the properties known as 8 Crest Road, Albion Park, 31/188 South Parade, Auburn and 32/188 South Parade, Auburn…

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: [2009] NSWSC 377
Decision Date: 14 May 2009

CaseChat Overview and Summary

In the case of Perpetual Trustees Victoria Ltd v Kirkbride, the dispute centred on the validity and enforceability of a mortgage granted over a property owned by the Kirkbrides. The lender, Perpetual Trustees Victoria Ltd, sought to enforce the mortgage and obtain possession of the property, while the Kirkbrides argued that the mortgage was invalid due to various alleged breaches of contract and lending practices. The case was heard by the Supreme Court of Victoria.

The central legal issues before the court were whether the mortgage contract was unjust and therefore unenforceable under the Contracts Review Act, and whether the lender had acted imprudently in lending money to the borrowers. Specifically, the court needed to determine whether the lender had adopted prudent lending practices, particularly in relation to the borrowers' declarations and the nature of the loan as a LoDoc loan. The court also needed to consider whether the contract was purely asset-based and whether there was evidence of the contract being entered into.

The court found that the mortgage contract was not unjust and therefore enforceable. It held that the borrowers had not demonstrated that the contract was unjust under the Contracts Review Act. The court found that the borrowers had signed the documents without reading them and had deferred to their husband, who had assured them that the mortgage would only affect their investment properties and not their family home. The court rejected the argument that the lender had acted imprudently, finding that the lender had acted reasonably in relying on the borrowers' declarations and had not breached any lending standards. The court also found that the loan was not purely asset-based, as the lender had considered the borrowers' financial situation and capacity to repay the loan. The court held that the lender had acted prudently in lending money to the borrowers and that the mortgage was therefore enforceable.

The court ordered that the mortgagee be granted possession of the property and that the borrowers pay the mortgagee's costs of the proceedings. The court also found that the borrower was liable for the mortgagee's costs of the proceedings, including costs on an indemnity basis.

Orders